My Lords, we are today considering an instrument which sets out definitions for the “protected groundwater source areas” and “other protected areas” in which hydraulic fracturing will be prohibited. The powers to make this secondary legislation are found in Section 4B of the Petroleum Act 1998, as inserted by Section 50 of the Infrastructure Act 2015, which, following scrutiny in this House and in the other place, received Royal Assent in February 2015.
Before outlining what the draft regulations seek to do, I will take this opportunity to restate the Government’s commitment to a low-carbon and affordable future for energy. Gas, the cleanest fossil fuel, still meets a third of our energy demand and we will need it for many years to come. It is vital that we seize the opportunity to explore the United Kingdom’s shale gas potential while maintaining the very highest safety and environmental standards. We have established these standards as world leaders in extracting oil and gas over decades.
Shale can and will be developed safely. The UK has over 50 years’ experience of safely regulating oil and gas exploration. We have world-class, independent regulators who will not allow operations that are dangerous to local communities and the environment to go ahead. Safety is and always will be absolutely paramount. Highly respected independent bodies such as the Royal Society, the Royal Academy of Engineering and Public Health England have reported that risks associated with developing shale gas in the UK can be managed effectively if operational best practices are implemented and enforced through regulation. We have a strong regulatory regime for exploratory activities, which we will look to review continuously as the industry develops. We insist on the highest safety standards, and all this is backed up by independent checks from the regulators.
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There is no denying it: 80% of us use gas for heating and cooking, and industry uses gas in many everyday products. At the moment we import around 40% of our gas needs, and by 2030 we could be importing three-quarters of the gas that we use. Shale is vital, not just to reduce our reliance on imports but because it can also create an energy “bridge” while we further develop renewable energy, improve energy efficiency
and build new nuclear generating capacity. Importantly, studies have shown that the carbon footprint of electricity from UK shale gas would likely be significantly less than unabated coal and lower than imported liquefied natural gas. Shale offers a valuable decarbonisation route from where we are today to where we want to be in future. Exploring for shale will also help to create jobs and grow local economies. Investment in shale could reach £33 billion and support as many as 64,000 jobs in the oil, gas, construction, engineering and chemical sectors.
I turn to the draft regulations. As noble Lords may be aware, Sections 4A and 4B of the Petroleum Act 1998 set out further safeguards for onshore hydraulic fracturing in England and Wales to provide the public with confidence that the developing shale industry is being taken forward in a balanced and measured way. The Act contains a number of conditions that must be satisfied before a hydraulic fracturing consent is issued by the Secretary of State. This includes two conditions specifying that associated hydraulic fracturing cannot take place within “protected groundwater source areas” or “other protected areas”. These two terms are not defined in the Act. Instead, the Act contains a requirement for the Government to produce draft regulations with the definitions and to lay them in both Houses by the end of July this year. Honouring this commitment, we laid the instrument, in draft, on 16 July.
The draft regulations will afford greater protection to some of our most precious areas, in a manner that meets the Government’s broader policy objective of supporting the long-term development of the UK’s shale gas industry. Regulation 2 defines “protected groundwater source areas”. The definition is equivalent to the regulators’ existing definition of source protection zone 1, which applies to those areas close to drinking water sources where there is the greatest risk associated with groundwater contamination. As required by Section 4B of the Petroleum Act, we consulted with the Environment Agency and Natural Resources Wales when formulating our proposed definition of “protected groundwater source areas”. Both agencies confirmed that they were content with the definition being aligned with source protection zone 1, as this reinforces their approach to controlling risks from other groundwater activities.
The draft regulations ensure that the process of hydraulic fracturing cannot take place at depths above 1,200 metres within these areas. The vast majority of drinking water supplies are located at depths above 400 metres. This limit therefore provides a buffer of at least 800 metres between the depth of most drinking water sources and the highest possible level at which hydraulic fracturing can take place. This exceeds the safety depth recommended by the most cautious scientific reports.
It is worth noting that if the environmental regulators assess that more stringent controls are needed to protect groundwater, these can still be applied as conditions in the environmental permits required for all developers. The environmental regulators have successfully influenced operators not to apply for sites in these zones and have made sure that pipelines do not run through these areas. What is more, if either of these agencies assess
that more stringent controls are needed to protect groundwater, these will be applied as conditions in the environmental permits required, as I say, for all developers. The proposed definition would not impact on the environmental regulators’ current powers to refuse permit applications within source protection zones 1, 2 or 3, or wider on a case-by-case basis, if they consider that an activity poses an unacceptable risk to the environment. So, in addition to the regulations a discretion can be applied via the environmental regulators that is more stringent even than those in the regulations, if it is considered that an activity poses an unacceptable risk to the environment.
I turn to Regulation 3, which really comes in two parts. One part relates to the depth at which the fracking can be carried on, which is always at least 1,200 metres below ground. I will come to some specific areas where it will be more than that and where there will be a control on what happens on the surface, as it were. Regulation 3 defines “other protected areas” as national parks, the Broads, areas of outstanding natural beauty and world heritage sites. The regulations ensure that the process of hydraulic fracturing cannot take place above 1,200 metres in these areas.
In defining protected areas there is a need to strike the right balance between affording them additional protection and stifling the nascent shale industry. The Government firmly believe that the depth limit chosen, 1,200 metres, strikes this balance. In addition, national parks, the Broads and areas of outstanding natural beauty are our finest landscapes and are afforded the highest protection within the planning system in relation to landscape and scenic beauty. Similarly, world heritage site status is the highest international heritage designation. Our world heritage sites are irreplaceable, and the Government take their responsibility to conserve and protect them very seriously.
We recognise that concerns have been expressed about fracking from wells drilled at the surface of some sensitive areas. The draft protected areas regulations can relate only to the subsurface process of fracking, in accordance with the requirements and provisions of the Infrastructure Act 2015. However, we have separately committed, in a way that is not intended to impact on conventional drilling operations, to ensure that fracking cannot be conducted from wells that are drilled at the surface of our most valuable areas. That will be reflected in the licensing and environmental permits process. We are minded to apply the surface restrictions in sites of special scientific interest, in Ramsar and Natura 2000 sites, which are very similar—Natura is a European designation, Ramsar an international one—as well as in the areas covered by the draft regulations. We are currently consulting industry and other interested parties on how best to implement these surface restrictions.
I stress that, even with these draft regulations, a company looking to develop shale will still need to obtain all the necessary permissions, including planning and environmental permits, before hydraulic fracturing can be carried out. Those are in addition to these requirements. As part of the licence, permission and permit procedures, the environmental impact of operations, and any risks associated with them, are assessed by regulators and through the planning system
on a case-by-case basis. All oil and gas sites need permits under the Environmental Permitting (England and Wales) Regulations 2010, as well as planning permission from the relevant planning authority. The National Planning Policy Framework and supporting practice guidance clearly state that, in respect of minerals like shale oil and gas, new development should be appropriate for its location. Let me be clear: if the risks of a proposed shale activity are deemed unacceptable, the environmental regulators will simply not allow it to go ahead, irrespective of the area or depth.
In line with the Small Business, Enterprise and Employment Act 2015, Regulation 4 commits us to carry out a review of the regulations in five years’ time and every five years thereafter, and to publish a report setting out the conclusions of the review.
Before we start what I am sure will be a helpful and insightful debate, I emphasise that shale gas may hold huge potential for adding to the United Kingdom’s energy sources, helping to improve energy security, create jobs and meet carbon targets. We need more secure, home-grown energy supplies, and shale gas has a vital role to play. It is much better that we use what we have at home than rely on supplies from overseas. I beg to move.