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Osborne plan may pave way for Westcountry shale gas bonanza

By Western Morning News  |  Posted: October 09, 2012

Prime Minister David Cameron applauds as Chancellor George Osborne addresses the Conservative Conference at Birmingham  Picture:  David Jones

Prime Minister David Cameron applauds as Chancellor George Osborne addresses the Conservative Conference at Birmingham Picture: David Jones

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Graeme Demianyk hears George Osborne unveil new plans aimed at heading off the UK’s looming energy crisis, plus details of a new employee-ownership scheme for smaller firms.

Chancellor George Osborne has vowed tax breaks to encourage gas drilling known as "fracking" in an effort to tackle Britain's looming energy crisis.

So-called "fracking" – or hydraulic fracturing – involves injecting high pressure water and chemicals into shale rock to blast out trapped natural gas. The technique has courted controversy after triggering earthquakes in Lancashire.

At the Tory party conference in Birmingham, Mr Osborne said the Government was consulting on a "generous new tax regime for shale" so the UK was not left behind as gas prices fell in the US, where shale gas is being widely exploited.

A Government document has previously identified large areas of eastern and southern England as having the best potential for "shale gas" – with large deposits found in Dorset and Somerset.

Government licenses have been granted for two companies to carry out gas exploration in the Mendip Hills just south of Bath.

The South West Green Party has said Devon and Dorset "could be next" as the counties sit on underground shale gas.

Critics, though, warn the technique risks contaminating an already scarce water supply as well as causing earthquakes.

Mr Osborne said yesterday: "We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic." The Treasury said a targeted tax regime would help unlock investment in shale gas, which had the potential to create jobs and support energy security.

Mr Osborne also launched a scheme where employees are to be given the chance to take a stake in their company, in return for giving up some of their employment rights.

The voluntary scheme will be open to any limited company, but it is expected that it will be taken up mostly by smaller and medium-sized firms in fast-growing markets, as a means of recruiting a motivated and flexible workforce.

Under the scheme, employers would be able to offer "employee-owner" status to new recruits or existing members of staff.

The employee-owners would receive between £2,000 and £50,000 worth of shares, which would be exempt from capital gains tax when they are eventually sold.

In return, staff will give up rights including the ability to claim unfair dismissal after two years in a job.

The Chancellor also announced plans to cut a further £10 billion from welfare by 2016-17, on top of the £18 billion in benefit reductions already being implemented.

In his keynote speech to conference, Mr Osborne admitted that the recovery from recession is "taking longer than we hoped, because the damage was greater than we feared".

But he insisted: "We will finish the job we have started."

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  • Phil_lip  |  October 10 2012, 2:33PM

    Many Thanks for your response ****rats, it is great you have a knowledge of drilling as that brings something to the table that is valuable knowledge. I refer you though to one part of what you said above. "However if you make sure you have a formation or cemented casing that will act as a barrier between the fracs and the potable water source, then you are good to go." The only part they can case is the vertical shaft, I believe the reason they cannot cement the horizontal shaft is because of the explosives they place down there to create the initial fracks, it is also clear from the information on the cuadrilla site that they do not encase a whole area in cement to attempt to mitigate any leakage of the highly toxic fracking fluid and while we do not have personal wells for our water in this country it is the reason so much has permeated into the aquifers that the land owners use in the US. As I am sure you are aware, basic physics denotes that water will run the easiest and straightest course in natural conditions in the bedrock, yet when this stuff is injected into the fractures, splitting it further, any natural aquifer will be at risk due to the pressure that will force the water table to act in a way that is not natural and there is no way the permeation of this stuff into the natural water table can be stopped because of this.

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  • shagrats  |  October 10 2012, 1:36PM

    I have over 25 years drilling experience, so I do know a thing or two about this subject, however my expertise is not in Fracking and completeions but drilling. All of the problems that occour with Fracking are to do with geology, when the Frac near a formation that contains potable water that is linked to a groundwater supply they cause problems with contamination of not only hydrocarbons but some of the nasty chemicials they use in the fracing fluids. However if you make sure you have a formation or cemented casing that will act as a barrier between the fracs and the potable water source, then you are good to go. As regards of drilling around Cornwall for shale Gas. The geology is just not there to do it, in Dorset you have the source rock for the N Sea exposed along the coast, the Kimmeridge Fm. This pours oil into and polutes the enviroment 24 hours a day, but no one worries about that as its a natural thing. Next time your wandering around the beaches of Dorset and step in a big patch of oil, don't think it has come from an oil tanker, it probably dripped out of the cliffs.

