INTRODUCTION

In order to explore for or produce any form of petroleum, including shale gas, companies are required to gain permission. In the UK, this permission to access the petroleum is granted by the government on behalf of the Crown, and regulated by the relevant government department. There exists a diff erent petroleum access regime for onshore and off shore petroleum. This chapter will be concerned with the grant of an onshore UK petroleum licence, which is presently regulated and administered by the Department of Energy and Climate Change (DECC). The UK, in common with USA, Australia and Canada, has adopted a licensing system to regulate the exploration and production of oil and gas reserves. DECC acts under powers delegated to the Secretary of State for Energy through the Petroleum Act 1998 (the Act) to licence oil and gas production. This licensing system sets conditions for the grant of the licence.

As companies seek to, in the first instance, explore for shale gas in the UK, there needs to be a fundamental understanding of the legal regime that grants the right to access and explore for shale gas. Fundamentally two (quite distinct) systems for petroleum (including shale gas) exploration in the UK exist. The first, and the topic of this chapter, is the licensing system, which grants a petroleum company a right to search for and extract petroleum. This is essentially an access system, which gives a company permission to look for petroleum, and without which the search for petroleum would be illegal. However, even when a petroleum company has been granted a licence, it does not gain an automatic right to commence drilling for petroleum. In order to drill, it is essential for the licence holder to gain the appropriate permissions from the regulators to undertake drilling and associated activities. This permissioning regime for petroleum activities is considered in the chapter on ‘Shale Gas Law and Regulation in the United Kingdom’ (pp. 281 ff .). This chapter will only consider how companies acquire access to petroleum resources owned by the state, through the grant of a licence.

COMMON LAW AND STATUTORY RIGHTS TO OWNERSHIP OF MINERALS AND PETROLEUM

Under the common law of England and Wales, all mines and minerals underneath the soil of a land are owned by the landowner.