Fracking: Underground energy resources - new extraction access rights

30 October 2014


New statutory access right for underground drilling for energy resources to be introduced to overcome difficulties of landowner consents.

Key points

  • Drilling through land without landowner consent is an actionable trespass
  • Current procedures for consents/approvals often lead to uncertainty and delay
  • New statutory right for underground access to be introduced
  • Fracking operations (requiring deep horizontal drilling) may particularly benefit from new arrangements

Background

The carrying out of drilling operations by oil and gas companies through land without landowner permission will constitute an actionable trespass, for which affected landowners could bring a claim in damages.

Procedures currently exist for operators to seek court approval for access where landowners refuse to agree. The courts are generally likely to grant access as being in the national interest and the amount of any compensation ordered by the courts is likely to be relatively small. That said, the current regime allows a single landowner to cause significant delay to a project even where the vast majority of other landowners do not object and even if the proposed drilling and related operations will not affect the use and enjoyment of the land.

Consultation

As part of its support for energy development in the UK, during the course of the summer the UK government undertook a consultation on proposals for legislation to govern access to underground land for the purposes of extracting shale gas, oil and deep geothermal energy.

The consultation focused on the particular issue of companies wishing to carry out underground drilling having first to negotiate access rights with a potentially large number of individual landowners for permission to drill through their land located above the area of any drilling. A statutory right for underground access below a specified depth was proposed to address the uncertainties and delays that can be caused in obtaining such landowner consents.

Government response

Having analysed the results of the consultation, the government has now published its response (DCLG Consultation Outcome - Underground drilling access: government response).

Although there was a large body of opinion among respondents opposing the proposal for the new underground access rights, the government's view remains that its policy proposal is the correct approach and that there is nothing in the responses to suggest that this is not the best available solution. Accordingly, the government intends to introduce primary legislation for the following:

  • An independent right of access for operators to drill underground below land owned by others, at depths of at least 300 metres - the exercise of such right being subject to the operator first obtaining all necessary regulator consents and only to be used for the extraction of petroleum (which includes oil and gas) or natural heat
  • A voluntary one-off payment of a standard amount (proposed to be £20,000) for each unique lateral well extending for more than 200 metres horizontally, to be paid not to individuals but to the local community; and reserve powers for the government to make regulations for a statutory payment mechanism if the voluntary scheme proves to be unsatisfactory
  • A public notification system under which operators will make known the land affected and the compensation payment being made, in return for exercising access

Facilitating fracking

Although the new access rights will apply to both conventional and unconventional extraction of underground oil and gas (and deep geothermal energy), access rights are particularly significant for unconventional operators (which include those carrying out hydraulic fracturing, or 'fracking' as it is more commonly known), given the requirements for extensive deep horizontal drilling.

There has been considerable public concern raised in relation to the potentially adverse environmental impacts arising from the process of fracking.

In its original proposal, the government expressed the view that the access rights would strike the appropriate balance between landowner concerns and community/national interests. Those seeking underground access rights would remain subject to the other various consent processes referred to above, thus ensuring continued public protection and the opportunity to raise concerns and objections, as appropriate.

Following the results of the consultation, while acknowledging the existence of a groundswell of opinion against both the access proposal and against the fracking process generally, the government has nevertheless reaffirmed its commitment to the development of UK shale gas and oil and geothermal energy. It believes that the exploitation of these energy resources can be achieved safely and responsibly within the confines of and under the protections provided by the various planning, environmental and health and safety regulatory controls already in place.

Legislation to follow

The new underground access provisions were referred to in the Queen's Speech last summer, but were omitted from the Infrastructure Bill as originally published, pending the results of the consultation.

The Bill currently before Parliament has now been amended to make additional provision for the use of deep-level land for the exploitation of petroleum and geothermal energy.


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