Chancellor George Osborne’s inclusion of more support for shale gas development in last week’s Budget has sparked debate across the industry.
In addition to tax breaks for hydraulic fracturing operations, there will also be new technical planning guidance by mid summer, plus incentives for local communities.
Mr Osborne also said he was introducing “a generous new tax regime, including a shale gas field allowance, to promote early investment” which would allow Britain to take advantage of low-cost energy.
The move was welcomed by companies such as Cuadrilla, the only firm currently engaged in fracking in the UK, but environmental organisations and local community action groups roundly condemned the move.
Planning problems were cited by Cuadrilla earlier this month as the reason for delaying new fracking operations in 2013.
The pledge to provide technical guidance this July was well received by the company.
Mr Osborne stated during his Budget speech that “shale gas is part of the future and we will make it happen”.
The incentives received a positive reception from B&ES head of sustainability David Frise.
“The chancellor was right to identify shale gas as ‘part of the future’,” he said. “We have to make some hard choices and we have to make them very quickly.
“We are running out of energy and gas is very much the lesser of several evils.
“We need to focus on what is in front of us and that means using lots of conventional and proven gas-fired technology as energy efficiently as possible.
“Responsible use of fossil fuels will buy us some time to allow renewables and nuclear to start narrowing the gap further down the road.”
The government also plans to introduce a shale gasfield allowance in its 2014 Budget, with industry experts predicting that this could reduce the effective rate paid to the government on production from 62 to 30 per cent.
This year’s Budget also extended the ringfence expenditure supplement for shale gas projects, introduced in 2006, from six to 10 years.
This is designed to assist companies with insufficient taxable income to offset exploration and development costs against tax.
Further industry discussion on the Budget centred on the Help to Buy incentive, intended to encourage more activity in the housing market and increase activity in the construction sector.
While this was welcomed by many, others believed that this and infrastructure investment would not begin to make a difference before 2015 at the earliest.