Third Energy’s KM8 site, 9 November 2017. Photo: Eddie Thornton
Updated 13 November 2017 with reaction to the shale wealth fund proposals
Communities should have greater control of the decisions that affect them, the government said today in its response to a consultation on the proposed shale wealth fund.
The response, compiled by the Treasury, said:
“The government believes in empowering local people, and wants to see communities and individuals have greater control of the decisions, assets, and services which affect them.
“The government believes that local people are best placed to understand the needs of their own communities. We also believe that local people should benefit first from decisions that affect them and that they should benefit from the proceeds of economic growth.”
The document does not propose giving people greater powers to decide whether shale gas developments should be allowed in their local area.
But it says local communities will decide how money in the shale wealth fund is spent.
The publication comes as Third Energy is waiting for the final go ahead to frack its site at Kirby Misperton in North Yorkshire.
The proposed fund would be drawn from 10% of any tax revenue arising from shale gas production.
The government has estimated that it could provide £1bn across UK shale gas areas over 25 years. But it conceded:
“The deployment of the Shale Wealth Fund depends both on production and the profitability of the industry, which will determine the level of tax that can be attributed to shale production and, therefore the Shale Wealth Fund.”
Today’s document comes more than a year after the closing date of a public consultation on the fund. The Treasury sets out what it thinks should be the principles:
- Local communities will decide how money is spent, and the next steps for developing the details of how that process will operate
- The fund should be administered in a transparent manner, and any administrative body ought to represent the views of the local community and be accountable to them
- The fund could make payments to households, to be decided by communities
- It should meet local needs and maximise benefits to local communities
The document suggests that the fund could improve access to public services and contribute to the local economy by providing training or improving infrastructures. It could invest in the local natural environment. It could also provide funding for community groups and the development of community assets, such as libraries and sports facilities.
But the Treasury says the fund should be additional to existing local government funding.
It says the fund should also be separate from the industry-operated community benefit scheme, which pays £100,000 per shale gas well site and 1% of production revenue.
The document does not define local community or propose how to decide which residents should benefit.
Keith Taylor, visiting objectors to the Kirby Misperton site last month. Photo: Keith Taylor
The Green Party MEP, Keith Taylor, said this morning:
“The Government has the temerity to claim the ‘wealth fund’ will ’empower’ the very communities who have had their local democratic opposition to fracking ridden roughshod over.
“Kickbacks won’t keep catastrophic climate change at bay and nor will they succeed in dividing and conquering communities united in their opposition to this environmentally destructive and dangerous process.”
“If the Tories were serious about financing community projects they would ditch their ideological attachment to a failed austerity project and take urgent action on a tax avoidance crisis that costs taxpayers’ around £11 billion a year.”
More reaction
Tim Thornton, retired GP from Ryedale
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“Communities – does that include a lone farmhouse, schoolchildren living further afield but exposed to air pollution, visitors like those at Flamingo Land, or the owners of the huge theme park? How near or far will the community be? There is usually a vagueness about community that might poison the benefits.
“Sites approved for clean extraction – what if, as we suspect, the extraction is neither safe nor clean? Disqualified by falling outside the qualifying requirements?
“Shale gas – I thought this bit was easy but…for years we believed our local well at kirby Misperton was drilled down to the shale so that they could extract shale gas from the shale layer. Indeed our driller John Dewar thought so too when I asked him as did his operations manager. His geologist however, insisted they were fracking ‘tight sand’, not shale. Never had I heard that time in all the discussions and debates in the District Council or County Council etc. Shale it seems is not a homogenous rock but contains areas of sand and other formations. By specifying ‘tight sand’ it may be interpreted as being a conventional source of gas and therefore sits outside the regulations governing fracking.
“It’s so tricky and fraught with confusion – perhaps deliberate. Don’t think your £150 – £2,000 is guaranteed. And don’t forget to compare your winnings with the devaluation of your home by 10-20% and any other impacts you or your children and grandchildren may sustain.
“Just say No.”
No Fracking in Balcombe Society
The Treasury suggests that communities who accept shale drilling may be entitled to ‘up to 10% of tax revenues arising from shale gas production’. A total give-away of £1 billion is mooted.
