UK May Pay Homeowners in Shale Gas Areas
A scheme to spread the benefits of shale gas will include options to give more of the proceeds to local residents than previously planned, the UK government said August 7 following changes by the new Prime Minister Theresa May. Her plan now considers whether to make direct payments to homeowners and residents.
The Shale Wealth Fund, due to be formally consulted upon this week, was previously expected to share proceeds from shale revenues only with community trusts and local authorities.
The consultation has been changed by the new PM to include the option of money being paid directly to local residents in host areas.
In North America, property holders are paid by shale gas developers for the right to develop such resources. But in Europe, including the UK, such resources are deemed to be the state's property, so households have no legal right to be paid - unless their property is compulsorily purchased.
Plans for the Shale Wealth Fund were first announced at last year’s autumn statement, but the new government has changed the consultation to ensure a greater focus on control for local communities, including insisting on proposals to transfer funds directly to households rather than local authorities. Communities could receive up to 10% of tax revenues derived from shale exploration in their area to spend on priorities such as local infrastructure and skills training. The new fund could deliver up to £10mn per eligible community.
The government will also be looking at whether this approach to the Shale Wealth Fund can be a model for other community benefit schemes with the aim of putting more control and more resource in the hands of local households.
Speaking ahead of the consultation launch, PM Theresa May, said: "This announcement is an example of putting those principles into action. It’s about making sure people personally benefit from economic decisions that are taken – not just councils – and putting them back in control over their lives."
The BBC reported that a possible maximum payment per household might be £10,000.
The government is consulting in order to seek views on the delivery method and priorities of the Shale Wealth Fund. Responses are welcomed from individuals or from organisations, such as charities, businesses, local authorities and community groups. The government will publish its response to this consultation later this year. A British Geological Survey (BGS) study of shale gas across the north of England in 2013 estimated a total shale gas resource of 1,300 trillion ft3. This can be compared to the current UK annual gas consumption of around 2.5 trillion ft3.
The landscaped Kirby Misperton site (Credit: Third Energy)
Companies such as Total, Ineos and Cuadrilla Resources are keen to explore for shale gas in northwest England and the English east Midlands, while Third Energy, a subsidiary of Barclays Bank plans to frack an existing well in North Yorkshire.
Since June 2016 there has been a ban on shale gas exploration in Scotland. Wales is seeking legal advice on whether it too can enforce such a ban, or at least a moratorium.
Mark Smedley