Energy and Climate Change CommitteeWritten evidence submitted by Environment Agency (ISG 34)

We have undertaken a thorough assessment of the environmental risks of shale gas exploration activities and are satisfied that we have adequate regulatory controls to protect people and the environment during the exploratory phase.

As the industry develops we will keep our approach under review. In advance of the industry moving into the commercial stage of production, we will consider whether any changes are required either to our approach to permitting or to regulation. New regulations will of course be for Government to introduce.

Q1. How does the Environment Agency regulate shale gas activities (both for current exploration and potential future commercialisation)?

1.1 Regulating the Exploration for Shale Gas

We are the principal environmental regulator for shale gas operations in England and Wales. We have produced a guidance note which sets out our role in planning, permitting and monitoring shale gas exploration activities. This is attached as Annex A.

We take the potential risks arising from shale gas very seriously. We have undertaken a thorough assessment of those environmental risks within our remit, including those associated with the use of chemicals in hydraulic fracturing, and are satisfied that existing regulations are sufficient to protect the environment in the current exploratory phase. We are however keeping this under review as the industry develops.

The Health and Safety Executive (HSE), Department of Energy and Climate Change (DECC) and local minerals planning authorities also have regulatory powers that are complementary to ours. We work closely with these organisations to ensure effective and joined up regulation, which at national level is co-ordinated through DECC’s Strategy Group on Shale Gas. As part of this, the Environment Agency and HSE have developed a joint approach to inspecting and monitoring shale gas operations. This builds on a long tradition of partnership between us, including regulating the nuclear industry. This approach is outlined in Annex B.

Our operational teams across the country, and our newly-established central Shale Gas Unit, have considerable expertise in the assessment of environmental risk and the protection of the environment. While shale gas may be a new industry in England and Wales, it builds on existing practices in the oil and gas exploration industry. We regulate onshore oil and gas exploration activities.

Details of our role are published on our website to show operators and the public how environmental risks will be properly managed and regulated. Our website also provides information on how to apply for permits and from Spring 2013 will include detailed sector-specific guidance for shale gas operators.

1.2 Changes to Environmental Permitting

The position regarding environmental permits with respect to shale gas has changed since we last gave evidence to the Committee in March 2011. At that time, an environmental permit was only required if there was significant risk to groundwater. Cuadrilla, at that time, did not need an environmental permit for its Preese Hall site, as there was (and still is) no significant risk to groundwater or to nearby surface water that is not adequately addressed by regulations governing the design, construction and operation of wells and through planning conditions.

Since March 2011, there have been two significant changes which mean that operators now require environmental permits for the management of the flow back fluid and waste gases.

The first change was in relation to the regulation of radioactive substances and a revision to the Environmental Permitting Regulations, which came into force in October 2011. This changed the threshold levels of Naturally Occurring Radioactive Materials (NORMS) below which waste is not classified as radioactive waste. As a result, the flow-back fluid that returns to the surface following hydraulic fracturing is likely to contain sufficient naturally occurring radioactive materials to be classified as radioactive waste. Operators must now have an environmental permit for the temporary storage and subsequent treatment and disposal of the fluid.

The second change was due to the publication of legal advice by the European Commission in December 2011. The European Commission’s guidance ruled that shale gas operations should come under the Mining Waste Directive because flowback fluid and waste gases were considered “extractive waste”. As a result, operators are now required to apply for a permit and provide a waste management plan.

1.3 Our approach to permitting

As a result of these changes, operators now need to apply for up to three environmental permits, covering groundwater, radioactive substances and mining waste, as set out in our published guidance note. This is in addition to notifying us under the Water Resources Act of their plans to drill boreholes and, if they need to, applying for a Water Abstraction Licence.

For example, we are in the process of determining permits for Bowland Resources Ltd, a subsidiary of Cuadrilla, at three sites in Lancashire. They have submitted applications for environmental permits for the management of mining waste and radioactive substances. Our assessment is that there are no significant groundwater risks at these sites. We have already consulted the public on the permit applications and will undertake a public consultation on our draft decisions on those permits early this year. This will be a four-week consultation, after which we will consider the responses to the consultation and decide whether to issue or refuse the permits.

Looking ahead, we are keen to streamline the permitting process for industry. We have begun a project to combine the three permit applications processes so that operators only need to apply via a single application form.

1.4 Regulating the Future Commercialisation Phase

There are no permissions in place for commercial development and we do not expect there will be commercial development of shale gas for several years, assuming that exploration is successful.

We are starting to consider the regulatory implications of commercial development. We will undertake a full review of the environmental risks and regulatory controls, with government and other regulators, however this work will be limited until we gain experience from the exploration phase.

In the meantime we are learning lessons from other regulators internationally. We have regular discussions with the US Environmental Protection Agency to discuss progress and share evidence. We are also in discussions with the International Network for Environmental Compliance and Enforcement to explore lessons learned in other countries and to promote best practice.

Within the European Union, we have represented the UK on the European Commission’s ad hoc Working Group on Unconventional Gas. We will be monitoring the development of EU proposals in this area, which are expected to emerge in 2013, and will be feeding our views in via the Department for Environment, Food and Rural Affairs.

We are also considering opportunities for joint working with our European counterparts through the Network of the Heads of European Environmental Protection Agencies.

Q2. Does the Environment Agency consider how the UK Shale Gas industry might impact on the UK being able to meet its climate change objectives in its decision-making process?

This is mainly a policy issue for the Government. However, through our regulation and the application of best available techniques, we seek to ensure that fugitive emissions of methane from extracting shale gas are minimised.

January 2013