4 Regulatory and planning regime
76. The onshore oil and gas industry
in Wales is regulated by a number of statutory bodies including
DECC, NRW, the Health and Safety Executive (HSE), and local authorities.
The industry is also governed by European legislation. Commercial
companies need to obtain several licences or permissions to drill
for shale gas, including:
· Petroleum exploration and
development licences (PEDLs), issued by DECC;
· Planning permission, granted
by local authorities, based on planning guidance by the Welsh
Government;
· Any access rights from landowners;
· Up to 11 environmental permits
or consents from Natural Resources Wales;
· Health and Safety regulations
and permits (mainly related to design, construction and operation
of gas wells) from the Health and Safety Executive; and
· Consent to drill and frack
from DECC.
The regulation process is shown in Appendix
B.
77. During the inquiry we focused on
three areas of the regulatory and planning regime: PEDLs; planning
guidance to local authorities in Wales; and the need for environmental
impact assessments.
Petroleum exploration and development
licences
78. DECC issues onshore licences called
PEDLs, which confer exclusivity to a company to explore for and
later develop shale gas in an area.[84]
PEDLs do not include permission for fracking itself. During licensing
rounds, companies apply for PEDLs for unlicensed blocks of land
measuring 10km by 10km blocks, corresponding to the Ordnance Survey
grid. The next licensing round—the 14th—is
scheduled for mid-2014.
79. The UK Government decides which
area of land can be licensed to companies. In December 2013, DECC
published an environment report for consultation regarding the
areas for which licences may be granted. No sensitive areas were
ruled out of the draft licensing plan for the 14th round of onshore
hydrocarbon licenses.
80. Environmental organisations called
for shale gas development to be directed away from particularly
sensitive areas. Friends of the Earth told us that areas such
as "national parks, Areas of Outstanding Natural Beauty and
sites protected under Habitats and Birds Directives" should
be exempt from shale gas exploration and production.[85]
81. The Energy Minister stated that
he expected strong demand for the licensing round: "We could
be doubling the amount of onshore licences in this round,"
adding that the Government expected to issue 50-150 licences.[86]
He has also suggested that shale gas development should not be
confined to particular areas of the UK: "Shale exists under
towns, villages and countryside. Shale gas is everywhere and could
well be in quantity under attractive areas of the country as well
as industrial areas".[87]
82. Wales
includes many areas of natural beauty and heritage. As a shale
gas industry develops in Wales, careful consideration should be
given to the proximity to, and the potential impacts on, areas
of natural beauty and sites designated for their ecological value.
83. We
recommend that the UK Government considers the case for minimising
ground-level shale gas operations in sensitive areas in Wales,
such as Areas of Outstanding Natural Beauty, Sites of Special
Scientific Interest, and National Parks. In its reply to this
report, the Government must set out how it would ensure that such
development did not compromise designated sites, in particular
those in environmentally sensitive areas.
Planning guidance
84. The planning system plays a central
role in the regulation of shale gas activities. The Welsh Government
is responsible for setting the overall framework of the planning
system. It provides a series of Technical Advice Notes (TANs)
to support specific policy areas. These guide local authorities
(acting as Minerals Planning Authorities) when making planning
decisions. Local authorities are responsible for granting planning
permission for the location of shale gas wells and well pads,
but the Welsh Government has not produced a TAN for unconventional
gas.
85. Some of our witnesses criticised
the lack of a TAN to assist local authorities in Wales in taking
decisions on unconventional gas development. Friends of the Earth
Cymru suggested that the Welsh Government did not "want the
responsibility or the accountability" in case there was local
opposition to shale gas projects.[88]
It believed that the Welsh Government had been "absolutely
negligent" in terms of the planning framework that they had
applied to shale gas and unconventional gas.[89]
The Planning Officers Society for Wales told us that the lack
of guidance for Welsh planning authorities should be addressed
as a priority.[90]
86. In England, the Department for Communities
and Local Government (DCLG) produced the equivalent of a TAN for
onshore oil and gas in July 2013.[91]
The Planning Officers Society for Wales told us that local planning
authorities in Wales dealing with exploratory wells were referencing
the English guidance. It highlighted the need for consistency
in Wales in the handling of planning applications: "I think
the DCLG guidance, if we adopted something similar to that, would
give that consistency".[92]
87. The Welsh Government disagreed that
it had been negligent in not producing a TAN. Ron Loveland told
us that the guidance and regulations available under current legislation,
such as Minerals Planning Policy Wales 2001, were very similar
to the guidance promoted by DCLG for English local authorities.
88. It
is inherently unsatisfactory that the Welsh planning authorities
are looking at guidance that has been promulgated only in England
and applying it in Wales. We believe that a Technical Advice Note
for unconventional gas would assist local planning authorities
making planning application decisions for shale gas exploration
and extraction.
89. We
encourage the Welsh Government to develop a Technical Advice Note
for unconventional gas.
Environmental Impact Assessment
90. Developers are sometimes legally
required to undertake an Environmental Impact Assessment (EIA)
to assess the likely environmental impacts of a proposed development.
Individual shale gas well pads, at least at the exploratory stage,
do not usually require an EIA because current UK regulations exempt
developments under one hectare. Shale gas operations at the production
stage do require an EIA because they exceed one hectare in size.
91. Some witnesses expressed concern
about the fact that shale gas development at the exploratory stage
did not generally require an EIA, and argued that it should be
mandatory for all shale gas operations.[93]
A report by the Royal Society and Royal Academy of Engineering
in 2012 advocated the need for an EIA at the exploratory stage
of any shale gas development.[94]
Friends of the Earth Cymru told us that the size threshold was
"not a reasonable threshold to allow the (shale gas) industry
to evade what any other industry would be required to do".[95]
92. Others, however, did not believe
an EIA at the exploratory stage of operations was necessary. The
Planning Officers Society for Wales advocated making EIAs mandatory
at the production stage of operations, but thought they were not
necessary at the exploratory stage. It told us that many of the
environmental issues could be dealt with through a planning application:
"you could identify what the noise impacts are, you could
identify what mitigation the developer is going to put in, and
then it is up to the local planning authority to decide what is
acceptable or not".[96]
Ron Loveland from the Welsh Government agreed that there was no
need for EIAs at the exploratory stage of shale gas drilling.[97]
93. Shale
gas has the potential to have significant environmental effects
on the Welsh landscape. We believe that environmental impacts
must be understood and properly considered at an early stage in
the process.
94. We
recommend that the UK Government and the Welsh Government require
commercial companies to pay for an independent Environmental Impact
Assessment at the exploratory stage of any significant shale gas
development.
84 PEDLs are not specific to shale gas - they may have
been sought by a company intending to explore for conventional
sources. Back
85
Natural Resources Wales (ESG0017), RSPB (ESG0018), Friends of
the Earth (ESG0015) Back
86
"Britain to launch shale licensing round next summer",
Reuters, 17 December 2013 Back
87
"The South East must accept fracking", The London Evening
Standard, 31 July 2013 Back
88
Q68 Back
89
Q85 Back
90
Planning Officers Society for Wales (ESG0035) Back
91
Planning Practice guidance for onshore oil and gas, Department
for Communities and Local Government, July 2013 Back
92
Planning Officers Society for Wales (ESG0035) Back
93
Friends of the Earth (ESG0015), RSPB (ESG0018) Back
94
The Royal Society and Royal Academy of Engineering, Shale gas extraction in the UK: a review of hydraulic fracturing,
June 2012 Back
95
Q72 Back
96
Q156 Back
97
Q218 Back
| 
