Shale gas development would be entirely privately funded and could boost the tax revenues of the country. This is at a time when tax revenues from North Sea oil and gas are falling, due to decline in production. How much tax revenue shale gas can generate is dependent on how much gain be extracted. In Pennsylvania, unconventional gas activity is estimated to have supported 79,000 jobs, contributed $11.6 billion in value added and paid $1.1 billion in state and local taxes in 2012.
The industry has committed to paying £100,000 to the local community living near to each exploratory well site where hydraulic fracturing takes place. This will be paid by the operator, regardless of whether or not recoverable deposits are found. In addition, the industry has committed to paying communities 1% of the value of the shale gas that is produced. This could be equivalent to £5million to £10million per site over the lifetime of the site. The government has also proposed that £20,000 be paid to the community for each horizontal well drilled.
With regards to the specific tax regime, proposals are being worked up by the Government to ensure that early investment in exploration is encouraged and to ensure that there is a fair return to the tax payer at a later date once shale gas wells are in production.