Economic Report 2013

of Leicestershire and Lincolnshire). The size of the resources in place is much larger than previously forecast, with a central case of 37.6 trillion cubic metres (tcm). For comparison, current consumption in the UK is about 85 billion cubic metres (bcm) per year and so, even if only ten per cent of the resource were to be recovered, this would still equal more than 40 years of supply at today’s rate of consumption. However, it is not possible at this stage to forecast how much will be technically and economically recoverable. This will only become apparent when many more wells have been drilled and tested. As data are accumulated, it will gradually be possible to forecast the potential size of the prize. Nonetheless, the signs are encouraging. Shale gas is most unlikely to induce the degree of change in the UK (or EU) which has occurred in the USA because of very different circumstances, but there is the potential for a new arm of the oil and gas industry to

develop in Britain, providing investment, jobs, new gas supplies and tax revenues, while reducing imports. A report published by the Institute of Directors in May 2013 examines the possibilities 23 . In addition, everything else being equal, any new supplies of gas will tend to exert downward pressure on prices relative to what they would otherwise be. As drafting of this report was being completed, the government announced new tax arrangements for the production of shale gas, modelled on the FA concept which applies to the UKCS (see Section 6 for more details of the tax regime as applies to the UKCS). Further information about shale gas may be found at the following three websites especially established by the industry in Europe: http://www.ngsfacts.org http://www.shalegas-europe.eu/en http://www.europeunconventionalgas.org

23 See http://www.iod.com/influencing/policy-papers/infrastructure/infrastructure-for-business-getting-shale-gas-working

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