UK shale gas – a policy tug of war

Abstract

Given the important role that the United Kingdom offshore oil and gas industry has played in contributing to the UK's economy and energy security, it should not come as a surprise that the UK Government is eager to emulate, even if to a more modest extent, the success of the shale gas industry in the United States. The development of the shale gas industry is therefore firmly on the government's policy agenda and in recent years the former coalition government, and now the new Conservative government, have taken various steps to smooth the regulatory road for the industry. However, to date no production has commenced and it is clear that there are still difficult regulatory hurdles in place. This commentary considers recent regulatory developments and the issues they present for the industry. It is arguable that one of the main problems is the fact that the government is juggling two separate policies that are on a collision course with each other in the context of shale gas: on the one hand, a policy to support onshore shale gas; and, on the other hand, a policy to allow local communities a greater say in planning consent decisions.

Notes

1 For more information, see www.gov.uk/guidance/oil-and-gas-onshore-exploration-and-production, accessed 22 January 2016.

2 Written Ministerial Statement by the Secretary of State for Energy and Climate Change, 13 December 2012 www.gov.uk/government/speeches/written-ministerial-statement-by-edward-davey-exploration-for-shale-gas.

3 Department of Energy and Climate Change, Gas Generation Strategy (Cm 8407, 2012).

4 Department of Energy and Climate Change, Digest of United Kingdom Energy Statistics 2012 (TSO 2012).

5 IJ Andrews, ‘The Carboniferous Bowland Shale Gas Study: Geology and Resource Estimation’ (British Geological Survey for Department of Energy and Climate Change 2013).

6 IJ Andrews, ‘The Jurassic Shales of the Weald Basin: Geology and Shale Oil and Shale Gas Resource Estimation’ (British Geological Survey for Department of Energy and Climate Change 2014).

7 AA Monaghan, ‘The Carboniferous Shales of the Midland Valley of Scotland: Geology and Resource Estimation’ (British Geological Survey for Department of Energy and Climate Change 2014).

8 This is the view of both government and industry. See for example Task Force on Shale Gas, First Interim Report (25 March 2015) https://www.taskforceonshalegas.uk/reports/first-report.

9 Oil and Gas Authority and Department of Energy and Climate Change, ‘New Onshore Oil and Gas Blocks to Be Offered’ (18 August 2015) www.gov.uk/government/news/new-onshore-oil-and-gas-blocks-to-be-offered.

10 See http://news.scotland.gov.uk/News/Moratorium-called-on-fracking-1555.aspx.

11 For example, operators are required to develop a Hydraulic Fracturing Programme, based on the risk assessment, that describes the control and mitigation measures for fracture containment and for any potential induced seismicity. For more information, see ‘UK Onshore Shale Gas Well Guidelines’ (United Kingdom Onshore Operators Group, 1 February 2013).

12 See www.gov.uk/government/publications/regulatory-roadmap-onshore-oil-and-gas-exploration-in-the-uk-regulation-and-best-practice.

13 For example, the industry-backed Task Force on Shale Gas argues that ‘A single regulator with overall responsibility is more likely to provide the clear and transparent framework necessary to build public confidence in the issue.’ Task Force on Shale Gas, First Interim Report, ‘Planning, Regulation and Local Engagement’ (25 March 2015), p. 26, https://www.taskforceonshalegas.uk/reports/first-report.

14 Bocardo SA v Star Energy [2010] UKSC 35, [2011] 1 AC 380.

15 Spending Review and Autumn Statement 2015 (HM Treasury, 25 November 2015).

16 See for example the report of the House of Commons Environmental Audit Committee, which concluded that ‘fracking must be prohibited outright in protected and nationally important areas including National Parks, the Broads, Areas of Outstanding Natural Beauty, Sites of Special Scientific Interest and ancient woodland’. See House of Commons Environmental Audit Committee, Environmental Risks of Fracking (Eighth Report of Session 2014–15, HC 856) 31.

17 See Infrastructure Act 2015, s 50.

18 We refer here to both the OGA and the Secretary of State, because the legislation gives the relevant powers to the Secretary of State, but, as mentioned above, administration of the licensing regime has been transferred to the OGA.

19 The Broads are a network of rivers and lakes in the English counties of Norfolk and Suffolk.

20 Department of Energy and Climate Change, ‘Surface Development Restrictions for Hydraulic Fracturing’ (4 November 2015), https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/473795/Consultation_Surface_Restrictions_-_04_11_2015_FINAL.pdf.

21 National Planning Practice Guidance, Minerals, paragraph 120, reference ID 27-120-20140306 http://planningguidance.planningportal.gov.uk/blog/guidance/minerals/planning-for-hydrocarbon-extraction/eia/.

22 National Planning Practice Guidance, Minerals, paragraph 120, reference ID 27-119-20140306 http://planningguidance.planningportal.gov.uk/blog/guidance/minerals/planning-for-hydrocarbon-extraction/eia/.

23 Application LCC/2014/0101 (application documents available at http://planningregister.lancashire.gov.uk/PlanAppDisp.aspx?recno=6591) and application LCC/2014/0096 (application documents available at http://planningregister.lancashire.gov.uk/PlanAppDisp.aspx?recno=6586).

