If you live in or near an area that is licensed for petroleum exploration development (a PEDL area), your home may be adversely affected by fracking. The possible consequences for homeowners are as follows:
- The fracking company may want to detonate explosives on your land;
- You may find it difficult to obtain buildings insurance;
- The value of your home may go down, and
- You may find it difficult to sell your property.
Experiences with the fracking company, Cuadrilla
Some homeowners living on the Fylde Coast in Lancashire have had serious problems with the fracking company, Cuadrilla. In 2011 there were two minor earthquakes near Blackpool in Lancashire, and subsequently two reports[i] [ii] both attributed the quakes to fracking operations by Cuadrilla. At first most local residents did not realise that the earth tremors had anything to do with fracking. However, they became extremely concerned about seismic testing in 2012, when Cuadrilla used explosives and ground vibrators for geological surveys and “repeatedly trespassed on to private land”.[iii]
Local resident, Mark Mills, informed The Guardian (2.8.13)[iv] that, although he told a Cuadrilla operator not to come back on his land, they were “extremely unpleasant” and repeatedly trespassed into his garden to lay cables and drive in dozens of sensors to make seismic recordings. He copied the operators’ maps which allegedly showed a mark indicating the site of a planned detonation near to a gas main and his sceptic tank. Mr Mills took legal action against Cuadrilla, and in February 2013 the company paid him compensation and paid his legal fees. Subsequently, Mr Mills claimed further compensation for damage to his property following explosions set off on his neighbour’s property. Other local residents in the same area reported that Cuadrilla contractors had trespassed on their land as well. This article also states that Cuadrilla “failed to inform the government for six months that small earthquakes triggered by their drilling had deformed the well casing that is designed to prevent the contamination of ground water”.
(N.B. Seismic testing is usually carried out before any drilling takes place. It involves detonating explosives buried very shallow and sometime also the use of “thumper” trucks. It may cause damage to the landscape and nature but it does not cause earthquakes).
How could fracking affect your buildings insurance?
Local residents on the Fylde coast now claim that many insurance companies are not willing to provide buildings insurance to cover damage caused by fracking. Cuadrilla paid some compensation to homeowners, but apparently they will not do this if there is any evidence of previous structural damage.[v]
If homeowners already have buildings insurance, it will usually cover structural damage caused by fracking, but insurance companies are becoming reluctant to cover such losses because fracking has been blamed for ‘inducing’ earthquakes. In the United States there is widespread fracking, and in March 2017 the U.S. Geological Survey stated that 7 million Americans were at risk of ‘induced seismicity’.[vi] For example, earthquakes used to be rare in the state of Oklahoma, but after ten years of soaring shale gas and oil production, Oklahoma had 2,500 earthquakes in 2016, including three which were greater than magnitude 5.0. Earthquake insurance is now “almost impossible to buy in Oklahoma”.[vii]
Most home and commercial property insurance policies exclude losses arising from pollution or contamination. An article in Farmers Weekly[viii] warned farmers and landowners not to rely on insurance cover to protect them against losses such as contamination or damage to crops arising from nearby fracking operations. A farmer, who gave an energy company permission to dig a test borehole for coal bed methane gas on his land, said he regretted this when he learned how potentially damaging the drilling operation could be.[ix] He commented: “I learned that any pollution of the two springs on my land would devalue the farm 60 – 70%, and that if my cows died I would not get compensation. All I would have received was up to £4,000 to put the land back to what it was.”
If you live near a fracking site, you may face an additional uninsured risk of contamination spread by flooding. As one in five of the 150 PEDL areas recently announced have been identified as having a significant risk of flooding, contamination could be caused by polluted water from a fracking site being spread during exceptional floods.[x]
If your home is within a five miles of a fracking site, you may also have to pay more for buildings insurance to cover potential explosions.[xi]
The impact on house prices
A government report has suggested that properties located within one mile of a fracking site could see a reduction in price of up to 7%[xii], but this may be a significant underestimate. According to The Sunday Times,[xiii] hundreds, perhaps thousands of shale gas sites could be built, mostly in rural areas, and “fracking could be such a blight on homes near drilling sites that they will be placed into lower council tax bands.” The Valuation Office Agency, which sets the values of properties for council tax purposes, said that any industrial or commercial development near homes, including fracking sites, could reduce their value.
