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New guidance shows 'tangled web' of approvals needed for fracking projects, says expert

Out-Law News | 07 Aug 2013 | 4:33 pm | 3 min. read

Energy companies will need to negotiate a "tangled web" of regulatory approvals just to carry out exploratory 'fracking', an expert has said.  

The Environment Agency (EA) has outlined new draft technical guidance for onshore oil and gas exploratory operations (33-page / 971KB PDF) for consultation in a bid to clarify which environmental permits and consents are required prior to the commencement of any regulated activities.

Energy and environment law expert Simon Colvin of Pinsent Masons, the law firm behind Out-Law.com, said that the guidance highlights the challenges onshore oil and gas operators face in obtaining regulatory approval to conduct exploratory operations. 

According to the guidance, operators may need to obtain a number of consents or permits from the EA to proceed with exploratory work, including obtaining flood defence consent, or environmental permits in relation to groundwater or water discharge activities,  mining waste operations, waste gas flares or for carrying out work involving radioactive substances. 

"The guidance document spells out the complexity of the consenting process," Colvin said. "The fact that there might need to be nine separate applications to the EA for a single exploratory well is indicative of this. When this is aligned with the need for planning permissions and consents from both the Department for Energy and Climate Change (DECC) and also the Health and Safety Executive (HSE), the tangled web of consents that a project will require becomes apparent." 

"The complex web of consents is part of the reason for the calls to bring fracking projects under the umbrella of the Nationally Significant Infrastructure Projects (NSIPs) regime. There are however concerns about how flexible the NSIP/Development Consent Order (DCO) regime is and whether it can accommodate fracking projects that have different phases. Does an operator want to apply for a DCO, if there is a risk that they will not proceed beyond the exploration phase?" Colvin added. 

NSIPs are major infrastructure developments that are defined in the Planning Act 2008 and  a unique  planning process applies. 

Hydraulic fracturing, or 'fracking', involves pumping water at high pressure into shale rock to create narrow fractures which allow natural gas contained there to flow out and be captured. Although the technology is still at an early stage, the Government has previously estimated that potentially recoverable shale gas in the UK amounts to almost two years' worth of national gas consumption. 

The Government had placed a temporary moratorium on fracking operations but lifted the ban late last year following the outcome of an investigation into how the nature of the operations  presents a risk of seismic earth tremors occurring. 

Fracking is now permitted subject to a range of regulatory controls and permits being put in place to mitigate  any risks to the environment and human health and saftey. 

In its guidance, the EA said that it expects all applications for environmental permits relating to fracking operations will be treated as being of ‘high public interest’. Colvin said that the impact of this classification will be that the public consultation process will be elongated and see permit applications take as many as six months to resolve. 

"Some may see that as a good thing as the public consultation will provide a forum for objectors to voice their concerns and then for the regulator to consider and account for those concerns where necessary through the inclusion of conditions in the permit," the expert said. 

Plans to develop standard form permits for all onshore oil and gas operations, outlined by the EA in its guidance, are "quite ambitious" and may not be suitable, Colvin added. 

"All current operations are covered by bespoke environmental permits that can be tailored to be site specific," he said. "I do not think that the fracking process lends itself to the use of standard form permits, especially when you consider all of the possible variables in relation to site setting, such as geology." 

Further guidance to be issued by the EA should help explain to operators whether permits and consents obtained for exploratory operations can be relied upon should those businesses decide to move into the development and production phases, or whether the EA will require applications for new consents to be submitted, Colvin said. 

"Experience from other sectors suggests that applications to vary  existing permits and consents will be the preferred route," he said. "No doubt this will be addressed in the next instalment of the EA’s guidance dealing with the development and production phases. Watch this space." 

"Fracking is a relatively new process in the UK and for that reason the regulators are effectively having to learn on the job. This was reflected in the recent DCLG planning guide which again focused on the exploration phase. In reality, operators will not move into the appraisal, development and production phases in the UK for a number of years, so the fact this latest guidance document is limited to the early stages of the overall extraction process is not of immediate concern," he said.