Understanding the behaviors of oil and gas firms on water sustainability under different state-market relationships

The drilling of oil and gas wells and following decades-long production require significant amounts of water. The new development of shale oil/gas resources tend to have even much higher demand for water. Water sustainability,... [ view full abstract ]

The drilling of oil and gas wells and following decades-long production require significant amounts of water. The new development of shale oil/gas resources tend to have even much higher demand for water. Water sustainability, accordingly, has critical importance for both local ecosystems and continuous oil/gas production. We examine the behaviors of oil and gas firms in managing water consumption and pollution under different state-market relationships. Our focused region is Xinjiang, China with multiple major oil and gas fields and significant water resource constraints. Developers in different fields face different state-market relationships. In addition to the conventional relationship in which firms operate under the regulation of a local government with roughly monopolized governance authority in its jurisdiction, we will pay special attention to two additional relationships: (i) the local oil & gas firm is the de facto local government, and (ii) two independent local governments share the governance authority in an overlapped jurisdiction. Through publically available data and first-hand information from our fieldwork in 2016, our largely qualitative analysis will explain their behaviors from the perspective of water rights and stakeholders in its sustainable management, and how the three types of state-market relationships may have shaped their decisions.