Highest Paid Workforce Drives Aussie Developers to Sea
As Australia builds up its liquefied natural gas plants, energy workers are reaping the benefits with the highest salaries in the world—but not for long. As the country's resource boom inflates costs and threatens onshore developments, developers are turning to the sea for billions of dollars in savings, reports Bloomberg.
Australia's oil and gas workers currently earn an average annual salary of $163,600—35 percent higher than employees in the US (double the global average), according to Hays Plc and Oil and Gas Job Search.
Shell is pursuing the first LNG facility in the world and Exxon Mobil Corp is preparing to use the world's largest ship to turn gas into liquid at an onshore field, avoiding the cost of pipelines and port facilities. Woodside Petroleum Ltd is looking into sea-based technology, dodging an onshore plant for its Browse project. Both moves is expected to save the companies nearly 20 percent what they would pay onshore.
Many developers are turning to Asian-built floating projects to keep Australia competitive with the suppliers in North America and East Africa.
“A lot of people have been saying Australian LNG is now over, it’s going to be priced out of the market by U.S. LNG exports and competition from Canada and East Africa,” Mark Greenwood, a Sydney-based analyst at Citigroup Inc., told Bloomberg. “In our view, we are going to see continued investment in Australia, just a different sort.”
As the demand for LNG skyrockets, especially in nearby Asian markets, developing Australia's resources is critical in meeting growing energy needs.
“Of the 90 million tons a year of new projects that need to be approved globally in the next three years to satisfy LNG demand by the end of the decade, as much as a third of that may come from proposed floating LNG plants and expansions of onshore developments in Australia,” Neil Beveridge, an analysts at Sanford C. Bernstein & Co, told Bloomberg.
There are currently six onshore projects under construction in Australia, three already operating.
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.