Written evidence submitted by the National Farmers’ Union (NFU)

Introduction

1. The National Farmers’ Union represents over 55,000 farmer and grower members as well as 40,000 countryside members with an interest in the countryside and rural affairs.  With 75% of the national land area in the agricultural sector, the NFU is well placed to comment on the issue of shale gas and hydraulic fracturing, or “fracking”. 

2. While the "unconventional" oil and gas industry is making only slow progress in assessing and exploring new fossil fuel reserves such as shale gas and coal-bed methane, we welcome the opportunity to address the protocols and safeguards we would like to see in order to manage the impact of fracking on the agricultural sector.

3. Our approach is based on the evidence we have to hand, mindful that the development of shale gas in the UK geological and hydrological context is still at an early stage.

Energy diversification and carbon emissions

4. The mineral rights to gas and oil are held by the Crown, so farmers and growers would potentially receive income from unconventional gas and oil exploration only through access rights to their land.  It is expected that shale gas interests will be relatively short-term (up to 10 or 15 years) compared with other energy diversification opportunities for farmers, although future liabilities which may reside with the relevant landowner for decommissioned fracking sites could extend for decades. 

5. The NFU would like to see the Government act with greater consistency across energy technologies to ensure a level playing field for all potentially low-carbon energy sources.  It is difficult to square the current strong Government support for fracking with the much more cautious approach to land-based renewable energy opportunities such as bioenergy, solar and wind power, which remain far more popular with the general public than with many political representatives.  For example, "Wave 11" (4-Nov-2014) of the Government’s own DECC Public Attitudes Tracker found that 78% of UK adults support the use of renewables, including biomass (61%), onshore wind (67%) and solar (80%), whereas just 26% of people said they support shale gas extraction.

6. It has also been argued (by renewable energy trade associations as well as Chatham House and various green groups) that diverting investment into unconventional gas and oil supply rather than energy efficiency and renewables will hinder the delivery of the UK's carbon emissions targets.

7. Diversification into renewable energy is increasingly treated as an integral part of the future of our agricultural sector, supporting profitable farming and helping to manage volatility in farm commodity prices, in energy costs and in unpredictable extreme weather events.  Fracking does not represent a comparable farm diversification opportunity, but it poses a potential risk to farmland and farming.

NFU members' concerns

8. Over the past 2-3 years, the NFU has gathered evidence and listened to the concerns of our farmer members about the potential direct and indirect impacts of fracking on farmland and farming, with a particular concentration on the Northwest (where most pre-commercial activity has taken place) but also in the Southeast, Northeast and (recently) the East Midlands. 

9. The most significant potential direct impacts (among others) include:

• Possible risk of contaminating water resources or land
• Competition for water, and degree of seasonal water abstraction likely to be required
• Management and disposal of contaminated flow-back wastewater

10. In many cases, there are technical solutions to address these direct impacts through improved technology and appropriate regulation.  We note that these risks apply to agricultural tenants as well as landlords (who may nevertheless benefit from access payments).

11. Possible indirect impacts include:

• reduction in the open market value of land because of current perceptions of fracking (with implications for borrowing costs, farm business expansion) - the issue of property blight has been specifically raised by a group of NW members
• potential economic damage to supply chain relationships or farm diversification income such as tourism (especially sensitive agricultural products like fresh produce, again because of current public attitudes towards fracking) - this has been raised at local meetings in the NW region and elsewhere.  However, there is little evidence that the major supermarkets are presently concerned (apart from the Co-operative, which has adopted an anti-fracking stance and has supported campaigners)
• short-term damages and costs incurred by anti-fracking protestors on farmers’ land (this is already occurring – one shale gas operator has offered assistance to landowners)

Water resources

12. In the UK, water use for fracking will be subject to license and drought plans through the Environment Agency and local water companies.  Some 30-50% of the water returns up the well shaft as flow-back fluid.  Part of this can be directly recycled on-site, but some will be contaminated with minerals and salts and would have to be processed at a suitable location.

13. The shale gas industry would represent an additional water user which could increase water stress in times of shortages.  We understand that water could be piped to a fracking site, brought in by multiple road tanker movements, or extracted as ground water. In all cases, the impact on existing surface and ground water abstractors, including those depending on private supply must be considered by the Environment Agency. 

14. The NFU responds to each water company’s drought plan and we strongly argue that in times of water shortage, alongside public supply, agriculture must be a priority.  We would also engage with local shale gas producers to make them aware of times of high water use by agriculture, for example for irrigation of a particular crop that is grown in the area during a particular season. 

15. For the disposal of used water, it is clearly important for this water to be fully characterised and an appropriate assessment should be made as to the suitability of different disposal options, bearing in mind the UK’s obligations under the Water Framework Directive.  This should be verified by a technically competent regulator. 

16. The NFU understands that best practice in development of gas production pads involves the laying of an impermeable membrane with surrounding bunding and a sump to contain any spillage from pipework or vehicles.

Our policy asks

17. In order to better reassure the agricultural sector the NFU has a number of key policy ‘asks’ of Government and the fracking industry, which address three phases of operation (exploration, commercial extraction, aftercare):

• A standardised process for negotiating underground access, with an agreed minimum level of compensation, as for other major infrastructure schemes
• Effective regulation, backed by industry good practice, to minimise the impact on farmland and farming
• Government or industry underwriting of landowner compensation and possible long-term liabilities

18. Under the first of these, the NFU would like to further explore special arrangements in open countryside where there are fewer than (say) three landowners involved, as opposed to DECC's proposal (for land in multiple ownership) whereby compensation is paid only to a “relevant community body” agreed by the operator.

19. We would also like to further clarify landowner mineral rights to resources below 300 metres depth, perhaps through planning conditions, to avoid them being "sterilised" by horizontal or diagonal drilling. 

20. While in the phase of exploratory drilling, the NFU would also seek assurance from DECC and Defra that the Environment Agency will have the competence and resources to manage potential environmental impacts before revenues become available from commercial production.

21. Concerning long-term liabilities for contamination from decommissioned fracking sites, the NFU has previously pointed out to DECC officials and ministers that under the 1990 Environmental Protection Act if no 'polluter' or 'knowing permitter' can be found after reasonable enquiry then the owner or occupier of the site may be liable to pay the remediation costs. 

22. Amendment 15 to the Infrastructure Bill (at Clause 38), which was passed in the House of Lords on 19 November 2014, effectively addresses this problem for landowners by releasing them from liability “for any loss or damage….unless that loss or damage is the result the landowner’s deliberate omission".  The NFU would like to see a similar exemption from liability extended to tenant farmers as ‘occupiers’ of the land. 

23. We also understand from discussions with the industry body UKOOG that provision of a 'captive insurance’ vehicle is under consideration, a proposal that we would welcome if it can be implemented early enough, in order to address the possible apportionment of liabilities under any circumstances where the shale gas operator no longer exists or cannot be traced by reasonable enquiry.  The only other acceptable alternative under such circumstances would be for the Government to underwrite such liabilities.

31 December 2014