Government plans to streamline and simplify shale gas and geothermal licensing across UK

Shale gas signThe UK government has issued a new consultation paper on licensing underground access for extracting shale gas and geothermal energy.

Using similar legal concepts which provide statutory rights for coal mining, the Department for Energy proposes to licence commercial shale gas mining and geothermal drilling in the national interest.

These proposals will apply on a UK-wide territorial basis as petroleum assets are Crown property in the UK – albeit that the planning application procedures (though similar between England and Scotland) will still apply separately in their own jurisdictions.

The Department for Energy also aim to prevent environmental objectors taking their cases to court on a case by case basis on ‘trespass’ grounds by setting up a licensing framework.

The Government believes that shale gas and oil may have the potential to provide the UK with greater energy security, growth and jobs. Successful exploration of unconventional resources in other countries, notably the United States, has proved an important source of energy. We know that there are, for example, large shale resources in the UK but we do not yet know how much of the unconventional gas and oil in the UK is technically and economically recoverable.

Ultimately the question of whether recovery of these resources is economically viable is one for industry, but the Government wants to ensure the right framework is in place to support industry and local areas as this exploration and, in some cases, production, moves forward. Safeguarding the environment and public safety is a vital part of this process.

 The proposals would apply to any underground drilling for the extraction of petroleum, which covers all oil and gas including conventional oil and gas..

The consultation refers mainly to shale gas and oil for ease of understanding. Where ‘petroleum’ is used, this has the same meaning as defined in the UK Petroleum Act 1998 – which includes all oil and gas.

The proposals apply to England, Wales and Scotland in respect of petroleum (i.e. gas and oil). In respect of deep geothermal energy, the consultation also covers England, Wales and Scotland. However, the application of proposals on deep geothermal energy in Scotland and Wales will be the subject of consultation with the Scottish Government and the Welsh Assembly.

The consultation states:

The Office of Unconventional Gas and Oil (OUGO) is part of the Energy Development Unit in the Department of Energy and Climate Change. OUGO aims to promote the safe, responsible, and environmentally sound recovery of the UK’s unconventional reserves of gas and oil.

 The Energy Development Unit is responsible for encouraging and overseeing energy development in the UK, including licensing oil and gas exploration and production to ensure we make the best use of our available natural resources.

Given the potential benefits for energy security, decarbonisation and economic growth, enabling these industries to proceed with exploration is in the national interest.

The Institute of Directors has estimated that UK shale gas production would be a net benefit to public finances, could attract annual investment of £3.7 billion and support up to 74,000 jobs directly, indirectly and through broader economic stimulus.

And it concludes:

The current system for gaining access rights presents a barrier for the UK shale and geothermal industries. We believe it does not strike the right balance between the legitimate interests and concerns of landowners, and the benefits to the community and nation at large of permitting development.

For shale gas and oil in particular, the court procedure is not appropriate for underground access. In practice, a court is always likely to grant access because it would be expedient in the national interest, but must consider each case, which is likely to be a lengthy and costly process for all parties. Hence, it is practical to make this right of access less burdensome to obtain.

We intend to change this system by making it less burdensome for companies to gain underground access rights. This proposal would apply to oil and gas operators (using both conventional and unconventional drilling methods) and deep geothermal companies.

In return, the community will receive a payment for an activity that has a negligible impact at the surface. If the unconventional gas industry does not voluntarily offer community compensation payments, the government will consider introducing a statutory system.

 

Have your say: These are the three questions for consultation:

  1. Should the Government legislate to provide underground access to gas, oil and geothermal developers below 300 metres?
  2. If you do not believe the Government should legislate for underground access, do you have a preferred alternative solution?
  3. Should a payment and notification for access be administered through the voluntary scheme proposed by industry?

 

Respond by: 15 August 2014 to:

 The Office of Unconventional Gas and Oil

Heat and Strategy Policy Team

Department of Energy

3 Whitehall Place

London SW1A 2AW

Tel: 0300 068 5289

underground.access@decc.gsi.gov.uk

Consultation reference: URN 14D/099 – Underground Drilling Access

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