The Petroleum (Production) Act 1934 (24 & 25 Geo. 5 ch. 36) is an Act of the

Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprema ...

which clarified the ownership of underground petroleum, vesting it in the Crown. It made provision for searching and boring for and getting (producing) petroleum and natural gas, under appropriate licenses.

Background

Before 1934 there was a lack of clarity about the ownership of oil beneath a property. For example, in 1919 the Attorney-General was asked in Parliament whether the surface owner also owned the oil beneath their land.Hansard, House of Commons debate, 12 August 1919, vol. 119 c. 1128 The

Attorney-General In most common law jurisdictions, the attorney general or attorney-general (sometimes abbreviated AG or Atty.-Gen) is the main legal advisor to the government. The plural is attorneys general. In some jurisdictions, attorneys general also have exec ...

acknowledged that opinions differed, but was inclined to the view that the surface owner is the owner of oil beneath the land. The 1934 Act clarified the position and vested underground oil in the Crown. The Petroleum (Production) Act 1918 had required persons wishing to prospect for oil to obtain a license from the Board of Trade. However between 1918 and 1934 only seven licenses were issued and by 1934 only three were in force. Furthermore, oil prices were generally falling during the 1920s thereby discouraging exploration.

The Petroleum Act 1934

The Petroleum (Production) Act 1934 (24 & 25 Geo. 5 ch. 36) received

Royal Assent Royal assent is the method by which a monarch formally approves an act of the legislature, either directly or through an official acting on the monarch's behalf. In some jurisdictions, royal assent is equivalent to promulgation, while in other ...

on 12 July 1934. Its long title is: ‘An Act to vest in the Crown the property in petroleum and natural gas within Great Britain and to make provision with respect to the searching and boring for and getting of petroleum and natural gas, and for purposes connected with the matters aforesaid.’

Provisions

The Act comprises 11 Sections and a Schedule: * Section 1. Vesting petroleum in the Crown * Section 2. Licenses to search for and get petroleum * Section 3. Compulsory rights to enter land * Section 4. Supply of natural gas * Section 5. Accounting for receipts and expenditure * Section 6. Power to make regulations * Section 7. Power to inspect plans of mines * Section 8. Powers and duties of the Board of Trade * Section 9. Definition of minerals * Section 10. Savings * Section 11. Short title, repeal and extent * Schedule

Effects of the act

The Act vested ownership of petroleum in its natural condition in underground strata in the Crown. The

Board of Trade The Board of Trade is a British government body concerned with commerce and industry, currently within the Department for International Trade. Its full title is The Lords of the Committee of the Privy Council appointed for the consideration of ...

was empowered to issue licenses to persons to search for, bore and produce petroleum.

Natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...

could be supplied to premises by license holders. The Board of Trade was empowered to make Regulations specifying how to apply for a license, the fees payable, the size and shape of the permitted area of license, and model clauses. The Board of Trade was empowered to inspect the position of mine workings. The Petroleum (Production) Act 1918 (8 & 9 Geo. 5 c.52) was repealed. The 1934 Act was seen as a sensible measure: encouraging exploration, but through licensing, preventing wildcat drilling. The Act (Section 6) gave the Minister power to make regulations. The following year the Petroleum (Production) Regulations 1935 were published and contained Model Clauses which were incorporated into licences. In 1959 Shell applied to the Ministry of Power for a licence to explore for gas in the North Sea. The company asked whether the Petroleum (Production) Act 1934, could be extended beyond territorial waters to areas of the North Sea which would fall within the jurisdiction of the British Government. The view of the Ministry was that licences could not be issued until legislation was enacted.

Later enactments

The 1934 Act was repealed by Section 51 of the

Petroleum Act 1998 The Petroleum Act 1998 is an Act of the Parliament of the United Kingdom which consolidated arrangements for the licensing, operation and abandonment of offshore installations and pipelines. As a consolidation Act, it did not change the substant ...

(1998 c. 17).

References