From Bloomberg NJews:
By Nidaa Bakhsh
The U.K. government plans the world’s “most generous” tax system for shale gas to encourage development of a resource that may meet national demand for almost five decades.
Britain proposed a tax rate on shale production income of 30 percent, compared with the current 62 percent rate on oil and gas extraction, the Treasury said today in a statement.
The government is seeking to spur gas production to counter dwindling North Sea supply and curb reliance on imports. In 2012 it lifted a ban on the hydraulic fracturing drilling technique, and in June said shale fields in northern England are twice as large as previously estimated. It’s seeking to replicate a U.S. shale boom that has cut energy costs and boosted the economy.
“I want Britain to be a leader of the shale-gas revolution –- because it has the potential to create thousands of jobs and keep energy bills low for millions of people,” Osborne said.
Opponents of hydraulic fracturing, or fracking, have said the drilling method, which blasts rock with water, sand and chemicals to release fuel, may pollute ground water and blight rural areas.
“We’re likely to see the industrialization of tracts of the British countryside, gas flaring in the Home Counties and a steady stream of trucks,” said Lawrence Carter, a campaigner at Greenpeace. “The chancellor is telling anyone who will listen that U.K. shale gas is set to be an economic miracle, yet he’s had to offer the industry sweetheart tax deals.”
The government said June 27 that shale-gas fields under counties including Lancashire and Yorkshire may hold as much as 1,300 trillion cubic feet of the fuel. A recovery rate of 10 percent -- similar to fields in the U.S -- would give the U.K. enough gas to meet demand for about 47 years.
To win support, explorers have promised local communities a 1 percent share of output revenue. Operators will also provide at least 100,000 pounds ($152,000) for every well drilled by fracking, the government said.
“We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits,” Osborne said.
Explorers Cuadrilla Resources Ltd., IGas Energy Plc (IGAS) and Dart Energy Ltd. (DTE) have licenses in British shale areas. Centrica Plc (CNA), the largest energy supplier to U.K. households, agreed in June to buy a 25 percent stake in Cuadrilla’s permits in northern England, becoming the biggest company to enter the country’s shale industry.
IGas rose as much as 10 percent to 128.50 pence in London trading today, the highest intraday price since Jan. 9. Dart Energy jumped 15 percent in Sydney. Cuadrilla isn’t traded.
Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.
Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.
Concerned Citizens of Medina County, a grass-roots group.
No Frack Ohio, a Columbus-based grass-roots group.
Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.