Petroleum Act 1998

Last updated: 10 February 2022

This act states that Her Majesty has exclusive rights to petroleum and natural gas resources in the country's territory (including the petroleum in Crown land). It authorises the government to issue licenses to develop petroleum resources and establishes the general licensing conditions. 


The act vests authority in the Oil and Gas Authority (OGA), on behalf of Her Majesty, to grant licences to explore and exploit petroleum.  The OGA may determine what consideration should be paid for each license, by way of royalty or otherwise, with the consent of the Treasury. It also has the authority to grant flaring and venting permits.


The Secretary of State is authorised to prescribe regulations governing licensing, including issuing model clauses for licenses to be issued and enforced by the OGA.  The law also requires that any existing licenses incorporate updated model clauses pursuant to the Petroleum Act, subject to certain conditions and considerations.


The law also establishes separate safeguards for onshore hydraulic fracturing. It allows the OGA to issue  well consents for onshore areas if they set conditions that prohibit associated hydraulic fracturing from taking place in land at a depth of less than 1000 metres; and at a depth of 1000 metres or more unless the Licensee has the Secretary of State's consent for it to take place (a "hydraulic fracturing consent").


Furthermore, the act sets conditions for the granting of a hydraulic fracturing consent, including the following requirements: environmental impact studies; independent inspection of the integrity of the relevant well; monitoring of the level of methane in groundwater 12 months before the associated hydraulic fracturing begins as conditioned by an environmental permit; and monitoring of methane emissions.

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