Following two earthquakes in Blackpool last year shale gas extraction (known as ‘fracking’) was suspended in the UK and a process of consultation was undertaken due to a number of environmental and safety concerns about the practice. At present, the ban on fracking remains in place. It is, however, anticipated that the Government may lift the ban in the coming months as part of the broader ‘gas strategy’.
These intentions have been further confi rmed at the recent Conservative Conference where the Chancellor, George Osborne, pledged to consult on a tax regime for the shale gas industry. He said that the industry would be excluded from the current oil and gas taxation regime, and instead would be subject to a targeted tax regime with the aim to encourage investment. The consultation is expected to take the form of general, informal industry engagement which will take place before a decision on the fi nal fi scal structure is made. The intention is that shale tax breaks would result in greater exploitation of the resource in the UK.
Shale gas has been the subject of global controversy, with Bulgaria and France banning the extraction process outright. It has recently been announced in France – the country with some of the highest levels of potentially recoverable shale gas reserves in Europe – that the ban on fracking will remain in place, despite arguments from industry groups in favour of the practice. The French President stated at an Environmental Conference in September that no-one could be certain that fracking was free from ‘serious risks to health and the environment.’
By comparison, in London, at the recent GasTech Conference, the Secretary of State for Energy and Climate Change, Edward Davey, said that he hoped that it would prove possible for him to ‘give a green light to shale’. He noted, however, that it would ‘be wrong to dismiss questions about regulatory oversight and communities’ concerns’ and thus he is willing to be more patient in the exploitation of these reserves than supporters of the practice would prefer.