The Law of Energy Underground Understanding New Developments in Subsurface Production Transmission and Storage 1st Edition Donald N. Zillman Aileen Mcharg No Waiting Time
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T H E LA W O F E N E R G Y U N D E R G R O U N D
The Law of Energy
Underground
Understanding New Developments in Subsurface
Production, Transmission, and Storage
Edited by
DONALD N. ZILL MAN,
AIL EEN M cH AR G ,
L IL A B A RR E RA - HER NÁ ND E Z ,
a nd
A D R I A N B R A D BR O O K
1
3
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© The International Bar Association, 2014
The moral rights of the authors have been asserted
First Edition published in 2014
Impression: 1
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
by law, by licence or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above
You must not circulate this work in any other form
and you must impose this same condition on any acquirer
Crown copyright material is reproduced under Class Licence
Number C01P0000148 with the permission of OPSI
and the Queen’s Printer for Scotland
Published in the United States of America by Oxford University Press
198 Madison Avenue, New York, NY 10016, United States of America
British Library Cataloguing in Publication Data
Data available
Library of Congress Control Number: 2013952032
ISBN 978–0–19–870318–1
Printed in Great Britain by
CPI Group (UK) Ltd, Croydon, CR0 4YY
Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
Preface
This book is the seventh collaboration between the Academic Advisory Group
(AAG) of the International Bar Association’s Section on Energy, Environment,
Resources, and Infrastructure Law (SEERIL) and Oxford University Press (OUP).
The previous books are Human Rights in Natural Resource Development: Public
Participation in the Sustainable Development of Mining and Energy Resources (2002);
Energy Security: Managing Risk in a Dynamic Legal and Regulatory Environment
(2004); Regulating Energy and Natural Resources (2006); Beyond the Carbon Econ-
omy: Energy Law in Transition (2008); Property Law in Energy and Natural Resources
(2010); and Energy Networks and the Law: Innovative Solutions in Changing Markets
(2012).
The Preface to Beyond the Carbon Economy provides a short history of the
AAG. The Group has now reached 30 years of age. While much of the original
membership has changed, the objective has remained the same: to study analytically
developments in energy law from a worldwide perspective. We note with pride that
the authors who have contributed chapters to Energy Underground are nationals of
Algeria, Argentina, Australia, Canada, China, Colombia, Denmark, Germany,
Israel, India, Japan, Mexico, Namibia, the Netherlands, New Zealand, Norway,
Nigeria, the Republic of South Africa, Russia, Spain, the United Kingdom, and the
United States. If anything, that understates the geographic diversity of the authors.
Many of them have studied, worked, and taught in nations other than their native
countries and in international institutions.
As we noted in Energy Networks, ‘[e]nergy law is regularly changing and rarely
dull’. It continues to provide us with a rich supply of topics which are ripe for
analysis from a range of disciplinary and jurisdictional perspectives. In choosing the
theme for this book, we have been guided by the desire to identify issues on the
cutting edge of energy law, which are of interest to legal practitioners and to
academics, as well as to students of energy policy more generally. The matters
discussed in Energy Underground, whilst in some ways returning us to the property
law roots of energy law, raise issues which are the active subject of political
controversy and legislative and policy development in many parts of the world.
In developing the project, we followed our usual format. This time we met to
discuss draft chapters in Raglan, New Zealand in May 2013, and then to present
some of those chapters at seminars in Hamilton and Wellington. The authors
benefited enormously from these opportunities, and we are extremely grateful to
SEERIL, the University of Waikato, and the New Zealand Energy Law Association
for the financial support that made the New Zealand experience possible. We are
also indebted to Professor Barry Barton and Ms Rene Rewi of the University of
Waikato who were marvellous facilitators of our work. As ever, OUP has been
vi Preface
extremely efficient and supportive, and the comments from its anonymous
reviewers have been helpful in strengthening the project.
