Shale Round takes shape

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The Government has published the application criteria for the 14th Onshore Petroleum Exploration Development Licence (PEDL) Round, accompanied by new Planning Practice Guidance (Planning for hydrocarbon extraction) for use with applications.  There are some surprises in the PEDL materials, which significantly increases the need for planning and environmental input at the PEDL licensing stage. Whilst the PPG offers nothing new, it is a large political signpost away from National Parks and Areas of Outstanding Natural Beauty until the next General election.

PEDL Harder

The PEDL regime is the bidding process for companies seeking licences to explore for onshore oil and gas under the Petroleum Act 1998.  The licence terms for the 14th PEDL Round have been tailored to reflect the approach to ‘unconventional’ oil and gas exploration, including ‘drill or drop’ provisions (extinguishing the licence if progress has not been made to implement it) and licences that enable multiple operators to carry out initial exploration.  The PEDL application criteria now published by DECC set out the financial hygiene, competence and governance requirements for licence awards.

The DECC criteria introduces a new requirement, for detailed Statements
of Environmental Awareness
(EAS) to be submitted with licence applications, to ‘demonstrate applicants’ understanding of the environmental sensitivities relevant to the area proposed’.  Narrowing all the geophysical and other data down to get to a feasible surface access point for fracking in the UK is a challenge. The EAS requirement is at least partly a reflection of how poorly some of the current PEDL operators are perceived to have managed the interface with ecological and other sensitivities.  It is also intended to deflect legal criticisms of the PEDL process (see below).

shaleNew challenges

The new requirements provide the opportunity for environmental, planning and regulatory consultants to help PEDL applicants demonstrate a deep understanding of the following (and how it will shape their exploration activity):

  • UK onshore Environmental and Planning Legislation relevant to exploration; development, production and decommissioning stages;
  • The environmental sensitivities of the PEDL area – a 100 km2 ‘Block’ – and their options for addressing these in the operational phase
  • How the ‘Mitigation Measures’ proposed in the Government’s Strategic Environmental Assessment report (AMEC, December 2013) will be put into play operationally.

The EAS must also contain a context analysis identifying all ‘significant’ environmental sites in the PEDL Block (and sufficiently close to it to be affected).  ‘Particularly comprehensive and detailed’ analysis will be required where the area is within or adjacent to any National Park, or the Broads, or any Areas of Outstanding Natural Beauty or World Heritage Site.

The challenge for PEDL applicants will be considerable, given the scale of the Block areas, the scrutiny by national and local interest groups and the fact that the Government is relying on this analysis to discharge Conservation of Habitats and Species Regulations 2010 requirements.

To put the task into context, the DECC 14th Onshore Round Map  suggests that the c. 15,000 km2 (c 1.5 million ha) area already licensed will increase by around 104,000 km2 (c. 10.4 million ha). The total licenced area (assuming all the 14th Round licences were in fact applied for/ granted/ progressed) would be around 50% of the surface area of Great Britain (excluding Northern Ireland) – roughly a seven-fold increase in the licenced area.  In reality, DECC is understood to have set an internal target of approving 30 licences (out of around 1,040 available Blocks). Several existing licences have been relinquished in the last few months due, often, to a failure to progress exploration. They may be re-licenced in the 14th Round.

Legal challenges

Some form of legal challenge to the 14th PEDL Round (or to individual licence awards) is likely. The Government decided to undertake Strategic Environmental Assessment but not a Habitats Regulation ‘Appropriate Assessment’.  As the written statement to Parliament explains, the Government has decided to address the requirement at the individual PEDL licence stage where greater detail will be available.  The new Environmental Awareness Statement requirement is clearly intended to address this, by ensuring the environmental effects are dealt with robustly.

A future post will review the implications of the new planning guidance for applicants in relation to both the new and existing PEDL areas.