But that supposes that gas drillers will produce commercial quantities of gas, and manage to sell it at a profit, and will actually pay taxes – which is by no means sure, given the current gas glut worldwide, and the high costs of fracking shale.
Unlike the free-flowing wells of old, shale gas wells will flow only from the fractured sections of rock, so a very large number of wells would be drilled to extract shale gas across the North and Midlands.
The same goes for oil wells in the South East, where oil companies for the time being claim that they intend to acidise, not to frack.
Fracking will bring yet more air pollution, volumes of toxic waste and massive stress to communities across Britain. If the government thinks communities will roll over and sell their countryside and health, they are wrong.
Louise Somerville, Frack Free Somerset
“No amount of bribe money can clean our drinking water, no amount of bribe money can make polluted air safe to breathe, no amount of bribe money can protect us from the irreversible damage of fracking. There is an extremely powerful and successful anti-fracking movement in the UK. We’ve stopped this toxic industry from making any money for the last six years and we intend to continue. We will win our fight for a cleaner safer future.”
Professor Peter Strachan, Robert Gordon University
“No amount of cash can compensate for the environmental damage and diminishing quality of life that onshore #Fracking will bring to English communities.”
Who contributed to the consultation?
The consultation received 170 contributions, of which 115 were from individuals who were not identified in the response document.
Of the remaining 55, eight were from industry, eight from campaign groups and eight from funders/grant recipients. 27 local authorities responded, including councils in areas responsible for areas near active or proposed shale gas sites. Some contributions were from regions which have no exploration licences or are not considered to have shale gas prospects.
Categories: Politics
DRILL OR DROP? 
But if the oil company keeps its money in offshore accounts, eg Third Energy, how will they collect the tax and give percentage to local community? Hot air and nonsense. This is the same lie as taking back money from EU and giving it to the NHS, they think all the electorate are stupid, not just the Tory voter
Paula
I think you are right to wonder of any cash would turn up to be distributed. They may never make any money,
But if they do. Offshore funds or not, they get taxed. Lots of NSea companies were taxed, and the SNP were banking on such tax to fund a separation ( those in Scottish waters that is ). Lots of wriggling of course.
Maybe they are taking lessons from Amazon. No profit yet, but the founder is a billionaire. Uber on a similar course.
Regarding the leave vote and conservative voters, it’s a difficult one. To a person ( man or woman ) the in laws voted to leave, and also for Dennis, as he supported leave and was Labour and they live in his constituency.
To a person( bar one ) the relatives in the Weald voted to remain and conservative.
So even if they did make money i.e. profit, the tax on the profit would not be paid in the UK. No tax, no fund, no share. Simples!
Government Wealth Fund.
I don’t think so.
More like ‘The Economic Burden of the UK Shale Gas Industry’
Let’s see what those including the Industry say about the economic value of UK shale.
First is Energy Select Committee house of lords starts at 16-38. Here we see the energy experts tell us that shale cannot compete on production cost with the North Sea and that shale could never meet our base fuel needs.
http://www.parliamentlive.tv/Event/Index/b05e83ee-5d8a-4f48-bc34-8d4b75f6a0db
Now let the Oxford Institute for energy studies, Bloomberg, EY, and Centrica who have invested in the industry show you how there is no money in UK shale.
http://www.credoeconomics.com/shale-euphoria-the-boom-and-bust-of-sub-prime-oil-and-natural-gas/
More recently we see Statoil and Chesapeake turn their back on UK shale because it costs to much.
https://drillordrop.com/2016/11/13/francis-egan-on-drilling-in-2017-low-gas-prices-financing-expansion-and-how-many-wells-can-you-fit-on-a-site/
Now Scotlands report on the economic value
This could lead to direct expenditure of £2.2b in Scotland over the period, which could give supply chain benefits and other induced economic benefits of an additional £1.2bn over the period and be responsible for the creation of up to 1,400 jobs at its peak in the Scottish economy.
Scotland not seeing much economic benefit from unconventional oil and gas. No wonder they banned it. These figures are the total value until 2062 and before consideration of health costs, environmental damage, road damage and the effects of property price devaluation which will cost the tax payer millions to pay for those who need care in old age who have lost the asset of their property value and have to turn to the state sooner.
