The Government’s commitment to shale gas production in the UK is clearly reflected in the recent announcement of the 14th onshore round and with it the further 27 blocks within which shale gas operations might be undertaken (subject to obtaining the relevant planning and environmental approvals). As the UK Energy Minister, Lord Bourne, put it “we continue to back our onshore oil and gas industry and the safe development of shale gas in the UK.”
In parallel, the Department of Energy and Climate Change (DECC) and the Department for Communities and Local Government (DCLG) announced that they would amend existing planning processes to allow shale gas planning applications to be fast-tracked. These measures would apply to councils that repeatedly fail to determine relevant applications within the statutory timeframe. Such councils would be identified as “underperforming” and the Communities Secretary would then step into their shoes, much like other councils before them who were sent to the naughty step for failing to meet identified housing targets.
In theory this is a positive step forwards. However, this will take a great deal of time to put in place and, in the interim, the best the Communities Secretary can do is call-in individual applications for his own determination. When the new legislation is in place, it still won’t be a great leap forward for the oil and gas industry because operators have to suffer a fair degree of pain and delay before the Communities Secretary would be able to step in to fast-track their applications. There must also be a concern that councils that don’t support shale gas will simply exercise their democratic right to refuse consent within the statutory timeframe. This is likely to be an attractive route for councils with very limited resources to determine these complex schemes, particularly, when faced with unprecedented local objection, repeated Freedom of Information requests and continual threats of legal action. Operators would then be required to appeal this refusal leading to further delay and cost.
Unfortunately the search for a response to this challenge won’t necessarily be found in the short to medium term from the regime already set up for the determination of Nationally Significant Infrastructure Projects (NSIP). The NSIP regime might well help at production stage but would not assist the determination of exploration applications. Currently the UK shale gas industry is still in a state of gestation and the current flush of planning applications are directed at exploratory wells. Invariably, the location of these vertical wells and any horizontal drilling will be determined by a combination of geological assessment and other drilling activities. The process is a dynamic one as the industry seeks out the best source of shale gas within their licenced area and, in turn, the most economic/commercial location for any production facility. As such, until the location and scale of the project can be identified the NSIP regime is of little or no help.
If it is accepted that shale gas production is important to the UK economy, then it follows that a better solution is needed to secure these exploratory wells and for the industry to move more rapidly to production. A potential answer might be in the establishment of Development Corporations for a number of key blocks, in much the same way that Ebbsfleet Garden City is being promoted. These Corporations could benefit from simplified local authority planning powers through Local Development Orders that grant automatic planning permission for certain development and also tax structure that allows councils to keep 100% of business rates. Indeed, this approach might sit very well with the Government’s announcement in January 2014 relating to business rates retention from shale gas operations.
In the past 3-4 years we have seen virtually no progress whatsoever in shale gas exploration in the UK, predominately due to delays in obtaining planning permission. It is inevitable that the delay and rejection of applications for unconventional gas development will continue without a more significant step change that goes beyond the recent measures identified by DECC and DCLG.