Alkane looks to open two new methane sites

The company, which produces power from methane produced in former coal mines, has plans to extract the gas from the former Prince of Wales colliery at Pontefract and the Markham Main coalmine near Doncaster.

Alkane’s chief executive Neil O’Brien said geological work carried out at the two sites has been very encouraging.

“It’s only planning permission that would stop us opening up the two developments and that is very rarely rejected,” he said.

“We hope to be drilling at Markham Main in 12 months and we’re very encouraged by the prospects.

“At Prince of Wales I’d be really disappointed if we’re not on site by the end of the year,” he added.

Markham Main is expected to produce 4MW in output and Prince of Wales should produce 2MW.

Mr O’Brien was speaking yesterday as Alkane reported its eighth year of growth in output – up 19 per cent to 167GWh in the year to December 31.

Alkane said it is now the largest coal mine methane operator in the UK following the acquisition of rival Greenpark. Mr O’Brien said the group would look at further acquisitions if they are “the right assets at the right price”.

The group said a new site in Nottingham and a re-commissioned site at Askern, near Doncaster, added 5MW to capacity during 2012.

Askern contributed 2MW although there are plans to increase its output to 4MW after remedial work over the summer.

The group’s other Yorkshire sites include Wheldale near Castleford, Newmarket near Wakefield, and Grimethorpe and Houghton Main in South Yorkshire.

Revenues increased by 54 per cent to £14.7m in the year to December 31 and pre-tax profits rose 44 per cent to £2.9m.

Alkane is looking at entering the onshore shale gas sector. A potential shale gas formation called The Gainsborough trough runs from South Yorkshire to North Nottingamshire.

Yesterday Mr O’Brien said Alkane has commissioned some geological work looking at shale production, but it will be a few months before the results come out.

“Plenty of people believe there is going to be shale gas, but whether it can be brought to the surface conveniently we are yet to see.

“It would be several years before it is up and running,” said Mr O’Brien.

The Government has set out proposals for a wide reaching Gas Strategy and is working on regulations for the exploration of shale.

Alkane owns the rights to 823 square km of UK onshore Petroleum Exploration and Development Licences. It was awarded its first licence in 1996.

The group announced a maiden dividend of 0.1p per share, reflecting its confidence that it can play a meaningful part in helping to fill the energy gap.

The Government is keen to secure low cost, cleaner power sources as traditional coal and nuclear power plants are decommissioned.

An Ofgem/National Grid report published in November highlighted the impending energy gap as only limited new plant is being built.

Alkane said this raises the likelihood of power cuts which could occur as early as 2015.

“As a small and nimble power generator we are well positioned,” said Mr O’Brien.

“We’re flexible enough to jump in where the bigger players can’t. We can exploit these opportunities.

“We have a clear strategy in place in a power generation market where 25 per cent of industry capacity is scheduled to be retired in the next decade.”