The recent announcement by Ineos that the company is proposing to invest £640 million to produce shale gas as an energy source for its chemical plants including the Grangemouth facility, will ignite further interest in the merits and demerits of hydraulic fracturing (fracking).
It is clear that there are vast resources of shale gas underlying the UK. According to a recent survey conducted by the British Geological Survey, there is 1,300 trillion cubic feet of shale gas reserves underlying Yorkshire, Lancashire and surrounding counties.
Fracking has been widely implemented in the USA and has been viewed as a revolution in the energy supply industry in that part of the world. The production of shale gas is estimated to provide security of gas supply to the USA and Canada for the next 100 years. It is also seen as being positive from a climate change perspective in that shale gas has provided an opportunity to generate electricity at half of the CO2 emissions of coal.
The process of fracking involves pumping water, chemicals and sand at very high pressure into shale rock strata to free gas stored there. The gas is collected at the head of the well once it has risen free of the rock. The fracking process takes place at the beginning of the works on site for intermittent periods over a few weeks, and is then discontinued. However, the positive news is that the gas flow can last for years.
The regulatory framework for shale gas operations
Shale gas operations, as with all other industrial activities, are regulated under a plethora of different statutory regimes.
The shale gas is owned by the Crown and not the freehold owner of the over-lying land.
The Department of Energy and Climate Change (DECC) issues operators with a Petroleum Exploration and Development Licence (PEDL) which gives operators exclusive rights to explore for and develop the resource. The PEDL is granted by DECC for a specific defined area.
Before operators can begin they require planning permission from the local Planning Authority.
Legal advice should be sought on the full range of statutory requirements that will apply. DWF LLP has a team of specialist lawyers who can advise any business which is conducting fracking operations and any organisation affected by fracking including landowners, insurers, local authorities, downstream water users and water companies.
Safety and environmental considerations
It is clear from the regulatory framework which attaches to business in the UK, that any company that wishes to obtain a commercial advantage from fracking must conduct its business operations safely and with consideration for the environment.
A) The safety legal framework
There is a robust statutory framework to protect the safety of workers and those who may be affected by a fracking operation, including local residents.
Employers will be required by the Health and Safety at Work etc. Act 1974 to ensure that reasonably practicable steps are taken to protect their employees and contractors. This includes ensuring that:
- Full training is provided to workers.
- Machinery is properly maintained and fit for purpose.
- Appropriate personal protective equipment is provided to employees.
Specific risk assessments will be required to be undertaken which are suitable and sufficient to ensure that the key risks to health and life are controlled and minimised.
B) The environmental legal framework
Shale gas developments that include hydraulic fracturing are highly likely to require Environmental Permits to be granted by the Environment Agency under the Environmental Permitting (England and Wales) Regulations 2010. Under the Water Resources Act 1991, all shale gas operators must notify the Environment Agency of their intention to drill a borehole.
Operations to explore for shale gas are expected to require bespoke Environmental Permits with extensive conditions attached. From the date of submission of the application for a permit, the period of time for determination can be up to six months, if there are objections lodged by local residents and environmental interest groups.
The key risk that operators will be required to address is that of potential contamination of aquifers, sensitive ground water supplies and potable drinking supplies.
Development of fracking has been encouraged by the UK Government which is keen to reduce reliance on overseas gas supplies from politically unstable parts of the world. The Government is also keen to ensure that jobs are created and that economic growth continues to increase. However, it is likely that responsible water management and protection of the environment will also feature heavily in the regulatory landscape that will be applied to the fracking industry.
If fracking is to play its part in providing valuable energy resources for future industrial use, then it will be essential that pre-planning and risk assessment takes place before operations to produce shale gas commence.
The statutes in force to protect worker safety and the environment are longstanding and heavily enforced pieces of legislation. The legislation applies across business and industrial sectors, and will apply equally to the burgeoning fracking industry in the UK.
Any commercial operator which is found to have put safety at risk or to have polluted valuable water resources will be likely to face punitive financial penalties which will be imposed by the courts.
Robust health and safety and environmental risk assessment and management systems will be essential to ensure that fracking does make profitable and good business sense.
The above is a summary overview of the key safety and environmental legal requirements that will be applicable to fracking. Operators and organisations involved in or affected by fracking should take detailed legal advice. DWF LLP has a specialist team of construction, property, litigation and environmental lawyers who will be pleased to advise on specific legal issues that may arise.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.