THE GOVERNMENT

Since 2011 the Government has been banging the drum for fracking. It’s not only the case that the Government is being lobbied hard by the petroleum industry to get results, but it’s that oil and gas interests are at the very heart of Government – leading to the doors of George Osborne and David Cameron. Here’s a diagram that explains the connections as they were in early 2015, before the General Election:

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Petroleum interests being at the heart of Government is nothing new. But Lord John Browne (ex-BP, part-owner of Cuadrilla – dubbed the “UK fracking czar”) was appointed by MP Francis Maude to the Cabinet Office in June 2010, and tasked with appointing non-executive directors with industry links and knowledge to different departments, including the Cabinet, Home Office, Treasury, Defra and, of course, the Department of Energy and Climate Change (DECC) and its new subsidiary the Oil & Gas Authority (OGA).

 

 

South Western Energy and the other current operators of Petroleum Exploration and Development Licences (PEDLs) were pushing at an open door when they responded to the Government’s invitation to bid for PEDLs – the 14th Onshore Round – launched in July 2014 with the deadline for applications in October 2014.

Since 1964, the Government has regularly invited oil and gas prospectors to explore both offshore (mainly in the North Sea) and onshore (ie on land). Until unconventional hydrocarbons came along (including shale gas and coalbed methane) the closest sources of oil or gas found and explored were in the Potteries and Dorset – while methane which naturally seeps out of an old colliery, has been collected at Pontycymer in the Garw Valley by Alkane (this is Coal Mine Methane, a wholly different form of methane extraction which collects gas from vents). The process of fracking (hydraulic fracturing) has been used since the 1940s, and in Britain since the 1970s – such as at Wytch Farm in Dorset (the oil is actually collected from a 1.6km distance under the seabed, with the wells on the coast). But this article points out major differences between this 18ha intensive conventional oil site and a coalbed methane operation.

AWARDING OF LICENCES – 2014-15

frackmap2014So in 2014, the Government opened up a large proportion of Britain – including almost the whole of Gloucestershire (bar the Oxfordshire border) – for oil companies to bid in its 14th Onshore Round.

The following year, Parliament changed the law with the Infrastructure Act 2015 to make the “economic recovery” of onshore oil and gas a “legal objective”. The law made it possible for drilling to take place under anyone’s land, for “any substance” to be abandoned in the ground, and also gave a single Government minister the right to override any local authority decision. As well as this, the law provided for gas companies to provide £100,000 compensation to communities nearest installations.

(1)In this Part the “principal objective” is the objective of maximising the economic recovery of UK petroleum, in particular through—

(a)development, construction, deployment and use of equipment used in the petroleum industry (including upstream petroleum infrastructure), and

(b)collaboration among the following persons—

(i)holders of petroleum licences;

(ii)operators under petroleum licences;

(iii)owners of upstream petroleum infrastructure;

(iv)persons planning and carrying out the commissioning of upstream petroleum infrastructure.

 

 

 

The Queen gave her seal of approval, her assent, and this became law in March 2015. The Oil & Gas Authority was set up by the Government as a subsidiary of the Department of Energy and Climate Change.

However, during 2014-15 the Welsh Assembly and Scottish Parliament both agreed to impose a moratorium (ie suspension, rather than a ban – well, not even that, as this excellent Welsh blog explains) on gas exploration/ fracking.

When the Government announced in August 2015 a whittled-down list of the 159 blocks subject to be licenced (93 licences spread across the 159 OS-grid blocks) – pending a Habitats Regulations Assessment (HRA) – there were no new licences for Wales or Scotland, but the all-English blocks included the Forest of Dean, Somerset coast, east Wiltshire and a strip across the middle of Dorset including Poole.

In December 2015 the Government announced – following a “consultation” exercise on the HRAs – that every licence would go ahead. It offered, and continues to offer, reassurance that:

A Petroleum Exploration and Development Licence (PEDL) does not itself give any direct permission for operations to begin. A PEDL grants the licensee exclusivity over an area of land for onshore hydrocarbon exploration, appraisal and extraction. The exclusivity applies to both conventional and unconventional operations.

The UK has a long history of onshore gas exploration, and has developed a robust regulatory system to ensure that any such operations will be carried out to the highest standards of safety and environmental protection. Before a PEDL licensee can begin operations (such as drilling, hydraulic fracturing or production) they must be granted a number of further permissions and consents. These include, for example, planning permission, environmental permits from the Environment Agency, scrutiny of well design by the Health and Safety Executive, and OGA consents under the terms of the PEDL.

 

See here why we can’t trust the regulators and agencies- LINK TO FOLLOW

 

The Government has announced it wants to see at least 100 wells drilled to assess the viability of shale gas industry in Britain. Coalbed Methane – which has been dubbed ‘fracking’s evil twin’ – and Underground Coal Gasification get less press and there is a lack of public clarity about the Government’s targets for these industries, although this 2013 DECC report assesses the potential. (Page 15 suggests the coal volatility measured in a Forest of Dean borehole may have potential for oil).

Each licence applicant was asked to state its primary objective and “work programme”. The full licence applications from this 14th Round have not been made public (although you can see applications online from former rounds), but there are spreadsheets which show the name, address and email of the operator, the stated primary objective, and whether the applicant has gone for a “drill or drop” or “firm commitment” option. South Western Energy says it wants to explore for CBM (coalbed methane) and has opted for a “drill or drop” in the Wye Valley side of the Forest – which still requires the licensee to look into the potential of exploration – and has committed to drilling at least one well to test for gas in the rest of the Forest, east as far as Longhope and Newnham.

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See the below explanatory diagram, or this letter we recently received from energy minister Lord Bourne where explains the stages from licence to exploration well:

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