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« More from the empty set | Main | Today does sensible »
Tuesday
May062014

Private property

Behind its paywall, the FT is reporting a new survey that finds that an overwhelming majority of the public opposes plans to let unconventional gas companies frack below private property without permission.

The survey comes as a coalition of environmental groups including the RSPB, Friends of the Earth and the Wildlife Trusts writes to David Cameron to criticise the plans.

They argue that under-house drilling should only occur with the permission of homeowners. “The rush to change property rights will further erode public trust in the government’s approach to fracking,” they say.

A Downing Street official insisted that any company looking to exploit shale gas would still need a licence from landowners at ground level or controlling access to a site.

It may well be that shale gas companies would already be paying residents for access to sites, so in many cases there would be no objection to the drilling. But with the horizontal "laterals" extending so far beyond the well pad, it's possible to imagine adjacent landowners being affected too (if you can use the term "affected" when someone drills a small hole a mile below your property"). Would the shale gas companies simply pay them off in order to have an easy life? Or would they simply present them with a fait-accompli? It's hard to say. You can certainly understand that people might be angry if it was the latter.

I still think repeal of the Petroleum (Production) Act 1934, which nationalised onshore oil and gas assets, is the way forward. Then everyone who is "affected" has a stake.

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Reader Comments (41)

What is the problem with paying people for the right to drill under their properties? And compensating residents for losses and inconvenience? Let's get on with it, and let's get some benefit from it too.

May 6, 2014 at 9:31 AM | Unregistered Commenterfenbeagleblog

I still think repeal of the Petroleum (Production) Act 1934, which nationalised onshore oil and gas assets, is the way forward. Then everyone who is "affected" has a stake.

Totally agree. The key difference with the States, so seldom mentioned.

May 6, 2014 at 9:31 AM | Registered CommenterRichard Drake

Fen,

The problem is that all resources under your land is owned by Her Majesty. Therefore if anyone is going to get a payout it's going to be HMG and not the people on top of the land.

As Bish says, let the people own everything! That will never happen though as the left has far too much invested in ensuring "the people" don't get a say in how things are run.

Mailman

May 6, 2014 at 9:52 AM | Unregistered CommenterMailman

Mailman
I think that was part of the point I was making. It's time her majesty didn't own the land beneath our properties. It's time we got on with drilling for that gas.

May 6, 2014 at 9:57 AM | Unregistered Commenterfenbeagleblog

I can't see why groups who have charitible status like RSPB, Friends of the Earth and the Wildlife Trusts, concern themselves with private property law.

If they are doing it to obstruct fracking, why are they allowed to be charities?

May 6, 2014 at 10:00 AM | Unregistered CommenterCharmingQuark

I would be more sympathetic to these arguments if:
a) the moving force behind this idea wasn't the "usual suspects" whose main aim, we all know, is to delay or if possible prevent exploitation of any cheap, reliable energy source, and;
b) the suggested rules applied to coal-mining and any other activity which currently by-passes the landowner in a similar fashion (which includes virtually any form of tunnelling for road, rail or water transport and gas, electricity and water).
I agree with mailman's "let the people own everything" but my interpretation of "the people" is different from his. No individual person should have the right to hinder the development of vital natural resources. Proper compensation for damage or disturbance, yes, but for drilling thousands of feet down? I don't think so!

May 6, 2014 at 10:10 AM | Registered CommenterMike Jackson

I agree with you Mike but FoE type people are using the argument that people should be allowed to push back etc. all I'm saying us that if these groups want to argue that love then they should be prepared for letting people take full ownership of resources under their land.

Of course I see an unintended, but valuable consequence of all this is to also give people the full right to reject and stop windmills, mirrors and ground unicorn horn power generation from being built "near" their property because of the already extensively documented impact these have in people's quality of life!

Mailman

May 6, 2014 at 10:32 AM | Unregistered CommenterMailman

Mailman...have you ever lived in a country where the state owns very little land? It becomes pretty tribal and impossible to create good infrastructure.

May 6, 2014 at 10:32 AM | Unregistered CommenterJohn

To get permission for drilling under what might be miles of land would be near impossible. Even with incentives, somebody would say no as a matter of course and you can't wiggle round individual properties. Even if the drilling routes themselves are sorted, people would argue that the geology surrounding the bore holes is affected by the changes in adjacent rocks. Those who take the incentive would have long spent the cash should there be any problems so would demand more in the event of real or perceived damage. A better option would be an insurance fund that is ring fenced for paying compensation in the unlikely event fracking causes problems. If there is no problem after say 50 years the remaining money goes to the government to reduce national debt. Householders would have the reassurance that unless every area is affected then there would be plenty of money to sort any problems eg if borehole water was polluted then surface water storage could be created or a decontamination plant.

