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Conventional oil and gas win in the court of appeal

16 December 2014

While local opposition to fracking continues to dominate the headlines, an important Court of Appeal decision was made in June this year (in turn confirming the judgment in the High Court in July last year) which serves as a reminder of the continued significance of the conventional oil and gas industry in the UK.

That Court of Appeal decision should now help the domestic oil and gas industry on a national basis, by removing some of the barriers to obtaining planning consent for hydrocarbon exploration in areas which are designated as Green Belt.

Charles Russell Speechlys’ client, Europa Oil & Gas, had challenged in the High Court a 2012 Planning Inspector’s decision dismissing its appeal against Surrey County Council’s refusal of consent for Europa to develop an exploratory hydrocarbon well at Holmwood.

The proposed exploration site in this case is in the Green Belt and the High Court challenge centred on the Inspector’s interpretation of the National Planning Policy Framework and the Surrey Mineral Policy, relating to testing for hydrocarbons.

The Inspector’s view had been that hydrocarbon exploration was preparatory to extraction, not part of it, and, as such, subject to higher planning controls. This was held by Mr Justice Ouseley to be wrong, and that exploration for hydrocarbons indeed forms part of the process of mineral extraction for the purposes of the above policies.

The Judge held that the Inspector might have come to a different conclusion in the Inquiry, if he had recognised that testing for hydrocarbons was mineral extraction and then had considered duration, reversibility and purpose of the operations in the Green Belt, from that starting point.

Leith Hill Action Group then challenged Europa’s High Court success in the Court of Appeal. However, the Court of Appeal again found in Europa’s favour – that the Inspector had indeed erred in his interpretation of the above minerals policies and that, without that error, the planning decision might well have been different.

Following the above quashing of the Inspector’s decision, the appeal has now been remitted to the Planning Inspectorate for redetermination, which will involve a further Planning Inquiry next year. The challenge in the High Court and Court of Appeal related to the interpretation of the policies, whereas an appeal would again be decided on the merits of the particular case.

The case has been tracked in its passage through the High Court and the Court of Appeal by many other players in the UK hydrocarbon field. While the protestors at Balcombe and elsewhere in the country can perhaps celebrate when they delay operations, those in the oil and gas industry wishing to bring forward a conventional exploration well, have been cheering at the above Court successes.

The clarity provided by the Court in relation to the interpretation of the National Planning Policy Framework and County mineral policies governing the exploration for conventional hydrocarbons, is very welcome. It should now no longer be more difficult to obtain consent for an exploration well than a production well.

The decision may also serve to assist the UK Government’s stated aim for the UK to make better use of its own hydrocarbon resources, rather than relying too heavily on imported oil and gas.

This article was written by Helen Hutton.

For more information please contact Helen on +44 (0)20 7203 5314 or helen.hutton@crsblaw.com.