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Where to drill? The petroleum industry's response to an endangered species listing

Richard Melstrom ()

Energy Economics, 2017, vol. 66, issue C, 320-327

Abstract: This paper examines the effect of U.S. Endangered Species Act (ESA) regulations on oil and natural gas well drilling in Kansas and Oklahoma. In 2014 and 2015, petroleum companies faced land use restrictions when the imperiled lesser prairie chicken received threatened species-status under the ESA. In Kansas and Oklahoma, as elsewhere, the petroleum industry has been criticized for damaging environmental quality and developing wildlife habitat. Using data on well locations, I estimate a discrete choice model to measure the effects of ESA regulations on companies' location preferences. While the results show that habitat avoidance increased with regulatory scrutiny, the effect is very modest, which suggests that companies may have discounted the risk of penalties from ESA violations. Results also suggest that pre-listing announcements related to ESA regulations influenced companies' location choice.

Keywords: Well locations; Conservation; Energy; Habitat; Endangered Species Act (search for similar items in EconPapers)
JEL-codes: D22 Q24 Q56 R11 (search for similar items in EconPapers)
Date: 2017
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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