Dianna Westgarth, the owner of a five bedroom house 300 yards away from a potential fracking site on the Fylde peninsula, told The Daily Mail[xiv] that the threat of fracking had wiped £535,000 (over 70%) off the value of her home. She said, “Two other estate agents said they would rather not even comment, because the possibility of fracking meant they couldn’t actually say if it was worth anything at all.”
A year later, The Express[xv] stated: “Fracking is set to wipe £75 billion off the value of Britain’s homes (…) Leading property experts have voiced fears the controversial drilling technique could bring the housing market close to COLLAPSE in large parts of the country.” This article lists 18 areas where house prices are most affected and reports that a survey of 60 estate agents in these areas found that most thought house prices could drop by up to 10% while a handful anticipated losses of up to 70%. Paula Higgins of the HomeOwners Alliance told The Express: “Homeowners are being kept in the dark on how fracking will affect them. Some are already bearing the brunt through aborted sales.”
Could fracking take place under your home?
Yes, it could, and the fracking company does not even have to seek your permission! The Infrastructure Act 2015 gives companies the right to use underground land 300 metres and below for the purpose of exploiting oil and gas without notifying owners (subject to various conditions) and the right to leave pipes or substances in the land. To speed up the planning process, the Act also states that if a planning authority has not responded to an application within a specified period, certain planning conditions can be ‘deemed discharged’ – in other words, it will be assumed that the company has complied with certain conditions whether they have or not.
In October 2016, the Communities Secretary, Sajid Javid, granted permission to Cuadrilla Resources to frack underneath homes at the Preston New Road site near Blackpool.[xvi]
Can they frack on your land, if you don’t want them to?
Yes they can! If an agreement cannot be reached between the operator and the landowner(s), then under Section 7 of the Petroleum Act 1998 the operator who holds a licence (PEDL) can obtain rights to ‘enter upon the land to sink boreholes, for the erection of buildings and the laying and maintenance of pipes, the right to obtain a water supply or other substances and the right to dispose of water or other liquid.’[xvii] This right appears to include seismic surveys to find out what petroleum, gas or minerals lie underground.[xviii]
This may explain why operators working for Cuadrilla thought they could trespass on to private land in Lancashire, lay cables, install sensors and mark a site for the detonation of explosive charges. However, Cuadrilla subsequently had to settle a legal claim made by the homeowner by paying legal costs and compensation.[xix]
[i] Ch. A. Green et al, “Preese Hall shale gas fracturing – review & recommendations for induced seismic mitigation”, G Frac Technologies, Keele University and British Geological Survey, prepared for the Department of Energy and Climate Change (DECC), April 2012, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/48330/5055-preese-hall-shale-gas-fracturing-review-and-recomm.pdf (19/09/2013)
[ii] C.J. de Pater and S. Baisch, “Geomechanical Study of Bowland Shale Seismicity – Synthesis Report”, report commissioned by Cuadrilla Resources, http://www.cuadrillaresources.com/wp-content/uploads/2012/02/Geomechanical-Study-of-Bowland-Shale-Seismicity_02-11-11.pdf (19/09/2013)
[iii] The Guardian, 2.8.13, “Fracking firm Cuadrilla trespassed on private land for geological surveys”.
[iv] The Guardian, 2.8.13, “Fracking firm Cuadrilla trespassed on private land for geological surveys”
[vii] Reuters, 12.5.16, “Fracking-related quakes have made earthquake insurance almost impossible to buy in Oklahoma”.
[viii] Farmers Weekly, 2.6.16, “Insurance unlikely to cover fracking damage, farmers warned”
[ix] The Guardian, 17.7.15, “Beware permitting fracking, says farmer who allowed coal methane borehole.”
[x] Independent, 9.1.16, “Householders affected by floods face insurance double-whammy if they live nearby planned fracking sites”.
[xi] Defra, 2015, Shale Gas: Rural Economy Impacts [de-redacted version]
[xii] Defra, 2015, Shale Gas: Rural Economy Impacts [de-redacted version]
[xiii] The Sunday Times, 24.8.14, “Fracking digs deep hole in house values”
[xiv] The Daily Mail, 24.8.14, “Fracking wiped £535,000 off my home’s value”
[xv] The Express, 18.7.15, “MAPPED: Could YOUR home see its value COLLAPSE due to fracking?”
[xvi] The Financial Times, 6.10.16, “UK fracking go-ahead boosts shale gas industry”
[xix] The Guardian, 2.8.13, “Fracking firm Cuadrilla trespassed on private land for geological surveys”.