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26 April 2015

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Fracking – what Landowners need to know

Posted by: Ray Arnall

There is one thing that can be certain is that it is unwise for the UK to continue to be heavily dependent upon importing its energy requirements from the continent, given the ongoing volatility abroad. There are vast deposits of shale gas under the UK which if allowed to be extracted will provide this country with energy for many years to come.

The extraction processes surrounding shale gas is not without its problems which I will discuss below but in my opinion it is foolish to discount any energy resources on-shore at this time as given our increasing population and our hunger for resources further sources of energy need to be found and quickly.

The main reserves of shale gas are predicted to be in three main shale gas formations; the Bowland Shale in Northern England, the Weald Basin in Southern England, and the Midland Valley of Scotland.

No doubt you will have seen over the last few weeks the decision of Lancashire County Council in respect of Quadrilla’s application to Frack at Roseacre Wood between Blackpool and Preston. After a 15 month fight with the planners, members of the Local Authority’s Development Control Committee voted to turn down the application on the grounds that the proposal would have an unacceptable and potentially severe impact on the road network both in terms of traffic and increased danger to other road users. There is a further pending application with this Local Authority for a site at Preston New Road, Little Plumpton, again between Blackpool and Preston. This proposed scheme has previously received planning officers’ recommendation to approve but let’s see if the sway of public opinion will defeat this application also.

What is fracking?

The extraction of shale gas from the ground is carried out by a combination of two processes.

  • the directional drilling of boreholes into sedimentary shale rock; and
  • pumping fluid at very high pressure in order to fracture the rock to allow the currently trapped shale gas to escape and be captured at the surface via a well bore.

The fluid that is pumped into the ground consists of water to fracture the rock, sand and other solids to keep the fracture open and a combination of chemicals which are intended to clean the well, reduce friction and prevent bacterial growth.
To put it into context with regards to the volume of water used in this process, over the life span of a typical well which is 10 years the water consumption will be anywhere between 9 million and 90 million litres of water (a typical Olympic sized swimming pool holds 2.5 million litres).

What are the concerns?

In the United States and the continent where fracking operations have been going on for some time there have been instances where the fracking has caused earthquakes. Indeed operations in Blackpool were suspended in 2011 where earthquakes registering magnitudes of 2.3 and 1.5 on the Richter scale were registered on specialist seismological monitors. Earthquakes of this magnitude would rarely be felt at the surface by the general public.

Further concerns have arisen surrounding the uncontrolled release of methane gas and videos are readily available showing running taps being set alight by a naked flame because of the high levels of methane mixed with the water. The Department of Health here in the UK have suggested that such levels of methane within our water supply do not pose a threat to human health if consumed at the levels anticipated however at this stage this cannot be certain.

The legal position: liability for consequences arising from drilling

  • Exploration companies

The company’s operations could result in potential liability under Part 2A of the Environmental Protection Act 1990. Also companies could find themselves committing the tort of private nuisance arising from the noise and/or vibration caused by the drilling and also could find themselves liable under the rule in Rylands v Fletcher (1868) LR 3HL 330 due to the escape of gas and/or other contamination from the drilling site to adjoining land.

  • Landowners

Again, under Part 2A of the Environmental Protection Act 1990 it is conceivable that a landowner might be classed as a “knowing polluter” under that regime or a person who has caused or permitted a nuisance.

To mitigate this potential liability a landowner whose land is being proposed for such operations should seek legal advice at the earliest opportunity in order that a suitable well-crafted and robust indemnity in favour of the landowner is incorporated within the documentation with the operator.

  • Can a Landowner stop the exploration of his/her land?

The common law position as to land ownership is that a person who owns the surface of a given piece of land also owns the strata beneath the surface to the centre of the earth. This general rule like most other legal principles have exceptions to that rule namely that the minerals situated beneath the land may be separately owned by a third party by express reservation or by statute.

Shale gas is a “natural gas” within the meaning of Section 1 of the Petroleum Act 1998 (“PA 1998”) and as such vests in the Crown (Section 2 PA 1998). The Crown can in turn grant licences for exploration (Section 3 PA 1998). It should be noted however that it is only the gas that’s vested in the Crown and not the strata in which it is trapped which vests with whoever owns the strata beneath the surface which most likely will be the same person who owns the surface above it.

In order for the operator to be able to extract the gas it will need rights to do so from the surface owner and the strata owner if the strata is in separate ownership.

If agreement cannot be reached between the operator and the land/strata owner(s) then under Section 7 of the PA1998 the operator who holds a Department of Environment & Climate Change Licence can acquire compulsory rights to enter upon the land to sink boreholes, for the erection of buildings and the laying and maintenance of pipes, the right to obtain a water supply or other substances and the right to dispose of water or other liquid. The compulsory procedure is slow, cumbersome and expensive and the operator will be keen to strike a deal with the land/strata owner(s) as it would be quicker and cheaper to do so.

Conclusion

Like any new technology and processes, it is the fear of the unknown which causes the reluctance to embrace it. However the risk here is that without allowing such operations to take place, we will not know with certainty whether the concerns have any merit.

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Ray Arnall - Senior Partner

To discuss how glaiysers can assist you contact Ray Arnall on [email protected] or via 0161 832 4666.

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