Shale gas represents a huge economic opportunity for the UK with research from the Institute of Directors showing investment could reach £3.7bn a year and support 74,000 jobs in the oil, gas, construction, engineering and chemicals sectors. The industry will today set out proposals on how best to secure a role for UK companies as part of its supply chain as shale gas production develops in the UK.
Community benefits for local people will also be strengthened. Last year, the industry announced that local communities would receive £100,000 when a test well is fracked - and a further 1% of revenues if shale gas is discovered. This could be worth £5-£10m for the typical site over its lifetime. The industry has today confirmed it will further consult on how this money can best be shared with the local community, with options on the table including direct cash payments to people living near the site, plus the setting up of local funds directly managed by local communities.
Prime Minister David Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why we're going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country".
Today's action builds on the action the Government has already taken to back our shale gas production sector, which has already unlocked investment:
- In the Autumn Statement 2013, we introduced the most competitive tax regime in Europe for shale gas. New operators in this emerging industry will now have an effective tax rate that is lower than in the US
- We have streamlined and simplified the regulation of exploration activity through the Environment Agency, including developing a single application form for permits. And we will go further in 2014 - the Environment Agency aims to reduce permitting times for low-risk activity from 13 weeks to approximately 2 weeks during 2014
- Centrica last year announced an investment of up to £160m in shale gas projects in the Bowland shale. GDF Suez recently announced a £25m investment for several shale gas and coal-bed methane projects in Cheshire and the East Midlands. The 14th onshore licensing round, planned for later this year, is expected to bring more new entrants to the market, helping ensure the UK is able to get the most value from its onshore oil and gas resources.
Green party leader Natalie Bennett dismissed Government proposals to boost fracking and instead championed better insulation of homes as a means of cutting energy bills and creating jobs. Ms Bennett told ITV's Daybreak: "If we insulated every home in Britain that needed it, we would create up to 200,000 jobs. What we would also do is cut our carbon emissions and slash bills, take nine out of 10 people out of fuel poverty. Six million people in Britain are now in fuel poverty. We have got to tackle that. We are not going to tackle that with gas, which is the expensive, high-cost and volatile future."
Labour's Shadow Energy Minister, Tom Greatrex, welcomed the announcement saying: "Gas will remain an important part of our energy mix in the future, and if shale gas can replace our rapidly depleting North Sea reserves it could help improve our energy security. It is right that any communities that host nationally significant energy infrastructure are able to share in its rewards.
However the Labour MP has criticised the Prime Minister accusing David Cameron of "over-egging" the figures on fracking. John Mann commented: "I am concerned that Mr Cameron is over-egging the pudding. This Beckingham site currently pays just under £93,000 per year in Business Rates and it is already fracking for oil. This is nowhere near the promised figure of £1.7m and in my view is wildly optimistic and is within the upper reaches of what only the largest fracking sites will have to pay. We must ensure that local communities reap the benefits from sites such as these and announcements like this must not see them short changed." Also commenting that "This site is also adjoining the biggest RSPB wetlands site in the country."
The Local Government Association (LGA) say that the PM's fracking business rates pledge 'a step in the right direction' but community benefits are not good enough. A LGA spokesman said: “Councils have been clear that the people and communities whose areas host fracking sites must feel the benefit. Today’s announcement from the Prime Minister is a step in the right direction, which will mean that business rates paid by shale gas firms will help councils to maintain and improve local services for residents. While it is encouraging that government is listening, local areas will be keen to hear more details on how the community benefits package will be strengthened to fairly renumerate those who will be most affected.
Continuing the spokesman said: “Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes. One per cent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10 per cent. The community benefits of fracking should be enshrined in law, so companies cannot withdraw them to the detriment of local people. The LGA is encouraging the development of models which will ensure cash is used to support local priorities and which will treat money from fracking separately from ordinary tax revenue.”
Labour's Shadow Energy Minister, Tom Greatrex, welcomed the announcement saying: "Gas will remain an important part of our energy mix in the future, and if shale gas can replace our rapidly depleting North Sea reserves it could help improve our energy security. It is right that any communities that host nationally significant energy infrastructure are able to share in its rewards.
However the Labour MP has criticised the Prime Minister accusing David Cameron of "over-egging" the figures on fracking. John Mann commented: "I am concerned that Mr Cameron is over-egging the pudding. This Beckingham site currently pays just under £93,000 per year in Business Rates and it is already fracking for oil. This is nowhere near the promised figure of £1.7m and in my view is wildly optimistic and is within the upper reaches of what only the largest fracking sites will have to pay. We must ensure that local communities reap the benefits from sites such as these and announcements like this must not see them short changed." Also commenting that "This site is also adjoining the biggest RSPB wetlands site in the country."
The Local Government Association (LGA) say that the PM's fracking business rates pledge 'a step in the right direction' but community benefits are not good enough. A LGA spokesman said: “Councils have been clear that the people and communities whose areas host fracking sites must feel the benefit. Today’s announcement from the Prime Minister is a step in the right direction, which will mean that business rates paid by shale gas firms will help councils to maintain and improve local services for residents. While it is encouraging that government is listening, local areas will be keen to hear more details on how the community benefits package will be strengthened to fairly renumerate those who will be most affected.
Continuing the spokesman said: “Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes. One per cent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10 per cent. The community benefits of fracking should be enshrined in law, so companies cannot withdraw them to the detriment of local people. The LGA is encouraging the development of models which will ensure cash is used to support local priorities and which will treat money from fracking separately from ordinary tax revenue.”
