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Question for Department for Business, Energy and Industrial Strategy

UIN 66444, tabled on 3 March 2017

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he plans to establish a contingency bond to cover the costs of environmental clean up in the event of a shale oil or gas company going into administration.

Answered on

13 March 2017

Government has been clear that shale development must be safe and environmentally sound. In the UK, we have been regulating for gas and oil drilling, both onshore and offshore, for over 50 years and have tough regulations in place to ensure on-site safety, prevent water contamination, and mitigate seismic activity and air pollution.

Projects must be approved by the environmental regulator (in Northern Ireland, the Northern Ireland Environment Agency) and the Health and Safety Executive. Approval must also be sought from the relevant Mineral Planning Authority (MPA) through the planning system. MPAs are able to set the planning conditions they consider necessary, and some have already chosen to do so for site restoration.

In England, as part of the petroleum licensing process, and prior to awarding a licence, the Oil and Gas Authority (OGA) assesses whether a company has adequate financial capacity for its planned operations. The OGA also checks at the drilling and, where relevant, production stage that the company has sufficient funding and appropriate insurance. The licensing of oil and gas development is devolved to Northern Ireland.

BEIS officials are working with the industry’s trade body UK Onshore Oil and Gas to ensure that liabilities for shale wells are addressed in the rare circumstance where all of the companies on a licence became insolvent, and where no rescue mechanism for those companies could be found.