(CRA) Corac

13 December 2011

Corac Group Plc

("Corac" or the "Company")

Technology Update & Development Opportunities

Introduction

Corac, the innovative research and technology group that specialises in high speed compressor and power electronics technology, is pleased to provide the following update on its recent technology progress and its growing pipeline of development opportunities.

Highlights:

-      Successfully completed the initial build of its second generation downhole power electronics
module;

-      First compressor assembled and tested for the North American Downhole Gas Compressor ("DGC") project;

-      Ongoing In-pipe Gas Compressor ("IGC") progress, whilst exploring additional development and trial
opportunities;

-      Completed Saudi Aramco project concept design and specification stage;

-      A number of potential new development projects in detailed discussions.

DGC Programme progress

Corac has successfully completed the initial build of the second generation downhole power electronics module, an important milestone in the development process.  The enhanced design, which is now the basis of downhole electronics for the DGC programme, has achieved the intended results in a series of laboratory tests.  It was then connected to a proven compressor module, driving the motor to speeds in excess of 50,000 rpm.  These tests were all completed successfully within the programme test plan and provide a strong platform for further progress.  

The second generation electronics is a considerable step forward, eliminating many of the previous challenges.  It permits better access for instrumentation during testing and so supports more extensive monitoring of performance and behaviour.  It has also been simplified with a view to the ease, speed and cost of production for future commercial volumes.

In parallel with the electronics development, the first compressor designed for our project in North America was assembled and tested.  Once again, the compressor successfully reached full operating speed in excess of 50,000 rpm.  This is a significant milestone for the programme as a whole and the American development project as it is the first functional test to address aspects of different operating conditions in the American well and technical lessons learned through earlier development.

From here, Corac will progress from prototype activity to build and test a series of compressors and downhole electronics for the American project in our new Technology Centre.  In parallel, we will also build a series of second generation electronics to implement in the ENI system.  In both cases we will then conduct comprehensive tests on the major system components and then each integrated system to prove functionality and endurance within the local test facilities.

This will provide assurance of technology readiness to undergo individual customer acceptance testing at Spadeadam which will include a number of operational scenarios and endurance running.

IGC Programme progress

Corac has been working with several parties to define the core operational requirements for in-pipe high speed turbocompressors.  The programme focus is on compact, lightweight, high performance and low maintenance compressors. 

These will combine Corac's core technologies in high power permanent magnet motors and contactless rotors in a seal-less system that can withstand the operating conditions of a gas production or distribution pipe. 

Early programme research has identified established technology elements that are already proven and can be integrated with Corac's own technologies to produce reliable systems with reduced development risk.  This pragmatic approach allows Corac to focus on its core strengths and build partnerships with other technology providers where appropriate to supply integrated systems.

The first field trial project has seen Corac engineers working closely with their counterparts at Saudi Aramco to complete the specification phase of an IGC.  That project now moves into detailed design prior to the manufacture, build and testing phases.

In parallel with that project we intend to complete other specific development and trial activities exploring gears, couplings and high power motor configurations as part of the modular configuration of the intended IGC product family.

New Development Opportunities

Corac has been engaged in discussions regarding new partner supported projects with a number of major global companies across the energy and industrial engineering sectors in addition to those it currently works with. 

These initial projects will, subject to technical and commercial agreements being completed, commence during the course of next year.  Whilst limited project income will be recognised in 2011, these will generate income to partially finance Corac's significant investment in the broader technology development programmes in 2012.  Once completed successfully, such projects can be expected to lead to further contracts for the development of field trial systems to prove the technology for commercialisation.

Further announcements regarding these potential projects will be made once contracts are signed. 

Commenting, Executive Chairman, Phil Cartmell, said:

"Significant progress has been made within Corac's business over the last year, strengthening the intellectual property portfolio, multiplying the number of future commercialisation opportunities and creating the platform for growth in 2012 and onwards.   

"Corac now has a strong pipeline of opportunities for its IGC and DGC applications as well as renewed interest in industrial compressor applications, derived from a much more diverse group of companies encompassing not just oil and gas majors, but also industrial engineering groups.

"The Board is greatly encouraged by the progress being made with the technology and partners."

ENDS

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