Today's entry reports on the issuing of planning guidance on shale gas extraction and a consultation on tax incentives for it. It should be a useful round-up of the latest developments in the regulation of this nascent but rapidly developing industry.
Recent developments
Before last Friday there had been two developments in the last month on fracking that are worth mentioning.
First, the Environment Agency issued a commitment at the end of June to simplify the environmental permitting regime for shale gas, with a single point of contact, draft technical guidance for consultation to be published by the end of this month and a reduction in the time to issue a permit from 13 weeks in September to 1-2 weeks by February 2014. Now that is impressive.
At about the same time, industry body the UK Onshore Operators Group (UKOOG) issued a 'community engagement charter' last month, which promises £100,000 to local communities per well site where fracking takes place. UKOOG should not be confused with the government's new Office of Unconventional Gas and Oil, which sadly is not abbreviated to 'off-u-go', but OUGO.
Friday 19 July developments
Last Friday, accompanied by headlines such as 'George Osborne unveils 'most generous tax breaks in world' for fracking', the government first announced what was in fact a consultation on a fiscal regime for shale gas.
The consultation document can be found here. It's the first time I've seen a 'consultation document' that is just a web page rather than a downloadable PDF - is this the shape of things to come? As it is not divided into pages, I would suggest that for documents such as this the paragraphs are numbered so that the document can be referenced easily. The consultation document omits to mention it, but the closing date is 13 September.
Later in the day, the Department of Communities and Local Government issued planning practice guidance for onshore oil and gas, which can be found here. Here is a summary.
There are three phases to onshore hydrocarbon extraction: exploration, testing (sometimes called appraisal) and production. Applications for each phase should be treated independently. At the moment they are consented via planning applications to the mineral planning authority, which is the county council if there is one, or the unitary authority if not.
I have a bee in my bonnet that applicants could use the 'upgrade' facility in the Planning Act 2008 to try to use that regime. While I can see that a single exploration or testing application might legitimately be considered not to be nationally significant, it would be more difficult to refuse an upgrade application for the production phase on the grounds that it wasn't nationally significant, given the column inches devoted to the subject if nothing else. But that's by the by.
Paragraphs 27 and 28 of the guidance reveal that not only is planning permission needed but consents from or notifications of up to seven other bodies may also be needed (plus additional consents such as stopping up rights of way). If only there was a single consenting regime available.
The guidance is keen that any issues covered by other consenting regimes should not be considered by a planning authority considering a planning application, which should concentrate on whether the development is an acceptable use of the land. Having said that it identifies 16 possible impacts that could be considered by a planning authority at paragraph 30, from noise to site restoration and aftercare.
Paragraph 33 recommends pre-application engagement between the applicant and interested parties and sets out what this could look like. If only there was a regime with a statutory requirement ... you get the picture.
Paragraph 38 recommends that minerals planning authorities 'seriously consider' planning performance agreements (i.e. where the developer pays them to have the resources to handle applications). It doesn't say whether developers should consider offering them.
Section A then takes one through the application process. Section B considers environmental impact assessment. It says 'it is unlikely that an Environmental Impact Assessment will be required for exploratory drilling operations which do not involve hydraulic fracturing' - the implication being that the exploration stage will not require EIA unless it involves fracking at that stage rather than just drilling.
When deciding an application, the guidance firmly states at paragraph 65 that 'Mineral planning authorities should not consider demand for, or consider alternatives to, oil and gas resources when determining planning applications' but that 'minerals planning authorities should give great weight to the benefits of minerals extraction, including to the economy', quite a nudge towards approval. Some model conditions are usefully included at Annex D - I suspect that most if not all 19 of them will find themselves attached to most fracking permissions.
The guidance addresses separation distances, the idea that these developments should be a minimum distance way from other things, something of a vexed issue when it comes to onshore windfarms. It says that separation distances could be introduced, but they would have to be effective, properly justified and reasonable.
You may be interested to know that once a site has stopped being used for fracking it could be used for 'creation of new habitats and biodiversity; use for agriculture; forestry; and recreational activities'. These proposals should be submitted with the original planning application. In exceptional cases, a financial guarantee to pay for 'aftercare' may be justified.
There is a useful flowchart of the application process and how it sits with other consents at Annex B on page 22.
This is a good example of the government getting a move on and being fairly joined-up when it wants to encourage something new.
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