Britons will decide how to spend $1.3 bln shale gas fund

An anti-fracking protester wears a message on his hat during a demonstration outside County Hall in Preston, Britain June 24, 2015. REUTERS/Andrew Yates/File Photo
An anti-fracking protester wears a message on his hat during a demonstration outside County Hall in Preston, Britain June 24, 2015. REUTERS/Andrew Yates/File PhotoB

By Karolin Schaps and Kylie MacLellan

LONDON (Reuters) – Britons living near “fracking” developments will be able to decide how a 1 billion pound shale gas wealth fund should be spent, either by accepting direct personal payments or supporting projects such as railways or flood defences, the government said on Monday.

Prime Minister Theresa May announced on Sunday that some tax proceeds from new shale gas developments could go directly into local residents’ pockets, showing her support for the nascent industry that she hopes can ease Britain’s growing reliance on imported gas.

In a consultation published on Monday outlining how the shale wealth fund should be run, the government said payments to individual communities, where residents could decide what to do with the money, should not exceed 10 million pounds over the 25-year lifespan of the fund.

Residents would be given the choice of receiving payments directly or picking a project that would help their community.

“Local communities should be the first to benefit from the Shale Wealth Fund, and they should get to decide how a proportion of the funding is used,” the government said in its consultation document.

Britain is estimated to have plenty of shale gas resources in place, enough to cover the country’s annual gas needs for hundreds of years.

But shale gas extraction — so called fracking — has been slow because of local residents’ and green campaigners’ concerns over environmental impact and the fall in energy prices.

In the U.S., where abundant shale gas production has started to turn the country into an exporter, landowners have directly benefited from the shale gas boom because they have rights to mineral resources.

Payouts to communities from the wealth fund will come on top of shale gas operator payments of 100,000 pounds per exploration well and a one percent share of shale gas site revenues.

INEOS, which controls Britain’s largest shale gas sites, has pledged to increase the percentage of its revenue it would pay to communities to 6 percent. It said these payments could add up to 2.5 billion pounds.

Shale gas developers welcomed the government’s proposal.

“The onshore oil and gas industry in the UK continues to believe that local people should share in the success of our industry and be rewarded for hosting sites on behalf of others in the country,” said Ken Cronin, chief executive of the UK Onshore Oil and Gas body.

Environmental campaigners said cash sweeteners would not convince Britons about shale gas.

“You can’t put a price on the quality of the air you breathe, the water you drink, and the beauty of our countryside,” said Doug Parr, Greenpeace UK’s chief scientist.

(Reporting by Karolin Schaps and Kylie MacLellan; editing by Giles Elgood)

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