Huge reserves of shale oil and gas around the British coast are ripe for exploitation that could see energy prices fall.
Besides cheaper fuel, Chancellor George Osborne is hoping to trigger a mining boom with the establishment of the Office for Unconventional Gas and Oil which will oversee the drilling and extraction of shale oil and gas reserves.
Drilling was banned last year after exploratory work off the North West coast led to minor earth tremors but it is expected to restart soon.
The announcement was part of a Gas Generation Statement which will see the UK build 40 gas-fired power stations in the coming years.
The UK is also looking to the USA where there are massive reserves of shale oil and gas considered viable for extraction.
Lucrative returns
One of the driving forces in the US to such a controversial move is that it will help prevent the country relying on unstable countries such as Iran and Syria for energy supplies.
Experts say the increase in production of shale oil and gas over the next two decades will help the country hit new domestic production peaks.
The demand for natural gas is growing in the US and improvements in technology mean the gas is cheaper to extract.
Many oil companies are moving rigs from the traditional oil zones in to exploit shale oil and gas in places like South Dakota, Ohio and Oklahoma – where oil drilling stopped more than 100 years ago.
America has the world’s largest shale gas reserves and with gas prices rising steadily, it’s quickly becoming a lucrative business for oil and mining companies. The economics now mean that reserves that were too expensive to extract are now cheaper to access than importing oil and gas from abroad.
Cheap oil and gas
However, the real success story for America is that their natural gas costs a fraction prices charged by other countries is helping fuel a rise in the US economy, especially in industries such as iron and steel, plastics and chemicals.
Now a ‘dash for gas’ is likely to start in the UK and the government will introduce tax incentives to encourage development and encourage investment in new technology.
Shale gas production could begin as early as 2016 but even the government admits that a secure increase in gas supplies may not lead to bills falling for some time.
However, the added benefits of securing a cheap source of energy will be felt in boosting British industries, much like has been seen in the USA.
