On 6 October 2016, the UK's Secretary of State for
Communities and Local Government, Sajid Javid, overruled local
councillors on appeal and approved Cuadrilla's plans to explore
for shale gas in Lancashire. Cuadrilla has been granted planning
permission, which is subject to certain conditions, to drill and
use hydraulic fracturing for four horizontal wells at its Preston
New Road site. A second opportunity to drill four further
wells at its Roseacre Wood site could soon be granted, subject to
Cuadrilla providing further evidence on road safety. As
applications for both sites were rejected by Lancashire County
Council last year, the decision signifies a shift in the political
support for shale gas in the UK, although it remains a highly
The approval is only the UK's second, and follows the
approval granted to Third Energy in May this year to extract shale
gas from an existing well (for more details, please see a previous
Regulatory developments paving the way for shale
In recent years, incremental changes have been made to the
UK's regulatory regime to progressively remove certain legal
and practical hurdles to the development of the UK's onshore
Prior to the entry into force of the Infrastructure Act 2015
("IA 2015"), companies seeking to drill
onshore for shale gas were required to obtain the consent of
multiple landowners to gain underground access, often through
protracted negotiations, or risk committing trespass1.
The IA 2015 amended this position and permits the exploitation of
petroleum or geothermal energy in "deep-level land" (i.e.
at least 300 metres below the surface) by operators, without the
requirement to obtain prior consent of surface landowners. The
operator will still be required to obtain a Petroleum Exploration
and Development Licence, planning permission and other necessary
The IA 2015 also contains environmental safeguards which were
brought into force on 6 April 2016, namely requiring a well consent
to impose a condition prohibiting associated hydraulic
fracturing2 at a depth of: (i) less than 1,000 metres;
and (ii) 1,000 metres or more unless consented to by the Secretary
of State (together, a "hydraulic fracturing
consent") . A hydraulic fracturing consent can only
be issued by the Secretary of State once certain conditions have
been met, which include the meeting of: (i) safeguards relating to
environmental impacts and health and safety; and (ii) additional
conditions set out in section 4A(6) of the IA 2015. The Secretary
of State is also required to satisfy itself that it is appropriate
to issue the well consent.
With regards to gas transportation, all onshore gas producers in
the UK (whether conventional, unconventional or bio-methane) were
previously required to hold a transporter licence under the Gas Act
1986, unless specifically exempted for a defined period. This was
identified as a barrier to the development of the UK onshore gas
sector, and a class exemption was therefore introduced to cover all
forms of onshore gas production. This exemption removed the
requirement to hold a gas transporter licence where a person
conveys gas from an onshore gas processing facility to a pipeline
system, provided that the length of pipeline through which the gas
is conveyed does not exceed 16.043 kilometres.
A bright future for UK shale?
In recent years, there has been a clear
shift towards a more permissive regulatory regime for shale gas
exploration and exploitation in the UK. The decision to allow
Cuadrilla to carry out hydraulic fracturing for shale gas marks a
significant step for the UK's shale gas industry, and for the
future of energy security in the UK as an alternative to importing
gas from abroad3. With a decision looming on the
horizon in respect of IGas's application for shale gas
exploration in north Nottinghamshire, expected this November, we
will shortly have a clearer steer on whether 2016 will be the year
UK shale moved to full steam ahead.
1 In Bocardo SA v Star Energy UK Onshore Ltd and
another  3 All ER 975, it was
held that the landowner could sue for underground
2 "Associated hydraulic fracturing" is defined
in the IA 2015 as fracking for shale gas that is: (i) carried out
in connection with use of a well to search, bore for or get
petroleum; and (ii) involves (or is expected to involve) the
injection of more than 1,000 cubic metres of fluid at each stage or
more than 10,000 cubic metres of fluid in total.
3 The first shipment of US shale gas arrived in the UK
for use at Ineos' Grangemouth refinery in Scotland on 27
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This short note is to introduce two detailed papers that discuss the justification for the development of an Asian LNG reference price that is not benchmarked against the current ‘Japanese Crude Cocktail' and suggests an approach to how that might be achieved. A short summary of the two papers is provided below.
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