24 Decision notice dated 29 June 2015 for application LCC/2014/0096.

25 Decision notice dated 25 June 2015 for application LCC/2014/0101.

26 Application LCC/2014/0097 (refused) (application documents available at http://planningregister.lancashire.gov.uk/PlanAppDisp.aspx?recno=6587) and application LCC/2014/0102 (granted with conditions) (application documents available at http://planningregister.lancashire.gov.uk/PlanAppDisp.aspx?recno=6592).

27 Planning Inspectorate reference numbers APP/Q2371/W/15/3130923, APP/Q2371/W/15/3130924, APP/Q2371/W/15/3134385 and APP/Q2371/W/15/3134386.

28 ‘Group Wins Right to Challenge Lancashire Fracking Monitoring Plan’ (BBC News, 24 October 2015) www.bbc.co.uk/news/uk-england-lancashire-34618544; ‘Residents Win Permission to Challenge Approval for Seismic Monitoring’ (Local Government Lawyer, 26 October 2015) http://localgovernmentlawyer.co.uk/index.php?option=com_content&view=article&id=24853%3Aresidents-win-permission-to-challenge-approval-for-seismic-monitoring&catid=1%3Alatest-stories&Itemid=1; http://www.bbc.co.uk/news/uk-england-lancashire-34938891.

29 Emily Gosden, ‘Fracking: Major Setback for Shale Gas Industry as Cuadrilla Plans Rejected’ The Telegraph (London, 29 June 2015) www.telegraph.co.uk/news/earth/energy/fracking/11706809/Fracking-major-setback-for-shale-gas-industry-as-Cuadrilla-plans-rejected.html; www.bbc.co.uk/news/uk-england-lancashire-33277517.

30 HL Written Statement, 19 July 2013, vol 747, cols WS149–WS150 (written ministerial statement by the Parliamentary Under-Secretary of State for the Department for Communities and Local Government) www.publications.parliament.uk/pa/ld201314/ldhansrd/text/130719-wms0001.htm#13071961000017. The guidance itself is available at www.gov.uk/government/uploads/system/uploads/attachment_data/file/256357/Publication_Planning_practice_guidance_for_onshore_oil_and_gas.pdf.

31 Department for Communities and Local Government and Department of Energy and Climate Change, ‘Shale Gas and Oil Policy Statement by DECC and DCLG’ (13 August 2015) www.gov.uk/government/publications/shale-gas-and-oil-policy-statement-by-decc-and-dclg/shale-gas-and-oil-policy-statement-by-decc-and-dclg.

32 HC Written Statement, 16 September 2015, vol 599, cols 31WS-32WS www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2015-09-16/HCWS202/.

33 Oil and Gas Authority and Department of Energy and Climate Change, ‘New Onshore Oil and Gas Blocks to Be Offered’ (18 August 2015) www.gov.uk/government/news/new-onshore-oil-and-gas-blocks-to-be-offered.

34 ‘Calling-in’ of a planning application refers to the power of the Secretary of State to take the decision-making power on a particular planning application out of the hands of the MPA for his own determination. This can be done at any time during the planning application process, up to the point at which the MPA actually makes the decision. If a planning application is called-in, there will be a public inquiry chaired by a planning inspector, or lawyer, who will make a recommendation to the Secretary of State. The Secretary of State can choose to reject these recommendations if he wishes and will take the final decision. The power to call-in planning applications is very general and the Secretary of State can call-in an application for any reason. In practice, very few applications are called-in every year. They normally relate to planning applications which raise issues of national significance.

35 Usually, planning appeals are determined by planning inspectors on behalf of the Secretary of State for Communities and Local Government. In certain situations, the Secretary of State can recover appeals so that he makes the final decision taking into account a recommendation by the inspector.

36 Department for Communities and Local Government, ‘Amendment to Permitted Development Rights for Petroleum Exploration’ (last updated 13 August 2015) www.gov.uk/government/consultations/amendment-to-permitted-development-rights-for-petroleum-exploration.

37 Section 50.

38 For example, the Secretary of State for Energy and Climate Change, Amber Rudd, said, ‘the delays that have been taking place on deciding if these applications [for planning permission for fracking] could go ahead, have simply been taking too long’. Adam Vaughan, ‘Government Will Step in If Councils Don't Fast-Track Fracking Applications’ The Guardian (London, 13 August 2015) www.theguardian.com/environment/2015/aug/13/government-will-step-in-if-councils-dont-fast-track-fracking-applications.

39 Scottish Government, ‘Moratorium Called on Fracking’ (28 January 2015) http://news.scotland.gov.uk/News/Moratorium-called-on-fracking-1555.aspx.

40 See, in particular, p. 8 of ‘Major infrastructure planning: extending the regime to business and commercial projects Summary of responses and government response’, Department for Communities and Local Government, June 2013: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/208049/Major_infrastructure_planning_-_extending_the_regime_to_business_and_commercial_projects_-_summary_of_responses_and_government_response.pdf