19 May 2016

Fracking - What a landowner needs to know

James Lloyd Consultant

James Lloyd, partner, takes a look at what fracking and what it means if someone wants to frack your land.

There is a lot of political discussion about fracking but, whether for or against it, you need to know what may practically happen if someone wants to frack your land.

The government changed the law to allow gas companies to frack under your land, below 300m, without the surface owner having to agree. The Crown already owns the gas and has granted licences to collect it, but any gas company is still going to need the relevant rights from you on the surface to place the well heads and for access.

The gas companies will wish to negotiate a commercial deal for these rights. Whilst you may not agree, it is not as simple as just saying 'no'. Authorised gas companies have rights of compulsory purchase to enter, use and occupy the land for the purposes of fracking, although these are to be used only as means of last resort if reasonable negotiations cannot be concluded. Gas companies will also not want the delay and expense of the compulsory purchase process.

Compulsory rights are not a stick to bash you over the head with during negotiations, and there are steps you can take, but compensation will be on the basis of the loss of the existing value of the site, not the value of the site to the gas companies. However, being forced is likely to be significantly worse financially, than a negotiated commercial deal.

Compensation/rent is not the only issue to consider. Risks and liabilities may be picked up under any commercial deal. Most landowners are protected for environmental problems arising from fracking below 300m, but anyone agreeing a deal for surface rights must look at risks and liabilities carefully, as well as protection against claims for nuisance coming from their land.

These need to be covered in any deal and you also need to check the ability of the gas companies to pay if there is a problem. Potentially, the industry may provide an over-arching insurance against environmental disasters, but this is not yet in place, so you will need to take real care and seek professional legal advice.

If you have any questions over fracking, or would like further information, please do contact me.

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