Operators looking to exploit the estimated 822 - 2281 trillion cubic feet of unconventional gas in England and Wales will need to navigate their way through complex and somewhat fragmented public and private consenting regimes. In this article, we focus on the current planning regime and land owner process in England and ask whether the framework is fit for purpose to deal with issues raised by this relatively new and somewhat controversial activity in the UK.

Landowner consent

One of the central issues for those interested in drilling for shale gas in England is – who owns the gas and the rights to extract it? In England and Wales it is the state which owns the hydrocarbons and consent for their extraction is ultimately required from the Department of Energy and Climate Change (DECC) on behalf of the state.

That does not, however, address the question of what private landowner consents are needed. It will come as no surprise to hear that the owner of the drill pad site will need to consent to its installation. In addition, due to the horizontal drilling associated with shale gas wells, the consent of each and every owner of land within which the drill passes will need to be sought. This is the case regardless of the drill depth and lack of interference with the owner at the surface. Although an English man's home may not (in fact) be a castle, he usually does own the rights to drill below his land. The Supreme Court decision of Bocardo SA v Star Energy UK Onshore Limited (SC(E)) [2011] AC confirmed this very principle. Drilling without the landowner's consent was held to be trespass and, although the damages for drilling several hundred metres below the surface were nominal in that case, it does open the door for landowners to pursue injunctions.

In October last year, Greenpeace launched a campaign for landowners to create a patchwork of "no-go" areas, based on this principle. That may make consented shale gas exploration more difficult in England and Wales but legislation allowing for the compulsory acquisition of rights where (amongst other things) landowners act unreasonably may be used to circumvent such objections. So far such legislation has seen little use. While some argue that this is because private agreements are secured, the more cynical observers suggest that where private agreements haven't been secured drilling has (historically) taken place anyway and without the surface owners ever knowing! If the latter position had been true historically, the increased profile of hydraulic fracturing would seem to make this less feasible. Further, on 2 April this year DECC announced that it is reconsidering whether this legislation is indeed fit for purpose and the outcome of that review is awaited.

Quite separately, the picture becomes more complicated as a result of tenanted properties (where both the owner of the land and its tenant may need to be consulted) and historic rights for the extraction of minerals which have existed in favour of the Church for many (if not hundreds of) years. A recent legislative change has required the Church and holders of manorial rights to register such interests on a central database, protecting them for years to come. The consequences of these overriding rights can mean that it is not the surface owner (or even the tenant) but the holder of overriding rights, which has the ability to grant drilling rights below the surface.

The sheer number of private parties who may be interested in a shale gas well and the potential for objection may make the exercise of statutory rights to drill more appealing and as the issue of energy security sees ever increasing prominence in the UK we can anticipate an increased focus on its potential use.  Partly for this reason, the UK government may decide to change the law on trespass, essentially legislating over the Bocardo SA v Star Energy UK Onshore Limited(SC(E)) [2011] AC position, in order to spur unconventional oil and gas development.

Planning consent

A key consent required before the exploration phase can start is planning permission but the planning process in England and Wales is not known for its speed or simplicity! The UK government is keen to keep planning decisions at the local level and has recently brought into force the following reforms to simplify and speed up the planning process for shale gas extraction:

  • Planning applications need to be drawn widely and should cover the sub-surface area where directional drilling may take place, in addition to land take on the surface. The need to notify potentially numerous owners of a relatively large area of subsoil before the submission of the application was an onerous and burdensome duty on the applicant. The new law confirms that operators do not need to notify every owner of the subsoil. Provided the operator has served notice on the owner of the surface of the site and has placed a notice in a local newspaper and on the site, it will have satisfied its legal responsibilities.
  • Planning application fees are usually calculated on the size of the development site and would therefore include the sub-surface area. There have been difficulties in calculating the site area and thus the fee. Disagreements about the fee payable can lead to a delay in the local authority validating the planning application. To help operators and local authorities, the new law states that the application fee will be based on the surface area of the site only, with an additional 10% added to reflect the sub-surface drilling area is no longer taken into account.
  • The government will introduce standard planning application forms to provide consistency of approach between the various local authorities throughout England and Wales.

These changes will help speed up and simply for the planning process. There has been further good news for the industry in that the European Parliament has dropped its plans to require operators to carry out a full Environmental Impact Assessment at both the extraction and exploration stages.

However the real issue for operators seeking property and planning consents for shale gas extraction will be effective public consultation. Operators will need to win over hearts and minds in the local community if they are to successfully negotiate the consenting process.