Newspaper article International New York Times

Britain to Create Fund for Shale Gas Revenue

Newspaper article International New York Times

Britain to Create Fund for Shale Gas Revenue

Article excerpt

The government of Prime Minister David Cameron said it would create a sovereign wealth fund to invest future proceeds from oil and gas extracted from shale deposits.

The British government said over the weekend that it would establish a sovereign wealth fund with the proceeds from extracting natural gas from shale.

The announcement, which was made on Saturday, might be seen as premature because no shale gas production is likely to occur in the near future. The decision is another step by the government of Prime Minister David Cameron to encourage development of a shale gas industry and overcome public opposition to the extraction process known as hydraulic fracturing, or fracking.

Edward Davey, the energy minister, said in a statement on Saturday that the sovereign wealth fund "was part of this government's broader strategy to strengthen our security of supply in a cost-effective way for generations."

Oil-producing countries like Norway and Kuwait, as well as the emirate of Abu Dhabi, have built up large sovereign wealth funds intended to save and invest the proceeds from the extraction of fossil fuels for future generations. Studies have shown that Britain has shale gas potential, but whether the gas is commercially exploitable will not be known until more exploratory wells are drilled.

George Osborne, the chancellor of the Exchequer, suggested on Saturday that the British sovereign wealth fund might be used for the benefit of northern England, which is thought to have substantial deposits of shale gas and has lagged behind southern England in economic growth. Setting up a fund is "a way of making sure this money is not squandered on day-to-day spending but invested in the long-term economic health of the north to create jobs and investment there," Mr. Osborne said, according to the BBC.

With North Sea oil and gas production in decline, the government hopes that tapping into shale formations will attract new investment and provide new sources of energy.

The government is in the midst of opening up large chunks of land to oil and gas exploration. Bids for the new tracts were due on Oct. …

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