Authors
Chandler J Sachs, Dylan E Bugden, Richard C Stedman
Publication date
2020/11/1
Journal
The Extractive Industries and Society
Volume
7
Issue
4
Pages
1443-1450
Publisher
Elsevier
Description
We describe the presence of post-production cost clauses (PCCs) in shale gas leases in two Northeastern Pennsylvania counties. Using a large, random sample of leases (N=1031), we demonstrate (1) how common PCCs are, (2) how frequently landowners address the risks of these clauses directly in the lease, (3) and several factors associated with greater likelihood of landowners addressing PCC risks in a lease. We find that nearly every lease contains language allowing for post-production costs to be taken out of landowner royalty payments, and that the language is often sufficiently general to allow for exploitative industry practices. However, we do find that (1) a small majority of landowners directly address these risks by inserting counter-acting lease terms, and (2) that these alternative lease terms increase over time, indicating a social learning process through which landowners are able to insulate …
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