(The author is a Reuters market analyst. The views expressed are his own.)
By Gerard Wynn
LONDON, Dec 18 (Reuters) - A proposed law could ease British planning regulations for shale gas developers after the country gave the green light for a resumption of exploration last week, but local support will be vital for even limited production.
A high population density in much of the European Union and Britain is partly responsible for planning regulations which include detailed public consultation which in the present form will test the development of a shale gas industry in its infancy.
The complexity of the planning process in Britain is illustrated by the efforts taken by the main present explorer, Cuadrilla, to drill six exploratory wells in the north west of England.
The private-equity-backed company has submitted at least 18 separate planning applications, local government data show, and has dealt with 31 British national planning policies on issues including the environment, oil and gas production and water quality.
The company has not produced any gas by fracking to date.
A proposed Growth and Infrastructure Bill in Britain offers the prospect of extending to extractive industries a fast-track planning procedure introduced four years ago for projects deemed of national significance.
Without such assistance it is difficult to see how shale gas development can take off in densely populated Britain.
And even with fast-tracked planning approvals, production is likely to be limited by the political clout of lobbies for the protection of the countryside and wildlife.
Britain’s existing Planning Act of 2008 already allows streamlined decisions on major energy, waste and transport development classed as Nationally Significant Infrastructure Projects (NSIPs).
Oil and gas exploration and drilling are not presently explicitly supported under that programme.
Eligible projects in the energy sector are electricity generation including renewable, nuclear and fossil fuel power; electric grids; and gas infrastructure projects including pipelines, storage and import facilities.
These are defined in “national policy statements” which detail relevant planning guidance, supporting projects above a certain size such as onshore power plants over 50 megawatts.
Planning decisions are streamlined through a time-limited process (one year) run by a panel called the Planning Inspectorate, rather than involving multiple local planning authorities.
The Secretary of State makes the final decision based on the panel report. Developers are still required to carry out extensive public consultation on their proposals.
Approvals for projects are based on the published national policy statements, making the process quicker and outcome more predictable.
A draft growth and infrastructure bill offers the prospect of extending that fast-track process to other industries, and is in a legislative pipeline approaching parliamentary approval.
“This (bill) broadens the 2008 Planning Act’s scope so that a much wider range of infrastructure development can be brought within the nationally significant infrastructure planning regime,” states an impact assessment report accompanying the proposed law.
“This will allow applicants for large scale business and commercial development to apply to the Secretary of State for the option of using the streamlined approach set out in the Planning Act.”
Extractive industries were one possible beneficiary.
”Formal consultation will be carried out on the types of development which the Secretary of State proposes to prescribe in regulations.
“Forms of development which could form part of that consultation include: Warehousing and storage; Manufacturing and processing proposals; Office development, including research and development facilities; Extractive industries (mining and quarrying); Major tourism proposals and leisure venues; Mixed -use developments (where this includes two or more of the above uses but does not include housing).”
Use of the fast-track process would be the choice of the developer and a decision of a government minister.
Meanwhile, the government is pressing for more rewards for local communities which may boost support for development.
A particular example is the case of long-term disposal of nuclear waste: the former government decided it would be difficult to thrust such a development on a local community simply on the basis of geological suitability.
It proposed in 2007 a “voluntarism and partnership” approach which stressed the economic and social benefit that would accrue to the local community, in its paper published in 2008, “Managing Radioactive Waste Safely”.
The recent 2011 Localism Act reinforced that principle of rewarding communities more widely, broadening the uses for a levy on developers beyond simply infrastructure to wider neighbourhood benefits.
Cuadrilla’s shale gas operation is at present focused in an economically deprived area of north west England.
Unsurprisingly, the company is already keen to appeal to both the national significance of shale gas development and local benefits.
For example, it says it not only expects explicit support but pressure from the Department for Energy and Climate Change (DECC) to develop any successful exploratory wells.
“Any plans to develop a hydrocarbon discovery ... would be the subject of a further planning application. The licensees would be pressed to develop any commercial discovery by DECC, the licensing authority whose duty is to encourage oil and gas exploration and production activities in the UK,” it says in its supporting statement for development of one of its exploration sites in Lancashire.
The planning outcome may more depend on how far the company can garner local community backing including through generous financial support, especially given well-flagged concerns about tremors, truck movements and impacts on water quality. (Editing by Keiron Henderson)