May 6, 2014 at 10:41 AM | Unregistered CommenterTinyCO2

John,

As opposed to a state that owns everything where it becomes pretty tribal and almost impossible to get good infrastructure built?

Mailman

May 6, 2014 at 10:50 AM | Unregistered CommenterMailman

All I'm saying John is that all things should be equal. If you allow residents to stop fracking then equally residents should be able to veto windmills.

Mailman

May 6, 2014 at 10:51 AM | Unregistered CommenterMailman

Mike Jackson on May 6, 2014 at 10:10 AM

For most land owners, especially those not close to the drilling rigs, they are unlikely to be affected at all. The problem is when an unexpected accident or mishap occurs. So, apart from a general improvement in economic activity which could be shared by lowering the Community Charge or something similar, the problem to be addressed is the risk of a mishap and how it should managed. And it is not as if private individuals are able to extract the resource and make a profit. Reducing a tax will be require less resource to administer than paying people money as it would have to be put on the tax form for everyone involved and it would be like playing land owner bingo!.

I think that the taxation levels also need careful consideration. The 3G licences distorted the business model for years, just so Gordon could get his hands on our money sooner. Taxing profit makes more business sense than taxing revenue, but we all know about Amazon profits in the UK, although taxing energy recovered wouldn't necessarily be without its own problems: would land owners be paid according to the area of their land, the thickness of the shale beneath their land, the energy extracted from the volume under their land or on its rateable value. And how would the figures be verified? I have been a Geophysicist, but I think I would need some expert advise, though I might be a better judge as I have also done some auditing! I would expect lots of expert witnesses would find plenty of work if the legislation was not 'smart'. Better to issue some guidelines while the local distribution of shale hydrocarbons is still hazy.

Yes, there is still the National Debt to pay off, but I think that explicitly coupling that with shale would allow politicians to squander money without notifying us even more easily than they do now!

May 6, 2014 at 10:54 AM | Registered CommenterRobert Christopher

Following John's point, it seems sensible to me that the state should decide what happens to the deep depths. It seems more workable that way in a densely populated country.

If the Crown owns the rights miles underground then why should it matter what the dwellers on the surface think if they are not materially affected by the extraction? They didn't buy the land for those rights. We don't own the high airspace above properties. For good reasons IMO, people cannot individually complain about air corridors or satellite orbits, or distribution of bandwidth of the elctromagnetic spectrum. I don't believe the private ownership concept works everywhere always.

May 6, 2014 at 11:04 AM | Unregistered Commentermichael hart

It's a funny world.

I've read that horizontal drilling can extend upto 6 miles from the well pad which means a site can milk gas(potentially) from an area of 113 square miles.

Now when I were a lad I could count 12-14 working coal mines within a 6 miles radius. Each with their own (large) spoil tip, subsidence and water contamination. - And we counted ourselves lucky!

All gone now thankfully.

May 6, 2014 at 11:09 AM | Unregistered CommenterBken

What is the problem with paying people for the right to drill under their properties?

Hold-outs.

Greenpeace or whoever buy one property in the area and refuse to sell the rights. Taken to its extreme, property rights are is a method of preventing anything.

That's why there are compulsory purchase provisions for roads etc. Even in the US, which is far more pro-property rights. If we allow locals to prevent nearby windmills, then they have the ability to prevent prisons, roads, schools, factories etc as well. Do we actually want that?

It's also why there are laws that prevent small shareholders from preventing a 100% buyout of a company. While you may think the shares you own are your property, you can be obliged to sell them. The alternative is companies preventing their opposition from ever getting a buyout.

In the case of mineral rights, it is easier to cut the Gordion Knot and not allow people "rights" to things that they have no way of accessing, so cannot really claim to be losing. The current system isn't perfect, but it beats the alternatives.

May 6, 2014 at 11:31 AM | Unregistered CommenterMooloo

Mike Jackson.Agree , there is an unholy alliance of green fanatics, ex-trots and subsidy junky businesses who would use
lawfare to stop shale. In my experience when one explains how shale gas works most people opposed change their views.
one only has to look at charities have become dominated by ant-industrialists/capitalists to see the danger of Bish's proposal.

