Marcellus Shale Gas Resource Estimate Reduced 80%
The Marcellus Shale has reinvigorated the economies of the northeastern United States with newfound wealth in natural gas. All the major oil and gas companies—ExxonMobil, Chevron, Shell—not to mention mining giants like BHP Billiton, have been claiming their stakes on Marcellus shale land through acquisitions and mergers. It looked like shale natural gas was to be the saving grace of America’s energy economy; that is until the United States Geological Survey released its new report. The group has found that the Energy Information Administration (EIA) has grossly overestimated the amount of natural gas resources available in the Marcellus Shale formation.
Federal geologists claim that there are only 84 trillion cubic feet of technically recoverable natural gas in the Marcellus Shale formation compared to the former estimate of 410 trillion published earlier this year by the EIA. The EIA has now agreed to reduce its official resource estimate by 80 percent based on the Geological Survey’s new findings.
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The EIA is responsible for quantifying oil and gas supplies, but there has been growing concern from Congress as to how exactly the Administration goes about calculating its data. The EIA reportedly depends highly on outside input from industry consultants, which may produce biased figures.
In July, EIA Director Howard K. Gruenspecht appeared before congress to quell any worries about resource estimates, arguing that his EIA’s figures were accurate. Now, the Administration is apparently retreating on its word, and downgrading the estimates dramatically.
Nonetheless, the new Marcellus Shale natural gas resource estimates are still higher than the U.S. Geological Survey’s previous study in 2002, which predicted that only 2 trillion cubic feet of recoverable resources were present in the shale formation. This estimate, however, was released prior to new hydraulic fracking drilling technology increasing access to hard-to-reach reserves.
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.