Fracking – What does this mean if you are a Landowner?

15th August 2016

Energy is such a fundamental part of our day to day life both at work and at home, yet the generation of power is often controversial and emotive in our desire to have electric on demand and at an affordable price. You only have to look at the recent debates over nuclear at Hinkley Point and the recent fracking approval in North Yorkshire to understand the level of emotion and debate surrounding energy. Government policy and incentives to produce renewable energy had a desired outcome but it’s a shame that this sector has now died a death (particularly solar on small scale for onsite demand). The direction now seems to be moving towards generation of electric from gas with analysts suggesting around 60% of our electric being produced from gas in the near future and I don’t see this changing unless the consumers want to pay more for electric.

Fracking is likely to become more headline news over the next 5 years as the Government issue licences to operators and planning consents granted. From a land owner/occupiers or householders perspective, the questions arises as to what can you do? Theresa May as recently announced that up to 10% of the tax from fracking will be re-directed to the communities affected by the wells and rather than being lost within local councils (spent on administration now doubt), there is suggestions that it will be paid directly to the householders in the parish. From personal experience living in a community where there is a renewable energy pot of money, the issue we always face is distributing this amongst the parish and this statement from central government I think perhaps is a much more equitable way of ensuring fairness within the area and distributing equally.

But what happens if you own the land? Under the Petroleum Act 1988, shale gas belongs to the Crown, not the Landowner, however exploration can only happen once the Secretary of State has issued a Licence to an operator following a competitive but stringent bidding process. Such licenses will grant exclusivity to operators in defined licence areas and, as we know parts of the north are already subject to certain agreements. An operator is also able to obtain certain ancillary rights under legislation which include an ability to occupy land, to erect buildings and lay pipes, amongst others, in order to carry out extraction of the gas if deemed feasible, with such rights able to be enforced under statutory powers if terms cannot be agreed between the Landowner and operator. The operators’ access requirements should be carefully scrutinised as these may need to be separately negotiated as part of any terms of entry. Compensation will of course be payable to a landowner for any of these rights being enforced upon their property, however if pursued down a statutory route rather than by agreement, compensation has been established as what the landowner is losing rather than what the operator is gaining, so it is important to understand the whole picture.

For more information or to discuss further contact Robert Moore on 07590 230510 or you can email on robertmoore@georgefwhite.co.uk.

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