The week ahead: local incentives for fracking unveiled

News editor

Shale gas is set to dominate the news this week, with the government announcing details of how local authorities will be compensated for fracking in their region and a new evidence session beginning in the House of Lords

The wheels of Britain’s shale gas juggernaut have started to move a little more quickly with the announcement of further incentives to develop the untapped resource.

Councils will now get to keep the business rates they’d collect from such developments, adding to the fiscal benefits already being offered by industry to local communities where hydraulic fracking takes place. They include an automatic £100,000 for every test well drilled and one per cent of revenues from wells where shale gas is extracted.

The government believes this could be worth between £5m and £10m for a typical site over its lifetime, although the exact mechanism through which the money will be shared out has yet to be worked out. Options so far include cash payments to people living near the site, plus the setting up of local funds directly managed by local communities.

Today’s cash incentive to local councils could add another £1.7m a year to local government coffers and developers themselves were thrown a fiscal bone in December 2013’s Autumn Statement in the form of a 30 per cent tax rate.

This relatively new industry – in terms of its input into Britain’s energy mix so far – is seen by government as key to its long-term economic plan with around 74,000 jobs supported in the oil, gas, construction, engineering and chemicals sectors; and levels of investment reaching up to £3.7bn a year.

In 2013 Centrica committed investment of up to £160m in shale gas projects in the Bowland exploration area, whilst GDF Suez has earmarked £25m of investment for several shale gas and coal-bed methane projects in Cheshire and the East Midlands.

Another major to enter the fracking fray is Total, which has bought a 40 per cent interest in two development licences from IGas.

UK Onshore Petroleum Exploration and Development Licences PEDL139 and PEDL140 cover a 240km2 area located in the Gainsborough Trough in Lincolnshire and represent a minimum n investment by Total of $19.5m.

Subterranean resources are owned by the Crown and not the landowners who might think they’re sitting on an oil and gas cash bonanza.

This is one of the areas to be discussed tomorrow when the House of Lords Economic Affairs Committee holds another evidence session on shale gas.

Witnesses are Chris Wright, chief executive of Liberty Resources and Liberty Oilfield Services; and Alan Seatter, environment deputy director general at the EU Commission.

The committee has a three-pronged line of enquiry for Wright: asking questions about the American experience of shale gas extraction and what lessons the UK can learn from it, whether the higher population density of the UK makes shale gas extraction more difficult, and how the legal position in the UK – where underground minerals belong to the Crown – impacts on the likelihood of rapid development of a productive shale gas industry.

Seatter will be asked how far European legislation impacts on the production of shale gas and oil in Member States. A further line of enquiry will ask how recent changes to the Environmental Impact Assessment Directive might affect the development of shale gas and oil production in the EU.

On August 22, 2013 BAE Systems announced that it was renewing a funding agreement with UK Sport, a move that’ll see £800,000 invested into elite British sport for four years

Speaking at the announcement, Simon Howison, BAE Systems engineering projects director, said the partnership has the potential to act as a showcase for the possibilities presented by engineering ‘and the difference it makes to the world’.

Later this week, apprentices from the defence company will demonstrate how they tackled briefs from Help for Heroes and The Royal British Legion to build a new hand-bike for disabled athletes or a device to support the posture of disabled sailors.

The six teams taking part in the Apprentice Innovation Challenge are set to present their solutions to a panel of judges who will decide a winner following two days of presentations and deliberations.

The previous competition was won by the Rochester team that developed Inviso, a visual-aid device for patients with restricted movement.

Inviso uses a combination of three cameras, connected to a 12.1in anti-glare LCD screen, to give the soldier unrestricted views of the hospital ward; thus enabling them to see neighbouring patients and visitors, and to help with basic needs such as eating and shaving.

Finally, the 25th North American International Auto Show kicks off today in Detroit.

Rather than run through a list of debuts and concepts (and sift through the frankly beguiling language used by many automotive PRs), let’s instead congratulate the automotive manufacturers – including Porsche, SEAT, Audi, Volkwagen, Ford and Rolls-Royce –  who’ve announced increased sales for 2013.

In the UK alone, 2,264,737 cars were registered last year, which SMMT inform us is up 10.8 per cent on 2012 and exceeds the trade organisation’s 2.25 million forecast for the year.

Dr. Ralf Speth, CEO of Jaguar Land Rover, attribute’s his company’s record sales on ‘unrelenting focus on design, technology,innovation and quality.’

The company announced yesterday that global sales were up 19 per cent in 2013 to 425,006 vehicles.

Sales have risen in Asia Pacific and the China region by 30 per cent, North America by 21 per cent, the UK by 14 per cent, Europe by six per cent, and other overseas markets by 23 per cent.

2015 will see the scheduled debut of three Evoque technology demonstrators showcasing hybrid, plug-in hybrid and fully electric powertrain technology, and 2016 will see the first cars roll off its new production line in Brazil.

The company will be the first British automotive manufacturer to open a manufacturing facility in Brazil, a move that represents an investment of £240m.