Fracking for shale gas could prompt a gold rush that will turn northern towns like Blackpool into British equivalents of oil-rich communities in the Middle East, a Cabinet minister has claimed.
Business and energy minister Matthew Hancock revealed that the Government is preparing to announce plans for a ‘sovereign wealth fund’ to hold the revenues from fracking for the north of England.
Such state-owned funds have been set up in the Middle East and Norway to generate huge sums from the proceeds of oil and gas exploration.
They invest in assets such as stocks, property, infrastructure and precious metals, with proceeds able to fund public spending. Chancellor George Osborne is expected to unveil details of a fund in his autumn statement next month.
Mr Hancock will also today announce the creation of a new National College for Onshore Oil and Gas, based in Blackpool with offshoots in Chester, Portsmouth, Redcar and Strathclyde.
It will train school leavers and graduates in fracking technology, enabling them to win lucrative jobs in the industry.
Ministers believe fracking could herald an energy revolution that will boost the economy, make Britain more self-sufficient and bring down sky-high bills from greedy energy firms. The Treasury has offered generous tax breaks to kickstart the technology.
Scientists say the UK is potentially sitting on shale deposits filled with enough gas to supply the whole country for at least 40 years – a discovery that could see a repeat of the North Sea oil boom.
Shale gas development has taken off in the US, using the controversial process of fracking, or hydraulic fracturing. Gas deposits trapped underground are extracted by fracturing shale rock with blasts of water, sand and chemicals.
Opponents warn that the technology risks causing small earthquakes, polluting water supplies, blighting the countryside and affecting house prices.
Possible sites for the extraction of shale gas have been identified across the north of England, from Morecambe Bay and Cheshire across to North Lincolnshire and Humberside. The Weald Basin and the central belt of Scotland also harbour potentially valuable deposits, experts say.
Mr Hancock told the Daily Mail: ‘Fifty years ago there was a debate about whether we get oil out from under the North Sea. Our country would have been much poorer if we had chosen not to do so.
‘Now we need to extract the gas that’s deep beneath the ground to improve our energy security and provide jobs and prosperity.
‘Aberdeen has become a global hub for offshore oil and gas expertise. We want Blackpool to become the hub for expertise in onshore oil and gas.
Revenue from fracking could remain in the north. Picutred: A test drilling site for shale gas in Lancashire
‘We have to make sure that when the revenues flow, we make best use of them. As well as money going directly to local communities and landowners, we are also working on a sovereign wealth fund to make sure the revenues are well spent on behalf of the nation.
‘Lots of different countries have these funds. Norway is the best example and the Shetland Islands also have a fund using some of the oil revenues that they keep.
‘When we extract shale gas, there is the potential for very large returns and we have to ensure they are spent wisely. A sovereign wealth fund would make sure the money is spent for the long-term.
Chancellor George Osborne is expected to unveil details of a fund in his autumn statement next month
‘There is a very good case for it to focus on where the shale flows from, which would make at least part of it a northern fund.’
Mr Hancock said it was estimated that at least £3.5 billion a year in net benefits could flow from shale extraction.
‘One shale pad has the potential to generate between £5 million and £10 million-worth of gas over its lifetime, which is a transformative amount in a local community.
‘The truth is, nobody knows exactly how much is down there or how much we can get out. The way to find out is to get on with it.’
As well as the economic benefits, Mr Hancock suggested it was important to reduce Britain’s dependence on foreign gas.
‘In terms of our energy security, we import eight per cent of our gas from Qatar. We import a small amount from Russia. Domestic gas is a much more secure supply,’ he said.
‘It has been extracted from the North Sea for 50 years, but that’s on a downward trend.’
Despite Mr Hancock’s enthusiasm for the technology, some of the Government’s own energy advisers suggested yesterday that ministers may have overstated the potential of fracking to transform the British economy.
Criticising politicians’ ‘premature’ claims, scientists from the UK Energy Research Centre said the need for gas is falling – not growing – and shale can only have a limited role in Britain.
Professor Jim Watson, research director of UKERC and an advisor to the Department of Energy and Climate Change (DECC), dismissed suggestions of a rapid economic revolution.
‘I think where the Government has gone wrong is talking this whole thing up, in the early days when it first came on the agenda, as if it was going to reduce consumer bills and tackle energy security problems in a substantial way any time soon,’ he said.
Dr Christophe McGlade of University College London, an author of a new report on fracking, said: ‘There’s no evidence there will be a huge boom in the UK: absolutely explore, but stop banking on it being plentiful and cheap.’
Read more: http://www.dailymail.co.uk/news/article-2830819/Fracking-transform-North-Minister-reveals-Government-plans-sovereign-wealth-fund-hold-revenues-shale-gas-certain-parts-country.html#ixzz3IqJgDHIN
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