Sep 25, 2015

The problem with fracking (part 1)

Energy Digital Staff
3 min
When the concept of fracking was first introduced in the early 1900s, it seemed like a good idea. From an economic standpoint, the United States...

When the concept of fracking was first introduced in the early 1900s, it seemed like a good idea. From an economic standpoint, the United States has enjoyed a 47 percent drop in natural gas prices; other countries have experienced cost reductions as well. 

Related: New guidelines for hydraulic fracturing

Government officials were happy, business owners were happy and consumers were happy—and then voices were raised to contend it; to stop it. Claims were made that it caused flammable water, which contaminated the soil and drinking water, and a controversy was born.

With both sides adamantly demanding that they are right, it begs the question: What’s wrong with fracking?

No, really: What’s wrong with it?

Fracking, or hydraulic fracturing, is a method used to recover oil and gas from shale rock. It involves drilling deep into the earth, then directing a high pressure mixture of 98.5 percent water, 1 percent sand and 0.5 percent chemical additives at the rock, thus fracturing it to release the gas and allowing it to flow to the well head. 

Related: American majors opt out of European corporation-led request to UN for help on climate change

The drilling is typically done horizontally but sometimes vertically to reach the rock layer. While it is often used to create new pathways for natural gas, it may also be used to extend channels that already exist inside the rock.

The earliest recorded well fracking was in 1947. Since that time, it has gained popularity and garnered a great deal of controversy. 

As with all controversies, both sides think that they are right—so we are going to address the five top arguments head-on, separating fact from fiction.

Argument #1: Fracking will worsen climate change
Fracking produces methane and certain groups are concerned that it will escape through leaks in natural gas infrastructures.

Methane has been linked to climate change because when it is emitted into the atmosphere it traps a tremendous amount of heat—in excess of 20 times more over a 100-year period than carbon dioxide. 

Related: Frozen and the State Department: How Elsa could fight climate change

Environmental activists have latched onto this, using it in their arguments to ban fracking.

To get the full story, though, you have to look at the whole picture.

A 2013 study conducted by the University of Texas at Austin reported on a series of extensive measurements that were taken at various points of the fracking process, including right at the well pad.

Related: How will the energy landscape change after EPAs new emissions rule?

These measurements were taken at 190 fracking sites located throughout the U.S., with access allowed by nine different energy companies that agreed had to participate.

Results from the study showed that the equipment installed at most of the wells had successfully reduced methane emissions by 99 percent. When juxtaposed with methane emissions estimates (released by the EPA in April 2013) in the 2011 calendar year, the emissions during this study were 97 percent lower.

Next in the series: [Video] The "problems" with fracking (part 2)


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Editor's note: This article first appeared in the August 2015 edition of Energy Digital magazine. Click here to read the complete piece. 



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Jul 26, 2021

Ofwat allows retailers to raise prices from April

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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