Infrastructure Bill [HL]

Debate between Lord Truscott and Lord Borwick

Monday 9th February 2015 Lords Chamber

[Lord Truscott]

That is exactly the reason. The noble Lord may know that that is why some companies are going bust—today Max Petroleum, which develops oil and gas in Kazakhstan, said that it was facing insolvency because it can no longer raise the funds to develop new fields. When the price of oil is under $50 a barrel—and we are already seeing the effect on companies such as BP, which is laying off people in Aberdeen because the price of a barrel of oil makes it uneconomic to continue to develop mature fields in the North Sea—we are facing a problem, are we not?

[Lord Borwick (Con)]

My Lords, I welcome this government amendment and thank my noble friend for clarifying some extremely important points. I am particularly pleased that it is now clearer that the clauses apply to hydraulic fracturing, with any ambiguity removed. However, there are some further points that I hope will be addressed in secondary legislation.

We have delayed shale exploration for too long. We have to get going so that we can show the public that there is nothing to fear. Once we start, the public will surely say, “What was all the fuss about?”. It is therefore extremely important that drilling boreholes for groundwater quality monitoring is delinked from the planning process. Permitted development rights under the general permitted development order can be used to install boreholes for monitoring water quality; that is common in the water industry. However, it is different for any development that is subject to environmental impact assessment regulations. Then, any part of the development, including the drilling of boreholes for monitoring water quality, cannot take place until full planning consent is granted. That would apply in the case of any development which includes hydraulic fracturing. It would mean, in practice, that no baseline data could be collected until full planning permission was granted, leading to a minimum of 12 months after planning before hydraulic fracturing would be permitted to take place. That would be a significant and unnecessary delay.

We should therefore allow baseline monitoring during the planning process for shale exploration. That would drastically cut the delay: doing the monitoring, then putting in the planning application, and monitoring while the planning process continues. Even if it is not a positive planning decision for industry, at least some useful data will have been obtained in the mean time during the monitoring process. More baseline data would be very welcome, so delinking from planning is a win-win whether the planning decision is positive or not. Can my noble friend therefore assure me that these concerns are noted in the amendments and will be strongly considered as the secondary legislation is formulated?

The treatment of groundwater protection zones was one of the worst outcomes of the amendments made in the other place. The Environment Agency already effectively prohibits operations in what is known as source protection zone 1, and in the lesser zones 2 and 3 the industry already has to make a convincing case to the Environment Agency. That strikes me as the right balance of regulatory oversight. That could impact on other industries, too. Shale operations take place well over 1,000 metres below any aquifer, whereas a lot more industrial activity from other sectors takes place on the surface, directly on top of the same source protection zones.

Moving away from the current regulatory framework of the Environment Agency regulatory position could have dire consequences for other industries. Furthermore, if a licence has already been purchased, it may be of no use whatever. There is no chance of that company receiving its investment back. Every investment is risky—rightly so—but this will make future investment in shale exploration all the more risky than it ought to be. Changing the rules after the licences have been awarded will not increase future licence revenue.

The government amendments mean that a decision on what is groundwater area is referred to secondary legislation. Can my noble friend assure me that those concerns will be taken into consideration as the secondary legislation is formulated?