May 6, 2014 at 12:06 PM | Unregistered CommenterCharlie

Just another illustration of the fact that an overwhelming number of people are wary of any change, anywhere at any time. But if it's a new house or factory the answer is always the same: Not round here you won't! It might be smelly, noisy, obstructive, use/spoil water, pollute the air, cause cancer, etc...

How do we engage with these nimbys? Well we listen very carefully to these 'stakeholders' and then bribe the noisiest or most important ones. Always works!

May 6, 2014 at 12:50 PM | Unregistered CommenterJamesG

The seminal case in this area, which went all they way to the Supreme Court, was Mohammed Al Fayed vs Star Energy.

By a 3-2 majority, the Supreme Court upheld the Court of Appeal’s award and confirmed that compensation for landowners who suffer trespass from oil exploration should be evaluated in the same way as in cases of compulsory land purchase (in other words, by applying a very limited statutory measure of damages).

The detailed opinion is here:

http://ukscblog.com/case-comment-star-energy-weald-basin-ltd-or-respondents-v-bocardo-ltd-appellant/

They stated that had the company negotiated with Al Fayed in the first place, a sum of £100 would have been appropriate for 3 wells passing 800-1300 ft under his property.

May 6, 2014 at 1:19 PM | Unregistered CommenterIt doesn't add up...

I thought we'd done this one before ..the Bishop has a strange view on this and he is wrong.
- Tunnel rights are much better belonging to the state for the common good than the individual.
- The same greenies who complain about fracking under your house ("fracking is bad!"), would be the first to force HS2 under your house (cos" public transport is good")
- Water pipes, tube trains go under those activists houses in London, and coal mines under their second homes elsewhere and they never complain against them.. It's just another case of the green-loonies trying to disrupt the democratic process to get their own dogma to rule.
..Sorry can't type properly due to the glare from that solar array over there, and the whirr of the wind farm on the other side which are much more legitimate concerns than the idea than invisible fracking done within the law is going to affect your property 1 mile above, except increase it's value due to the new workers coming into the area.

May 6, 2014 at 1:27 PM | Registered Commenterstewgreen

The Yougov article is available here, and also their full poll.

May 6, 2014 at 1:39 PM | Unregistered Commentermichael hart

Were I a property owner, my only objections would be about developments that encroached on my property, whether it be a drill-pad flattening my hydrangeas or wind-turbine blades swooshing round and knocking the apples off my tree, or close over it, and adversely affected the visual impact (that wind-turbine, again). Obviously, should the work progress UNDER my property, my only concerns would be about the security of the property (i.e. is it going to drop into a big hole?) and noticeable impacts to my comfort – are there vibrations or noise?

Should the work be several miles below my property, then, unless the drill-rig is within a few metres of my home, how can I honestly say that it is having any impact upon me, whatsoever? That would be equivalent to the inhabitants of Bournemouth complaining about the noise on the Isle of Wight during Cowes week, or the folks in Wells complaining about the music in Glastonbury.

I think that I can see what the Bishop is writing about, but feel it would be better if landowners gained recompense only if they could prove that what was taking place under (or over – think of those on airport flight-paths) their property was adversely affecting their lives; hence, it makes sense that it is the State (or the Crown, probably a better choice) who is the one who gains the monies from licenses to drill (or fly), under the proviso that those who DO suffer get due recompense. It should be quite a simple process to establish and run, but, sadly, you can bet that it will become incredibly complex and difficult – there are too many potential jobs and petty empires to build to make it otherwise.

May 6, 2014 at 1:44 PM | Registered CommenterRadical Rodent

Apologies. That yougov poll is from last year. I'm still trying to get the one referenced in the FT.

May 6, 2014 at 1:49 PM | Unregistered Commentermichael hart

Can anyone who thinks the Bish is wrong explain how shale gas has been extracted successfully in such quantities in the United States, with property rights there much more in line with what is proposed here? I'm assuming the answer will be that there are more open spaces between people's dwellings. I'm no expert on such matters but doesn't the experience of the US give the lie to some of our parochial attitudes here?

May 6, 2014 at 2:03 PM | Registered CommenterRichard Drake

All

I'm quite happy for people to think I'm wrong here. I'm not saying it can't happen with current arrangements, but I think it would be easier if we used the private property approach. This post was not really about trying to persuade dissenters that they were wrong, but to report what is being said in the FT.

