The huge shale gas deposit around Blackpool is 50pc larger than previously thought, according to reports.

The British Geological Survey (BGS) is currently carrying out a review of the UK’s shale gas reserves, which will be published in the new year.

The Times newspaper reported on Friday night that the BGS will conclude that the the 1,000 square kilometres covered by the Bowland Basin to the east of Blackpool contains 300 trillion cubic feet of gas. This is roughly 17 times more than the known reserves in the North Sea.

In 2011, exploration company Cuadrilla estimated there was 200 trillion cubic feet of gas in the area.

The news comes just two days after George Osborne said shale gas could make a “substantial contribution” to UK gas supplies from the 2020s. The Chancellor also revealed in his Autumn Statement that the development will be overseen by a dedicated Office for Unconventional Gas and Oil. He is looking at tax breaks to encourage its development.

Shale gas is controversial because of the extraction process, known as “fracking”, which was suspended in the UK after causing two small earthquakes near Blackpool last year.

Energy secretary Ed Davey is expected to give the green light next week for the company involved, Cuadrilla, to resume operations.

Mr Osborne said the new office would ensure “that regulation is safe but simple”.

A shale gas boom has transformed US energy markets, sending gas prices to record low levels.

“We don’t want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic,” Mr Osborne said.

But the gas strategy, published by the Department of Energy and Climate Change, cautions that while “there are very large quantities of gas in the shales beneath the UK, not enough is known to estimate what fraction of this could be produced”.

Shale gas development would take place more slowly in the UK than in the US, it said.

If exploration succeeds, “early production is likely in the second half of this decade, but any substantial contribution to the UK’s gas supply is unlikely until further into the 2020s”.