The UK government appears to be intent on using fracking to liberate oil deep beneath the surface of the land.
New rules have been proposed concerning access to land to speed up the introduction of fracking.
The proposal is that shale oil and gas companies be granted access to land below 300m from the surface. The new proposals do not affect the existing system for gaining access rights to land on the surface.
It also suggests companies pay £20,000 for each well to those living above the land. This would be in addition to the £100,000 per site already announced, and is specifically designed for those living above horizontal pipes underground.
Shale exploration companies have already committed to giving 1% of revenues from any successful wells to local communities.
Recently the British Geological Survey estimated that some 4.4bn barrels of oil in shale rocks exist in southern England, including Sussex, Hampshire, Surrey and Kent.
But the survey noted it was not possible to say how much of that oil could be extracted.
It also reported that there was no known gas in the shale.
Last year, a BGS study of the North of England suggested there could be as much as 1,300 trillion cubic feet of gas contained in shale rocks.
Amidst reports from the USA and Australia of polluted air and water resulting from careless fracking, support in the UK for the practice has dwindled to below 50%.
While most fret about water pollution and earthquakes, experts believe the greatest impact on communities will be traffic and noise.
Fracking involves pumping water, sand and chemicals into rock at high pressure. Some governments have banned the process.
Prime Minister David Cameron has insisted fracking will be "good for our country" and has blamed a "lack of understanding" of the process for some of the opposition.
In the US, fracking for oil and gas has created an energy boom and led to speculation that the country could overtake Saudi Arabia as the world's biggest producer by 2020, or even sooner.
Gas prices in the US have fallen sharply as a result.
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Comment from Property Wire newsletter:
Property industry needs to react to consultation on fracking in southern England
Fracking, the process whereby gas and oil is obtained from impermeable rock, has not really been on the property industry radar in any meaningful way but now the government has announced that parts of southern England could be sitting on billions of barrels of shale oil. New research from the British Geological Survey shows that there are between 2.2 billion and 8.6 billion barrels of shale oil in the Weald Basin which covers Sussex, Hampshire, Surrey and Kent.
Shale gas is essentially the same as North Sea gas, they are both mostly methane, but shale gas is trapped in impermeable shale rock so wells need to be sunk first vertically and then horizontally so that fractures can be created in the rock by hydraulic fracturing, or fracking, with fluid at high pressure, which enables shale oil to flow out.
In response, the editor of one business newspaper posed the question: what is the difference between the Home Counties and Texas? His answer: nothing. Well, that's not quite true. These potentially vast petrochemical deposits are unlikely to spawn a Dallas style soap opera named after Brighton or other towns in the Sussex Weald.
And landowners in southern England are unlikely to get rich due to the discovery of shale gas or oil because, unlike in the United States, they don't actually own the hydrocarbon deposits under their land.
As Andrew Shirley of Knight Frank told me, in the UK these are all reserved to the state and most of the compensation that will be available is set to go to local communities in the form of voluntary payments.
These payments have set at £20,000 per lateral well extending for over 200 meters and officials have estimated that this will work out at around £800,000 per site.
Shirley explained that property owners where the drilling sites are located will of course be able to negotiate a deal to allow the fracking companies to set up the well heads, which may extend to a hectare or so, on their land, but they will see little benefit from what happens underground.
The government has also confirmed that it plans to amend the law to allow frackers to drill lateral wells at depths of over 300 meters under people's property without first gaining planning consent.
The government's justification for this move is that the energy bonanza promised by fracking is too important to the UK's economy to be held up by constant wrangling in the courts. But land owners still need to consider their options carefully, according to Knight Frank's Christopher Smith of the firm's energy team.
He believes there will be room for negotiation with fracking companies. But he reckons that despite the government's enthusiasm, fracking is clearly deeply unpopular with many and those land owners who are happy to allow their land to be used for exploration may be able to strike a better deal.
Land owners also need to bear in mind that any geo thermal heat, which may be a potentially profitable by product of fracking activities, is not owned by the state and therefore its value should be up for separate negotiation with property owners.
It is also worth noting that the amended laws only cover deep drilling activities. Any additional infrastructure that is required like shallower pipelines or cables will be covered by existing compensation legislation. It will be important to negotiate fair compensation and not necessarily accept the first offer.
Land owners will also need to be indemnified in some way for any compensation claims that could arise in the future as a result of any fracking activities under their land that they may not even have consented to.
There is now a consultation period on the proposals which is due to close on 15 August. Now home owners, land owners and builders need to give their views on these radical changes.
Ray Clancy
Editor Property Wire
