UK Government Continues The Fight for Shale
Introduction Despite facing opposition on numerous fronts, the development of a regulatory regime to promote the exploration of shale gas in the UK has continued apace following David Cameron's comments earlier this year that the UK was "going all out for shale".[i] The UK government has reiterated the national need to develop the UK's shale gas resources to improve the country's energy security and transition to a low-carbon economy. For over a decade, the UK has been a net importer of gas following declining levels of production from the UK's North Sea's gasfields. Imports of gas accounted for 45% of the UK's supply last year.[ii] The Department of Energy and Climate Change ("DECC") predicts that, without any contribution from shale gas, net imports of gas could increase to 75% by 2030.[iii] Amber Rudd, Secretary of State for Energy and Climate Change, considers the development of the UK's shale resources as an essential component of the UK's energy mix going forward and has pledged to "deliver shale". The passing of the Infrastructure Act 2015 and new measures introduced by the UK government in August 2015 to enable shale gas planning applications to be fast-tracked continue to foster the development of the industry. This article gives an overview of the latest legislative reforms and measures affecting the shale gas industry in the UK. Underground access rights and the Infrastructure Act 2015 In the UK, rights to petroleum belong to the Crown and the UK government issues licences to operators to search for, bore for and extract petroleum (which includes shale gas and oil). Ownership of freehold land in the UK generally entitles the landowner to rights at the surface and down to the centre of the earth. As a result, prior to the introduction of the Infrastructure Act 2015, onshore extraction companies were required to obtain the consent of potentially numerous landowners to gain underground access following receipt of a licence from the UK government. Failure to do so would constitute a trespass. Bocardo SA v Star Energy[iv] was the first modern case to consider how far beneath the surface a landowner's title to land extends and whether the landowner can sue for trespass for underground incursions. The Supreme Court held that the landowner owns everything below the surface and can sue for damages for subterranean trespasses. As a result, prior to commencing any form of onshore drilling programme, extraction companies were compelled to enter into negotiations with landowners to secure underground access, which often resulted in a protracted and costly process. In May 2014, DECC launched a public consultation which proposed various legislative changes, including:
- granting underground access rights to operators seeking to extract petroleum and geothermal energy from below 300 metres, without the need to obtain landowner consent;
- a requirement for a voluntary payment to be made to the local community in return for underground access; and
- a notification system to enable companies to inform the public of areas of underground land that would be accessed by drilling and the payments which would be made in return for such access.
- at the exploration stage, benefits of £100,000 per well-site where fracking takes place (split between the local community and the county); and
- at production stage, 1% of revenues to communities (which it is estimated could be worth in the region of £5 "“ 10 million for a producing site over its lifetime).[viii]