Alkane Energy increases output as demand grows

Alkane Energy has increased its output following new contract wins and orders, the gas and power provider said Friday.

Production has risen 19% year-on-year, according to the group's trading update for the year to December 31st.

The company expects to deliver full-year electricity output of 167 gigawatt hours (GWh), compared to 140GWh in 2011, in its preliminary results to be released in March.

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Group output increased 44% to 101 megawatt hours (MWh) in 2012, buttressed by the addition of seven sites through its acquisition of Greenpark Energy in April.

The transaction bolstered Alkane to the top spot as the largest operator of coal mine methane in the UK.

Another contributor to output was Alkane's approval for plans to extract natural gas at Nooks Farm in Staffordshire. Electricity will be generated using the group's core gas to power skills.

The drill programme is expected to be completed in coming months and the site has estimated contingent resources of 1.5bn cubic feet (bcf) of gas, which is expected to provide 2.0 megawhatt (MW) electricity output for up to 15 years.

Alkane also gained from orders for new biogas plants worth £4.0m and has contracted 21MW of its power response capacity to the National Grid's UK Short Term Operating Reserve ("STOR") market up to March 2014.

"We have continued to see strong growth in our core coal mine methane business and we are encouraged by our progress in related markets such as power response and biogas," Chief Executive Officer Neil O'Brien said.

"The prospect of a shortfall in energy supply in the UK, as highlighted by Ofgem and the National Grid, reinforces our confidence about the continuing opportunities to the group for further growth.

"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."

Shares jumped 3.7% to 27.75p at 11:23 Friday.

RD