Shale gas exploration will be a defining part of the planning scene in 2014. In 2013, the Government used new best practice planning guidance and other announcements to help shale prospecting get off the ground. Centrica’s 25% stake in Cuadrilla’s Bowland Shale operations confirmed that oil and gas majors see sufficient regulatory tailwinds to get involved. More reforms, investment deals, planning applications and protests will follow in 2014.
Last summer’s protests over Cuadrilla’s exploration at Balcombe highlighted public concern over the use of hydraulic fracturing – ‘fracking’ – techniques. Cuadrilla’s unexpected withdrawal from two of its Lancashire sites also confirmed the technical constraints. Investors feel they have been “getting smashed” in the information battle – culminating in protesters gluing themselves to PR advisors’ offices – due to underestimating the politics of securing planning consents. More slow walking protests, ownership disputes and forensic criticism of planning materials and decisions lie ahead this year, but the planning regime itself is in surprisingly good shape.
Shale Reforms Keep On Rolling
The Government’s consultation on planning law changes needed to facilitate onshore shale exploration finished on 14 October 2013. The 18 December Ministerial Statement confirmed that draft Regulations have been laid before Parliament to address two initial technical challenges arising from the fact that the horizontal drilling used for shale prospecting – ‘laterals’ – extend far beyond the surface operations area. The Government recognises that the site ‘red edge’ area (within which development will be permitted) must be drawn widely to ensure that it is broad enough to cover laterals. Cuadrilla’s new Balcombe application recognises this, following criticism by Friends of the Earth.
Planning fees for oil and gas are based on site area. A 40 hectare exploration consent application could have an above ground site of only 2 hectares. Fees will be based on the surface operations area only, once draft changes come into effect.
Notices – ‘Not For Shale’
Secondly, notice requirements will be radically reduced from 13 January. Applicants will only need to notify owners affected by the surface operations area. As well as removing some admin hassle for applicants, there is a wider benefit – reducing the number of owners aware of proposed lateral drilling. That is significant because the Supreme Court confirmed in Star Energy v Bocardo that unlicensed deep drilling is trespass. Greenpeace and some high profile landowners intend to resist shale exploration through denial of access rights – termed the ‘Not for Shale legal block’. The existing regime for securing such rights through the courts, under Section 7 of the Petroleum Act 1998 and the basis for compensation following Bocardo, mean that the owners’ position is likely to be a speed bump, not a road block. It will be interesting to see how Celtique Energie’s recent exploration application in the South Downs National Park fares amidst all the clamour and change. An update on the EU’s proposals for EIA reform and the Government’s SEA report for new exploration licences will follow in Part 2.