Do UK regulatory changes signal large-scale shale gas exploitation?

The 14th onshore licensing round closes on October 28, 2014 for both conventional and ‘unconventional’ oil and gas exploration, including shale gas. The UK Department of Energy and Climate Change (DECC) expects about 50-150 unconventional licences to be awarded in the round.

There is general consensus across industry and Government that a more streamlined regulatory regime and improved land access rights would facilitate shale gas projects. DECC has recently considered proposed changes regarding land access and sub-surface rights to reduce barriers to shale gas development in the UK.

Petroleum Exploration and Development Licences (PEDLs) allow companies to pursue a range of activities involving energy reserves, including unconventional gas, subject to necessary drilling/development consents and planning permission. Some companies drilling mainly for conventional oil and gas are now drilling deeper than they might have to investigate the shale potential in their licenced areas (“coring” is foreseen in these cases but no fracking is currently involved).

Changes in planning permissions

Proposals for shale gas exploration or extraction (like all other reserves) are subject to approval by the Minerals Planning Authority (MPA) for the area where the reserve is located. Since January 2014, the requirement to notify individual owners and tenants of land where only underground operations will take place has been removed; only those where aboveground work is planned must be served notice.

In addition, although “material considerations” may be allowed in planning permission decisions, the Supreme Court held that issues such as loss of property value, loss of view and opposition to the principle of development are not “material” considerations. The MPA local planning authorities also have greater freedom to act on oil and gas extraction projects than they normally would because the Government excluded these projects from the aegis of the National Planning Policy Framework, the major infrastructure planning regime in the UK.

Proposed land access reforms

In the 2010 landmark Bocardo case[1], the Supreme Court found that an oil and gas company had committed trespass by drilling and installing pipelines under the landowner’s land, even though the deepest well was 2,800 ft below the surface.

The case confirmed that any activity on or under a landowner’s land, even deep underground, will constitute trespass. Under the current regime, coming to an agreement for access with multiple landowners or pursuing so-called ancillary rights under statutory law, can cause long delays. The Government’s proposed changes include:
  • granting automatic underground access rights to shale gas operators for horizontal drilling at least 300m below the surface;
  • a voluntary community payment of £20,000 for each unique horizontal well that extends more than 200m laterally (for projects benefitting the community);
  • public notification of drilling proposals and details of the voluntary payment.
The proposal does not apply to any work above 300m depth; therefore, access for the drilling pad itself will be subject to negotiation with the landowner or the ancillary rights regime.

Still it appears that legislation will be put before Parliament to implement a more streamlined system and rights of access. With the exploration licenses expected in the current licensing round, the outlook is positive for greater shale gas exploration and production in the UK.

[1] Bocardo SA v Star Energy [2010] UKSC 35

This post was written by Lucy Bruce Jones ( or +44 20 7444 5159) from Norton Rose Fulbright's Energy Practice Group.