254.In May 2014, the Government published a consultation on the proposal to change the process by which companies obtain underground access to petroleum and deep geothermal energy resources. Following the responses to the consultation, which closed in August 2014, the Government published its own response in September 2014 setting out the proposals to introduce a right to use deep-level land for certain purposes.
255.At present, a company drilling for petroleum or deep geothermal energy must reach agreements with landowners to obtain rights of access, even where works will only take place far below the surface. If a company cannot obtain a right of access from the landowners or, in the case of petroleum, be granted ancillary rights by the court, then the company cannot carry out works in that land. It is therefore proposed that, where a company seeks to carry out works at such depths that it would not affect a landowner’s use of the land, there should be a statutory right to use the land.
256.Both the petroleum and deep geothermal industries have made voluntary commitments to notify local communities and make payments in connection with the right to use deep-level land. If the Secretary of State is not satisfied in practice with the commitments made by either of the industries, then he may introduce regulations to set up one or both of a statutory payment or notification mechanism.
257.Subsection (1) provides for a right to use deep-level land for the purpose of exploiting petroleum or deep geothermal energy.
258.The right of use is only applicable to land that is deep-level land within a landward area (subsection (2)). Subsection (3) clarifies that deep-level land within a landward area may still be used to exploit petroleum or deep geothermal outside a landward area. It is therefore possible, for example, for a person to benefit from the right of use when drilling from a point onshore into a resource offshore, although the right will not extend to works that are not within a landward area and are not in deep-level land.
259.Subsection (4) defines deep-level as any land at a depth of at least 300 metres below the surface.
260.Section 44 further identifies the scope of the right of use of deep-level land.
261.Subsection (1) lists some of the ways in which the right of use may be exercised, some of which include drilling, boring and fracturing; the installation, keeping, use and removal of infrastructure; and putting any substance into deep-level land and subsequently removing it. This allows, for example, for a company to drill and use a well in deep-level land for the purposes of exploiting petroleum or deep geothermal energy, pass substances through that well and remove any substances that are put into it.
262.Subsection (2) lists some of the purposes for which the right of use may be exercised, including searching for petroleum or deep geothermal energy, assessing the feasibility of exploitation, and preparing for exploitation and decommissioning.
263.Subsection (3) clarifies that the right of use allows land to be left in a different state than it was before.
264.Subsection (4) limits the effect of the right of use so that it is no different to a right granted by a person, such as a landowner, who is legally entitled to grant such a right. As a result, companies benefitting from the right must still comply with all other regimes governing petroleum and deep geothermal activities, such as the need to obtain all necessary planning permissions and environmental permits, and the need to comply with statute law relating to control of pollution.
265.Subsection (5) excludes a person who owns land from being liable in tort for any loss or damage that happens as a result of the exercise of the right of use of deep-level land. In accordance with Schedule 1 of the Interpretation Act 1978, “land” includes buildings and other structures, land covered with water, and any estate, interest, easement, servitude or right in or over land. Provided that an owner of land would not ultimately have to bear any of the costs associated with the acts identified in the section, an owner of land may nevertheless be liable if the loss or damage is attributable to a deliberate omission on their part as owner of the land.
266.Sections 43 and 44 bind the Crown under subsection (6). This means, for example, that the right of use can be exercised in relation to land that belongs to the Crown.
267.Subsection (1) confers a power on the Secretary of State to make regulations requiring companies to make payments in return for the right of use.
268.Subsection (2) sets out to whom the Secretary of State can require payments to be made, and subsection (3) allows the Secretary of State to specify the amount of the payments or provide a mechanism for determining the payment amounts. Subsection (4) states that the regulations may require energy companies to provide specific information on the right of use and payments to the Secretary of State or to any other specified person.
269.The Secretary of State must consult with appropriate persons before making any regulations under Section 45 (subsection (5)).
270.Section 46 confers a power on the Secretary of State to make regulations requiring energy companies to notify others of the right of use, before or after it is exercised.
271.Subsection (2) allows for the regulations to specify the people to whom notice should be given to require the display and publication of the notice. Subsection (3) provides that the regulations may make provisions on the content of the notice, including information on payment schemes available, their application and method for obtaining a payment. Subsection (4) provides that the regulations may specify how the notice is given which could, for example, be by display and publication at specified places or in specified publications. Subsection (5) specifies that the regulations may require energy companies to provide the Secretary of State or another specified person with information about the company’s exercise of the right of use and notifications made by the company.
272.The Secretary of State must consult with appropriate persons before making any regulations under Section 46 (subsection (6)).
273.Subsection (7) defines “payment scheme regulations”.
274.Section 47 provides for supplementary provisions relating to the payment and notice schemes regulations under sections 45 and 46 including, in accordance with subsection (1), the imposition of financial penalties.
275.Subsection (2) allows for the regulations to confer a function on the Secretary of State or to any other person, apart from Welsh Ministers. Subsection (3) lists examples of the kinds of functions that may be imposed.
276.Some of the provisions in sections 45, 46, and 47 state that particular kinds of provisions may be made in regulations made under sections 46 and 47. Subsection (4) states that where this is the case, those provisions in sections 45, 46, and 47, do not limit the powers to make the necessary regulations.
277.In accordance with the principles of better regulation, subsection (5) requires a review of sections 45 and 46 five years after the provisions have come into force. Subsection (6) stipulates that the Secretary of State must repeal sections 45 and 46 and make any appropriate consequential amendments if the relevant conditions as defined by subsection (7) are met. Subsection (7) defines the relevant conditions as a delegated power not being exercised within seven years and the Secretary of State being satisfied there is no convincing case for retaining it. This ensures that the powers and related provisions will not remain on the statute book if they become unnecessary or redundant.
