16 Jul 2013
After discovering that the amount of shale gas may be greater than previously thought, the Treasury is set to announce a 30% tax break for the industry. The field allowance mechanism, previously used in the offshore oil and gas industry, will reduce the shale gas tax rate which is currently at 62%.
The British Geological Survey said last month: “There could be 1,300 trillion cubic feet of gas in northern England alone. If just 10pc could be extracted it could meet Britain’s needs for more than four decades”. “Andrew Austin, chief executive of shale explorer IGas, said he was hopeful of a “sensible set of proposals which will allow the safe appraisal of the country’s shale resources”.
The discovery of additional shale gas has the potential to provide a new source of energy across the UK. The Government is keen to test its potential and, due to the high costs related to shale gas exploration, the tax break aims to encourage companies to investigate different options of setting up production wells. In addition, the Government has promised to provide guidance and environmental planning to the energy companies.