ABOUT two dozen households in Lancashire, England, are set to receive £2070 ($1600) each in the UK's first ever compensation payments made to people living near a shale gas exploration site, with about 250 others set to receive smaller amounts, writes Rob Watts.

Exploration firm Cuadrilla said this week it is to make a £100,000 payment that will be split between residents near the Preston New Road exploration site, close to Blackpool, where drilling is under way and hydraulic fracturing could begin next year.

The decision, which relates to the second of four potential wells at the site, follows consultation with residents on how the funds should be distributed.

About 25 homes within one kilometre of the Preston New Road site will each get £2070 and about 230 more within 1 kilometre to 1.5 kilometres will receive £150.

In August, Cuadrilla made a first payment of £100,000, in line with an industry charter agreed with the government, to an independently-managed fund that will distribute cash to local community projects.

That payment was related to the first well at Preston New Road.

However, the company has gone further than the industry guidelines by vowing to pay an additional £100,000 for all subsequent wells that get drilled and committing to giving residents a choice over where these additional funds end up.

Cuadrilla has planning permission and permits for four wells but so far has only confirmed it will drill and hydraulically fracture two.

Cuadrilla chief executive Francis Egan said: “We are … pleased to make this second payment direct to local householders, after listening to their views, which is another first for the shale gas industry.”

The decision follows a survey of 741 homeowners from mid-August and mid-September in which Cuadrilla asked residents how they wanted the money to be paid out.

A total of 250, or 34%, responded, with 84% of those asking for the additional money to be paid directly to residents instead of into the community fund where the initial £100,000 has been paid.

Residents chose to split these extra funds proportionally between all households within 1.5 kilometres of the site, with the 26 homes within 1 kilometre set to receive 60% of the cash and the 230 located between 1 kilometre and 1.5 kilometres from the site set to receive 40% of the fund.

However, one local resident opposed against the exploration work called the payments “abhorrent and disgusting”.

John Tootill, who runs a nursery business within a kilometre of the site, told Upstream this week: “No amount of money can compensate for the ill health and misery this industry is going to inflict on people.

“They are trying to buy acceptability but it is totally unacceptable. It is abhorrent. It is disgusting.”

Cuadrilla said drilling on the first two wells is under way and is expected to be completed early next year with hydraulic fracturing due to start soon after.