The Oil & Gas Authority (OGA) on 18 August 2015 issued a consultation to seek comments on the OGA's strategic plan-level Habitats Regulations Assessment (HRA) of blocks taken forward for consideration of award in 14th onshore oil and gas licensing round.
The 14th round was opened by DECC last year on the 28 of July and closed on the 28 October 2014. In total, DECC received 95 licence applications covering 295 blocks in England, Scotland and Wales. Following reviews and following the decision not to award licences in Scotland and Wales, this was reduced to 159 blocks for consideration. Each of these 159 blocks, for which a licence application has been received, was assessed by DECC in accordance with the requirements of the Conservation of Habitats and Species Regulations 2010 (the Habitats Regulations).
The OGA's announcement confirmed that no licences are being issued yet. Successful companies for27 blocks are being notified that they are going to be awarded a licence, but only once the HRA for a further 132 other sites is completed; likely to be later this year.
The purpose of the consultation issued today is to seek views on DECC's approach and assessment to the strategic plan-level HRA on the 132 blocks that were taken forward for further consideration.
The OGA on 18 August 2015 confirmed that no new Petroleum Exploration and Development Licences (PEDLs) would be awarded in Scotland or Wales, including as part of the 14th Round.
In Scotland that 14th Round took place against the backdrop of the Scottish Independence referendum campaign and vote on 18 September 2014. The referendum and subsequent 'no' vote, set in motion a series of political events resulting in the Smith Commission being formed to consider transferring more powers from Westminster to the Scottish parliament and a Scotland Bill received its first reading in May 2015. The new devolution settlement has yet to be finalised but the Scotland Bill currently makes provision, in relation on onshore oil and gas, for transfer of powers to the Scottish Parliament which will be given:
- power to legislate for the granting of licences to search and bore for and get petroleum within the Scottish onshore area (but not for payment)
- competence to legislate for access to petroleum within the Scottish onshore area; and
- Scottish Ministers will have transferred to them the power to grant licences to bore and get petroleum with conditions attached.
Although the outcome of the 14th Round is in question, it should be noted that there are already PEDLs in place for areas in Scotland. These PEDLs cannot currently be used to explore for unconventional hydrocarbons. In January 2015 Fergus Ewing, the Scottish Minister responsible for energy consenting announced a moratorium on consents for unconventional oil and gas through the planning system. This was at the same time as a moratorium in England was rejected during the passage of the Infrastructure Act 2015.
Mr Ewing also announced that a consultation on unconventional oil and gas extraction in Scotland would take place. At the time of writing, 8 months later, no formal consultation has been initiated. Ministers have been meeting with representatives from community, environmental and industry groups to discuss the consultation and pre-consultation preparations. There are also currently no plans to include underground coal gasification within the scope of the consultation. The Scottish Government, in addition to consultation, also announced that it intends to commission a full public health impact assessment relating to unconventional oil and gas. The results of that assessment will likely be crucial in informing public opinion going forward.
The importance to the Scottish Government of an 'evidence-based' approach which underlies their approach to a consultation is a theme consistently emphasised by Nicola Sturgeon, the Scottish First Minister, and Mr Ewing.
We will continue to monitor progress in this area but with the Scottish parliament's election due in May 2016 the climate for 'evidence based' decision making may not arrive for some time.
What happens next?
The announcement covers 27 blocks that will be formally offered to successful companies in due course. However, the OGA has said that the final licence award will be subject to the outcome of the assessment of a further 132 blocks.
These further 132 blocks are subject to detailed assessment and consultation under the Habitats Regulations. The announcement marks the beginning of the public consultation stage of the HRA for the 14th Onshore Round. The consultation will close on 29 September 2015.
The licences for all offered blocks will then be granted after the terms and conditions have been finalised. This it is anticipated will be later this year.
The announcement is a further significant step in this Government's support for the onshore oil and gas industry and the safe development of shale gas in the UK. The announcement gives the companies in relation to the 27 blocks an assurance that they will be formally offered later in the year.