May 6, 2014 at 2:23 PM | Registered CommenterBishop Hill

The host's stance can I think be summed up as "trust free people and the truth". Although a sizeable proportion of UK folk right now have been negatively and wrongly influenced by green scare stories it's misguided not to maximise freedom, then let the truth have its way. I also agree with Andrew that a better result than present can arise without extending private property in this particular way but I'd still like to know how people interpret the world-changing developments across the pond.

May 6, 2014 at 2:38 PM | Registered CommenterRichard Drake

It's simplistic to say that in the United States the property owners get the money from oil & gas exploration and production. There are different laws (state and federal) in different jurisdictions. Most significantly it's the entity who owns the mineral rights. Those rights often spun out of the property deed many generations before now.

May 6, 2014 at 2:45 PM | Unregistered CommenterRob Schneider

Did not the 19th century canal and railway builders manage without compulsory ''purchase''? I realise that they had to have an Act of Parliament passed for the incorporation of each railway company. And as companies they could issue shares and face only limited liability.

May 6, 2014 at 2:49 PM | Unregistered CommenterJoseph Sydney

What would be the effect of an independent or more devolved Scotland/Wales repealing the Petroleum (Production) Act 1934? There is a bit of a precedent with the way Shetland gets oil revenue money isn't there?

May 6, 2014 at 3:29 PM | Unregistered CommenterSandyS

The existing system seems perfectly sensible - you buy a plot of land with a house on it to live in the house, not to extract minerals from beneath it or use the airspace above it. If you did have these rights then the value of the property would have to reflect the value of those rights which would be unworkable.

I see nothing wrong with the principle that you buy a plot on the surface and what is underneath is another matter.
It is already the case that anyone extracting minerals under your property is liable for any damage or disturbance caused.

There are already problems with the way property ownership works in this country - one reason why roads are dug up so often is that most of them are also routes for an ever growing number of services because the alternative is to negotiate with a huge number of individual owners. I often wonder if other countries have the same system as they don't seem to have the same roadworks issues.

May 6, 2014 at 3:56 PM | Unregistered CommenterNW

Hey, I want those airplanes that fly a mile high over my property to avoid my airspace or pay compensation. After all, I can hear them sometimes and one might just fall on my house. Same principle as objecting to drilling a mile below my property. /sarc

May 6, 2014 at 4:08 PM | Unregistered CommenterRobert Austin

There is already at least one directional well in the UK in Gainsborough, Lincs, where, in the 1960s BP drilled from a field outside the town into an oil field located under the railway station. How did existing law cover that?

May 6, 2014 at 4:19 PM | Unregistered CommenterMike Post

AFAICR Shetland gets its oil money from business rates, mainly from Sullom Voe Terminal. They also got a power station on the cheap on the back of it. The rates used to be quite substantial. Here's an insight into the present:

http://www.shetnews.co.uk/news/6664-gas-plant-takes-shape-as-costs-go-up

May 6, 2014 at 4:38 PM | Unregistered CommenterIt doesn't add up...

Although a sizeable proportion of UK folk right now have been negatively and wrongly influenced by green scare stories it's misguided not to maximise freedom, then let the truth have its way.
How engagingly naive! Try mentioning the name "Michael Forbes" to Donald Trump some time and see what the reaction is.
Then multiply that by as many bits of land as Greenpeace or FoE or any other obstructive group of eco-luddites can buy and see how long it takes to get shale gas out of the ground. (Clue: hell freezing is getting close.)
Landowners do not own the mineral rights. If the government hasn't got the guts to describe shale as a mineral then please elect one that has.
Compensate for proven disruption or damage. Apart from that treat each landowner as you would if you were installing a utility line or building a railway tunnel.

May 6, 2014 at 5:00 PM | Registered CommenterMike Jackson

Rob Schneider:

It's simplistic to say that in the United States the property owners get the money from oil & gas exploration and production. There are different laws (state and federal) in different jurisdictions. Most significantly it's the entity who owns the mineral rights. Those rights often spun out of the property deed many generations before now.

I'm not sure who's said the simplistic thing on this thread. Once onshore oil and gas assets were privatised no doubt similar arrangements would be made over here.

Mike Jackson:

How engagingly naive!

