Further changes to the Infrastructure Bill have now addressed the potential problems for the UK unconventionals industry introduced by a Labour amendment two weeks ago, but the approach of Scottish and possibly Welsh Ministers is less encouraging for would-be shale developers.
At the last substantive debate on the Infrastructure Bill in the Commons, an amendment was inserted providing that “any hydraulic fracturing can not take place” unless 13 conditions are fulfilled. As we pointed out in an earlier post, the drafting of this “safeguarding” provision (which can be seen here at amendment no.21) left considerable scope for doubt as to when some of these conditions would be satisfied. Such uncertainty inevitably assists those who want to delay or obstruct fracking operations.
The House of Lords has now replaced the Commons’ amendment with some much better drafted provisions (see amendment 21B here) that provide a clear and practicable route to satisfying each of the safeguarding requirements proposed by the Commons. Although the Labour spokesman, Lord Tunnicliffe, raised a number of points of detail which he suggested had been lost in translation from the Commons’ amendment to the Government’s version (see column 1079 of the Hansard report), it seems possible that there will be no further changes when the Bill returns to the Commons for the next stage of the so-called ping-pong process.
In the meantime, here are ten points to note about the new clauses:
- The new clauses insert two new sections (4A and 4B) into the Petroleum Act 1998, under which oil and gas exploration, production and development licences are granted.
- The standard conditions of licences for onshore development (the model clauses) provide that the licensee may not commence drilling of any well or borehole without the Secretary of State’s consent. In future, any such “well consent” must contain a condition prohibiting fracking at a depth of less than 1000 metres and a condition requiring the licensee to have the Secretary of State’s consent for any fracking at a depth of 1000 metres or more.
- Under new section 4A, the Secretary of State may only issue a “hydraulic fracturing consent” if he is satisfied that 12 conditions are met. These conditions reflect the Commons’ 13 pre-conditions for permitting fracking, but they are expressed more clearly and 11 of them are accompanied by a description of the documents whose existence will be sufficient for the Secretary of State to be satisfied that the relevant condition is met – although the legislation explicitly states that he may also consider them to be satisfied without reference to such documents.
- The 12th condition is “that a scheme is in place to provide financial or other benefit for the local area” – slightly wider than the equivalent Commons drafting. The Commons’ 13th condition was about not fracking at less than 1000 metres: this is subsumed into the well consent itself, rather than being a condition for issuing the hydraulic fracturing consent.
- The new conditions avoid imposing the Commons’ requirement to notify “residents in the area on an individual basis”, substituting a requirement for the local planning authority to confirm that the applicant has self-certified its compliance with publicity requirements under the planning regime. Baroness Verma, speaking for the Government, pointed out that it would be difficult for the Secretary of State to be satisfied that all residents had been individually notified.
- The picture is not yet quite complete. Draft regulations are to be laid before Parliament, by 31 July 2015, to clarify the burning issue of exactly which “protected groundwater source areas” and “other protected areas” will be off-limits to fracking. Unless the current Government (or its successor) means to beat that deadline by a wide margin, it may be Autumn before these important details have been clarified and we know whether Greenpeace’s analysis of the extent of the protected areas is unduly optimistic from an anti-fracking point of view.
- Government has made a lot of statements and published guidance about the inter-relationship of the various different consenting regimes that apply to fracking, but new section 4A for the first time “joins the dots” between the different regimes in legislation. So, for example, the condition on environmental impact assessment is linked to a notice from the local authority; the requirements about methane monitoring are linked to conditions in the environmental permit; and the requirement on well integrity is linked to an HSE certificate.
- The decision to permit fracking in each case rests with the Secretary of State, but if everything is working as it should, he will issue the consent on the basis of work that is already required to be done under the existing planning and other regulatory regimes. Presumably for that reason, applications for hydraulic fracturing consents are not required to be published or consulted on.
- A hydraulic fracturing consent may be issued subject to conditions. Failure to comply with the conditions of a hydraulic fracturing consent, or with the prohibition on fracking at less than 1000m, could lead to revocation of the underlying licence.
- Once the new sections are in force, the requirement to apply for and obtain a hydraulic fracturing consent before beginning to frack will apply whenever a licensee seeks a new well consent, regardless of when the licence under which the consent is sought was granted.
The provisions about hydraulic fracturing consents link to another change made to the text of the Bill as it left the Commons. This relates to reporting by the Committee on Climate Change on the impact that greenhouse gas emissions from the use and extraction of gas from onshore sources may have on the UK’s ability to meet its Climate Change Act emissions reduction targets. When such reports are produced (on 1 April 2016 and every 5 years thereafter), the Secretary of State will be obliged either to legislate to terminate the right of use of deep level land for petroleum and deep geothermal exploitation or to produce a report explaining why he has not done so. But if the right of use is terminated, it will only be removed in respect of projects that have not already made use of that right.
Scotland and Wales
While for the Coalition Government in Westminster, a safety-first approach to fracking may be achievable simply by means of some deft legislative drafting, the politics in Edinburgh and Cardiff are different. Both Scottish and Welsh Ministers have recently taken a less positive stance on fracking.
The negative noises from Ministers in the devolved governments come in the context of debates about further devolution of energy-related powers and against the background of the awkward split between the oil and gas licensing regime (currently administered by the Secretary of State for all of Great Britain, but a potential candidate for further devolution, particularly in Scotland) and the planning regime (where Welsh and Scottish Ministers are, or can be, the ultimate decision-makers). Any unconventional development will need both a Petroleum Act licence and planning permission.
On 28 January 2015, Fergus Ewing, the Scottish Energy Minister, announced that the Scottish Government’s “cautious, evidence-based approach” to fracking and its desire to hear “the voices of the communities…likely to be most affected…in a formal and structured way” meant that “it would be inappropriate to allow any planning consents in the meantime” and he announced ” a moratorium on the granting of planning consents to unconventional oil and gas developments…until such time as the work I have referred to has been completed”. Scottish Ministers have also directed the Scottish Environment Protection Agency not to issue any “controlled activity regulation licences” during the moratorium (see page 17 of the report here for the full debate).
On 4 February 2015, there was a vote in the National Assembly for Wales in favour of both the devolution of energy consents and a fracking moratorium. Discussion of fracking, ranging as far afield as New York and New South Wales, dominated the debate: the party lines on the subject in Cardiff are not the same as those in Westminster.
It seems that Welsh and Scottish Governments have made the political calculation that it is best to let England lead the way in building the UK evidence base on fracking.