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  • shagrats  |  October 10 2012, 1:36PM

    I have over 25 years drilling experience, so I do know a thing or two about this subject, however my expertise is not in Fracking and completeions but drilling. All of the problems that occour with Fracking are to do with geology, when the Frac near a formation that contains potable water that is linked to a groundwater supply they cause problems with contamination of not only hydrocarbons but some of the nasty chemicials they use in the fracing fluids. However if you make sure you have a formation or cemented casing that will act as a barrier between the fracs and the potable water source, then you are good to go. As regards of drilling around Cornwall for shale Gas. The geology is just not there to do it, in Dorset you have the source rock for the N Sea exposed along the coast, the Kimmeridge Fm. This pours oil into and polutes the enviroment 24 hours a day, but no one worries about that as its a natural thing. Next time your wandering around the beaches of Dorset and step in a big patch of oil, don't think it has come from an oil tanker, it probably dripped out of the cliffs.

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  • Phil_lip  |  October 10 2012, 7:56AM

    ****rats, Ignoring the geology a minute but it is because of the location; if they were to put these drills on/around Bodmin Moor, say at St Breward, Cardinham, Bowithick and Tresinney what do you think the potential is for polluting Cornwall? I would like to refer you to the map on Cuadrilla's website for the drills in use/to be drilled in Lancashire so you can see how close they actually get to each other and to water sources and catchments, then don't forget there will be groundwater and aquifers. http://tinyurl.com/96qjaon

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  • Doitdreckley  |  October 09 2012, 8:35PM

    Apart from the insanity of the poorest and most vulnerable having to pay for the treachery of the banking fraternity the employment rights/share onwership issue is nuts. People are not going to give uo their crucial rights for a nominal share that may be worthless. It sounds like one of those daft ideas dreamt up by young Oxbridge graduates on a policy trainee scheme with the Tories.

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  • Phil_lip  |  October 09 2012, 6:52PM

    The Environment Agency have a report available here: http://tinyurl.com/9gh9qsc In it they claim at our current rate of use the amount of gas available from fracking in the UK is 1 1/2 years worth from a report done a few years ago, they then go on to claim industry reports claim it is higher but do not give any reference to either report or to the higher figure, as reports go it is an industry biased report and not a public interest one, which the EA are meant to be representing. I have also been reading local people's views on this and the damage it has caused. I have also sent a request to the EA (can't use friends for this one, yet anyway) about pollution sampling of soil and water sources around Elswick and Fylde and any information on the health of residents from the NHS and animals (farmed and pets) from local vets. From the things i have read so far this stinks and it should not be allowed to happen anywhere in this country, we live on an island and the groundwater and geology of this island means this way of extracting gas is going to permeate and pollute every water source that we need, let alone the geological damage it is going to cause as it splits us from the bedrock in many sensitive areas.

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  • Wyrdsister1  |  October 09 2012, 4:15PM

    "Shale gas is being widely exploited in the US" says George Osborne - yes it is and the people who live close to it are suffering as is the environment. It's fine to say 'it must be regulated', but experience tells us that regulations are not always followed, unseen problems arise and people are entirely fallible every step of the way. There is something manifestly suicidal about blowing the earth apart so we can continue to poison it for longer with fossil fuels. Anyone remotely interested/concerned about this should do as Phil-lip advises and watch "Gasland" - the film was made several years ago as a word of warning against this insane process when the potentially catastrophic human and environmental consequences became apparent. This must never happen in the Westcountry, or anywhere else for that matter.

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  • shagrats  |  October 09 2012, 3:44PM

    Fracking is does not have to be a dangerous operation, but it has to be regulated and the companies that do it must study the geology and understand where the Fracs will extend to. No fracking near formations that contain potable water. The UK Oil industry has used fracking in probably a good 70 % of completion programs with little or no adverse problems. However Shale gas plays and the shear number of wells that need to be drilled to make this economic means that we will see alot more in the future.

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  • Phil_lip  |  October 09 2012, 1:36PM

    Get a copy of Gasland by Josh Fox, available here: http://tinyurl.com/yl53pdd Then sit down your local mp, councillor and neighbours and pin their eyes open to watch it. Then see if you want these companies to frack in your back yard.

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