Wales and Ireland have obviously done their homework.
Now we see Total reduce their interest in UK shale, obviously seeing the financial pitfalls.
“Total’s decision to reduce its holding of UK onshore acreage is in line with its strategy to concentrate on its current British offshore assets.”
https://www.energyvoice.com/other-news/154916/ineos-shale-secures-total-uk-fracking-licences/
And if you want to know more
Next is Gundi Royle explaining how shale cannot work
And to finish off spot the similarities between the dead cert ‘sad ken’ and the UK shale industry.
John Powney, you left out Snoop Doggy Dog, I have heard that he believes UK shale is not viable also!
What’s funny is that you put so much faith in what these “experts” are saying, and yet we know for a fact that none of them know for a fact whether or not shale gas will be viable. I think there is a very strong chance that shale gas will be viable, in places within the UK. If you watched PNR live last Friday, you may sense the excitement at Cuadrilla based on the gas flows they are seeing from core samples.
You also may find this article instructive, as it provides a good high-level explanation for why UK onshore shale gas should be very cost competitive. https://www.naturalgasworld.com/ggp-from-zero-to-hero.-the-coming-boom-in-uk-shale.-56692
Then again, why should we bother spending tens of millions of dollars on core samples, well logs, and pressure gradient readings when we have the likes of Gundi Royle and Snoop Doggy prognosticating on the viability of UK onshore shale gas?
‘I think there is a very strong chance that shale gas will be viable, in places within the UK’
A personal opinion which appears to be based on a paper by a Mr Grealy and disputes the findings of all the professional organisations I mentioned above.
Let’s have a look at Mr Grealy’s summary
“UK shale will secure high price market with minimal entry costs and rapid commercialisation. All we need is to find demonstrable flow rates. Don’t worry – they’re coming. The only question is to invest today or wait for the crowd”
A bold statement from someone who applied for a PEDL and was refused. You would think with his stated knowledge of the industry he would have put forward a proposal to investors which would have seen a licence granted and commercial drilling well under way.
“UK shale will secure a high market price”
I presume you need to produce the gas for less than you could sell it for.
Here is the outlook for the market price of gas. There will be spikes both ways but this is the general assumption.
This statistic shows the forecasted price of gas in the United Kingdom (UK) from 2016/17 to 2021/22. From the initial price of 34.6 pence per therm, the price of gas is expected to increase to 49 pence per therm by 2021/22
https://www.statista.com/statistics/374970/united-kingdom-uk-gas-price-forecast/
And yet OIES, Bloomberg, and Centrica say UK shale can’t be produced for these prices.
Ernst and Young state it will cost 75 pence per therm for UK shale.
“with minimal entry costs”
Ernst and Young state one site would cost £333,000,000 to bring on line. Not my idea of minimal.
Click to access EY-Getting-ready-for-UK-shale-gas-April-2014.pdf
“rapid commercialisation”
Actually the opposite.
Apart from the obvious fact that no UK shale gas has been produced since 2010 when planning applications were PASSED I suggest you listen again to the energy analysts from the house of Lords on how quickly the industry could progress.
http://www.parliamentlive.tv/Event/Index/b05e83ee-5d8a-4f48-bc34-8d4b75f6a0db
Start at 16-43
“The idea that shale gas is going to save the UK energy economy from brown outs is laughable to be honest because it cannot get there quick enough”
Do keep on watching through to the bit where they explain the fact that UK offshore gas is plenty full and a third the cost of UK shale
All those who have carried out these reports or invited to speak at the House of Lords are professional organisations with no connection to those who oppose the UK shale industry.
As for Snoop Doggy Dog, who knows, but if he, like the professionals, belief it is not viable, he won’t be placing a bet on that UK shale favourite ‘ Sad Ken’
UKOOG believes it will take around 10 well pads per 100sq km PEDL to tap shale gas resource. Far fewer pads than most anti-frackers have predicted. https://www.linkedin.com/pulse/texas-measles-thanks-david-robottom/?trackingId=xDc58H3VbJ6CVEl31YKMMw%3D%3D
Also, far less impact on the countryside than from solar or wind.
