Britain’s shale prospects got a lot brighter today after 10 Downing Street sweetened the deal that local governments will get for playing host to drilling operations. Local councils could now reap nearly $3 million per site, an amount that could overcome what has been to this point strident NIMBY opposition. The FT reports:
The prime minister said that local authorities will be able to keep 100 per cent of rates they collect from shale sites – up from the usual 50 per cent – amounting to an estimated £1.7m for a 12-well site.
“That’s going to be quite a significant boost for that local council’s coffers,” Michael Fallon, energy minister, told the BBC on Monday. “We want local councils and local people to benefit from this exploration. We expect 20-40 wells to be drilled in exploration over the next couple of years.”
In addition to the bumped up tax rate, local communities have also been promised £100,000 per well fracked, and 1 percent of all revenue generated by wells should companies successfully produce gas. Today’s announcement coincides with French oil company Total’s unveiling of a nearly $50-million investment in two exploratory drilling sites in eastern Britain. Total is the first oil major to take advantage of an attractive tax scheme for investing in the UK’s estimated 1.3 quadrillion cubic feet of shale gas.
UK localities have more reasons than ever to embrace the shale revolution, and with investors like Total keen to tap in, Britain’s shale ambitions have taken a significant step forward. The UK won’t be able to replicate the American shale boom for a variety of reasons, but even a pale imitation would be welcome in a country struggling with stagnant oil production in the North Sea and rising heating bills.