Financial News

  • 14 January 2014, 10:42

Fracking: Cameron Offers Councils Drill Money

David Cameron has announced £1.7m for councils which agree to drill for shale gas sparking angry protests from campaigners who say it amounts to little more than bribery.

David Cameron said the Government was "going all out for shale" as he announced local authorities that allow drilling will receive 100% of the business rates collected from the scheme - double the current 50%.

Whitehall officials estimate that could be worth £1.7m extra a year for each site a council agrees.

The announcement sparked angry scenes at a fracking site in Barton Moss, near Salford, Manchester, where protesters confronted lorries entering the plant, then handcuffed themselves to the vehicles.

Six people - three men and three women - were arrested on suspicion of either obstructing the highway or obstructing police.

About a hundred people have been living in tents and caravans at the spot near the M62 where IGas has been given permission to carry out exploratory drilling.  Most are local but others have travelled from various parts of the UK to join in.

The business rates money will be in addition to a promise last year that shale exploration firms will also pay out £100,000 when a test well is fracked and 1% of revenues, a deal which could in total be worth up to £10m.

However, campaigners dismissed the business rates payout as bribe money and said it was not enough in the face of the vast profits that stand to be made by the energy firms and the damage that would be caused to local areas.

Mr Cameron's announcement comes as the French energy giant Total has announced it will invest millions with a 40% interest in two shale gas exploration licences in the UK.

Mr Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure.

"That's why we're going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country."

On a visit to Gainsborough, Lincolnshire, in the area Total will be looking to develop shale gas wells, the Prime Minister added: "We have the strongest environmental controls in this country. Nothing would go ahead if there were environmental dangers. I think people can be reassured by that.

"But I actually believe it's when these wells go ahead, when people start to see the benefit, when people see there aren't environmental concerns, they will see that it is quite right that this is part of our long-term economic plan."

Jackie Anderson, a teacher who lives within a mile of an exploratory drilling site at Barton Moss near Salford, was on Sunday protesting about the effects of fracking on the community.

She told Sky News: "For the local residents it's got no benefit whatsoever. More and more the businesses and the councils are going to benefit because the incentives are going to them and we're getting none of the benefits at all."

A Local Government Association spokesman said: "Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes.

"One per cent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10%."

Hydraulic fracturing, commonly known as fracking, is a process that involves drilling thousands of feet down into the earth to create a narrow well. Water and chemicals are then pumped in at high pressure to create fractures in the rock. Gas then flows from the cracks and is captured.

Vanessa Vine, who founded the British Anti-Fracking Action Network, said: "Concerns of local residents range from everything from heavy traffic through villages, damage to the roads, right up to triggering of earthquakes and permanent, potentially permanent contamination of the groundwater, of the aquifer, of drinking water."

The Government estimates the industry could attract £3.7bn a year in investment and support 74,000 jobs.

Last year, a study by the British Geological Survey suggested there could be enough shale gas in the north of England to supply Britain for 40 years.

It is thought there may be as much as 1,300 trillion cubic feet at the Bowland site in Lancashire alone.

Energy minister Michael Fallon said he expected between 20 and 40 wells to be drilled over the next couple of years.

He told Sky News: "We know now that we are sitting on top of hundreds of millions more cubic feet of this gas than we originally thought. What's so important now is to encourage companies to go down there and find out whether we can get it out as a new, home-grown source of energy.  

"That is extremely important for every local community and what we are doing today is saying it is for that local people, who have some of the hassle when they are getting it out, when they are exploring for it, that they should be able to retain all of the benefits."

Lawrence Carter, from Greenpeace, said: "This is a naked attempt by the government to bribe hard-pressed councils into accepting fracking in their area.

"Cameron is effectively telling councils to ignore the risks and threat of large-scale industrialisation in exchange for cold hard cash."

Andrew Austin, chief executive of iGas, told Sky's Jeff Randall "it wasn't policy on the hoof".

"The industry's been in discussions with the Government for many, many months around this subject," he said.

Mr Austin added: "We need something there for the times when the wind isn't blowing and the sun isn't shining - and that is gas. And locally-extracted gas has a much lower carbon footprint that importing it from Qatar or other parts of the world."

Shadow energy minister Tom Greatrex said: "Gas will remain an important part of our energy mix in the future, and if shale gas can replace our rapidly depleting North Sea reserves it could help improve our energy security.

"It is right that any communities that host nationally significant energy infrastructure are able to share in its rewards.

"But the Government must get its priorities right. Only by fully addressing legitimate environmental and safety concerns about fracking with robust regulation and comprehensive monitoring, will people have confidence that the exploration and possible extraction of shale gas is a safe and reliable source that can contribute to the UK's energy mix."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Advertisement