Making Green While Being Green in the Oil and Gas Industry – An Interview with Darren Jamison President & CEO
Tell us about Capstone Green Energy. A little history and where you are currently.
Capstone originally started in the 1980s as a 30-kw mileage range extender for electric vehicles. The company was specifically interested in getting their product into buses and trucks. Though they had good working prototypes and did work for Ford, General Motors, and Saturn, they quickly saw there wasn’t really any commitment from the U.S. automotive industry to move toward electric, and the market wasn't materializing. They decided to move toward the stationary power market, but with a 30-kw microturbine, which ironically, wasn't very well suited for the stationary power market. So, they developed a 65-kw unit. That was better, but still a little undersized for most industrial and commercial applications.
When I joined Capstone in December 2006, the company had done some work on MW-scale technology, but they put it on the backburner. I saw an opportunity to transform the business by providing larger power solutions and brought United Technologies on board to fund the development of what would become the C200. With $12 million in cash and Hamilton Sunstrand as well as Pratt & Whitney providing engineering support, we were able to get the C200 commercially available in 18 months. The C200 eventually turned into the C1000, which is now our flagship product.
With the oil and gas market, we saw that the shale boom in the U.S. provided an opportunity to use the associated gas as a fuel for our microturbine. It was a win-win: a great way to help oil and gas producers quickly get product out of the ground without requiring air quality permits or having to bring in landlines from utilities. By 2015, roughly 70% of our revenue was oil and gas in U.S. and worldwide.
What is the oil & gas market for Capstone like today?
Currently, oil and gas customers make up about 30% of our total revenue, but we're seeing a resurgence in that market for several reasons many having to do with environmental issues since our turbines can run on the associated gas produced in the industry.
Obviously, oil prices are now over $100 a barrel, so there's more interest in oil and gas activity and infrastructure. We’re also seeing more countries and governments look to restrict or eliminate the environmental impact of flaring the associated gas. There’s also more Environmental, Social and Corporate Governance (ESG) pressure on oil companies to lower their carbon footprint in field. And now, there is the emergence of bitcoin mining. Bitcoin miners need a lot of power and so they want a lower cost of energy, but they also want to be green. These miners have started locating their operations on closed in oil wells so they can run on the associated gas. We’ve done three projects of this kind to date. Our most recent is in Pittsburgh on a closed oil lease where they’re running our microturbines on the associated gas and producing 4 MW. It’s a great way to make use of that stranded asset that would normally be flared, which would further exacerbate climate change. Instead, we can make bitcoins in an environmentally friendly way.
What makes Capstone unique in the oil & gas space?
I think a big reason our product is well received in oil & gas operations is that the days of “easy oil” are gone. Today, worldwide, most oil & gas operations are offshore and in remote areas. The more remote and harsher the environment, the better our product is for that application. Because microturbines have no moving parts, there’s no need for oil, grease, or antifreeze— none of the things you need for a traditional engine. Our product has very little maintenance, which is great when you don’t have operators onsite. With Capstone, lifecycle costs are very predictable, and reliability is very high. What’s more, our emissions are 1/10 those of traditional engines, so air permitting is much easier, in some cases not even required when our product is used.
You talked about Bitcoin as a new space, are there any new products or services that you're excited about?
On the new product front, our focus has been on hydrogen. I’m excited to say we have a commercially available 10% hydrogen product today, and shortly, we will be announcing a 30% hydrogen-blended product. As the world is looking for renewable hydrogen and lower emission fuels, hydrogen is something that's getting a lot of momentum globally. We’re following that momentum and offering it to our customers. From the beginning, our fuel flexibility has been a hallmark of our technology, which is able to run on associated gas, natural gas, propane, butane, ethane, cow manure, chicken manure, landfill gas, wastewater gas, liquid fuels, diesel, biodiesel, and kerosene. We’ve always prided ourselves on being a low emission technology, adding hydrogen is just the latest way we’re providing more environmental solutions.
What do you wish the oil & gas industry better understood about green energy?
The biggest challenge I face is in helping companies understand that not only can green energy be practical, but it can also be financially sound. Though often the perception is that green power is not economical or reliable, companies can actually save a lot of “green” and increase their power reliability by being green. There are so many applications where baseloading our technology provides good financial return, very high efficiency, very high reliability, and very low emissions.
I firmly believe that implementing practical green energy solutions that are both economical and environmentally sound is the right approach. Because, frankly, being green with no economic payback or spotty reliability doesn't make sense. But being a big polluter and continuing to degrade the environment when there are viable, clean solutions simply makes even less sense in the face of climate change. And there's no single answer. Always, the best way to be green is to be more efficient and use less energy, particularly with things like energy efficient lighting and pumps and motors. Start there but then look at your emissions sources to see where you can make reductions. In the oil & gas industry, using the associated gas to generate energy is truly a no-brainer—you get to tap a free fuel that and ensuring that the pollution longer being released into the atmosphere. These are the areas we can focus on right now.
