Influence of Operator Size on Regulatory Compliance in the Unconventional Oil and Gas Industry

Abstract

The hydraulic fracturing boom in the United States has opened vast areas of the country to oil and gas development. While beneficial to the energy sector, unconventional oil and gas operations are not without risk. This study analyzes the compliance risks of oil and gas operators of differing sizes from two states actively involved in the unconventional industry. Historic oil and gas inspection and violation data was analyzed to evaluate the regulatory compliance risk of operators of different sizes. This data was then used to test an industry assumption that larger companies are less likely to commit regulatory violations when compared to smaller operators. The data analysis in this study confirmed this assumption, suggesting a general trend that larger companies engaged in unconventional oil and gas development are less likely to commit regulatory violations when inspected than smaller companies.