“Shale Gas is a resource with huge potential to broaden the UK’s energy mix. We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits”
Chancellor George Osborne (19 July 2013)
In a bid to start the dash for shale gas the government has this month published new planning guidance for shale gas and other onshore oil and gas developments in England, alongside proposals for a new tax regime for shale gas.
The new planning guidance places the responsibility for decision making for shale gas and other onshore oil and gas applications firmly with the local minerals planning authorities. This reflects the commitment by the government to a locally led planning process. The guidance examines the planning issues arising from the 3 phases of hydrocarbon extraction - exploration, testing (appraisal), and production. It sets out the planning and environmental considerations to be taken into account in determining such applications and explains the procedures to be followed by the gas industry in order to both safeguard the environment and to provide certainty and reassurance to local communities. It also explains the planning framework within which minerals planning authorities will interact with other regulatory bodies such as the Department of Energy and Climate Change, the Environment Agency and the Heath and Safety Executive, on such issues as the granting of petroleum licences and environmental permits, the mitigation of seismic risks, the protection of ground water and health and safety issues surrounding the design, construction and operation of the wells.
Specific issues addressed by the guidance include:
the role of local minerals plans to make provision for extraction of hydrocarbons including shale gas;
the benefits of pre-application discussions with the relevant minerals planning authority and the Environment Agency;
the need for an environmental impact assessment, the use of screening and scoping opinions and the extent of the geographical area to be covered by the assessment;
the extent of the exploratory activity to be included in any application;
the principal environmental issues of hydrocarbon extraction to be addressed by minerals planning authorities;
the weight to be given to economic need in determining such applications; and
restoration and aftercare requirements including the use of conditions and /or section 106 agreements.
The guidance also includes model planning conditions for use by minerals planning authorities to control such developments and to mitigate any potential adverse environmental impacts.
It is intended that any specific application requirements for such development and the relevant fees for such applications will be dealt with in secondary legislation to be published in due course.
The guidance clarifies that shale gas will be dealt with under the current planning regime for minerals and will not be subject to some new bespoke regime. This seems to be consistent with the desire of the industry and a vote of confidence by the government that the current regime is flexible and robust enough to withstand the scrutiny it is likely to come under in the coming months.
The guidance is complemented by a proposed new tax regime for shale gas introduced by the Chancellor George Osborne in a recent consultation paper entitled “Harnessing the potential of the UK’s natural resources - a fiscal regime for shale gas”. The consultation period for this paper runs until 13 September 2013 and comments are invited from a wide range of stakeholders. It is intended that any new legislation will be introduced in the Finance Bill 2014.
The government hopes that the combination of these measures will support and encourage investment in the shale gas industry to enable shale gas to contribute to the UK energy supplies, assist in the creation of new employment opportunities and deliver increased tax revenues from the oil and gas industry.
Should you require further information about any of the matters contained within this alert or any advice on how these reforms may impact on your development proposals please contact the authors or your usual K&L Gates contacts.