This article explores the legislative proposals of the UK Government to help promote expansion of a UK shale gas and deep heat geothermal project pipeline in the United Kingdom, and includes discussion on the “rights”-pack that an energy developer operating in the UK might compile and then sell to exits.

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Shale Oil and Gas, Geothermal Energy…in the UK?
Government consultation URN 14D/099 visits the feasibility
of these energy forms in the UK, and whether the UK can soon
begin projects in these sectors; discussion on the potential
rights that a developer could sell to a fund.
General disclaimer: the following constitutes the written view of the author and in no way constitutes actual legal advice
or a legal opinion and so no reliance may be placed upon the content hereinafter contained by any reader of this document
in any way whatsoever. In the event that legal advice or opinion is sought, please contact the author of this opinion at
the contact details below. The view below is expressly confined to matters as they stand at 27 June 2014
Why does the UK Government want to look at Shale Oil and Gas or Geothermal Energy?
The UK Government has set up the, “Office of Unconventional Gas and Oil” (“OUGO”) for energy sources
such as shale oil and gas, and the “Heat Strategy and Policy Team” for sources of deep heat such as
geothermal energy1
.
As North America has been advancing shale oil and gas extraction, so too the UK Government believes that
there may well be substantial reserves as per the studies published on the same day as the consultation
paper URN 14D/0992
, and that the costs of extraction if reduced due to advances in industry technologies
would make this a large source of energy going forwards for the United Kingdom.
The proposals in the paper would apply to all petroleum drilled for extraction, including conventional oil
and gas.
British Shale Gas
According to the consultation for extraction of shale gas, the British Geographical Survey studies referred
to within the consultation suggest that the Pennine Basin in the north of England has an estimated 1,300
trillion cubic feet of “gas in place” with other areas being the Kimmeridge Clay area of the Weald Basin in
Surrey and Sussex, the Oil-Shale Group in the Midland Valley and the Central Belt of Scotland (between
Glasgow and Edinburgh).
Deep geothermal (heat use); deep geothermal power
Deep geothermal (direct heat use):
The consultation states that this can be sourced from hot water aquifers that are rock layers containing
groundwater at depths of around a mile below the Earth surface where temperatures are high. Over 60’C,
heat can be used for local heat networks or cooling through use of absorption chillers.
Deep geothermal power:
The consultation states that this power can be sourced using Enhanced Geothermal System technologies
(EGS) but that the UK may not have the resource potential of more volcanic regions (New Zealand,
1 Consultation on Proposal for Underground Access for the Extraction of Gas, Oil or Geothermal Energy, URN 14D/099,
published by the Department for Environment and Climate Change (“DECC”) on 23 May 2014:
https://econsultation.decc.gov.uk/decc-policy/consultation-on-underground-drilling-access (at page 3)
2 https://www.gov.uk/government/publications/bgs-weald-basin-jurassic-shale-reports (cf. too at:
https://www.gov.uk/government/news/government-proposals-to-simplify-deep-underground-access-for-shale-gas-and-
geothermal-industries)

