Keeping the power going

The cost of production outages makes emergency generators an essential piece of equipment. Chandra Dhar, engineering manager, Cummins Middle East, explains his firm’s approach to the regional market
Keeping the power going
By Administrator
Tue 31 Oct 2006 04:00 PM

What is your group responsible for?
Our group has three separate activities: sales, engineering and project management.

As a team, we are abler to deliver a solution where engineering would receive an enquiry through the sales department, which is specific to the customer’s needs.

We would work out a commercial solution that sales and engineering sell together to the customer.

Once this converts into an order, it is handed over to the project management department, which then executes it and hands it over to the customer as per the budget and time frame.

Then, it commissions and subsequently manages the warranty on that solution.

What kind of products do you provide?
Typically, it would mean emergency power solutions, which means diesel engine-driven generator sets.

These would be especially packaged to customer specifications, which could mean IP55 alternators, it could mean remote panels that can interface the generator with the customer control system.

It would enable the complete generator set to be supervised, controlled and monitored through a remote control system, or a remote supervisory, control and data acquisition system.

That is typically for the generator sets.

We also can deliver generator sets that are sized appropriately to start critical customer equipment like air compressors and uninterrupted power supplies.

We can supply packages for offshore applications that can be generator sets or engines operating in hazardous areas.

We could also do special enclosures that meet fire rating requirements.

What uses are these systems being put to?
Typically, for emergencies or what we could call blackstart applications, which would mean there’s a complete blackout in a power station or in a system.

This solution would be needed to start up the system again.

What level of power can you provide and what can you do with these systems?
We are able to deliver power from 11 kilowatts up to 2.6 megawatts.

What do your clients use the systems for?
Standby power.

If the whole plant shuts down, it would be to safely shutdown process plans, to start up process plants and provide emergency power for protection of personnel during an emergency.

Typically, you would lose complete electrical power and you want to evacuate people safely.

So you want lighting and other services; therefore, you need to have these backup diesel stations.

It’s like in a building.

You lose the power supply and you’re stuck in a lift.

You would need diesel generator sets as backup, so they start up immediately and you are able to power up all the critical installations.

For example, in a supermarket, the most critical part is refrigeration.

If refrigeration fails, they lose millions on the stuff in cold storage.

Diesel backup ensures that if the main power fails, there is sufficient power to take care of those essential loads.

How often are the generators needed?
It depends upon the reliability of the utility.

Typically, they are designed to run for anything from 250 to 500 hours per year.

These are reliable power backup systems that can meet the rigours of the Middle East’s climatic and environmental conditions.

Have there been recent examples of where they’ve been used here in the Middle East?
We have supplied the backup generators for the royal terminal in Dubai at Dubai airport.

We are currently operating a diesel-based power station for the Dubai metro project.

The construction power is on our generator sets.

We have supplied backup generators for Kuwait Oil Refinery and are currently executing projects for Shell in Oman and the Abu Dhabi National Oil Company.

Have they ever been called upon?
They are tested on a weekly basis to ensure availability.

That is part of what we call the exercise regime, so you don’t wait for an actual blackout or failure.

These are run on a routine basis to make sure that in the event of a real emergency, they will start and take up the load.

How does ownership of an emergency system work?
These are typically part of an engineering, procurement and construction (EPC) contract where the customer is building a huge facility like an oil refinery.

This generator set would be one of the components in the whole scheme of things.

They would issue a tender through the EPC contract that is usually given to one contractor who assumes complete responsibility.

He issues an enquiry to three or four approved vendors because people cannot wait in the oil & gas industry.

We are one of the approved vendors.

We receive the enquiry and we then go through the specification, respond with a compliant solution, then go through the negotiations and once the job is awarded, we deliver the product, installing it and commissioning it.

Do customer pay a one-off fee or an ongoing ownership charge?
This is what we call a purchase deal.

They became the owner of the goods once they leave the premises.

It is not a rent option, they are the owners of the equipment.

The payment terms depend on the deal.

If there is not much we need to do on the standard commercial product, we would typically ask for payment when the goods are ready for delivery.

But if it is customised, we go through a stage payment process based on what we call a progress payment.

We receive a down payment and if we complete a certain milestone, we get paid a certain percentage, leading up to the final payment when we deliver the goods.

What about ongoing maintenance; how is that accounted for?
Once we deliver the goods, the customer calls us to supervise the installation because they usually have a huge team on site installing various equipment in the plant.

We supervise the installation, commission the equipment and it is then handed over to the customer for commercial use.

That triggers what we call a warranty and this warranty typically lasts for twelve months from the date of having put the equipment into commercial operation.

After that, the client takes care of it, but we could be asked to bid for an annual maintenance contract.

Would an annual maintenance contract be most attractive for you?
It would if this was equipment that was going to run all the time.

But as this is standby equipment, maintenance would be every month or so to carry out a check.

Maintenance is only attractive if something runs all the time and is clocking up hours.

As products, are these emergency generators commoditised?
It is a commodity as far as commercial sets are concerned, but for oil & gas it is customised right down to the bones.

It is very specification driven.

What is specific about oil & gas?
The industry is unique because the repercussion of equipment failing when it is supposed to be operating is that they could lose millions of dollars of production.

The cost of electricity in the whole scheme of things is about 10%.

If that generator fails and they lose production, typically a generator set’s cost would be thirty minutes of oil production in a medium sized field.

One shutdown could mean anything between half a million and a million dollars of lost production.

The reliability requirements are so high they specify things they have used before and are happy with.

Where we would need 100 kilowatts, they ask you to do 200 kilowatts with all kinds of bells and whistles just to make sure the reliability and availability is close to 99%.

What do you feel is your company’s competitive edge in this market segment?
Cummins is the largest producer of engines above 50 horsepower, so we have a strong brand name that helps us to sell.

Then we have what we call local engineering capability.

We come up with solutions that meet the specific needs of this industry segment.

The key here is local solutions.

If we come up with a solution in the US, it might be double the price and not meet the requirements of the customer.

As we are here, we know exactly what the customer wants.

What are those unique needs?
It’s typically the ambient temperature, which is very high; and a very dusty environment.

The equipment is exposed to the elements.

If it’s on an offshore platform, you have very high salt content in the air.

Equipment is exposed to high levels of hydrogen sulphide, which means a means corrosive atmosphere.

It’s a very hostile environment.

How would you sum up what your division does?
We are amongst the market leaders, although we accept that Caterpillar is the market leader.

We are getting there and in the last two or three years, we’ve been building up a team that has the right experience in dealing with these markets.

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