Cue the nattering naybobs of negativity to tell us exactly how money will not be created and thus not spent. These are the same people, no doubt, who wave placards asserting that there’s no way to tap onshore shale gas safely. They’ll then claim that shale gas can’t provide energy security nor can it be extracted profitably.
Notice a pattern? These nattering naybobs aren’t doers, they’re just negative talkers. They’re professional couch-sitters, who tell all the doers in the world that they can’t be successful. These same nattering naybobs were telling the US that shale gas would never amount to anything fifty years ago.
[Comment removed by moderator]
“The government believes in empowering local people, and wants to see communities and individuals have greater control of the decisions, assets, and services which affect them.”
I cannot find the words to express my horror at the above statement after what this Government has done to literally force fracking on a community that 99.2% voted against.
Unbelievable.
If the Government wants to empower the people and let them have greater decisions over what affects them then the fracking industry should pack up and leave now.
This is a quite transparent move, since no funds will be forthcoming unless there is revenue flowing from the industry which needs to be established first and then the argument will be, “don’t oppose it or you will get no money”. Rather funny really, because it implies acceptance to get any benefit.
They really don’t understand do they? Nothing more than pro industry propaganda, what good will the money be if peoples lives are made a living hell because of the very thing that the money comes from?
Yes you will get money from slavery, but you have to agree to be a slave first? Yeahhhhh?
More lies from an industry that is less popular than a rattlesnake in a lucky dip , 65,000 jobs? There will be a few jobs for experienced oil workers who will move from site to site , the rest will be temporary , any money given to communities will not even cover repairs to roads and loss of value to local houses .Selling your soul to the devil if you take this blood money and the gagging order that will no doubt be in the small print.
Seems those around PNR would disagree, willingly accepting the “peanuts”. And the real money has not even got started.
Interesting how some are so keen to try to impose their decision process upon others-and how it is rejected immediately.
741-250=491 less than 34% would not accept the money, 491+ did not participate and would not accept the money.
Hardly an overwhelming acceptance is it? And of course you might also ask how many took the money and used it to fund the anti fracking protectors? Now there is a thought?
Always interesting how the figures are never mentioned if they don’t support the illusion?
Forgive me for cross posting but Cuadrilla cannot even get their sums right on the ‘peanuts’
So if only 250 of the 741 eligible households (34%) participated in the consultation. And at least one resident said he wouldn’t take the money.
and
’29 households within 1km of the centre of the site will qualify for £2,070 and another 259 households within 1-1.5km qualify £150′
so,
is this another of those Cuadrilla maths problems where the numbers don’t add up cos in my book 29 + 259 = 288. So if 250 participated, less one who refused a payout of blood money this equals 249 households eligible for the payout?
and
29 x £2070 = £60,030
259 x £150 = £38,850
Total = £98, 880 not £100,000
More monkey business methinks……..
Perhaps the fact that so few cared either way informs on failure of antis? What ever happened to all that Lancashire says no stuff.
Lancashire says no to what stuff?
Lancashire says no to being stuffed more like?
Seeing as you are here Nick can you let us know what EURs your puff article on UK fracking was based on and what your sources were.
Thanks in advance.
‘The document suggests that the fund could improve access to public services…’
you mean policing the frack sites?
‘…and contribute to the local economy by providing training…’
in what exactly? (maybe on how to say one thing and mean another?)
‘…or improving infrastructures….’
like what; the trashed roads, flyover perhaps so we can get passed the trucks, to work?
‘…It could invest in the local natural environment….’
what the one you have just destroyed?
‘…It could also provide funding for community groups and the development of community assets, such as libraries and sports facilities.’
errr already had them and they are all closed due to Westminster refusing to send our tax money back to the North…
And this will recompense for the degradation of the countryside by fracking, and the side effects caused. Ridiculous notion, a wealth fund to make our environment poorer!!
Spot on ET and John Houston. If the Govt *genuinely* cared one jot about “empowering local people” and wanting to see “communities and individuals have greater control of the decisions, assets, and services which affect them”, they’d have listened to what the overwhelming majority wanted – and banned fracking in England, just as it’s been banned in Scotland, Wales, Germany, France, Canada etc.
Crikey that’s riled the antis hasn’t it.
So are you getting it now? GBK. No? Oh well (scuse the pun)