Effectiveness of Fracking Regulations

Overview of Report

This report has been prepared by The MSSD for the Secretary of State for Communities and Local Governments. This report will be looking at the effectiveness of the regulatory framework of the fracking industry, it will assess the current framework, evaluating whether the framework is fit for purpose, and if not, propose alternatives considering that a lighter touch to regulation is the approach wanting to be taken. Because we are only at the exploratory phase of drilling in the UK, the main focus will be on pre-drilling regulations.

What is Fracking?

We will briefly look at what Fracking is and how it works, and looking at this will also allow us to be able to assess the most pressing environmental concerns and the controversies surrounding fracking.

Fracking is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well. The process can be carried out vertically or, more commonly, by drilling horizontally to the rock layer and can create new pathways to release gas or can be used to extend existing channels. The term fracking refers to how the rock is fractured apart by the high-pressure mixture.[1] In the UK, drilling is only at an exploratory phase, however, there are plans for this to intensify as shale gas reserves have been identified across the UK.

Impacts and Concerns

Having looked at what Fracking is, we will identify it’s impacts on the environment and its most pressing concerns.

The extraction of shale gas is a topic that is highly controversial in the United Kingdom, this is mainly because of the environmental concerns it raises. One of the major concerns is the water usage in the extraction, the volume of water that is needed. Vast amounts of water are required for the process and this must be transported to the fracking sites[2]. The water tends to be transported to the sites, which has its own environmental impacts, though some sites could use the local water resources and the volume of water that is required could place a strain on local water resources. In addition to the amounts of water, the water is mixed with chemicals, this mixture could escape and could spill or contaminate groundwater in the surrounding areas.

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Another concern is that fracking could lead to small earthquakes. This was the case in the town of Blackpool, where two tremors struck, one registered a magnitude 2.3 and the other 1.3. Both tremors occurred near the local drilling site. This caused the operation to suspended, the site operators, Cuadrilla, commissioned a report, which found that “Most likely, the repeated seismicity was induced by direct injection of fluid into the fault zone”[3] The report goes on to question whether further earthquakes are to be expected from fracking, it says “the earthquakes occurred because of a rare combination of circumstances: the fault was already under stress, was brittle enough to fracture and had space for large amounts of water that could lubricate it”. The report says “this is unlikely to happen again at the Preese Hall site.”[4] To reduce the risk of earthquakes, it has been proposed that seismic activity monitoring is introduced around fracking sites.

Advantages and Disadvantages of Fracking

The main advantages of fracking include, an increase in the production of natural gas, some could argue that this would ease the burden on finite resources such as fossil fuels, fracking would thus diversify our energy supplies. A further advantage is that this is a relatively clean energy source, providing environmental benefit. The gas produced emits less carbon per calorie of energy produced than other fossil fuels. It is easy to inject and it can be transported directly, shale gas requires very little infrastructure investment before it can be injected into the national gas grid, thus proving to be an economical benefit. Fracking is also the most natural way to pump gas from the ground. An abundant supply of natural gas makes prices relatively cheap to producers and consumers.

The disadvantages of fracking include, Risk of groundwater pollution, Risk of localised earthquakes (probably not a huge risk when well-regulated in the UK), Localised noise and traffic congestion, Loss of amenities, when fracking wells are sited in areas of natural beauty and national parks, A high water demand for the “process water” needed by the fracking technology used, potentially entailing additional stress on water supplies, Planning blight on local properties, and suffering by those unfortunate enough to live near a proposed site for a fracking well. [5]

Environmental Policy Context

Fracking also poses wider questions about current thinking on sustainability and the environment. [6] John Allen writes, “the shale revolution has the potential to provide the UK with local, low cost, clean sources of energy and potential for local energy independence” [7] from a sustainable development viewpoint, this makes for positive reading. If fracking is low cost and a cleaner source of energy, it enables sustainable development. However, looking at the intricacies of fracking, this may not seem the case. For the process to take place, a vast number of resources are needed, and here you look at whether fracking, as an industry, is sustainable. The shale gas industry consumes materials such as water, sand, chemical treatments, drilling fluids, all of which require transport by road and rail. Perhaps one of the biggest challenges is the use of water, the volume required is vast, and to sustain that, there must be an infrastructure in place and policies in place to ensure that whilst providing the water to sites, there is no inconvenience to the water flow in the local area and if being transported via tank to the site, this must be done in a way where the environment is put first.