278.Section 48 provides for the relevant definitions and interpretation of the sections about the right of use.
279.Subsection (1) specifies that the 300m depth limit applies from the surface, which is measured vertically above the point where works take place. Buildings, other structures, and water are not taken into account when determining the location of the surface.
Subsection (2) provides definitions of “deep geothermal energy”, “deep-level land”, “landward area”, “relevant energy undertaking”, “right of use”, “specified” and “substance”. For the purpose of these sections “landward area” is defined as parts of landward area in England and Wales or beneath water (other than waters adjacent to Scotland).
280.Subsection (3) provides that the Secretary of State may make regulations under section 4 of the Petroleum Act 1998 to amend the definition of “landward area” for the purposes of these sections.
281.Subsection (1) requires the Secretary of State to seek advice from the Committee on Climate Change (CCC) from time to time on the likely impact of the combustion of, and fugitive emissions from, onshore petroleum activities and the UK’s ability to (a) meet the net UK carbon target for 2050 and (b) not exceed the carbon budget.
282.Subsection (2) sets out that the Secretary of State must lay before Parliament (a) a copy of the CCC advice and (b) a draft of regulations or a report as specified under subsections (3) and (5) as soon as practicable after each reporting period (i.e. the period ending 1 April 2016 and each subsequent period of 5 years).
283.Subsection (3) allows the Secretary of State to provide for the right to use deep-level land in section 43 to cease to have effect as specified by regulations. Subsection (4) clarifies that no such regulations can apply retrospectively to anything done in exercise of the right of use conferred by section 38 before the regulations comes into force. As an alternative to subsection (3), subsection (5) provides for the Secretary of State to submit to Parliament a report explaining why a draft of such regulations has not been laid. Subsection (6) sets out that regulations under section 49 may also make consequential amendments or repeals of sections 43 to 48 and section 49 as appropriate.
284.Subsection (7) contains the definitions of “CCA 2008”, “petroleum got through onshore activity, petroleum” and “reporting period”.
285.Section 50 inserts two new sections into the Petroleum Act 1998 after Clause 4. As this relates to the petroleum licensing regime, geothermal activities are excluded from this section 50. Section 4A “Onshore hydraulic fracturing: safeguards” sets out conditions for a well consent that is required by an onshore licence for England and Wales in relation to hydraulic fracturing.
286.Subsection (1) requires that the Secretary of State must not issue a consent to drill a well unless that well consent contains conditions (a) prohibiting associated hydraulic fracturing at a depth of less than 1000 metres and (b) requiring a hydraulic fracturing consent for associated hydraulic fracturing at a depth of 1000 metres and below. Subsection (2) clarifies that the licensee, or a person on behalf of the licensee, must apply for such a hydraulic fracturing consent.
287.Subsection (3) provides that a hydraulic fracturing consent will not be issued unless the Secretary of State is satisfied that the conditions (a) in column 1 of the table in subsection (5) and (b) in subsection (6) are met. The Secretary of State must also be satisfied that it is appropriate to issue the consent. Subsection (4) refers to the documents listed in the same table on which the Secretary of State may rely on to be satisfied that the conditions have been met. However, subsection (5) clarifies that the absence of these documents does not prevent the Secretary of State from being satisfied that the conditions have been met; provided that, in accordance with subsection (3), the Secretary of State is satisfied that the conditions are indeed met he may grant a hydraulic fracturing consent.
288.The table lists eleven conditions (column 1) and corresponding documents that may be considered to be sufficient for the Secretary of State to be satisfied that the conditions have been met (column 2). The conditions relate to: the environmental impact of a development, independent well inspections, monitoring of methane in groundwater, monitoring of methane emissions, banning hydraulic fracturing within protected groundwater source areas and other protected areas, consideration of cumulative effects, regulatory approval of substances used, restoration conditions, consultation of relevant (i.e. water and sewage) undertakers, and public notification. The Secretary of State is not limited to relying on the documents listed in column 2 and may instead rely on alternative documents in determining whether the conditions have been met.
289.Subsection (6) sets out further conditions to the issuing of a hydraulic fracturing consent, requiring arrangements to be in place for publication of the results of methane emissions reporting and the existence of a scheme to provide financial or other benefit for the local area.
290.Subsection (7) allows for the hydraulic fracturing consent to be issued subject to any conditions considered appropriate by the Secretary of State, while subsection (8) clarifies that a breach of a condition is considered a breach of the well consent.
291.Section 4B “Section 4A: supplementary provision” contains further definitions and clarifications. “Associated hydraulic fracturing” is defined in subsection (1) and subsection (2) sets out the mechanism for determining the depth at which associated hydraulic fracturing takes place. Subsection (3) provides that subsections (1) and (2) apply to both section 4A and 4B.
292.Subsection (4) requires the Secretary of State to specify by regulations the meaning of “protected groundwater source areas” and “other protected areas”. Subsection (5) makes these regulations subject to the affirmative resolution procedure and subsection (6) stipulates that a draft of these regulations must be laid before Parliament on or before 31 July 2015. Subsection (7) requires the Secretary of State to consult the Environment Agency for England and the Natural Resources Body for Wales before making any regulations on the definition of “protected groundwater source areas” in England and Wales respectively.
293.Subsection (8) contains various definitions, including the meanings of “hydraulic fracturing consent”, “onshore licence for England and Wales” and “well consent”. Subsection (9) provides the Secretary of State with the power to amend the definition of “onshore licence for England and Wales” as appropriate under regulations made under section 4 of the Petroleum Act 1998. Subsection (10) allows the Secretary of State to amend column 2 of the table in 4A and make any consequential amendments to section 4A. In accordance with subsection (11) any such regulations must be subject to the affirmative procedure.
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