UK Government Offers New Incentives To Accelerate Fracking

  • Date: 24/06/14
  • Emily Gosden, The Daily Telegraph

Energy companies will be offered the chance to explore for shale gas across bigger blocks of land, under a revised system aimed at enticing them to commit to fracking.

Ministers are expected to launch the ’14th onshore licensing round’, offering companies the chance to bid for exploration rights, within weeks.

In previous licensing rounds companies would typically be awarded rights to drill over blocks spanning 100 sq km (39 sq miles) in return for committing to a plan of exploration work in the area.

The energy department said that under the new guidance, the companies will be asked to commit to a single work programme to span two blocks – 77 sq miles – “as this will be big enough to give a licensee scope to make plans for commercially-viable work”.

Michael Fallon, the energy minister, said the change was necessary as current licensing arrangements didn’t reflect the fact that “unlike conventional oil and gas, shale gas is not concentrated in small high value fields but is likely to be dispersed across large areas with ‘sweet spots’.”.

“Traditional petroleum licence terms do not reflect this,” he said. “They limit the amount of acreage that can be retained beyond certain deadlines and impose fees to incentivise the voluntary surrender of acreage. This could undermine the exploitation of shale gas in the UK.”

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