If we are looking at this from the standpoint “what is best for the environment”, surely the question would be, why does the policy not encourage the use of no oil and gas in the UK, because this would be the best policy for the environment. The answer to this would be several factors, mainly economical and convenience, the ecosystems we live with and in are so adept to using those resources, that to prohibiting use would mean that our systems would fail to exist. A middle ground has been established, whereby the environment is somewhat protected and that human needs are met, and this needs to be the case with fracking, whilst there are signs that there are benefits, economically the policy must promote sustainable development.

“History shows us that whenever we can extract fossil fuels, short term gain, usually trumps long- term consequence. Much has been made, on both sides of the argument, of the US experience, but fracking has not found universal welcome. France, for instance, is in the process of banning it, and Poland is currently deciding whether to develop the industry, or concentrate on other forms of energy.” [8] – John Allen

If there is regulation and procedures in place to negate the downsides, surely a cleaner alternative is beneficial long term.   

Regulation of Fracking

Now we will be looking at the regulatory framework that is in place for the industry. This section will be split into three parts: 1) An overview of the regulatory framework, 2) Assess and analyse the strengths and weaknesses of the frameworks, 3) Consider whether any improvements can be made to the framework, looking at different types of regulation.  

Overview of Regulation

The Environment Agency (EA) in England and Wales, and Scottish Environment Protection Agency (SEPA) are the environmental regulators who monitor the environmental aspects of shale gas fracking. The key regulation that governs how shale gas fracking operators comply with environmental laws is the Environmental Permitting Regulations 2010.[9]

The framework that surrounds fracking is one that is quite complex. Companies wanting to explore must have permission from a number of regulatory bodies before they can proceed. In order to explore and produce shale gas, operators must pass rigorous health and safety, environmental and planning permission processes.[10] The first stage is obtaining a Petroleum Exploration and Development License, (PEDL), these are issued by the Oil and Gas Authority. The Oil and Gas Authority work closely with other regulatory partners to ensure that the exploration and development is safe and sustainable. [11] A PEDL obligates companies to follow its terms. Key PEDL terms include: – conferral of the right to get petroleum, payment of fees in return, parameters of the field licensed to the operator, obligation to obtain written consent prior to drilling, operator’s obligation to work the licensed area in accordance with ‘good oilfield practice’ and termination and surrender provisions. PEDLS are licenses which grant exclusivity to operators in the license area, they do not give immediate consent for drilling an exploration well or any other operation.

After a PEDL has been granted, the operator of the proposed site must then obtain local planning permission from the Minerals Planning Authority, as shale gas operations involve the extraction of minerals. The MPA involves local authorities including representatives from districts and county councils.[12]  Planning applications require the submission of a standard application form, supported by plans and drawings, certificates of ownership relating to the application site and design and access statements. An operator must also negotiate access with landowners. A PEDL and planning permission alone do not give operators consent to conduct their operations, access must be secured by the operator, this tends to be through a license or a lease to be taken that are conditional on the grant of satisfactory planning consent. When a decision is made on a planning application, only planning matters called “material considerations” can be taken into account. There is no exhaustive list of what constitutes a material planning consideration, although there are some “principal issues” for consideration, shown in Figure 3 [13]

MPA’s are screened to determine whether any proposals require an Environmental Impact Assessment (EIA), the Environment Protection Agency an EIA describe this as “the process by which the anticipated effects on the environment of a proposed development or project are measured. If the likely effects are unacceptable, design measures or other relevant mitigation measures can be taken to reduce or avoid those effects.”[14] This, however, is a contentious issue, as it’s not clear whether operators are obliged to conduct and EIA and submit an environmental statement under the EU’s EIA Directive[15] to accompany their application. Under the EU law, all projects require an environmental statement, though those under Annex 2 require a case-by-case examination, and considering certain criteria, it is determined that such a project is likely to have significant effects on the environment. Even if an EIA is not required, environmental and health impacts can be addresses through the conditions of planning permission. Mineral Planning Authorities are responsible for ensuring operators comply with these conditions.

