Acquisition sees methane capture group Alkane step up presence

METHANE gas can prove lethal for coal miners, but it is also helping to keep Britain’s lights burning.

Alkane Energy, which uses methane gas in former coal-mining areas to produce power, has secured an acquisition which increases the size of its Yorkshire operations.

Alkane yesterday revealed it had bought Greenpark Energy for up to £5.73m. Alkane captures coal mine methane and uses it as fuel for electricity generation and industrial heating.

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Alkane, which is listed on AIM, has licences to extract gas from sites across Yorkshire, Derbyshire, Nottinghamshire, South Wales and Greater Manchester.

The company finds a site in a coal mining area, obtains a licence from the Government and carries out a geological test to estimate the size of the gas reserve.

Alkane brings in a subcontractor to drill into the redundant mine workings and provide a safe link to its raw material. It then sets up a modular reciprocating engine.

Around 85 per cent of Alkane’s revenue comes from selling electricity to the National Grid. The rest comes from selling gas and joint ventures.

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Greenpark has nine sites in coal mining areas in West and South Yorkshire, including Grimethorpe, Bretton and Manvers.

Neil O’Brien, Alkane’s chief executive, said: “This acquisition is a significant step change in the scale of Alkane and adds significantly to our operating capacity and project pipeline. In addition, the acquisition will allow us to triple our capacity in power response for the National Grid.”

Greenpark doesn’t have any staff in Yorkshire, because all site maintenance is carried out by contractors.

It employs five staff at its head office in Chesterfield. Mr O’Brien told the Yorkshire Post: “There are other assets we would be interested in, if they came on the market.”

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Greenpark is a wholly owned subsidiary of GEL/GPEL which is a privately-owned developer of gas assets in the UK, Poland, Spain and the Ukraine.

As part of the acquisition, Notttinghamshire-based Alkane will acquire 16 modular reciprocating engines and associated plant and equipment, which have an estimated value of around £9m.

In a trading update, the company said it had seen further positive momentum in 2011, with output increasing by around 17 per cent compared to the year before.

After the latest acquisition it is anticipated that Alkane, which has 26 staff, will achieve full year turnover of £15m, compared with £9.5m in the year ended December 31, 2011.

In a research note, VSA Capital said: “The Greenpark acquisition will expand the scope and scale of the company to be the largest CMM (coal mine methane) developer and producer in the UK.”