Shale investment gets boost from UK bill

An Infrastructure Bill included in today’s Queen’s Speech sets out to change trespass laws so shale gas exploration firms need no longer seek the permission of landowners.

Measures included in today’s Queen’s Speech to the UK Parliament – outlining the coalition government’s legislative agenda for the year ahead – are set to give a boost to those seeking to develop the UK’s shale industry.

A new Infrastructure Bill proposes to change trespass laws so that shale exploration can be conducted on private land without the permission of the landowner needing to be sought.

The move is designed to speed up fracking (the process of extracting shale, also known as hydraulic fracturing) and deliver improved energy security for the UK. Shale industry promoters say the move simply allows fracking firms to do what utilities are already able to do.

However, the move is also sure to be controversial. Public opposition to fracking in the UK has been strong, with large protests at Balcombe in Sussex last year against planned drilling by energy company Cuadrilla.

The US is the world’s most thriving shale exploration market, with many midstream infrastructure investors active in the sector. However, in the US, landowners are more easily able to claim a slice of subsequent profits and thus have less incentive to object to drilling.

“These proposed changes are designed to incentivise companies to invest in shale gas exploration in the UK,” said Richard Blunt, a partner at law firm Baker & McKenzie, in response to the speech.

He added: “While these changes will be viewed positively by the industry (as they will result in a reduction in permits needed for shale gas exploration and production), eyes will also be on the scale and nature of the public reaction to the bill.”

The Infrastructure Bill also contains a well-flagged measure that may encourage investment into the UK’s roads. The Highways Agency becomes a government-owned, arms-length company (similar to Network Rail) free from the kind of political interference that can make its funding unpredictable.

The Bill also hands the highways sector greater regulatory security, with units within Passenger Focus and the Office of Rail Regulation to represent the interests of road users and monitor the company’s performance.