Not if you take on board what Rob Schneider says about the US situation, as I do. Extended property rights obviously don't mean totally equality of outcome for all tenants and leaseholders. But they certainly mean more freedom. Some will use that freedom badly but the market is (for me) bound to be better than the dead hand of Whitehall.

May 6, 2014 at 5:10 PM | Registered CommenterRichard Drake

Respect to the Bish for allowing dissent & discussion.
- It's a bad predecedent to change fundamental principles of the law in aid of individual cases like fracking, it will give legitimacy to some ugly green practices.

PS 'Yougov polls are the best opinion research you can buy', therefore often not credible.

May 6, 2014 at 5:23 PM | Registered Commenterstewgreen

At last legal action against the bird-shredders.
http://www.americanthinker.com/blog/2014/05/bird_conservation_group_taking_feds_to_court_over_windmill_slaughter_of_eagles.html

Now when will the hopelessly conlicted RSBP actually start to fulfil its primary objective?

Just to remind them "Protection of Birds".

Simple isn't it?

May 6, 2014 at 6:11 PM | Unregistered CommenterDon Keiller

The collective has multiple powers to over-ride the individual property right in the UK - the idea of allowing private property owners the right to veto such an important national issue as shale gas miles under their property, all the same time that they have to allow a gas pipeline to put through their property at 10 feet deep (as is the case - utility companies have statutory powers to install water/gas and electric cables/pipelines without the consent of the property owner) is utter madness. Either one has pure property rights (which in a congested country such as the UK is practically impossible) or one doesn't and singling out shale gas for special treatment is ludicrous.

May 6, 2014 at 6:19 PM | Unregistered CommenterJim

On a pedantic note (if you can't be pedantic over the law what can you be pedantic over!?), the Petroleum (Production) Act 1934 was repealed in February 1999.

The replacement, The Petroleum Act 1998, has the following as ss.1 and 2:

1 Meaning of “petroleum”.

In this Part of this Act “petroleum”—

(a)includes any mineral oil or relative hydrocarbon and natural gas existing in its natural condition in strata; but

(b)does not include coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation.

2 Rights to petroleum vested in Her Majesty.

(1)Her Majesty has the exclusive right of searching and boring for and getting petroleum to which this section applies.

(2)This section applies to petroleum (including petroleum in Crown land) which for the time being exists in its natural condition in strata in Great Britain or beneath the territorial sea adjacent to the United Kingdom.

However, predating both statutes the practice (in Scotland at least) was to exclude the wider mineral rights from being disponed. This practice continues, in order to avoid the disponer attempting to transfer something he or she doesn't have title to.

So repeal of the latest statute alone would not be sufficient to vest the current landowner with any mineral rights.

May 6, 2014 at 6:33 PM | Registered Commenterwoodentop

If I have the right to prevent fracking under my ground how far does that right extend? Can I prevent tracking from being carried out in Australia? What if I give approval for tracking under my back garden but some Green living in the Antipodes objects on the grounds that it is also under his/her back garden?

May 6, 2014 at 7:33 PM | Unregistered CommenterRoy

Greeneace have yet to link to the detailed YouGov poll they commissioned, but they have this article on it:

http://www.greenpeace.org.uk/media/press-releases/coalition-faces-voter-backlash-over-%E2%80%98under-house-fracking-bill%E2%80%99-new-poll-shows-20140506

It's surprisingly honest:

Under current laws, if an energy company wants to drill or frack for gas which is found under somebody’s home or land, they need the person’s consent, or must obtain special permission from a judge, otherwise they can be held liable for trespass [2].

[2] The Supreme Court held in 2010 in Bocardo SA v Star Energy [2010] UKSC 35; [2011] 1 AC 380 that property rights apply when someone wants to drill underneath your land.

Please see the case I referenced above involving Mohammed Al Fayed's Hogtrough Lane home. What they omitted to mention was that the Supreme Court thought that the value of the right was quite low - £100 for a large property, but allowed £1,000 in the case in view of the fact that permission had not been sought - but there was no right to refuse because in effect the law provides the right can be compulsorily purchased.

Drilling a 5 km lateral under a town might pass under 250 properties. A bill of £25,000 for the right to do so (plus admin cost) is not going to kill the well. I don't see why there is a need to consider changing the law.

May 7, 2014 at 1:32 AM | Unregistered CommenterIt doesn't add up...

To help you visualise what happens when private property rights trumps the common good, here are a few images from China. Yes, the communist China.

May 7, 2014 at 11:48 AM | Unregistered CommentersHx

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