Report to the Cabinet Member for Environment, Planning and Cultural Services
Report submitted by: Interim Executive Director for Environment
Date: 15 July 2014
Part I
Electoral Division affected:
All
Consultation on Government Proposal for Underground Access for the
Extraction of Gas, Oil or Geothermal Energy
(Appendix 'A' refers)
Contact for further information:
Clare Phillips, 01772 534188, Environment Directorate,
clare.phillips@lancashire.gov.uk
Executive Summary
The government has published a consultation document on 'Proposal for
Underground Access for the Extraction of Gas, Oil or Geothermal Energy', a copy of
which is attached at Appendix 'A'.
The purpose of this report is to provide a recommended response from the County
Council to the consultation.
Recommendation
The Cabinet Member for Environment, Planning and Cultural Services is asked to
consider and approve the recommended response to the consultation as set out in
the report.
Background and Advice
1. The Crown owns the mineral rights to oil and gas in the UK. However,
landowners own land rights on the surface, and underground with no defined
depth limit.
2. The exploitation of shale gas reserves by hydraulic fracturing could typically
require the drilling of very long and deep (up to a mile or more) horizontal wells
which spray out from the central drilling pad.
3. Currently operators must identify & negotiate with landowners for underground
access, or risk charges of trespass. Oil and gas operators currently settle this
-2through negotiation with the landowner(s), but there is an existing legal route by
which they can apply for access in the courts where this cannot be negotiated.
4. At present, landowners tend to receive some kind of payment in return for the
right of access below ground. This is negotiated privately between the company
who wants to access the land, and the individual. There is no standard payment
level and landowners could request any amount of money (or none at all).
Payments for below ground access are usually of a nominal value.
5. These access rights have been the focus of some attention recently. In the
Supreme Court case of Bocardo SA –v- Star Energy UK Onshore Limited, the
energy company who undertook drilling beneath land owned by one of Al Fayed’s
group companies, without their consent, was ordered to pay a very nominal £50
damages for trespass. Mr Al Fayed was seeking many millions in damages,
essentially arguing that he was entitled to a share of the profits from the
exploitation of oil reserves under his land. The court did not rule in his favour on
that. More information can be found here:
http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Energ
y/UK_on-shore_shale_gas_and_land_rights_140127
6. In October 2013, Greenpeace launched a campaign called 'Wrong Move' to
exploit what they reported at the time was a ‘legal loophole’. Greenpeace has
encouraged people to actively proclaim their opposition to drilling and create a
patchwork quilt of non-consenting landowners to frustrate plans to carry out
drilling.
http://www.wrongmove.org/
The Consultation
7. The consultation can be read at the following link:
https://www.gov.uk/government/consultations/underground-drilling-access
8. This is a Government consultation on proposals to reform the procedure for
gaining underground access to oil or gas deposits and geothermal energy. The
consultation examines the existing procedures by which companies who wish to
extract oil, gas or geothermal energy obtain access to underground land, and the
problems raised by these procedures.
9. The government believes that in so far as underground development goes, the
existing system (see 3 &4) does not strike the right balance between the
legitimate interests and concerns of landowners, and the benefits to the
community and nation at large of permitting development, where that
development is otherwise acceptable in planning and environmental terms. The
consultation also sets out the options and conclusions that have been considered
during this process.
10. The option to do nothing was rejected. The government concluded that the
difficulties associated with the existing framework mean that the shale gas
industries will not be able to fully explore shale gas potential in the UK.
-311. It was concluded that the impact on the landowner from underground drilling is
negligible, and broader issues of concern about the environmental and other
impacts of the proposed activities are addressed through planning and other
regulatory frameworks. So it is considered that there is a case for changing the
statutory framework to provide for underground access without the complexity
and expense of the existing procedure.
12. The government have drawn similarities between access to airspace, coal,
utilities and telecommunications rights of access; and they have concluded that a
statutory right of access would be an appropriate solution to allow companies to
access underground land for the purpose of extracting petroleum or geothermal
energy.
13. Consideration was given to requiring the operator to negotiate access with a
large group all in one go. This would reduce some of the administrative costs
associated with contacting and negotiating with each landowner. However, the
government considers that this would not bind any member of the group who
disagreed, and therefore does not remove the fundamental problem: that the
ability of individual landowners to obstruct the project is disproportionate to any
impact it might have on them.
14. Another option considered was enabling companies to apply for compulsory
rights orders under an Acquisition of Land Act 1981 procedure. This route
requires express applications to be made for land or rights, and a lengthy
compulsory purchase-style inquiry procedure to be gone through under the Act.
The government do not consider it necessary or appropriate for a lengthy
application procedure to apply where all that is needed is use of deep
underground land. It is therefore considered by the government to be no
advantage (to either land owners or exploration companies) in legislation being
enacted which replicated these sorts of compulsory purchase provisions. It is
considered by government that exploration companies do not require land or
rights to be transferred to their ownership. A statutory right of access is sufficient,
and would have the merit of not dispossessing land owners of any substantial
property rights.
15. Similarly, the Government have considered bringing the technologies within the
Planning Act 2008 regime. The Planning Act 2008 is a mandatory consent regime
which applies to projects deemed "nationally significant infrastructure" projects.
However, the process of obtaining a development consent order is extremely
lengthy (a minimum of 15 months from application to consent, plus approximately
a year's pre-application consultation). To be obliged to undertake this expensive
and time-consuming process multiple times to drill a series of exploratory wells is
not a workable option for the industries involved, at such an early stage of
development.
16. Community ownership schemes were also considered as an option. This would
allow local people to take a financial stake in a project (and therefore a share in
the profits), making them more likely to approve of that project. However, the
government do not believe that this would sufficiently address the fundamental
problem that any individual could be unable or unwilling to participate.
-4The Government Proposal
17. The government proposal consists of three different elements; each designed to
address specific issues.

