Europe moves closer to shale production
It has been 10 years since there were more unconventional than conventional wells being drilled annually in the United States, but hydraulic fracturing has yet to make an impact elsewhere in the world, where operators continue to face environmental worries and logistical challenges, say analysts with research and consulting firm GlobalData.
According to Matthew Ingham, GlobalData’s lead analyst covering North Sea and Western Europe Upstream, and Gustavo Bianchotti, GlobalData’s senior analyst for Europe, Middle East and North African Upstream, countries must consider the significant impact that increasing supplies of unconventional gas have had in the U.S., where natural gas prices stand at less than half of those in Europe.
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“Russian gas exports to Europe grew to a record of 15.6 billion cubic feet per day last year. While domestic production from countries such as France, Poland, Lithuania and Ukraine cannot fully replace this supply, it can reduce expensive long-term Russian contracts and cushion volatile North African supplies, creating a more favorable price environment for the general public,” Ingham says.
In November 2013, Chevron signed a $10 billion shale gas Production Sharing Agreement (PSA) with the Ukrainian government to develop the western Olesska field, followed by a similar shale gas agreement with Shell. Although political, exploratory and commercial risks remain in Ukraine, Lithuania and Poland, the analysts say that shale production is inching closer.
However, fracking continues to lack public approval. Public disclosure of fracking constituents in the U.S. has done little to bring peace of mind, and ‘fracktivists’ from 26 countries are currently scheduling worldwide protests.
“Mitigation programs will be vital to the successful development of a well-rounded shale gas program and will facilitate acceptance of shale gas exploration and development in Europe,” Bianchotti says.
“Some governments are more effective at progressing development. With continued appraisal of reserves while fiscal and regulatory framework is devised, infrastructure is developed and advances in technology can drive down costs. The European region, including the UK, Ukraine, and Poland, could see production within the next three to four years, whilst it may take longer for other countries,” Bianchotti says.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.