Do Agriculture and the Oil & Gas Industry Mix?

When talking about the future of the modern economy, it’s impossible not to mention the industries of agriculture and energy. Both require a significant amount of land for their products, which can cause conflict between the two. But there are also ways for agriculture and energy companies to coexist for mutual profit. In Texas, it’s not uncommon for cattle and crops to share land with drilling companies looking for the next big oil discovery. For a closer look at how these businesses are intertwined, read our brief analysis below.

Harvesting Natural Gas

The average farmer has a lot to gain from allowing a company to extract oil or natural gas on their property. Most farms, especially small ones like ours, produce relatively low-profit margins and are vulnerable to severe weather that can destroy an entire crop. By diversifying their assets, farms can increase their financial security and income. Harvesting fossil fuels is an easy way to accomplish that.

When agreeing to share their land with an energy company, a farmer will most likely receive an initial deposit along with an ongoing royalty payment that’s equal to a percentage of the energy product. While the amount of money can vary from one farm to the next, the income is usually high. And since most farmers rarely have to contribute to the harvesting process, many of them are eager to accept an offer with an oil or gas company. We keep track of our farm’s oil royalties using this handy mineral management software from Austin-based InGauge Minerals.

Spills and Contamination

On the other hand, harvesting natural gas and drilling for oil can reduce the amount of land that’s available for farming and cause damage to surrounding farmland. For example, a chemical spill can lead to the contamination of an entire farm around the accident, which could kill any crops or livestock that are exposed to the chemicals. The long-term impact can be hard to judge, especially in the case of recent developments such as fracking, but can also cause severe destruction on a farm with years of cleanup.

Land Access

Harvesting fossil fuels can also hinder a farmer’s usual work if it’s not correctly managed. While a pipeline that cuts through a field can take up a small amount of growing space, it can also slow down tractor work by eliminating routes around a field. Even without a pipeline, gas workers will need to access harvesting devices and equipment, which can get in the way of daily work on a farm. Fortunately, goats don’t take up nearly as much acreage as horses or cattle, so we have plenty of land for the drilling company to access without infringing on the daily functioning of our farm.

Making the Choice

All of these factors add up to a complicated decision that’s faced by many farmers. On one hand, harvesting fossil fuels can provide a large and stable source of income during bad growing seasons and a fluctuating agricultural market. On the other hand, it also exposes farmers to the risk of a chemical spill and the occasional delay of farm work. And whether or not a farmer chooses to work with an energy company, there are many issues to consider.

 Do Agriculture and the Oil & Gas Industry Mix?