Our special thanks go to Mr Simon Beirne of the University of Maine School of
Law, Class of 2015, for his enormous help with the final stages of the project.
Simon has been research assistant, editor, and coordinator, as well as a crucial point
of contact with OUP.
The chapters take account of developments up to 7 October 2013.
Donald N. Zillman, Aileen McHarg,
Lila Barrera-Hernández, and Adrian Bradbrook.
Contents
List of Abbreviations xv
List of Contributors xxiii
1. Introduction 1
Donald N. Zillman, Aileen McHarg, Lila K. Barrera-Hernández, and
Adrian Bradbrook
I. Introduction 1
II. The emergence of energy underground 1
III. The challenges of the carbon economy 3
IV. Energy in the twenty-first century 4
V. Restraints on energy projects 7
VI. Predictions for the coming decades 8
VII. New developments underground 9
VIII. Unconventional oil and gas development 10
IX. Carbon capture and storage 13
X. The law of underground energy 14
XI. The internationalization of underground energy law 16
XII. The organization of this book 17
P AR T I : P R O P E R T Y RI G H T S I N U ND E R GR O U ND
R E S O U RC E S
2. The Common Law of Subsurface Activity: General Principle and
Current Problems 21
Barry Barton
I. Introduction 21
II. Rights of ownership of land extend downwards 22
III. Doubt about the general principle 24
IV. Subsurface activity as trespass: Bocardo v Star Energy 25
V. Property rights in minerals 27
VI. Mine workings and pore space 30
VII. The reservation of minerals to the state in common law countries 34
VIII. Conclusion 36
3. The Common Law of Underground Energy Resources in
the United States 37
Terence Daintith
I. Introduction 37
II. Private mineral ownership: the accession principle 39
viii Contents
III. Severance of the mineral estate 42
IV. The rule of capture and the special problem of oil and gas
ownership 45
V. How new (and newish) technology challenges the common law 49
VI. Conclusion 57
4. Civil Law Treatment of the Subsurface in Latin American Countries 59
José Juan González
I. Introduction 59
II. Civil law legal tradition 59
III. Subsurface property in civil law 61
IV. Current Latin American law on subsurface rights 69
V. The cujus est solum maxim and unconventional uses of the
subsurface in Latin American legal regimes 72
VI. Conclusion 74
5. Roman-Dutch Law, Custodianship, and the African Subsurface:
The South African and Namibian Experiences 75
Hanri Mostert and Meyer van den Berg
I. Introduction 75
II. Historical context 76
III. The different faces of resource regulation in South Africa
and Namibia 83
IV. Implications of the divergence and convergence of
subsurface regulation in South Africa and Namibia 91
V. Conclusion 97
P A R T I II : G O V E R N I N G U N C O N V E N T IO N A L OI L
A N D GA S E X T R A C T I O N
7. Regulating Multistage Hydraulic Fracturing: Challenges in a Mature
Oil and Gas Jurisdiction 127
Alastair R. Lucas, Theresa Watson, and Eric Kimmel
I. Introduction 127
II. Hydraulic fracturing technology 128
III. Alberta’s early experience regulating unconventional resources 131
Contents ix
IV. The societal role of the regulator; risk and intervention strategies 132
V. Regulatory interventions for unconventional resource
development 134
VI. Public engagement and change 142
VII. Conclusion 145
8. Emerging Regulatory Frameworks for Hydraulic Fracturing and Shale
Gas Development in the United States 147
LeRoy C. Paddock and Jessica Anne Wentz
I. Introduction 147
II. Shale gas development in the United States 148
III. Federal regulation of hydraulic fracturing 154
IV. State regulation of hydraulic fracturing 161
V. Analysis of differing approaches to critical regulatory issues 165
VI. Conclusion 180
9. Sleeping with the Enemy: The Legal Landscape of Unconventional
