SOURCE: Wood Group

March 14, 2007 07:01 ET

Wood Group Power Operations Passes the 11,000-Megawatt Mark With New Power Plant O&M Contracts

SUGAR LAND, TX -- (MARKET WIRE) -- March 14, 2007 -- Researched by Industrial Info Resources (Sugar Land, Texas). Wood Group Power Operations, Incorporated (Alpharetta, Georgia), part of the Gas Turbine Services Division of John Wood Group PLC (LSE:WG.L) (Aberdeen, Scotland), continues to strengthen its position in the power plant operations and maintenance (O&M) market by signing multi-year O&M contracts for facilities in California and Ontario, Canada. For more than 20 years the Wood Group has actively engaged in the O&M contracting business. For many years, the company's primary customers were those in the oil and gas industry operating on-shore and off-shore facilities inclusive of power generation equipment. In 2003, the decision was made to leverage the company's gas turbine services expertise, extensive O&M experience, and create a business unit whose primary focus is the power industry.

Over the past five months, Wood Group's power portfolio of 22 projects totaling 8,600 megawatts has grown to 27 projects and over 11,000 megawatts of operating capacity. On November 29, 2006, the company was awarded a six-year contract from Greenfield Energy Centre, LP (GEC) to provide operations and maintenance of a 1,010-megawatt power plant that is currently under construction near Sarnia, Ontario. GEC is a partnership between subsidiaries of Calpine Corporation (OTC:CPNLQ) (San Jose, California) and Mitsui & Company, Limited (Tokyo, Japan). Construction of the combined-cycle power plant started during late 2005 and commercial operation is expected to commence in early 2008. The plant consists of three Siemens/Westinghouse 501FD2 natural gas-fired combustion turbines. Each turbine is connected to a Deltak heat recovery steam generator (HRSG) to produce steam in order to drive a single Toshiba steam turbine generator.

The preparation of O&M services for a project the size of GEC starts long before the plant is commissioned. Freddy Alvarez, Eastern Regional Manager of Wood Group explained, "Initially, one person, a project manager, is put into place fourteen months prior to commercial operation of the plant to perform preliminary work leading up to mobilization." Mr Alvarez continued by saying, "Six to ten months prior to commercial start-up, the management team is phased in over a two-week period including the plant manager, operations manager, engineer and environmental health and safety manager." In all, a plant such as GEC will employ 18-20 people.

Wood Group's most recent O&M contract was signed with Sacramento Power Authority (SPA) to operate and maintain two existing brownfield plants with a combined capacity of over 180 megawatts for a period of five years. Staffing these facilities sometimes presents challenges, as on many occasions the company has only weeks to develop staffing and operation plans, as opposed to months to work with when moving into a greenfield site; however Wood Group always looks to retain the experience of the personnel at these facilities and in most cases is successful in retaining all, if not most of the existing personnel. For SPA, Wood Group will be operating a simple-cycle natural gas-fired GE MS7001E at the McClellan Air Force Base. This facility is a peak load plant that has been in operation since 1986. Also under the contract with SPA, O&M services will be provided at the Campbell Soup Cogen. This plant is home to a Siemens V84.2 natural gas-fired combustion turbine generator and a Nooter/Eriksen heat recovery steam generator (HRSG) and generates 107 megawatts, as well as supplies steam to the adjacent Campbell Soup plant.

Outsourcing O&M services continues to be a growing trend in the power industry. Wood Group fully intends to capitalize on the emerging opportunity and expects to finalize even more contracts in the coming months. When asked about long-term O&M contracts, Sergio A. Picon, Executive Vice President of Business Development stated, "We identify a term that allows the operator to provide the most value at a facility. For us to make a sizable investment and to really align the goals for an effective O&M contract, it is to both parties' benefit to sign an agreement of five years or more." Mr. Picon continued to say, "What we do is look at the economics of the facility and work with the customer to develop the right matrix." He concluded by stating, "One hundred percent of our fee is placed at risk on the proper matrix that is key to our customer. If we don't perform, we don't get paid."

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