DGC Update

Corac Group Plc

("Corac")

DGC Update

Corac Group plc today provides an update on progress of investigations following system tests of the Downhole Gas Compressor (DGC) at Spadeadam in Cumbria during December. Test records from Spadeadam show that of the three compressors in the downhole configuration that were tested, one successfully reached full speed, one would only run at low speed and one did not start at all.

The DGC has been stripped down and inspected as part of a rigorous failure analysis process at Corac's workshops in Uxbridge. The non-starting motor was due to failure of a soldered contact in the electronics module that was tested prior to departure to Spadeadam, and was fully functional at that time. It is not possible to attribute this failure directly to either vibration or temperature effects, but it is strongly suspected that either or both factors contributed. A back-up inverter has been substituted to correct this issue.

The partially running motor suffered a leak from a sealed oil system that insulates the DGC from its external sleeve. The leak path is believed to have occurred through the motor power connector on the compressor in question. This experience has led Corac engineers to improve the sealing of the motor connectors, to refine the oil filling procedure and introduce further validation of the integrity of the oil system prior to returning to Cumbria.

These events have further reinforced the need to improve test facilities at Uxbridge so that more of the proving process can be carried out locally. This will reduce reliance on the Spadeadam facility and de-risk the visits to Cumbria, which remain essential to operate the DGC in methane.

The Board is pleased to note the rapid assessment by our engineers of the issues arising from the December tests and that corrective actions are being implemented quickly to keep the programme moving forwards.

The Corac team intends to return to Cumbria in the next few weeks following completion of the corrective actions and system rebuild in preparation for partner acceptance testing.

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