British government lifts year-old fracking moratorium

Energy Alert

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The British Government has announced it is lifting its ban on hydraulic fracturing (fracking) to extract natural gas from shale deposits. On December 13, 2012, Edward Davey, secretary of the UK Department of Energy & Climate Change (DECC), announced that exploration for shale gas using fracking can resume, subject to new controls to prevent seismic risks.

The British government imposed the fracking moratorium in November 2011 while it investigated the events surrounding minor seismic activity (two earthquakes with magnitudes of 2.3 and 1.5) that occurred in May and April 2011 after Cuadrilla Resources Ltd. hydraulically fractured a well at its Preese Hall site in Lancashire in North West England.

 

Mr. Davey, a member of the left-of-center Liberal Democrats, emphasized that the decision to lift the ban “is based on the evidence. It comes after detailed study of the latest scientific research available and advice from leading experts in the field.” Mr. Davey stated that after careful review of “the evidence with the aid of independent experts, and with the aid of an authoritative review of the scientific and engineering evidence on shale gas extraction conducted by the Royal Academy of Engineering and the Royal Society,” he “concluded that appropriate controls are available to mitigate the risk of undesirable seismic activity.”

 

Future UK plans for shale gas

 

In announcing the end of the moratorium, Mr. Davey stated that “Shale gas could contribute significantly to our energy security, and reduce imports of gas as we move to a low-carbon economy. It could substitute for imports, which are increasing as North Sea gas is decreasing.”

 

Mr. Davey also emphasized that fracking must be done safely, and that the UK is “still in the very early stages of shale gas exploration … and it is likely to develop slowly.” He cautioned that it is unlikely that any new exploratory activities would commence until “well into” 2013 after operators receive all the necessary permits to proceed, and that any production operations are “some years away yet.” Mr. Davey also added that “[i]t is essential that [fracking] development should not come at the expense of local communities or the environment.”

 

The new mandated controls to mitigate seismic risks from fracking operations will include:

  • A review of the available information about faults in the area of proposed well sites to minimize the risk of activating any fault by fracking
  • Monitoring of background seismicity before commencing fracking operations and real-time seismic monitoring during operations
  • Developing a fracking plan detailing the duration and volumes of fluids to be used during fracking and submitting it to the DECC for consent
  • Carrying out seismic monitoring before, during and after fracking and using a new “traffic-light regime” that will categorize seismic activity and direct appropriate responses. Operations can be quickly paused and data reviewed should unusual levels of seismic activity be detected, and
  • DECC will select an independent expert to be on site to make sure that operators are conforming with protocols

In addition to these measures designed to mitigate seismic risks, any chemicals used in fracking will require governmental approval. Operators will also be required to monitor any growth in height away from the borehole of any fractures, which will help ensure that the fracture remains contained and far away from any aquifers.

 

The new controls do not remove any of the previous regulatory requirements already in place. All other consents, including planning permissions, any required permits and review by the British Health and Safety Executive must be in place before the DECC will authorize specific fracking operations.

 

Mr. Davey also announced the creation of a new office within the DECC – the Office of Unconventional Gas and Oil – which will monitor and potentially aid the development of the new industry. Finally, the DECC will commission a study of the potential impacts of shale gas extraction on greenhouse gas emissions and climate change.

 

Reacting to the end of the moratorium

 

Reaction to the lifting of the moratorium was generally positive among fracking proponents. Steve Radley, director of policy at EEF (formerly known as the Engineering Employers’ Federation, a UK manufacturers advocacy group), said: “The government continues to demonstrate a shift to a more balanced energy policy. Shale gas is a potentially game-changing resource where, as in the US, it has slashed energy prices and helped spur a re-industrialization. As we continue to struggle to rebalance our economy and balance our books, we cannot ignore this potentially significant resource. Well-regulated exploration is the sensible approach.”

 

The British government’s actions provide an example of cautious, deliberate and science-based decision-making process with respect to fracking that essentially concluded that the potential environmental risks associated with the exploration and production of shale gas utilizing fracking can be identified and responsibly addressed. This should further facilitate oil and gas exploration and production using high volume hydrofracking and horizontal drilling techniques, provided the proponents of such activity hew closely to applicable regulations and best management practices.

 

As in most other places throughout the world, the governmental and regulatory approval process for fracking in the UK involves a complex interplay of legal, technical and policy considerations and advocacy by various groups of stakeholders. There have been a number of recent judicial decisions, compliance proposals and directives from governmental and trade entities and environmental impact review techniques which have come to the fore in the past 12 months. Entities planning to take part in shale gas production utilizing fracking should keep actively apprised of relevant developments at the local, national and international level. At DLA Piper, we will continue to actively represent client interests in, and monitor the legal, regulatory, technical and policy landscape associated with fracking and shale oil and gas production in the US and internationally.

 

For further information about the contents of this publication, please contact: Robert J. Alessi  or Jeffrey D. Kuhn.

 

This client alert is part of an ongoing series by DLA Piper lawyers on the legal, regulatory, and policy issues related to hydraulic fracturing and shale gas and oil production in the United States and internationally. See the complete series on this page.