The MPA, in determining an application, will consider the advice of a variety of statutory consultees with regards to the protection of the environment and the public. Local planning conditions can address the aesthetic impacts, as well as contributions to local noise, traffic and air pollution. The density of local population may be considered in the local planning permission process. There will also be conditions for when operations finish, the operator would be responsible for safe abandonment of the well and for restoring the well-site to its previous state or a suitable condition for re-use. The authority which granted permission would require suitable restoration as a condition of the planning permission. [16]

The next part of the regulatory process is that operators will probably require a number of environmental permits issued by the Environment Agency under the Environmental Permitting (England and Wales) Regulations to conduct onshore activities.  The environment agency takes a risk-based approach to regulating, thus the regulation of each site is bespoke to that site, as the they take into account local site characteristics and site specific environmental risks.  The Environment Agency ensures that any shale gas operations are conducted in a way that protects people and the environment. The Environment Agency’s environmental permitting regulations cover: protecting water resources, including groundwater (aquifers) as well as assessing and approving the use of chemicals which form part of the hydraulic fracturing fluid, appropriate treatment and disposal of mining waste produced during the borehole drilling and hydraulic fracturing process, suitable treatment and management of any naturally occurring radioactive materials (NORM) and disposal of waste gases through flaring.[17]  With regards to water, if operators are wishing to abstract more than 20 cubic meters per day for operational purposes, they will need to obtain a water abstraction license under section 24/24A of the Water Resources Act 1991[18] The licenses are issues by the Environment Agency. A factor to bear in mind here is the Environment Agency make it clear that water availability at site is not “guaranteed”, this links back to the planning permission stage, as if the operators are unable to have a pipeline, they will have to transport the water to the site, which is expensive, but also, with regards to the environment, transporting tanks of water would be something they would have to consider.

Another element to be considered is the element of “induced seismicity”. The MPAs should consult the British Geological Survey (BGS) to advise on induced seismicity and help to identify suitable locations for well, drawing on a national and site-specific understanding of geology. [19] Under s.23 of the Mining Industry Act 1926[20] “firm sinking boreholes greater than 100ft (30m) deep must give written notification to the Natural Environmental Research Council. Operators are under several other continuing obligations, such as keeping records of their operations and retain specimen cores.

Once the above has been completed, the operator must notify the Health and Safety Executive at least of 21 days in advance of any drilling operations, The Borehile and Operations Regulations 1995[21] require this. A coordinated regulatory effort is required to ensure that shale gas wells are designed, constructed and operated to standards that protect both people and the environment, it must be noted that it only protects those in proximity of sites. HSE monitors shale gas operations from a well integrity and site safety perspective. We oversee that safe working practices are adopted by onshore operators as required under the Health and Safety at Work Etc. Act 1974, and regulations made under the Act. These specifically are: The Borehole Site and Operations Regulations 1995 (BSOR) applies to shale gas operations.  (These regulations are primarily concerned with the health and safety management of the site). The Offshore Installations and Wells (Design and Construction, etc.) Regulations 1996 (DCR)[22] apply to all wells drilled with a view to the extraction of petroleum regardless of whether they are onshore or offshore. (These regulations are primarily concerned with well integrity). HSE works closely with the Environment Agency (EA) and the Department of Energy and Climate Change (DECC) to share relevant information on such activities and to ensure that there are no material gaps between the safety, environmental protection and planning authorisation considerations, and that all material concerns are addressed. [23] Drilling operations must not be commenced unless a health and safety policy is prepared which demonstrates that adequate measure will be taken to safeguard the health and safety of the persons on the site.

