Alkane ponders move into the UK’s shale gas industry

ALKANE Energy might be moving into the UK’s nascent shale gas sector, an announcement sending shares up nearly four per cent yesterday.

The Aim-listed company, which uses methane gas in former coal-mining areas to produce power, said: “Given the high level of interest in UK onshore shale gas, Alkane is evaluating its options in relation to potential shale gas resources within its licensed portfolio.”

Alkane has 21 sites across Yorkshire, Derbyshire, Nottinghamshire, South Wales and Greater Manchester and a further 800sq km of licensed but undeveloped land. Corporate broker VSA Capital said the company’s sites in the North West, the East Midlands and Yorkshire could contain 1-2 trillion cubic feet

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Supporters see the energy source as a panacea to Britain’s economic problems after the shale gas revolution in America led to a revival of manufacturing industries. Shale gas supported an estimated 1.7m manufacturing jobs in the US last year. But environmentalists have raised concerns about side effects from the controversial extraction process known as fracking, including pollution and seismic activity.

Extraction of shale gas in Lancashire was halted after tremors near Blackpool, but the Government has since given the go-ahead for the work to continue.

Chief executive Neil O’Brien told the Yorkshire Post: “It’s still very early days for the industry.

“If you look at what happened in America, it went from being a gas importer to almost an exporter on the back of shale.

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“Whether that’s replicable in the UK nobody knows. They are beginning to reopen steelworks in America. They are bringing jobs back home.”

There are shale formations across the UK. The Gainsborough trough, which runs from North Nottinghamshire to South Yorkshire, is seen as a potential source of shale gas.

Mr O’Brien said: “If everybody respects all of the environmental and technical requirements, there could be a very significant industry. It’s going to take time to develop.”

He emphasised that the company is yet to decide whether to proceed. Alkane is due to report full-year financial results in March.

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In a trading update yesterday, Alkane said output increased 19 per cent year on year.

It expects to deliver full-year electricity output of around 167GWh.

Shares closed last night at 27.75p, a rise of 1p.