A right of underground access
This first element draws on the existing statutory right of access offered to coal
operators. The proposal would grant underground access rights to companies
extracting petroleum (as defined under the Petroleum Act 1998 – including gas or
oil) or geothermal energy in land at least 300 metres below the surface. This
underground access would only apply to companies seeking to extract energy (in
the form of petroleum or naturally-occurring heat) from land below 300m. It is
important to note that fracturing would not take place at 300m; it would be much
deeper – usually over a mile down. 300 metres has been chosen as the
landowner is very unlikely to have any use of the land below this level and below
this depth the vertical drill may need to start changing direction. The right of
access would exist independently of other necessary permissions; effectively
removing the issue of trespass at these depths for these purposes

A payment in return for the right of access
At present, landowners tend to receive some kind of payment in return for the
right of access, above and below ground. This is negotiated privately between the
company who wants to access the land, and the individual. There is no standard
payment level, and landowners could request any amount of money (or none at
all). Payments for below ground access are usually of a nominal value. The
government believe that people living above underground drilling should continue
to receive some kind of payment from the operator in return for the right of
access. This view is in line with other schemes that grant access rights such as
underground cables and tunnels. The shale and geothermal industries have put
forward a voluntary offer for a payment system. This will involve a £20,000 oneoff payment for each unique lateral (horizontal) well that extends by more than
200 metres laterally. Where lateral drilling vertically coincide payment will be
made only once. It is the government's preference for this payment to be made to
a relevant community body. The consultation does not define 'community' or
specify affected landowners.
It might be considered that this is 'generous' payment given precedent that has
been set in the Supreme Court case of Bocardo SA –v- Star Energy UK Onshore
Limited where £50 was offered as compensation for trespass. (See 5)

A notification system for the community
This option would include a proposal for a public notification system, under which the
company would outline matters such as the relevant area of underground land,
coupled with details on the payment that will be made in return for the access.
Recommended consultation response
The following response to the consultation is recommended:
-5-
"The County Council believes that given the existing framework this proposal
represents the best way forward to ensure a balance between the need of industry
and an offer of payment to communities in return for nominal rights to underground
access.
However, it is the County Council's view that it is of paramount importance that
concerns about environmental impact and public safety still be properly addressed if
shale gas extraction is to be pursued. Members at the county council unanimously
supported a Notice of Motion last year calling on the Government to put in place
industry-specific regulation, and to ensure local planning control is maintained.
It is also the County Council's view that further consideration needs to be given to
models for community funds to ensure that they support communities’ priorities and
deliver lasting benefits in a transparent and accountable way."
Consultations
N/A.
Implications:
This item has the following implications, as set out in the report.
Risk management
N/A.
List of Background Papers
Paper
Date
Nil.
Reason for inclusion in Part II, if appropriate
N/A.
Contact/Directorate/Tel