Oil Industry: The Rule of Capture

Consequently, an oil well can drain oil from a forty-acre radius, and a gas well ‎can drain gas from 640-acre radius. Furthermore, the mineral reserves can be placed ‎under the ownership of two or more people with different needs and interests with equal ‎rights or exclusive rights to their properties. As a result, some landowners may ‎interested to drill and benefit from the mineral reserves and others may oppose to such ‎drilling because of its negative externalities. To solve this competing interests, ‎employing the “Rule of Capture” undermined the property rights of a neighbor who is ‎not ready to drill or does not want to drill at all for various reasons. Between these ‎different individuals or groups with competing interests, one can have financial needs, ‎others may have environmental concerns, which means he or she values clean air and ‎water more than the financial benefit from the mineral content. Based on the ‎interpretation and utilization by the courts, the Rule of Capture failed to support the ‎enjoyment of those who do not want their environment to be affected negatively. If one ‎or more landowners want to drill and others oppose any kind of drilling around their ‎homes, the “Rule of Capture” does not stop these people from digging and disturbing ‎the residents of the rest of that area. “Even if this individual first digs in his or her ‎portion of the land and once he or she digs in deep underneath of the earth, that person ‎reaches under the land of others and can empty the other persons’ resources. He is the ‎only who dug deep under his property, and this creates low pressure and all the ‎resources flow towards his reservoir” (Burness). Therefore, if one of the neighbors may ‎value the extracted oil and want to be...

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...y trading ‎all or portion of their interest. An individual or group that wanted to extract oil could ‎negotiate with the opposing party by offering portion of the benefit form the common ‎pool. They could also reach into a negotiated agreement in protecting the quality of air ‎and water by producing oil and or gas more carefully and environmentally friendly way. ‎On this setting, only one or two wells could have been drilled while leaving more land ‎for alternative use. Under these circumstances, both sides would end up with mutually ‎beneficial terms rather than win or lose terms which favored by the courts. Under this ‎terms, resources could be also used more efficiently and mineral contents would had ‎captured to the extent technologically feasible quantity and less resourced could left in ‎the reservoir compared to the output gained under the “Rule of Capture”.‎