Whitehall plans changes to the law of trespass to boost shale development

Sources close to the Government have confirmed its intention to give energy companies the right to install shale pipelines under private land. Set to be included in the Queen's Speech as part of an Infrastructure Bill, the move is another indication of the Government’s keen support for the UK shale industry, reflecting its desire not to lose investment to other countries – particularly in Eastern Europe. Though planning permission will still be required for drilling activities, under new proposals companies will be allowed to run pipelines under privately owned land without fear of breaching trespass laws.

It is believed that the Government’s move follows the suggestion (from landowners and anti-fracking protestors including Greenpeace) that existing UK trespass laws could be used to block shale exploration and development. The principal ruling cited is the Supreme Court case of Bocardo SA -v- Star Energy UK Onshore Limited [2010] UKSC 35 in which Star Energy’s predecessor on its licence drilled under land owned by one of Mohamed Al-Fayed’s companies and was found to have committed trespass and ordered to pay damages (albeit a nominal sum). The argument is that this confirmation of trespass would allow landowners to block shale activities taking place hundreds of metres below their land by filing for an injunction. The Government’s response is likely to be new legislation, ensuring that companies installing shale pipelines are not at risk of breaching trespass laws and so subject to these restraining measures.

The precise form of the new legislation, and the extent to which it will encompass drilling activity, wells producing under a third party’s land, and the manner in which landowners would be compensated, is yet to be seen.

At present, where land rights and payment cannot be privately agreed between landowner and energy company, the Mines (Working Facilities and Support) Act 1966 (the “Act”), allows the company to apply to court to gain ancillary rights and establish the landowner’s compensation. In the Bocardo case, the Act was used to set compensation at £82.50 (rounded up to £1,000 on the basis that, had the defendant negotiated for the right, it would likely have been prepared to be generous). The Government has indicated that this system may no longer be sufficient, and possible amendments, including capping landowner compensation, providing automatic access rights for shale activity below a certain depth, and establishing a national landowner notification and compensation procedure, are being discussed.

The Government believes that clear legislation and the removal of trespass restrictions will promote efficiency and certainty for companies developing shale gas in the UK, sparing them from the time and costs in litigation spent by Star Energy. “We’re looking at primary legislation. We want to streamline the rules and get this thing off the ground” a senior government figure told the Financial Times.

Shale investment and development clearly remains central to the Government’s energy strategy, and even Bocardo’s Pyrrhic victory is likely to be denied for those trying to block shale exploitation.