Gas Development in Argentina 183
Lila K. Barrera-Hernández
I. Introduction 183
II. Energy is politics 183
III. The money trail: nationalization of Yacimientos
Petrolíferos Fiscales 185
IV. A spanner in the works: Decree 1,277 and Law 20,680 on
domestic supply of goods and services 187
V. Federalism, environment, water, and the public 191
VI. More disquieting news 198
VII. Conclusions 198
10. Japan’s Undersea Mineral Resources and Its New Mining Act 201
Kazuhiro Nakatani
I. Introduction 201
II. Japan’s rich undersea mineral resources 201
III. Japan’s Mining Act of 1950 204
IV. Japan’s New Mining Act of 2011 204
V. Some observations on the New Act 207
VI. Japan’s future energy and mineral policies and the
importance of undersea mineral resources 209
11. Evolution of Algeria’s Legal and Regulatory Framework for
Unconventional (Shale) Hydrocarbon Development with Emphasis
on Environmental Aspects 211
Mohammed Abdelwahab Bekhechi
I. Introduction 211
II. Algeria’s legal and regulatory framework for the hydrocarbon
sector: an overview 213
x Contents
III. Unconventional hydrocarbon exploration and production
in Algeria 217
IV. Algeria’s environmental law and hydrocarbon sector
development 219
V. Concluding remarks 229
12. Regulation of Unconventional Reservoirs in Colombia 231
Milton Fernando Montoya Pardo
I. Introduction 231
II. Importance of the hydrocarbon industry 231
III. Institutional and legal framework 233
IV. Unconventional hydrocarbon potential in Colombia 239
V. Ongoing projects 240
VI. Environmental concerns 243
VII. Conclusion 244
P AR T I V : A D D RES S I NG E N V I R O NM E NT A L A N D
S U S T A I N A B I L I T Y I SS U E S U N D E R GR O U N D
13. Risk, Regulation, and Carbon Capture and Storage: The United
Kingdom Experience 249
Aileen McHarg and Mark Poustie
I. Introduction 249
II. CCS and UK energy policy 251
III. Risk, regulation, and CCS 253
IV. The United Kingdom regulatory framework: regulating for CCS 258
V. The United Kingdom regulatory framework: regulation of CCS 266
VI. Evaluation and conclusions 273
14. Carbon Capture and Storage Development in China 275
Wang Mingyuan and Jin Feng
I. Introduction 275
II. The significance of CCS development in China 275
III. Present CCS development in China 279
IV. Difficulties and issues 284
V. The National Five-Year Specific Plan 287
VI. Essential steps for the next stage of CCS in China 289
15. Dynamic Regulation and Technological Competition: A New Legal
Approach to Carbon Capture and Storage 295
Lital Helman, Gideon Parchomovsky, and Endre Stavang
I. Introduction 295
II. Theoretical foundations 296
III. Framework applications 299
IV. Conclusion 307
Contents xi
Index 511
List of Abbreviations
Chapter 1
CBM coal bed methane
CCS carbon capture and storage
CSG coal seam gas
EIA Energy Information Administration [United States]
LNG liquefied natural gas
OECD Organization for Economic Co-operation and Development
UK United Kingdom
US United States
Chapter 3
CBM coal bed methane
CSG coal seam gas
UK United Kingdom
US United States
Chapter 5
CC Constitutional Court [South Africa]
CCS carbon capture and storage
MPRDA Minerals and Petroleum Resources Development Act
Namcor National Petroleum Corporation of Namibia (Pty) Ltd
SCA Supreme Court of Appeal [South Africa]
US United States
Chapter 6
AfDB African Development Bank
CCS carbon capture and storage
CDM Clean Development Mechanism
CER Certified Emission Reductions
CESCR Committee on Economic, Social and Cultural Rights
ECE Economic Commission for Europe
EIA Environmental Impact Assessment
Environmental 1991 Protocol on Environmental Protection to the 1959 Antarctic
Protocol Treaty
GEF Global Environment Facility
GHG greenhouse gas
GoK Government of Kenya
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