Round 14 for onshore oil and gas licensing: are fault lines emerging between DECC and environmental groups?

In December 2013 DECC published, and submitted for consultation, a Strategic Environmental Assessment (SEA) for further onshore oil and gas licensing. The SEA environmental report is required to identify the likely significant effects of proposed licensing on the environment, and identify the reasonable alternatives to DECC’s proposal. The consultation period closes on 28 March.  DECC will consider responses to the consultation before issuing a post-adoption statement that will summarise government policy on further onshore licensing.

Just as the consultation period was drawing to a close, six countryside and wildlife organisations, including the National Trust and RSPB, released a report entitled Are we fit to frack?”.  Referring to analysis in the SEA environmental report prepared by AMEC, the Are we fit to frack? report sets out concerns about the potential impact of unconventional onshore oil and gas developments on protected species and habitats in the UK.

Analysis in the report indicates that a significant proportion of land currently “under licence” comprises designated protected areas of one kind or another (e.g. 5.1% being sites of special scientific interest; 5% being national parks; and 9.8% being Areas of National Outstanding Beauty).  The analysis also indicates that a greater proportion of the land being considered in the 14th licensing round is similarly protected.  Despite this, the National Trust, RSPB, Wildlife Trust and Wildfowl and Wetlands Trust between them own only a very small proportion of these areas.  Perhaps as a result, the first of 10 recommendations made by the report is the creation of “shale gas extraction exclusion zones” to avoid sensitive areas for wildlife and water resources.

The SEA environmental report concludes that the existing regulatory framework will identify, assess and mitigate to an acceptable level any environmental effects. It states that construction and operational best practices can minimise effects to a level that is acceptable to both regulators and communities. By contrast, Are we fit to frack? describes the current regime as not fit for purpose. The report considers the current safeguards are too reliant on self-inspection and the HSE ,which “does not have the necessary specialist knowledge”.

The UK Onshore Operator’s Group (UKOOG), promptly published a response to the report on its website.  Chief Executive  Keith Cronin commented, We have studied this report and the fact is that many of the recommendations are already in place in the UK or are in the process of being put in place. We hope that the publication of this report, despite a number of critical inaccuracies, will kickstart a process of open dialogue which we have already proposed to conservation agencies.”

Are we fit to frack certainly has the potential to kickstart a constructive dialogue.  However, it also has the potential to polarise the debate, with important stakeholders on each side.  Indeed the debate already looks adversarial, with the current UK Government adopting an entrepreneurial “pro-shale” stance, but the EU Commission, conservation groups, and local residential groups all urging caution.

This emerging fault line could pave the way for legal challenges against decisions taken by DECC in the 14th licensing round.  Demonstrating the absence of harmful effects on protected species (for the purposes of the Habitats Directive) could prove costly for developers, whether this is tackled at the licensing / consenting stage, or subsequently in court.

The prospect of legal challenges can lead to considerable uncertainty for developers and investors.  More generally, the impact of the Are we fit to frack? report on public perception should not be overlooked.  Unlike other published environmental assessments, the report was widely covered in the media, thereby contributing to the groundswell of public concern about fracking.  This recently released video from the European Commission summarises the divergence of public opinion on fracking.  Both the video and the Are we fit to frack? report emphasise that navigating the route to achieving a “social licence” is inextricably linked to the route to obtaining regulatory consents.

Sam Boileau

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