Shale Gas Update

The 14th onshore oil & gas licensing round is live

The UK Government has published application criteria and terms for the 14th onshore oil and gas licensing round, accompanied by new guidance. Many but not all issues of concern to developers and others have been dealt with. The need for planning and environmental input at the licensing stage is also significantly increased.

Application Deadline

Applications for new licences under the 14th round can be made until 2pm on 28 October 2014.

Licence model terms set out in the Petroleum Licensing (Exploration and Production) (Landward Areas) Regulations 2014 are tailored to 'unconventional' oil and gas and include:

New 'drill or drop' provisions Extension terms, retention and development areas New 3D horizon splitting concept on surrender Echoes of Wood Review requirements for maximising economic recovery Remaining concerns with confidentiality provisions and water injection provisions Environmental Awareness

The DECC criteria introduce a new requirement, for detailed Statements of Environmental Awareness (EAS) to be submitted with licence applications. They are intended to 'demonstrate applicants' understanding of the environmental sensitivities relevant to the area proposed'.

This new requirement reflects the challenges current operators have faced in managing the interface with ecological and other sensitivities. Cuadrilla abandoned drilling operations at its Anna's Road site in Lancashire earlier this year following difficulties with protected species mitigation and Celtique recently suffered the first refusal of permission for shale related operations at it Wisborough Green site in West Sussex, due to concerns over transportation and noise effects. The EAS also reflect the way that the licensing process is now intended to address European and domestic law requirements for assessing impacts protected habitats, to deflect legal criticisms of the licensing process (see below).

New challenges

The EAS now requires applicants to demonstrate a clear understanding of the following (and how they will shape their exploration activity within the license area):

UK onshore Environmental and Planning Legislation relevant to exploration, development, production and decommissioning stages; Environmental sensitivities of the licence area - a 100 km2 'Block' - and the options for addressing these in the operational phase Mitigation Measures - how the measures proposed in the Government's Strategic...