Fracking gets a green light from Government
Despite the increasing outcry, the Government is reportedly “going all out for shale”. A Government consultation on proposals to “simplify the existing procedure for shale gas and deep geothermal underground drilling access” will close on 15 August 2015. Is the exploitation of shale gas a secure, cheap source of energy which justifies fracking?
In this article, we look at both sides of this controversial issue and the implications for landowners and developers.
What is “fracking”?
Fracking has been around since 1949. It involves the high pressure injection of a special fluid to break underground rock and release gas trapped in it. In the USA, fracking has become the fastest-growing source of gas. Parts of the UK are thought to contain huge reservoirs of shale gas. With the pressure on energy resources steadily growing, it is claimed that even the extraction of a modest 10% of the UK’s estimated shale gas reserves could meet our energy demands for the next 50 years.
The environmental concerns
Anti-fracking pressure group Frack-Off cites as reasons not to frack toxic and radioactive water contamination, severe air pollution, tens of thousands of wells, pipelines and compressor stations devastating our countryside and blighting communities, earthquakes and the acceleration of climate change “all for gas that will run out anyway”.
In January 2014 the European Commission made recommendations to safeguard public health, the climate, the environment and ensure all resources are used efficiently. Its recommendations include that installations:
- be constructed, operated and monitored according to good industry practices;
- minimise the use of chemical substances;
- prevent surface leaks and spills to soil and air; and
- be overseen by a well-staffed and funded regulator.
The Government will, accordingly, need to ensure that a proper regulatory framework is created. Would-be frackers will be required to consider the longer term environmental effects and possible damage at the outset of a project and have contingency plans in place.
Can fracking be stopped?
It is likely that opposition groups will use the Courts to try to prevent the Government green-lighting fracking.
But for all the evidence that fracking might cause earthquakes and poison the water supply, there is an equal amount of evidence that these concerns are overhyped:
- From the frackers point of view, it is unfortunate that an earthquake near a site operated by Cuadrilla close to Blackpool took place in 2011. Geologists have, however, pointed out that in March 2014, there were 16 natural tremors across the UK of greater intensity than the earthquake detected at the Cuadrilla site.
- The fluids used in fracking, which could contaminate nearby water, are typically 99.51% water and sand. While the possibility that the chemicals making up the additional 0.49% of the solution cannot be discounted, in a highly regulated industry it is unlikely that percentage would be significant enough to result in a ban on fracking.
But even if the environmental concerns are unsubstantiated or regulations are found to be robust enough to protect the health and safety of the local community, there are other possible grounds for challenging fracking in the courts.
In May 2014, Cuadrilla Balcome Limited was given permission by West Sussex County Council to frack. Lawyers representing the group ‘Frack Free Balcombe Residents Association’ (FFBRA) launched legal proceedings on three grounds:
- that the Council was simply wrong at law where it decided that the delivery of 889 objections to the planning application made during the Council’s consultation period (as opposed to 9 submissions supporting the application) was not a material consideration for the purposes of the Council’s decision;
- that the operation risked polluting a nearby reservoir; and
- that Cuadrilla’s drilling posed an unacceptable threat to human health.
FFBRA’s lawyers suggest that the granting of the planning permission would set a dangerous precedent that concerns of the local community could be ignored even where health and safety is at risk. On 1 August the High Court granted permission to FFBRA for the judicial review of the Council’s decision which will take place over two days later this year.
Any Government decision to press ahead with fracking could be challenged by judicial review on the grounds of ‘procedural impropriety’. A case might be taken in the European Court of Human Rights. The Government solution summarised below might be rejected on the grounds that the public interest in the extraction of shale for reasons of providing energy could be outweighed by the invasion of an individual’s private property. Will the desire of governments around the world to reduce carbon emissions and control climate change outweigh the advantages brought by the ready availability of shale gas?
A brief outline of the current and proposed statutory regime
Many of the Commission’s recommendations referred to above are already in place in the UK. In particular:
- Licensing An operator would be required to obtain a Petroleum Exploration and Development Licence (“PEDL”) from the Department for Energy and Climate Change (DECC) under The Petroleum Act 1998. The PEDL licences allow the holder to explore for and develop unconventional gas – to “search for, bore and get hydrocarbons” subject to access rights, planning permission, environment and health & safety permits. An Environmental Risk Assessment would also need to be submitted to the DECC for approval. A licence holder may also need to apply to Court to obtain ancillary rights such as the right to enter adjoining landowners’ sites to install boreholes.
- Planning Permission The activities involved in exploring for shale gas constitute development and accordingly a developer will also require planning permission under the Town and Country Planning Act 1990. Permission will also be required from the Minerals Planning Authority in relation to drilling activities.
- Coal Authority Rights If the operations involve penetrating or intersecting coal seams then permission will be required from the Coal Authority.
- Environmental Permits An operator will need to apply to the Environment Agency for permits relating to water, mining waste use of chemicals in hydraulic fluids and naturally occurring radioactive materials. The operator will have to make much of this information publicly available although commercially sensitive data may remain confidential.
Land ownership problems and the Government solution
There is a legal presumption that an owner of land owns everything up to the sky and down to the centre of the earth. There are, however, exceptions. Since 1934 ownership of all oil and gas has been vested in the Crown, even though that does not give the Crown the right to extract that oil and gas. An operator with a PEDL will still need the landowners’ permission to frack beneath its land. If this is not obtained such operations will constitute a trespass.
Fracking wells will extend horizontally underneath land adjacent to the initial drill site, rather than vertically below it. A fracker would not want to have to acquire the freehold to all the land which will be affected by the fracking. Under the current regime, a fracking operator would need to approach each individual landowner to negotiate a separate lease or licence. But what if a single landowner refused to sell the fracking rights beneath their land? The entire project would have to be called off.
The Government’s proposed solution is to give frackers a statutory underground right of access below a depth of 300m. There would be no need to go through the process of negotiating with each individual landowner and there would be no risk that a single landowner could stop an entire project in its tracks.
The Government has also proposed that a ‘community payment’ of £20,000 is made following consultation with local community groups.
So fracking is going to happen, then?
In August 2013, the Prime Minister, David Cameron, said the whole country should support fracking, insisting it is safe if properly regulated and pointing out that it could create thousands of jobs and reduce energy bills. This year, Total has become the first international oil major to bid to exploit the UK’s abundant shale gas reserves. It has announced its intention to invest £12.7m for a 40% interest in two shale gas exploration licences in the 240 km2 Gainsborough Trough area of in Lincolnshire. It seems clear that fracking will happen, however many regulatory restrictions are imposed on operators.
It remains to be seen whether the further proposals will placate protestors. These include a notification system to ensure that local communities are informed of shale developments and shale companies committing to giving 1% of revenues from any successful wells to local communities. Protestors objected to the measures announced by the Prime Minister in January this year, for example calling the £20,000 payment bribery.