May 17, 2020

Natural Gas Prices Force Down Marcellus Rigs

energy digital
marcellus
shale
Natural Gas
Admin
2 min
Marcellus rigs down by 29%
As natural gas prices drop this year, the Marcellus Shale region in Pennsylvania slows substantially. The number of rigs operating in the state is do...

 

 

As natural gas prices drop this year, the Marcellus Shale region in Pennsylvania slows substantially. The number of rigs operating in the state is down 29 percent from its peak a year prior, according to Baker Hughes Inc., a tracker of the industry. 

The slowdown is no surprise seeing as many exploration companies have been planning on shifting drilling equipment to areas where the oil and natural gas is more profitable. The warm winter, further depressing demand and prices, had an influence as well.

In the northern area of the state, where the most intensive drilling activity has taken place over the last few years, is particularly slowing down.

"You can clearly see there's a leveling off in traffic, both physical truck traffic and business development," Thomas B. Murphy, codirector of the Penn State Marcellus Center for Outreach and Research, told the Inquirer.

That doesn't mean the boom is over, however.

"We're really talking about a long-term play," Kathryn Z. Klaber, president of the Marcellus Shale Coalition, the industry trade group, told the Inquirer. "This relatively short-term drop in price does not change the overall viability and attractiveness of a play like the Marcellus."

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For now, the market is oversupplied. Should commodity prices rise again, drilling activity will likely increase in order to chase higher profits. For many, continuing to operate under current conditions won't produce a profit. Some, however, remain in order to secure expiring leases for mineral rights, while others are stuck drilling unprofitable new wells under the terms of deals struck with foreign investors.

In the Marcellus region, so many wells have been drilled that are not yet in production that it will take some time for the market to catch up. Over half of the more than 5,000 wells drilled in the area are still waiting on completion or on construction of pipelines to carry away production.

Once prices are better, those wells will be able to come back into production quickly.

 

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Ofwat
Utilities
water
prices
Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

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:   

  1. 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. 
  2. 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. 
  3. 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.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"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 VenturesWave 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.

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