Capstone to Supply Power Packages for Offshore Rigs in Alaska

Capstone Turbine Corporation has received multiple orders for oil and gas offshore platforms from its new Alaskan distributor Chenega Energy LLC.

The orders are for a single C1000 and multiple C200s power packages for use on offshore platforms in Alaska’s Cook Inlet.

Chenega Energy secured the orders from Hilcorp Alaska LLC, which purchased 10 oilrigs in Alaska’s Cook Inlet from Chevron and Marathon Oil in 2012 and 2013. Since January 2012, oil production on the platforms has increased by 36 percent to approximately 9,700 barrels per day. Despite this increase, cost of oil production remains high and Hilcorp plans to invest over $500 million to further develop this project and make structural changes to help drive down costs. It reported that half of this budget would be spent on remediation, repair, and replacement of old equipment and antiquated technology. One example of the changes being made is to convert the wells from gas-lift to ESPs (Electric Submersible Pumps) on all the platforms.

“This conversion to electric pumps highlights one of the reasons Capstone’s microturbines are a perfect operational fit for the oil and gas market,” said Jim Crouse, Capstone’s Executive Vice President of Sales and Marketing.

In addition to the expanded need for clean and reliable electrical power at remote sites, Hilcorp has sour gas, which contains 2000ppm of H2S. Capstone microturbines can easily handle this type of sour gas, whereas traditional power generation solutions would require expensive fuel pre-treatment. Furthermore, the ability of Capstone’s microturbines to parallel to existing power generation equipment or work independently was another driving factor in the purchase decision.

“Capstone’s extremely low emissions, low maintenance, and ability to operate without lubricating oil and cooling fluids also make it a perfect option for Alaska, where environmental impact, sustainability, and reliability are key issues,” said Darren Jamison, Capstone President and Chief Executive Officer.

According to Greg Porter, President of Chenega Energy LLC, “Capstone microturbines are an amazing solution for Alaska’s growing energy needs. With a state that covers an area 1/3 the size of the contiguous 48 states, our challenges are diverse. Rising energy costs, remote locations, and lack of a statewide grid infrastructure requires creative reliable solutions. In addition, often in this Arctic climate, 70% of our needs are heat. I believe we are seeing the beginning of a proliferation of Capstone solutions in Alaska across multiple industries and market sectors.”

Hilcorp has also purchased two C200s for the Bruce Platform in Nikiski, Alaska that are currently in the process of being installed. Hilcorp currently owns more than a dozen Capstone microturbines, some of which were inherited in the purchase from Marathon Oil, that have maintained a spotless operating record.

“Based on Capstone’s demonstrated reliability and performance, Hilcorp plans to use Capstone microturbines on the remaining 5 drill rigs that have yet to be renovated,” added Porter.

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Press Release, December 06, 2013