Tuesday, October 14, 2008 : 10:30 a.m.
Unitization: Renewing a Well-Oiled Approach to Nonrenewable Ground Water
Excessive access and drawdown in petroleum “reservoirs” has led to premature depletion and, in some cases, irreversible damage to the storage characteristics of reservoirs. In the case of oil and gas reservoirs, government-mandated “unitization”, or the single ownership and management, of the oil and gas reservoirs is one solution to the problem of access and related drawdown to the common pool resources. Economists and legal scholars in property rights suggest unitizing some situations associated with groundwater development as one means to mitigate the inefficiency of a possession or use-based system of groundwater along with the inefficiencies associated with joint access to groundwater. Under a non-renewable groundwater scenario, a single “unit operator” could extract from and develop the reservoir with other parties tapping the non-renewable groundwater resource share in the net returns as share holders. This arrangement eliminates the “race to the pump” and directs extraction toward maximization of the economic value of the entire reservoir or aquifer, rather than trying to meet the unreachable star of maintaining the “sustainable” water rights held by individual parties tapping non-renewable groundwater.
W. Todd Jarvis, Ph.D., Oregon State University Associate Director
John W. Jarvis, Certified Professional Landman (retired) John W. (Bill) Jarvis worked as a professional landman for major and independent exploration and land companies for over 30 years. He specialized in leasing federal lands.