Once the HSE step is completed, we arrive at one of the final steps in the regulatory process. This is the Oil and Gas Authorities consent to drill. Operators are obliged to seek the OGAs written consent prior to the start of drilling operations. OGA consent is one of the final, and coordinating consents in the shale gas process. In considering whether to issue consent to drill, the OGA will have regard to the suite of regulatory controls discussed above, including ensuring that planning permission is in place, environmental permits and consents have been obtained, and that the HSE has received notice of intention to drill. Planning permission is one of the approvals required before any activity may start on a site. The planning authority decides whether the activity is acceptable at that particular location, after local communities and other interested people have had the opportunity to set out their view on the benefits and impacts of the proposal. On receipt of OGA’s consent to drill, and subject to the finalisation of a hydraulic fracturing plan and agreed method for monitoring induced seismicity (where fracking is going to be conducted), an operator has in place the requisite consents and may continue its operations.

This concludes the pre-drilling regulatory framework, there is a duty in place whilst drilling takes place, and as mentioned, conditions are set out for after the drilling process has been completed.

Strengths and Weaknesses

One of the main strengths with the framework presented above, in my opinion, is that the process to start drilling is so rigorous. There are many steps an operator must take in order to start drilling, this has a lot of cost and time investment necessary, so these rigorous checks and procedures ensure that the operator is competent and ensuring the environmental protection necessary to offset any negative impacts of fracking in the main.

Another strength with the framework is the fact that a condition of granting permission to drill, there must be plans in place on how the site will be restored to ensure that it becomes usable land again, showing that the regulation is offering a protection measure.

However, it could be argued that there are more weaknesses with the regulation.

One of the major ones that comes across with the regulation framework provided above, is one concerning Environmental Impact Assessments (EIA). An operator may have to carry out an EIA, if the MPA deem necessary when screening the proposal presented, however, there is no obligation to do so, it only has to happen should the MPA feel it is a necessity in this case.  There isn’t a “one size all fits” approach here, it’s bespoke. Environmental Risk Assessment (ERA) has become best practice in non-shale gas industries[24], however like the EIA, an ERA is not mandatory, an ERA, unlike an EIA would assess not only the impacts of hazards, but also their likelihood. In their report, the Royal Society recommended[25], that to manage environmental risks, an Environmental Risk Assessment should be mandatory for all shale gas operations, involving the participation of local communities at the earliest possible opportunity. I would agree with this statement, an EIA and ERA should be a mandatory step, for all potential operators and cases of fracking, not just some, it should be a universal requirement when applying to drill for shale gas.

In her Article, Emily Gosden writes that the Fracking Regulations may inadequate, with regards to climate change[26]. From the regulation mentioned above, it does not tackle issues such as climate change in much depth, whilst it looks at environmental factors, it seems that this isn’t the most pressing matter on the agenda. The article reports that Britain’s fracking regulations may be inadequate to prevent environmentally damaging methane leaks, and that the current regulatory regime fell short of the minimum necessary standards. [27] Prof Jim Skea, one of the report’s authors, said that the law instead gave “quite a lot of discretion” to the Environment Agency (EA) over what monitoring it would require of future shale gas production. Here, I would agree, the EA can often be quite vague when it comes to these matters, an example mentioned above would be the water abstraction licenses requirement, the EA are very vague when it comes to a definitive answer. This could be something that could be further considered.

Another weakness in my opinion is that the current framework at present, isn’t very environment focused, and even if it is, a lot of the environmental factors aren’t factors that are mandatory for operators or regulators to take into account, as already mentioned, the EIA not being mandatory is one part. The regulation does not look at in enough detail issues such as climate change, air pollution, water pollution, and other means of contamination, these factors should be of more importance when coming to regulate the shale gas industry, yes, they may be considered, but even that at best is brief.

Alternate Proposals

The current framework that has been looked at in this report can be seen to be rigorous in the main, there are a number of steps an operator must take before being able to start the process. The current framework could be seen as being on the “heavier side” of regulation, and in the brief, a theory was posited that there be a lighter touch on regulation, in this section, we will look at whether this can be the case, and if so, how can it be the case.  

