14th Round PEDLs announced

On 17 December 2015, the Oil & Gas Authority (OGA) announced that licences for a total of 159 blocks were formally offered to successful applicants. This concludes Britain's first onshore oil and gas licensing round in seven years (endnote 1).

This followed the OGA's announcement, in August 2015, of its intention to offer licences covering 27 blocks which did not require further environmental assessment under the Conservation of Habitats and Species Regulations 2010 (the Habitats Regulations). At the same time as the August announcement the OGA launched a consultation relating to a further 132 blocks that were subjected to further detailed assessment in accordance with the Habitats Regulations, and a public consultation on that assessment was carried out.

Out of the total 159 licenses awarded, the Government said that 75 percent of the blocks covered were related to shale gas or oil. Companies which obtained new licenses include Aurora, Celtique, Cuadrilla, Egdon, GDF Suez, Hutton Energy PLC, IGas, Opsrey Petroleum Limited, Reach Coal Seam Gas Limited, South Western Energy Limited, Third Energy, Warwick Energy Exploration and INEOS. The latter won 21 new licenses which it said now made it Britain's biggest shale gas operator by acreage.

In accordance with the new devolution settlements the UK Government has decided that it would not award any new PEDLs in Scotland or Wales as part of the 14th Round.

The Protected Areas Regulations

Both Houses of Parliament have now approved the draft Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015 (draft Regulations) (endnote 2).

A motion to approve the draft Regulations was tabled in the House of Lords on Tuesday 15 December 2015; the motion was agreed. The Commons deferred approval from Tuesday 15 December 2015 to the following day, Wednesday 16 December 2015, when it voted by 298 (261 against) to approve the draft Regulations.

The draft Regulations now have all the approvals that are required for them to be made and come into force. While they have not actually been made at the date of this briefing, it is anticipated that they will be made and come into force in the near future.

The effect of the draft regulations is that fracking would be allowed under, but only at depths below 1,200 metres, National Parks, the Broads, AONBs, and World Heritage Sites, and Source Protection Zones (SPZ) 1 (areas close to a drinking water source where the risk of associated with groundwater contamination is greatest). The definition did not include SSSIs unless already covered by other designations. Our previous briefing covered the provisions of the draft Regulations in more detail, and can be read here.

A separate consultation on the proposed restrictions on surface development through the Petroleum Exploration and Development Licence (PEDL) (URN 15D/513) was published by DECC on 4 November 2015 (the DECC Consultation). For more information on the consultation read our previous briefing here.  

This Consultation proposes that the surface restrictions would apply to the areas defined in the draft Regulations and to additional sensitive areas, meaning that (if implemented) the surface restrictions would apply to National Parks, the Broads, AONBs, World Heritage Sites, Source Protection Zones (SPZ)1, and additionally to SSSIs, Natura 2000 sites and Ramsar sites.

If these proposals are also taken forward then drilling will still be permitted from outside the boundaries of these specified areas, but fracking could only take place below 1,200 metres. Note however, that the Consultation states that the proposals will not apply to drilling for conventional hydrocarbon resources and "also [will] not apply to the production of other unconventional resources, such as coal bed methane, which do not use high-volume hydraulic fracturing."

At the date of this briefing the Government response to the DECC Consultation has not yet been published.

What is next?

The PEDLs give rights to companies to explore for shale oil and gas, but do not give automatic permission to drill, which will require further consents including planning permission and environmental permits. The areas now opened up for exploration include land around Barnsley, Burnley Bolton, Chester, Chesterfield, Preston, Sheffield and York, as well as a number of areas in the South West.  Blocks of land adjacent to national parks including the Lake District, the Peak District and the North York Moors are also now open for exploration.

Planning permission to build rigs and drill land requires further permissions. So far local planning approvals for new projects have been slow because of concerns by residents about environmental, noise and visual impact. Lancashire County Council refused Cuadrilla's applications in June 2015 on grounds of visual impact and unacceptable noise. Also rejected was a related application for a monitoring array at Preston New Road to monitor seismic activity.

However, the Government moved decisively to set out its policy intention to call-in and recover shale applications for its own decision on 13 August 2015; for further detail read our briefing here.

By letter to Lancashire County Council dated 26 November 2015 the council was given notice that the Secretary of State will determine Cuadrilla's appeals against the council's’ decision to refuse applications to drill and test frack at sites at Little Plumpton off Preston New Road and at Roseacre. The letter stated: “The reason for this direction is because the drilling appeals involve proposals for exploring and developing shale gas which amount to proposals for development of major importance having more than local significance and proposals which raise important or novel issues of development control, and/or legal difficulties.” The inquiry to determine four linked appeals relating to the company's planned operations in Lancashire is due to take place in February 2016. The Government intervention will now mean that the planning inspector, instead of taking the decision, will prepare a report and recommendation to the Secretary of State who will take the final decision on the company's appeals.

This decisive intervention will give the industry greater confidence that they have a potentially timelier route to decision.