Engineering news
Chancellor George Osborne has boosted the controversial shale gas industry in the UK’s 2013 Budget with a set of tax relief measures, announcing that “shale gas is part of the future and we will make it happen”.
Shale gas reserves in the UK are estimated by the British Geological Survey to be as large as 150 billion cubic metres (5.3 Trillion Cubic Feet) and interest is high in exploiting potential reserves following the apparent success of the burgeoning sector in the US.
The tax relief measures are designed to encourage early investment in the UK’s sector, which only a handful of companies, including Cuadrilla and iGas, are currently looking to exploit.
The UK Onshore Operators Group (UKOOG) represents companies conducting exploration, production and storage of shale gas. Speaking to PE after the announcement, Ken Cronin, chief executive of UKOOG, said: “We welcome the announcement that the Chancellor gave today - for local community benefits, planning and tax reliefs. Communities should benefit from hosting our operations and the proposed taxation measures will help the industry invest in new sites.
“The UK is currently entering an important phase in terms of the exploration of shale and the announcements in the Budget today will help the industry to take the next steps in assessing this resource.”
The proposed tax relief measures are a shale gas field allowance to be introduced in the Finance Bill 2014 and an extension to the ring-fence expenditure from six to ten years.
The Government will also produce technical planning guidance for use by local authorities during the exploration phases of shale gas drilling by July this year. In addition the Chancellor committed to developing proposals to ensure that local communities benefit from shale gas projects conducted in their area by the end of this summer.
However environmental groups condemned the measures as unfair, warning that they would stifle investment in the low carbon sector. Lawrence Carter, an energy campaigner for Greenpeace, said: “Everyone from the energy regulator Ofgem to BP to the Energy Secretary say UK fracking won’t bring down bills.
“George Osborne needs to stop playing Britain’s JR Ewing and instead back the shift to carbon free energy, which will create jobs and be cleaner, safer and cheaper over time.”
Dr Tim Fox, head of Energy and Environment at the Institution of Mechanical Engineers, said: “It’s important for Government not to see shale gas as the silver bullet many claim it is. Shale gas is unlikely to impact greatly on energy prices in the UK and we must avoid becoming hostage to volatile gas markets by not being over-reliant on gas.”