Osborne’s shale gas tax regime is “premature”

The Chancellor’s decision to give the shale gas industry a tax relief to encourage investment is “premature” and a “surprise”, says a top prof. Yesterday George Osborne declared plans to […]

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By Vicky Ellis

The Chancellor’s decision to give the shale gas industry a tax relief to encourage investment is “premature” and a “surprise”, says a top prof.

Yesterday George Osborne declared plans to help UK firms mimic the American shale gas boom.

In a speech at the Tory party conference in Birmingham he said a new “generous” tax regime would make sure “Britain is not left behind as gas prices tumble on the other side of the Atlantic”.

But an academic involved in shale gas research believes tax relief for the sector has come “surprisingly” early.

Professor Michael J Bradshaw, at the University of Leicester told ELN: “It’s all rather premature to be honest, considering the UK only has one well being drilled at the moment. The thought this could replicate the United States’ shale gas revolution is rather naïve.”

He said there were too many issues with building a shale gas industry that haven’t been fully considered yet, such as the number of rigs available, how large the UK’s reserves are, the environmental impacts and the cost of drilling. Another hidden cost not considered is regulation, he added.

The professor, who penned an article for environmental campaigners Friends of the Earth last year called “Time to take our foot off the gas?”, added: “It could be a very long time before we have the same amount of [shale gas activity] as the United States, if at all. It’s not going to happen overnight.”

Mr Osborne’s speech didn’t give any signs of “joined-up” policy from government, he added.

But shale gas firms hailed the tax regime plans and said the industry would be a boon for UK jobs.

Cuadrilla Resources, the first firm to start developing the gas in the UK told ELN in a statement: “Clearly, we welcome the Chancellor’s comments. The economic and employment benefits of shale gas at both a local and national level have been made by a number of respected organisations.

“Cuadrilla currently remains steadfastly focused on exploring the distinctive geological potential of the Bowland formation, while establishing and maintaining standards that produce onshore gas safely and sensibly.”