UK: Shale Gas Update 4 Sept 2014

Shale Planning

Overview

In the second of our Shale Updates following the publication of the Government's criteria for the 14th Round of Petroleum Exploration Development Licences (PEDLs), we look at the likely impact of the new planning guidance and Infrastructure Bill proposals for automatic subterranean rights. Whilst the Guidance does not change direction on planning consents, there are some clear political signposts to which applicants and objectors will need to pay attention.

New planning guidance for sensitive areas

Planning permission is required for most aspects of shale development other than initial survey work. Our Shale: Review of 2013 earlier this year highlighted the Government's efforts to stimulate UK shale development through planning, tax and business rates reforms, as well as the Regulatory Roadmap for onshore oil and gas. The Government has now sought to address environmental concerns about permissions for shale development by coordinating publication of the new PEDL criteria and terms as discussed in our previous Shale Gas Update, with further Planning Policy Guidance on development in Areas of Outstanding Natural Beauty (AONB), National Parks and World Heritage Sites (WHS).

We commented on the impact of the Planning Practice Guidance (PPG) when it was originally published in July last year.  The revised 'Planning for hydrocarbon extraction' PPG now published by the Department for Communities and Local Government is intended to give comfort to those concerned about the effects of development in AONB, National Parks and WHS. The new guidance requires an exceptional case for (and a public interest in) allowing unconventional hydrocarbon development in these sensitive areas where it is classified as 'major development'.

Policies continue to support shale development

The new Guidance is already being described as making unconventional exploration in National Parks, AONB and WHS more difficult (or prohibiting it in these areas other than in exceptional - or in the case of WHS, wholly exceptional - circumstances).  That is wrong -  the PPG in fact restates what is already in the National Planning Policy Framework (paragraphs 116 and 133) on development in sensitive areas. The requirement for an exceptional case and a public interest only applies where it is 'major development'.

Mineral Planning Authorities, who will take the decisions on shale development in the first instance, will need to be clear about the correct application of the policy and the guidance on it:

  • the Guidance cannot, legally, add anything to the NPPF policies. A plain reading confirms it does not try to. The written Statement to Parliament summarises the approach as simply "recognis[ing] there are areas of outstanding landscape and scenic beauty where the environmental and heritage qualities need to be carefully balanced against the benefits of oil and gas from unconventional hydrocarbons".
  • the PPG does not say whether fracking is 'major development', which is sensible because 'major development' is not a precise term. It must flow from a planning judgment about scale and impacts.
  • the PPG emphasises the importance to be attached to onshore exploration in the Government's Annual Energy Strategy.  The Government has been clear about the national significance of onshore unconventionals and the House of Lords Economic Affairs Committee called for more to be done to achieve it in May this year.

Political signposts

Nonetheless, the written Ministerial statement to the House of Lords accompanying the PPG makes it clear there will be enhanced oversight of planning appeals on these points in these sensitive areas – the Secretary of State for Communities and Local Government is likely to recover appeals for his own consideration where local authorities refuse permission.  The new Guidance is therefore a political marker that there will be careful scrutiny of effects, mitigation and the balance of benefits by a political decision maker, particularly in the run up to the next election.   Shale developers in sensitive areas will need to show that the intended surface access site is both the best available alternative and is as well designed and mitigated as it can be. Robust input from transportation, landscape design and noise advisors will be critical to credibly demonstrating it.

Special case?

The novel aspects of onshore unconventional oil and gas development are well known. There are regulatory and technical challenges, including transportation, waste and water issues. The policy environment for onshore exploration (both conventional and unconventional) remains supportive though. Where schemes are appropriately-sited, well-mitigated and can operate safely from a highways and hydrogeological perspective, it should be rare that they are refused even where they are in AONB and other sensitive areas. We say that because:

  • the National Planning Policy Framework is clear that energy minerals need to be extracted where they are found and that minerals planning authorities must give great weight to the benefits of the extractive development, including to the economy (paragraph 144);
  • the temporary and reversible nature of minerals permissions means the nature of the impacts they have are very different to more permanent forms of development;
  • the recent Europa Oil and Gas judgment confirms that both shale prospecting and production phases fall within the NPPF 90 approach to mineral exploration in the Green Belt – they are not 'inappropriate development' per se. Given that the policy approach to Green Belts is intended to preserve openness, that is relevant to the approach to effects in AONB and other areas.

The Wytch Farm installations in Dorset are a helpful reminder that the UK is not closed to well-mitigated onshore oil and gas development. Wytch Farm contains 199 of the UK's 2,000 consented onshore wells and includes a WHS, an AONB, several Sites and Special Scientific Interest and various nature reserves. It is well screened, there has been no discernible impact on property prices and there is little or no public concern. Its business rates contribution alone last year was estimated as £3million. If planning permission was sought now, the process would be controversial but the answer should still be 'yes'.

Deep access rights

We highlighted the 'Not For Shale legal blockade' promoted by Greenpeace and others earlier this year in our Planning Law Blog and the existing regime for securing ancillary rights under Section 7 of the Petroleum Act 1998.  The Government's consultation on streamlining underground access rights for geothermal and PEDL operators so that they do not have to rely on the 1998 Act process closes on 15 August 2014.

It is anticipated that the forthcoming Infrastructure Bill will include measures to automatically grant underground access rights to companies extracting petroleum (as defined by the 1998 Act) or geothermal energy in land at least 300 metres below the surface. The Government has committed to a payment system in return, but intends this - and the accompanying notice provisions - to be voluntary not statutory. 

Further details are awaited on UKOOG's promise of £20,000 to be paid for each unique lateral well to UK Community Foundations on trust for the local community as part of its Community Engagement Charter. 

Future Updates in this series will review waste and planning issues in shale gas projects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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