Under the conditions of their Petroleum Exploration and Development Licence, each licensee is responsible for wells drilled under their licence, including their safe plugging and abandonment. Before issuing licences, the Oil and Gas Authority considers the ability of operators to fulfil their responsibilities. In addition, as a matter of policy the Government will assess the financial status of companies wishing to carry out hydraulic fracturing operations, including their ability to fund decommissioning costs, before granting Hydraulic Fracturing Consent (HFC). Hydraulic Fracturing Consent will not be issued unless my rt. hon. Friend the Secretary of State is satisfied that it is appropriate to do so. The Secretary of State is entitled to refuse HFC and/or, in certain circumstances, can impose conditions to provide additional protections.
The relevant regulators, including the Oil and Gas Authority, Environment Agency, and Health & Safety Executive, will not allow onshore operators to relinquish their licences and permits until they are satisfied that the terms of the relevant permits/licences have been met and that any assets have been safely plugged and abandoned.
Planning permission conditions set by the relevant Minerals Planning Authority (MPA) generally include site restoration to return the land to its former state, as witnessed at Cuadrilla’s former Preese Hall site in Lancashire; the first hydraulically fractured well in the UK. In this case the well has been fully decommissioned in accordance with legislation. MPAs may also take financial security to cover decommissioning costs should they consider it necessary.
If, despite the precautionary measures set out above, the operator was to become insolvent, the liability may fall to other appropriate parties, which may include other licensees or landowners.