20 Jul 2013

UK tax breaks tipped for shale gas companies

7:44 am on 20 July 2013

Plans to give tax breaks to companies involved in the shale gas industry have been outlined by the British government.

It proposes cutting the tax on some of the income generated from producing shale gas - found in underground shale rock formations - from 62% to 30%.

"We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits," said Chancellor George Osborne.

"I want Britain to be a leader of the shale gas revolution because it has the potential to create thousands of jobs and keep energy bills low for millions of people."

Britain is believed to have large resources of shale gas. A recent report by the British Geological Survey estimated there may be 1300 trillion cubic feet of shale gas present in the north of England alone - much of it in the Bowland basin beneath Lancashire.

Drilling companies have previously estimated that they may be able to extract about 10% of this gas - far in excess of the three trillion cubic feet of gas currently consumed in Britain each year.

However, the BBC reports the industry is still in its infancy with a handful of companies holding licences for shale gas exploration, none of which have begun extracting gas.