The UK government has introduced a series of new tax breaks in its 2013 budget to encourage shale gas exploration in the country.
The measures were announced in the annual budget speech to parliamentby UK Chancellor of the Exchequer George Osborne.
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The measures proposed by the Chancellor include new planning guidance, tax breaks for fracking companies and incentives for local communities that are expected to relax public opposition to hydraulic fracturing or fracking.
Fracking companies will also be allowed to offset their exploration spending against tax for a decade.
"Shale gas is part of the future and we will make it happen," Osborne said in his speech.
Fracking is a method in which water and chemicals are injected at high pressure into the rock to retrieve trapped gas.
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By GlobalDataShale gas exploration has made little progress in Europe due to concern over the safety of hydraulic fracturing.
Britain removed a moratorium on fracking in December 2012, but imposed tighter restrictions on how it should be conducted.
The proposed tax changes also include a new field allowance for shale gas, as well as an extension of the ring-fence expenditure supplement.
The new measures have been designed to bring the UK closer with the US and to allow land owners to legally earn royalities from shale-gas production.
The UK, which holds abundant shale-gas reserves according to the British Geological Survey, is planning for commercial exploitation.
According to Deloitte, the UK Treasury’s package of proposed tax measures will make onshore shale gas exploration and production more attractive to companies.
Natural gas from shale will become an alternative to more carbon emitting sources such as coal.
Shale gas has helped US to transform its economy by reducing the cost of energy for businesses and consumers.
UK Onshore Operators Group’s Chief Executive, Ken Cronin, said the announcements in the budget will help the industry to take the next steps in assessing the resource.
Major global oil companies such as Chevron, Royal Dutch Shell, Total and Eni, which have been present in the European shale exploration for the past three years, have not yet entered the UK market.
Image: UK Chancellor of the Exchequer George Osborne. Photo: Courtesy of HM Treasury.
