Fracking agreements - protect your interests

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News article

Fracking agreements - protect your interests

February 2014

renewable energy news
Landowners have been warned to think of the long term as the rush for fracking sites is set to hot up.
 
News that French oil and gas company Total will invest at least £12.7 million by buying interests in two shale gas exploration licences in Lincolnshire has opened speculation that the big energy firms are ready to move into the market. That news also followed the purchase by Centrica of a 25% share of Cuadrilla for £40 million.
 
The Land Registry has also revealed that 73,000 claims to manorial rights – which allow mineral extraction under properties – have been received , while it has been announced cash-strapped councils could keep up to £1.7m extra a year from each fracking site.
 
Land and energy experts at Fisher German believe those pressures could see a rapid expansion in the market and fear that some landowners will rush into agreements - jeopardising the future of their land and without achieving maximum financial gain.
 
Darren Edwards, a partner at Fisher German, said: “Farming, in common with most industries, has had a difficult time and I am sure that many landowners might be interested in opening the field gate to energy firms wishing to undertake exploratory drilling for shale gas.
 
It is up to them to weigh up any environmental issues, but it is imperative that they deal with what could well be a “gold rush” in the right way so that they optimise the fiscal benefits but also protect their farm or land.
 
Most people are aware of the protests which took place at Balcombe in West Sussex, where damage to property, adverse media attention, and legal issues with protestors resulted in costs to the landowner, and it is exactly these issues which the site owner needs protection against.

In the US, the big energy companies bided their time while initial tests were done and then poured into the market. Total putting its head above the parapet may well now see the others emerging and making key commercial investments which will inevitably involve approaches to landowners.

We are talking about major commitments. A typical shale gas well pad will take up 1 - 2 hectares of land and if it moves forward commercially, there will be multiple wells on each pad, operated for up to 30 years.
 
We know from experience that too many landowners rushed into financial agreements before encountering problems when telecommunications masts were first introduced onto land and this happened again with renewable energy projects including wind farms and more recently solar parks.
 
We expect that – because of increasing energy prices and the current political and public pressure on other energy sources – the demand to secure fracking sites could be significant and developers have a habit of being very pushy.
 
We have been dealing with several enquiries and we would urge all landowners to seek advice from professional experts before entering any discussions, or if they want to see if their land has potential shale gas reserves."
 
For further information contact Darren Edwards on 01858 410200 email darren.edwards@fishergerman.co.uk
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