BRITAIN is sitting on enough shale gas deposits to power the country for the next 40 years, a report claimed yesterday, as the government promised to introduce tax breaks and incentives for explorers.
The boost to the UK’s energy industry came as Ofgem warned that homes and businesses could face regular blackouts in as little as 18 months. The regulator said that by 2015, the UK power grid’s spare capacity could equal as little as two per cent of national demand for energy.
The British Geological Survey estimates there is likely to be around 1,300 trillion cubic feet of shale gas underneath the Bowland Basin area in the north of England, raising hopes of a US-style shale gas boom. The government is also planning an electricity auction next year to encourage investment into power generation, but Paul Massara, chief executive of energy firm Npower, told City A.M. that there would be a “tight squeeze” on capacity before then.
Some of Britain’s ageing nuclear sites and power stations will be shut down in the coming years, hitting the UK’s ability to generate energy.
Ofgem’s warning came as Treasury secretary Danny Alexander outlined clearer guidelines and tax incentives to encourage shale exploration as part of the coalition’s infrastructure drive. He promised £100,000 of investment, and a one per cent share of revenues for communities close to exploration sites. In a major boost to explorers, the waiting time for an exploration permit will be slashed from 13 weeks to one or two weeks by February.
“Even if only 10 per cent of the gas in the ground could be recovered, it would still provide more than 40 years’ worth of Britain’s total gas consumption,” said Corin Taylor, senior economic adviser to the Institute of Directors. “[This is] a very welcome step that will speed up development.”
Only one firm – Cuadrilla Resources – has fracked in the Bowland Shale, but 176 licences for onshore oil and gas exploration have been issued. Shares in iGas and Dart Energy, which have licences in the area, rose yesterday. Deloitte has estimated that tax revenues from Bowland Basin gas production could rise to over £1bn a year.