We analyze the relative price elasticity of unconventional versus conventional natural gas extraction. We separately analyze three key stages of gas production: drilling wells, completing wells, and producing natural gas from the completed wells. We find that the important margin is drilling investment, and neither production from existing wells nor completion times respond strongly to prices. We estimate a long-run drilling elasticity of 0.7 for both conventional and unconventional sources. Nonetheless, because unconventional wells produce on average 2.7 times more gas per well than conventional ones, the long-run price responsiveness of supply is almost 3 times larger for unconventional compared to conventional gas.
This study explores factors driving tract-level heterogeneity in the quality of leases executed by property owners who transfer their mineral rights to irms that drill for and extract natural gas. The data set consists of tract-level aggregates of lease terms, our measures of lease quality, and tract-level census data from the leases. We ind that higher-quality leases are negatively correlated with higher concentration of minority households when controlling for census-tract-level characteristics. Based on the indings, we propose policies to reduce observed heterogeneity in the quality of leases and, subsequently, to reduce residents' exposure to negative effects of nearby well sites.
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