With regards to regulation, there are two approaches that can be taken. There is Direct Regulation, which can often be referred to as “the command and control” regime, this is where standards are set, as are penalties for failing to meet them, there are often several ways of drafting direct regulation. [28] The other approach is Indirect Regulation. Whereas direct regulations focus on the polluting activity itself, indirect regulation tends to centre on economic instruments, the effect of which will be to impose higher burdens on higher polluters, there is also self-regulating, whereby you can apply methods such as voluntary environmental agreements and codes of conducts to regulate. These systems tend to have vague standards and are flexible and non-interventionist in their nature.

We will look at whether we stay with a command and control approach adopted, or would a self-regulating approach be more effective in this situation. Before we start that, we will briefly look at whether the current framework we have looked at is effective in its purpose, however looking at the effectiveness of the framework is an area where one struggles as in the UK, we are not at the stages where there is mass production of shale gas, we are merely at the early exploratory stages of the process. The only real working example is the Cuadrilla site as mentioned at the start of this report. Though some regulation, such as the induced seismicity was introduced because of that site.

Self-regulating such an industry seems impractical considering the disadvantages mentioned earlier in the report. Simon Sneddon writes that this method of regulation is more flexible than the traditional command and control methods, and this method is non-interventionist in nature and that these methods are criticised for having vague standards and for being unaccountable, and there is no realistic enforcement system. This, as a regulation method would not work with an industry such as fracking. An industry where there are many impacts both environmental and economic and as such a framework of command and control would be better suited, there is a set of rules, or steps put in place and there are penalties and fines for operators should they fail to abide. This is very similar to the current framework in place. The risks that fracking entails, it would be a uncertain approach to have a light touch to regulation. However, when there is more data to analyse once further fracking takes place, it may be the case that we could adopt a self-regulating framework or one that is lighter than the one in place, but until then, the current “command and control” framework is one that is effective and sufficient for use.

Conclusion

The regulation in place at present is several steps that an operator must take before they are able to drill for shale gas. The procedure is one that is described as rigorous and upon evaluation this seems to be the case, though as mentioned when looking at alternatives, there is no way of knowing how effective the regulation is in the UK, until there are more working examples of fracking.

[i]

[1] Bbccouk, ‘What is fracking and why is it controversial? ‘ (BBC News, 16 December 2015) <http://www.bbc.co.uk/news/uk-14432401> accessed 10 May 2017

[2] Bgs, ‘Potential environmental considerations associated with shale gas’ (Bgsacuk, 0) <http://www.bgs.ac.uk/research/energy/shaleGas/environmentalImpacts.html>accessed 10 May 2017

[3] Michael Marshall, ‘How fracking caused earthquakes in the UK’ (New Scientist, 2 November 2011) <https://www.newscientist.com/article/dn21120-how-fracking-caused-earthquakes-in-the-uk/> accessed 10 May 2017

[4] Ibid 3

[5] Steve Last, ‘The pros and cons of fracking in the UK and why you need to know about them’ (Lowimpactorg, 14 October 2016) <http://www.lowimpact.org/pros-cons-fracking-uk-need-know/> accessed 10 May 2017

[6] DrGareth Evans, ‘Fracking: Truly Sustainable?’ (Sustainablebuildcouk, 16 Dec 2016) <http://www.sustainablebuild.co.uk/fracking-truly-sustainable.html> accessed 10 May 2017

[7] Allen John, ‘Fracking: believe the hype for a sustainable UK energy market’ (The Guardian, 22 January 2014 ) <https://www.theguardian.com/sustainable-business/fracking-uk-sustainable-energy-market> accessed 10 May 2017

[8] Ibid 6

[9] Hsegovuk, ‘The regulation of onshore unconventional oil and gas exploration (shale gas)’ (Hsegovuk, 0) <http://www.hse.gov.uk/offshore/unconventional-gas.htm>accessed 10 May 2017

[10] Govuk, ‘Guidance on Fracking: Developing shale gas in the UK’ (Wwwgovuk, 13 January 2017) <https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk#regulation> accessed 10 May 2017

[11] Govuk, ‘Guidance on Fracking: Developing shale gas in the UK’ (Wwwgovuk, 13 January 2017) <https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk#regulation> accessed 10 May 2017

[12] Society, T. (2012). Shale gas extraction in the UK: A review of hydraulic fracturing.

