There's The Problem of Social Cost in getting energy out of the ground and to consumers, complicated by the transactions costs (ala Ronald Coase, the problem is reciprocal);
Maoba resident Deng Fagui says he is concerned the operations damaged water quality. On his farmhouse porch one recent morning, Mr. Deng said the groundwater he pumps for drinking and bathing has been off color since around the time drilling began. Shell says it takes measures to ensure local groundwater isn't polluted.
Shell compensates villagers for land use and other inconveniences. A person who loses a field measuring one mu—a traditional Chinese measurement equal to about 700 square meters, or about 7,500 square feet—would likely receive at least 8,400 yuan ($1,400) over two years in compensation, according to local government official Chen Jiayou. Shell says payments are transferred to higher-level township governments, which distribute them to village-level leaders, in some cases as cash.
Other payments that Shell reimburses its partners in China for also end up as cash given to local officials, according to a Shell spokeswoman. Shell said in a statement that it "follows the government laws and regulations in terms of standards and procedures" for doling out compensation, and that it doesn't make payments in cash, which would violate corporate policy aimed at preventing bribery. But it said that Shell contractors or subcontractors might make cash payments out of "operational convenience" and bill Shell for the costs.
Maoba's village chief Deng Yuguo says he received a cash payment late last year from the companies drilling in Maoba of around 14,000 yuan to use in local road repairs. Shell said the payment was made as a bank transfer to township-level officials on behalf of Shell's joint venture with CNPC, and those officials converted it to cash for Mr. Deng. Mr. Deng said the funds haven't yet been spent.China's lack of political infrastructure no doubt stems from their hostility to western capitalism under Mao for decades; they have to work out the details for themselves just as other societies have. And, that's on top of their other disadvantages;
The region's rough terrain, poor infrastructure and deeply buried gas formations present tough technical challenges. .... Some shale-rich countries, including China, are short on developed roads, water and drilling contractors trained in modern safety standards.All problems that can be worked out, eventually, with property rights assigned.