New UK Planning Practice Guidance for Onshore Oil and Gas

The UK Government published a suite of policy announcements on 19th July 2013 targeted at facilitating economically viable full scale exploration and production of shale gas reserves in England and Wales.  Alongside the Treasury which published proposed competitive tax incentives, the Department for Communities and Local Government (charged with oversight of the land use planning regime) has published new 'Planning Practice Guidance for Onshore Oil and Gas' which pays particular attention to shale gas. 

The jury will be out for some time to come as to whether the new planning guidance will successfully achieve its objective of assisting promoters to bring through the planning system major shale exploration in the short term, and production thereafter.  Since the new guidance was published, protests close to Cuadrilla's operations at Balcombe in Sussex indicate public perception of shale gas may yet remain a potent obstacle to projects coming forward quickly under the UK planning regime. 

Background

The UK has an adept and creative oil and gas industry poised to take advantage of the country's seeming rich shale gas reserves, but to do so it must engage with one of the most complex land use planning regimes in the world engineered to balance competing interests stemming from land being a limited resource on a crowded island.  The UK's system of land use planning can, to the unfamiliar, make the UK look like Mars to Texas' Venus.

It places local consultation and decision making at the heart of its system.  This central tenet of the system was given added weight by the current Coalition Government which put the principle of 'localism' at the heart of its planning policy: placing additional duties on applicants to consult with local people, whilst providing local communities with additional powers to take ownership of local "neighbourhood" planning policy.

Faced with the need to evidence substantive economic growth prior to the next general election in 2015, the Coalition has not however been blind to the limitations of localism in bringing forward often controversial, major infrastructure projects.  So for significant rail, airport, port and energy schemes it has progressed the previous Labour Government's idea of taking these projects out of the local decision making process to be determined by central Government following their examination and a recommendation provided by an independent body, the Planning Inspectorate.

So what about shale gas?

In its new planning practice guidance the Government has taken a key decision which it will need to stand by for sometime to come.  This is the decision to keep shale gas proposals within the local decision making process and not to designate them as major infrastructure to be determined by the Planning Inspectorate. Instead, the Government has sought to bolster shale gas' status within the local planning decision making system, providing clear steers to both promoters and local mineral planning authorities.  The Government has also emphasised that the effectiveness of the guidance will be kept under review.  The following key points in the guidance are of note.

First, the guidance underscores early pre-application consultation by promoters with the local minerals authority who are expected to provide a "clear, timely and authoritative view on the merits of a proposal to extract hydrocarbons". This sets a marker to local planning authorities that they must engage positively with promoters.  The guidance also emphasises the need for early interaction with various statutory consultees and local groups, and has set out proposals for profit share schemes for communities to secure their buy-in on schemes, similar to that used not least in the new nuclear and energy from waste spheres with mixed success.  

Second, the guidance signposts the appropriate decision tree for promoters considering the need for an environmental assessment for their project, and states "it is unlikely" that EIA will be required for exploratory drilling operations which do not involve hydraulic fracturing "unless the well pad is located in a site which is unusually sensitive to limited disturbance occurring over the short period involved".  This latter point seems surprising, and may soon be out of date; the Environmental Committee of the European Parliament has stated it wants EIA to be mandatory for these operations across the EU.  Caution would suggest, at least for now, that promoters should still submit an environmental assessment for exploratory projects, notwithstanding the guidance.

Third, the guidance advises local minerals authorities that "they should not take account of hypothetical future activities for which consent has not yet been sought."  This point addresses upfront a central argument which objector groups would likely take at the exploratory drilling stage.  However, there is a flipside: the guidance stresses exploratory drilling can only be considered material to future appraisal and production activities insofar as it has established the presence of hydrocarbon resources.

Fourth, the guidance states that local mineral authorities should not have to consider alternatives to oil and gas resources when determining shale gas applications, as it sits within the Government's policy that energy supplies should come from a variety of sources.  This is key guidance for promoters and undercuts a central tenet of objections to shale. 

Fifth, the guidance emphasises that there is no standard minimum separation distance for proposals for hydrocarbon extraction, and moreover it is unlikely that the cumulative impact of exploratory wells will need to be assessed for the purposes of EIA. 

Sixth, the guidance states that a financial guarantee to cover restoration and aftercare costs will normally only be justified in exceptional cases.

Finally, the guidance provides model planning conditions.  This will assist operators if they come up against a compliant minerals authority who nonetheless seeks to impose unreasonable conditions on any consent.

Missed Opportunity?

The guidance is useful to operators and mineral planning authorities as it sets the bar high for productive engagement between the two sides to take forward applications in a positive and cooperative spirit.  It also sets down markers for how applications should be supported in terms of pre-application consultation, environmental information and consideration of alternatives.

However, in paying due regard to localism and the Government's objective of applications being determined at the local level, the Government's guidance may yet prove wide of the mark if the ongoing publicity war about shale gas in the UK comes favours local action groups.  It will be sometime before the effectiveness of the Government's new guidance becomes clear, and the decision to treat shale gas differently to other significant energy infrastructure can be deemed both bold, and correct.  The Government has said the effectiveness of its guidance will be kept under review.  Shale gas promoters may yet be glad of that.

Gary Sector, Legal Director at law firm, Addleshaw Goddard LLP.  Gary has over 15 years experience advising in all areas of town and country planning and environmental law in England and Wales, with particular experience in promoting controversial projects in the energy from waste sector.