[13] Briefing Paper Number 6073 on Shale Gas and Fracking – House of Commons Library

[14] Wwwepaie, ‘Environmental Impact Assessment ‘ (Wwwepaie, 0) <http://www.epa.ie/monitoringassessment/assessment/eia/> accessed 10 May 2017

[15] Directive 2011/92/EU

[16] Department of Energy and Climate Change – Fracking UK Shale: Regulation and Monitoring – February 2014

[17] Govuk, ‘Guidance on Fracking: Developing shale gas in the UK’ (Wwwgovuk, 13 January 2017) <https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk#regulation> accessed 10 May 2017

[18] Water Resources Act 1991

[19] Ibid 7

[20] Mining Industry Act 1926

[21] Borehile and Operations Regulations 1995

[22] The Offshore Installations and Wells (Design and Constructions, etc.) Regulations 1996

[23] Hsegovuk, ‘The regulation of onshore unconventional oil and gas exploration (shale gas)’ (Hsegovuk, 0) <http://www.hse.gov.uk/offshore/unconventional-gas.htm>accessed 10 May 2017

[24] Contribution from Professor Simon Pollard, Head of Department, Environmental Science and Technology, Cranfield University

[25] Society, T. (2012). Shale gas extraction in the UK: A review of hydraulic fracturing.

[26] E Gosden, ‘Fracking regulations inadequate’ The Telegraph (7 July 2016) <http://www.telegraph.co.uk/business/2016/07/07/fracking-regulations-inadequate-government-advisers-warn/> accessed 10 May 2017

[27] ibid 20

[28] Simon Sneddon, Environmental Law (2ND edn, Pearson 2015) 54-61

[i] Bibliography

Websites

http://www.bbc.co.uk/news/uk-14432401

http://www.bgs.ac.uk/research/energy/shaleGas/environmentalImpacts.html

https://www.newscientist.com/article/dn21120-how-fracking-caused-earthquakes-in-the-uk/

http://www.hse.gov.uk/offshore/unconventional-gas.htm

https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk#regulation

https://www.gov.uk/government/publications/about-shale-gas-and-hydraulic-fracturing-fracking/developing-shale-oil-and-gas-in-the-uk#regulation

http://www.epa.ie/monitoringassessment/assessment/eia/

http://www.hse.gov.uk/offshore/unconventional-gas.htm

Steve Last, ‘The pros and cons of fracking in the UK and why you need to know about them’ (Lowimpactorg, 14 October 2016) <http://www.lowimpact.org/pros-cons-fracking-uk-need-know/> accessed 10 May 2017

DrGareth Evans, ‘Fracking: Truly Sustainable?’ (Sustainablebuildcouk, 16 Dec 2016) <http://www.sustainablebuild.co.uk/fracking-truly-sustainable.html> accessed 10 May 2017

Allen John, ‘Fracking: believe the hype for a sustainable UK energy market’ (The Guardian, 22 January 2014 ) <https://www.theguardian.com/sustainable-business/fracking-uk-sustainable-energy-market> accessed 10 May 2017

Directives

Directive 2011/92/EU

Reports

Society, T. (2012). Shale gas extraction in the UK: A review of hydraulic fracturing.

Contribution from Professor Simon Pollard, Head of Department, Environmental Science and Technology, Cranfield University

E Gosden, ‘Fracking regulations inadequate’ The Telegraph (7 July 2016) <http://www.telegraph.co.uk/business/2016/07/07/fracking-regulations-inadequate-government-advisers-warn/> accessed 10 May 2017

Department of Energy and Climate Change – Fracking UK Shale: Regulation and Monitoring – February 2014

Briefing Paper Number 6073 on Shale Gas and Fracking – House of Commons Library

Acts

Water Resources Act 1991

Mining Industry Act 1926

Borehile and Operations Regulations 1995

The Offshore Installations and Wells (Design and Constructions, etc.) Regulations 1996

Books

Simon Sneddon, Environmental Law (2ND edn, Pearson 2015) 54-61

Misc.

PowerPoints and Notes from Lectures.