Fracking (otherwise known as hydraulic fracturing for shale gas) continues to be a favourite topic for the Press. We previously addressed some of the key issues for landowners and now consider recent legal developments in this area.
THE HISTORIC LEGAL POSITION
Onshore oil and gas extraction is regulated by the Petroleum Act 1998 (the 1998 Act) and the Mines (Working Facilities and Support) Act 1966, now extended by the Infrastructure Act 2015.
Under the 1998 Act, petroleum includes shale gas . The Crown owns shale gas found beneath the ground in Great Britain or under the territorial sea adjacent to the UK. Where land is privately owned, energy companies require legal rights to access and extract it. .
However whilst the Secretary of State (on behalf of the Crown) has the power to grant licences to bore for shale gas in Great Britain, such licences only entitle the licensee to “search and bore for” petroleum or gas - they do not entitle a licensee to access a property without the landowner’s consent to search for and/or extract shale gas.
Therefore, until very recently for “deep-level land” and still for other land, in order to obtain the additional necessary rights, the licence holder must first seek to negotiate with the landowner on a private treaty basis in order to secure any additional rights required. Such negotiations could, for example, include a payment to the landowner for any inconvenience.
Failure to reach agreement left the licence holder having to rely on the compulsory purchase scheme under the 1998 Act. If rights are granted by this mechanism, they will be on terms which should include payment by the licence holder of “fair and reasonable” compensation in a sum to be determined by the Court.
This is however a very expensive and time consuming solution and is seen as being prohibitive to the exploration and potential exploitation of the UK’s shale gas reserves (the UK is said to import around 80% of its gas whereas it is estimated that around 10-15% of the UK’s shale gas reserves would be sufficient to meet the gas needs of the UK for more than 40 years).
As well as addressing other matters, to overcome this hurdle at least in part, the Infrastructure Act has been introduced. This is designed to “simplify procedures by which the onshore oil and gas and deep geothermal industries obtain underground drilling access 300 metres or more below the surface ”.
The new law brings about significant change for “deep-level land” meaning that consent is now unnecessary for exploiting petroleum or deep geothermal energy at depths of 300 metres or more below surface level. Further, unless any regulations are made to change this position, such actions can be taken without notice to the landowner. It does not alter the position regarding surface access or depths of less than 300 metres however.
The only areas not subject to these wide-ranging changes are “protected groundwater source areas” and “other protected areas”. The government must define these by 31 July 2015. Currently also there is no obligation to pay for such access (although it is possible that future regulations may require it).
Fracking is likely to become easier and cheaper and is therefore with us to stay. Whilst landowners’ rights have been curtailed significantly the voices warning against fracking continue unabated.