1. ITV Report

Chancellor set to back controversial gas drilling

Anti-fracking protestors scale the rig at Banks, near Southport, on November 2, 2011 Photo: Peter Byrne/PA Archive/Press Association Images

A controversial method of gas extraction that has been blamed for causing earthquakes in Lancashire is expected to get Government backing today.

The Chancellor George Osborne is understood to be planning to use today’s Autumn Statement to announce a new regulatory regime for getting gas from shale rock, a process known as fracking.

Mr Osborne is thought to be planning to open an Office for Unconventional Gas to oversee the development of the shale gas industry and arbitrate in disputes with opponents of fracking.

Gas extraction firm Cuadrilla had to stop fracking on the Fylde coast after minor earthquakes were linked to their drilling.

One 2.3 magnitude tremor hit the area on April 1, 2011, followed by a second of magnitude 1.4 on May 27. A report by the company concluded the tremors were caused by the fracking and the sites’ ‘unusual geology’.

In April this year the Government said fracking, which involves pumping high pressure water into underground rock, could start again, but only under strict conditions.

The announcement is likely to delight Conservative MPs who see gas as the route to cheap energy bills for consumers, but dismay environmentalists who fear the impact of fracking and would rather see efforts directed at renewable sources of power, like wind and solar.

The Chancellor is also reportedly planning to approve the construction of up to 30 gas-fired power stations in the Autumn Statement.

The publication of a "gas strategy" alongside the statement will add further detail to the Government's plans to keep the UK's lights on over the coming decades, outlined in last week's Energy Bill.

It is understood that Mr Osborne will also seek to encourage investment in gas through possible tax breaks.