Hydraulic fracturing for shale gas (“fracking”) is a controversial issue worldwide – simultaneously condemned as a harbinger of environmental pollution and earthquakes, and promoted as the solution to dwindling conventional energy resources. In the UK (estimated in the 2010 British Geological Survey to hold 74bn-148bn cubic metres of potentially recoverable reserves of shale gas), the government has promised to go “all out for shale”, which it considers to have the potential to bring “greater energy security, growth and jobs”.
However, this commitment to shale is somewhat tempered, particularly in other parts of the UK than England. In the same month that the government announced that planning applications for fracking would be fast-tracked, it published draft regulations that impose a number of environmental safeguards, which will inevitably impact on project timetables.
Complex consent regime
In keeping with its commitment to shale exploration, the government recently held its 14th landward licensing round, as a result of which 27 onshore blocks were formally offered for exploration. The newly established Oil and Gas Authority (“OGA”) and the Department of Energy and Climate Change (“DECC”) have also issued a consultation on a further 132 onshore blocks, which runs until 29 September.
However, potential applicants will need to obtain numerous licences and approvals before any exploration and/or fracking can occur. These include: a petroleum exploration and development licence (“PEDL”); consent from landowners whose land will be affected by the exploration; planning permission; an environmental permit (in some circumstances); an abstraction licence; written authorisation from the Coal Authority; and a well consent. A developer will also need to notify the Health and Safety Executive (“HSE”) and seek approval for its well design and operation plans, and notify the Environment Agency (“EA”) of its intention to drill (which may then result in the EA issuing a conservation notice under the Water Resources Act 1991). While some of these processes may be simplified or expedited, upcoming legislative changes may further restrict the areas and circumstances in which fracking can occur.
On 13 August, the DECC and the Department for Communities and Local Government (“DCLG”) announced that shale gas planning applications would be “fast-tracked”. Although no changes to existing legislation are proposed, the secretary of state will reportedly “actively consider” calling in shale planning applications on a case-by-case basis and will be encouraged to take decisions instead of local councils if they repeatedly fail to determine oil and gas applications within the 16-week statutory timeframe.
Energy and climate change secretary Amber Rudd said: “To ensure we get this industry up and running we can’t have a planning system that sees applications dragged out for months, or even years on end… We now need, above all else, a system that delivers timely planning decisions and works effectively for local people and developers.”
The greater priority at central government to ensure planning applications for fracking are decided without delay is probably in response to the difficulties that developers have experienced in obtaining permissions to date, as demonstrated by the recent unsuccessful applications submitted by Cuadrilla Resources Holdings Ltd.
Cuadrilla, whose fracking operations in Blackpool were suspended in 2011 after they were suspected to have caused or have contributed to earthquakes in the area, had two applications for planning permission to carry out fracking in the Lancashire area refused in June 2015. The applications sought planning permission to drill, hydraulically fracture and test the flow of gas from up to four exploration wells on each of two sites, one at Preston New Road and the other at Roseacre Wood.
Lancashire county council refused the application at Roseacre Wood because it would cause an increase in traffic, which would reduce road safety. The application at Preston New Road was refused on the grounds of visual impact and unacceptable noise, contrary to the Lancashire Minerals and Waste Local Plan. It was also determined that the application was contrary to paragraph 9 of the National Planning Policy Framework in that it will not contribute to and enhance the natural environment by protecting and enhancing valued landscapers.
Although Cuadrilla has announced it plans to appeal these decisions, they demonstrate the difficulties and uncertainties currently faced by shale gas applicants. These impact not only the developer and the communities affected, but also the ability for applicants to secure the finance and investment necessary for the development of these projects.
The introduction of legislation imposing environmental safeguards will bring further challenges for the shale gas industry. The Infrastructure Act 2015 inserts sections 4A and 4B into the Petroleum Act 1998 (“the 1998 Act”). These provisions prohibit associated fracking at a depth of less than 1,000m and put in place a number of conditions that must be satisfied before a well consent required by a PEDL for associated fracking at a depth below 1,000m can be granted. These include that the request for the environmental impact of the well has to be considered by the relevant local planning authority (“LPA”); appropriate arrangements for the monitoring of emissions of methane into the air have to be made; that the associated fracking will not take place within “protected groundwater source areas”; associated fracking may not take place within “other protected areas”; and that in considering an application for the relevant planning permission, the LPA has taken into account the cumulative environmental effects of the application, and any other applications relating to fracking.
Section 4B of the 1998 Act requires the secretary of state to make regulations specifying which areas are “protected groundwater source areas” and “other protected areas”. The draft Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015 (“the regulations”), currently before parliament, fulfil this function. The regulations define a “protected groundwater source area” as any land at a depth of less than 1,200m beneath land that is within 50m of a point at the surface at which water is abstracted for domestic/food production purposes, or within/above a 50-day travel time for groundwater to reach such an abstraction point.
The regulations define “other protected areas” as land less than 1,200 metres below a national park, the Norfolk/Suffolk Broads, an area of outstanding natural beauty, or a world heritage site. The regulations reflect the government’s commitment to proceeding with fracking in a manner that has sufficient environmental safeguards in place, but also add to the increasingly complicated regulatory framework governing fracking, which attracts costs and delays that may negatively impact developers and those seeking to finance such projects.
Permitted development rights
In further evidence of its support for fracking, the government also recently responded to a consultation on expanding permitted development rights to include drilling boreholes for groundwater monitoring for petroleum exploration.
In August 2015, the government announced that it intends to amend the Town and Country Planning (General Permitted Development) (England) Order 2015 (“the 2015 Order”) to allow for development consisting of the drilling of boreholes for groundwater monitoring for petroleum exploration to take place as permitted development. According to the government, this measure would “enable groundwater monitoring to be put in motion much earlier in the planning process, and provide early reassurance that the environmental impacts are being properly considered”. The amendments will also make provision for restricting development in protected groundwater source areas, in line with the regulations.
The government is now consulting on proposed amendments to the 2015 Order to expand permitted development rights, to include the drilling of boreholes for carrying out seismic investigation and monitoring and for locating and appraising mine workings, as well as extending the duration of the permitted development right for the drilling of boreholes for groundwater monitoring from six to 24 months.
Contrasting the rest of the UK
In contrast to the situation in England, in January, the Scottish government announced a moratorium on granting consents for unconventional oil and gas developments in Scotland while further research and a public consultation is carried out.
The Scottish government is using planning and environmental powers to stop shale gas fracking developments from going ahead, pending a full public health impact assessment and public consultation on the industry. Work is also being carried out to assess the adequacy of environmental and planning regulations. The situation is similar in Wales, where a moratorium on fracking was announced in February 2015. Although licences for exploration have been issued in Northern Ireland, no fracking has actually taken place to date.
Although shale gas applicants in England are required to traverse a complicated regulatory landscape, recent developments demonstrate the government’s commitment to pursuing fracking in a manner that protects both the nation’s energy security and the environment.
See details on the government’s ongoing “Habitats Regulations Assessments of 14th onshore oil and gas licensing round” consultation, which closes on 29 September 2015.
Review the “Further amendments to permitted development rights for petroleum exploration site investigation and monitoring” consultation, which closes on 24 September 2015.
Caroline May is a partner and Emilia Richards is an associate at Norton Rose Fulbright LLP