There is currently a media storm arising out of coal shale infraction “fracking” which calls for more legislation to control the perceived risks. What are the real risks and is the process currently uncontrolled or are there sufficient safeguards currently in place?
Who can frack?
The first point to understand is that the Petroleum Act 1988 establishes that all natural gas is vested in the Crown. In order to extract gas it is necessary to obtain a licence from the Department of Energy and Client Change (“DECC”). A licence will only be granted if an operator meets the requirements of DECC which requires that an operator is sufficiently experienced, and has sufficient financial resources to meet its obligations in carrying out oil and gas exploration. The type of licence and length of licence are governed by the Hydrocarbons Licensing Directive Regulations which prescribe a set of model clauses to be used.
A second point to appreciate is that although DECC grants licences to prospect for and ultimately exploit the shale gas obtained by fracking it is still necessary for an operator to control a necessary surface interest upon which to place the wellhead. Any landowner would want to be sure that the operator was a fit and proper person to operate the well the agreement would contain sufficient safe guards to ensure the landowner’s freehold interest was not adversely affected by contaminated. As with other mineral operations, the fracking operation would be subject to controls issued by the Minerals Planning Authority on the grant of planning permission, the Environment Agency who would ensure that in particular there was no potential contamination of the ground water and the Health and Safety Executive who would ensure minimal potential hazard arising out of the operation.
Various interest groups and the media have made use of images from America which show sites where contamination has taken place and/or there has been pollution of the ground water. A particularly striking image is the image of gas being ignited from domestic taps. However, it has to be remembered that in the United States, there is a very different legislative regime, which does not impose the same controls as in English Law and contamination of the watercourse/flaring of gas is in many cases as a result of naturally occurring substances and would have occurred in any event.
The next point which usually concerns landowners is whether the fracking process will cause damage to surface structures. A few years ago there was a series of earthquakes in the Fylde area which were said to be as a result of the fracking process. However a report prepared by eminent geophysicists showed that the tremors felt in that area were as a result of a natural phenomenon and were not as a result of the fracking process. The government has accepted those findings and has granted licences to explore in those areas. The experts’ opinions are that surface damage is far less likely to occur from fracking than from other more traditional means of mining.
On the face of it, fracking seems to provide a solution to the country’s short and medium term energy requirements without any additional environmental risks. Although the generation of energy from the gas obtained by fracking will result in some carbon creation, it is less than more traditional methods of producing energy and in the medium term, the country has no option but to pursue fracking as a means of producing energy if communities wish to enjoy their current standard of living and energy usage. In the long term there may be other solutions but for the next 25 to 40 years gas produced by fracking would appear to provide one solution for the requirement for new forms of energy.
Real Estate Group
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