U.K. Minister Says Spurring Shale Gas Exploration Is Responsible

U.K. plans to support exploration for shale gas are responsible because of the potential boost to fuel reserves, while people living near drilling will be compensated, possibly with lower bills, Energy Minister Michael Fallon said.

“There have been a number of optimistic estimates for the amount of shale,” Fallon told lawmakers today in Parliament. “It clearly has enormous potential and it would be irresponsible of us not to encourage exploration.”

IGas Energy Plc (IGAS), which is licensed to drill for gas in 300 square miles in the northwest of England, said June 3 that its shale formations probably hold about 102 trillion cubic feet of gas. Cuadrilla Resources Ltd. has said its licensed area may hold as much as 200 tcf in the same region. Should 30 percent of that be extractable, U.K. reserves would increase more than 13-fold from BP Plc (BP/)’s current estimate of 7 trillion cubic feet.

Britain is pushing for shale gas after lifting an 18-month moratorium on fracking in December. Chancellor of the Exchequer George Osborne on March 20 pledged a “generous” new tax regime to promote early investment in shale, and Prime Minister David Cameron three days ago said that rules on energy drilling should be changed to make prospecting for shale easier.

The government will hold a consultation on treating areas affected by fracking, or hydraulic fracturing, used to exploit the shale deposits, Fallon said. “We’re discussing with the industry and will be consulting on more specific proposals shortly,” he said. “It’s important that those who suffer disruption in the area from drilling do see some benefits -- grants or expenditure or, better still, discounts on their bills, which could really be rather significant.”

Environmental groups including Greenpeace and Friends of the Earth sas fracking risks contaminating water supplies.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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