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Indonesia or Iceland) given a report from Atkins for the Government3
, and for this reason, despite the
existence of a deep geothermal system in Southampton (which provides a district heating system for warm
water from the Wessex Basin Hot Sedimentary Aquifer), the current Government will prioritise heat-only
deep geothermal projects, stating that a number of this type of project are already planned under the
Renewable Heat Incentive program, through the Heat Networks Delivery Unit with projects planned in
North-West and North-East England, and the South-West of England.
What would be in the underground drilling “rights” pack for a developer selling shale gas extraction
rights/deep heat geothermal system under an SPA/Asset Purchase Agreement?
(1) Licence to drill
DECC can issue a licence for onshore oil and gas. Geothermal extraction doesn’t have an
equivalent system but in the case of geothermal heat schemes a Groundwater Investigation
Consent (GIC) and an abstraction licence may be required from the Environment Agency.
(2) Landowner consent
The legal principle of cuius est solum, eius est usque ad coelom et ad inferos4
, whereby the owner
of the freehold title to land in England and Wales owned everything on the surface of their land,
the airspace above it, down the centre of the Earth, has been somewhat modified in scope since
Bernstein of Leigh (Baron) v Skyviews and General Ltd [1977] 3 WLR 136 which limited the scope
of this principle to the extent to which the landowner requires to reasonably enjoy its subjects on
the ground, which presumably extends in the opposite direction below the surface, such that the
landowner will have rights on the strata below its land to the extent that it reasonably requires
control to enjoy its subjects. In 2010, in the Bocardo SA case (Mohammed Al Fayed’s company
claiming compensation for drilling and extraction of oil from beneath his estate in Surrey), their
Lordships decided that, “…the owner of the surface is the owner of the strata beneath it, including
the minerals that are to be found there, unless there has been an alienation of them by a
conveyance, at common law or by statute to someone else..“, with the final extent being to, “…the
point at which physical features such as pressure and temperature render the concept of the strata
belonging to anybody so absurd as to be not worth arguing about..“5
. In the event that a form of
consent cannot be obtained due to defect in title, or unreasonable terms offered by a landowner
for provision of their consent, compulsory rights may be acquired by court order under s.3(2) of
the Mines (Working Facilities and Support) Act 19666
.
(3) Planning permission
As with most energy developments in the United Kingdom that may have an impact on the local
community a pre-planning consultation will be required to assess feasibility, and an Environmental
Impact Assessment may well be required by the local authority as a part of the public consultation
process. The UK Onshore Operators Group which supports the shale gas industry in the United
Kingdom would be worth contacting in this regard.
(4) Environmental regulator permit
Once an application for an environmental permit is submitted, the relevant environmental
regulator such as the Environment Agency will publish the permit application on its website for
public comment, before issuing its permit7
.
(5) Well plans require examination by the UK Health and Safety Executive (HSE)
An HSE inspector and a third party well examiner will check the design and construction of the
intended well to check for compliance with the well’s design, leaks, and maintenance.
3 https://www.gov.uk/government/publications/deep-geothermal-review-study
4 Cf. http://www.hardwicke.co.uk/insights/articles/local-authorities-and-fracking
5 Star Energy Weald Basin Limited & Anor v Bocardo SA [2010] UKSC 35 (http://www.supremecourt.uk/decided-
cases/docs/UKSC_2009_0032_Judgment.pdf)
6 http://www.legislation.gov.uk/ukpga/1966/4/section/3 (cf. also at:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/185935/UKOOGShaleGasWellGuidelines.
pdf)
7 https://consult.environment-agency.gov.uk/portal/ho/ep/src/no10/standard_rules_no10

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(6) Drilling/Production consent
For wells relating to proposed hydraulic fracking, DECC will consider seismic risk, the planning
permission, the HSE report and EA permit, (3)-(5) above, and then will give its consent. For
geothermal heating schemes, the final consent and seismic hazard consent will be administered
through the local planning department in the local authority to the site of the proposed
geothermal project.
Risks
(a) Water contamination
The consultation states that the Royal Society and Royal Academy of Engineering view the risk of
water contamination due to hydraulic fracturing as being low if the well is designed, well8
. In
relation to deep geothermal EGS projects, as the water is extracted in situ, and no waste water
produced, the risk of contamination into strata below the ground-surface higher up from the point
at which the aquifer where the geothermal deep heat project is located is viewed in the
consultation as minimal.
(b) Seismic activity
Shale operators will have to monitor the proximity of relevant faults before fracking, monitor
seismic activity during and after a frack, and halt operations if seismic activity breaches acceptable
parameters. In terms of deep geothermal the risk is thought according to the consultation, to be
minimal.
(c) Subsidence
The consultation points to shale gas or geothermal having low or minimal risk of this.
Proposed action by the UK Government
(i) A right of underground access from land below 300m. Fracking would take place much deeper
than 300m however this is the distance beneath which the Government believe the surface
landowner will no longer have any use of land. This right would negate any claim of trespass
from a surface landowner.
(ii) One-off £20,000 payment for each unique lateral (horizontal) well that extends by more than
200m laterally, and if lateral drilling vertically coincides payment is made only once. The
payment is suggested to be made by the operator to a community body which would then
distribute the payment amongst the community to ease the administrative burden.
(iii) Public notification system to allow an individual or community to raise valid objections.
Questions raised by the Government for this consultation
1. Should the Government legislate to provide underground access to gas, oil and geothermal developers
below 300 metres?
2. If you do not believe the Government should legislate for underground access, do you have a preferred
alternative solution?
3. Should a payment and notification for access be administered through the voluntary scheme proposed
by industry?
Operators, developers, funds, contractors, individuals and community bodies can engage MBC Energy
Team to assist on responses to DECC on the consultation and the questions above by 11.45pm on 15 August
2014.
London, 27 June 2014.
To find out more on how My Business Counsel can assist you, please contact our Energy Team today on
info@mybusinesscounsel.com or by calling +44 (0) 203 507 0152.
8 https://royalsociety.org/~/media/Royal_Society_Content/policy/projects/shale-gas/2012-06-28-Shale-gas.pdf