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Catalytica Energy Systems Announces Installation of Xonon-Equipped Kawasaki Cogeneration System at Plains Exploration & Production Company California Site Kawasaki's Xonon-Equipped GPB15X to Provide Clean Power with Less than 3 ppm NOx for San Luis Obispo Facility GILBERT, Ariz., Oct. 28 /PRNewswire-FirstCall/ -- Catalytica Energy Systems, Inc. , a leading provider of innovative nitrogen oxides (NOx) solutions for combustion-related applications in the power generation and transportation industries, announced today that the Plains Exploration & Production Company's oil field located in San Luis Obispo on California's Central Coast will -- as soon as next week -- be operating one of the lowest emission-producing gas turbine cogeneration systems in the country. The Kawasaki GPB15X generator package featuring Catalytica Energy Systems' Xonon Cool Combustion(TM) system will supplement existing electrical service from PG&E, the area supplier, while achieving ultra-low NOx emissions of less than three parts per million (ppm). PXP, headquartered in Houston, is an independent oil and gas company with several facilities in California. PXP was recently recognized by the Air Pollution Control District (APCD) of San Luis Obispo County for demonstrating that it is possible to reduce air pollution while increasing production. In keeping with that objective, the Xonon-equipped Kawasaki system is an ideal fit, having demonstrated less than three ppm NOx in other installations. "It is imperative that we continue to find ways to increase our productivity while also being able to operate our facility in a manner that is respectful of the environment, the people who are affected by our plants and, of course, all regulatory issues," said PXP Facilities Manager, Jim Nelson. "The recognition of the APCD," continued Nelson, "is only one of many that the company has received at our various sites, and we know that this new gas turbine installation will further our overall goals." Kawasaki's M1A-13X 1.4 megawatt gas turbine, which is at the core of its GPB15X package, will be equipped with Xonon Cool Combustion to achieve a significant reduction in NOx output levels. The Xonon(R) system uses a catalyst instead of a flame in the combustion process, enabling combustion temperatures below the threshold at which NOx forms. The Kawasaki GPB15X is the first and only commercially available power generation package to include the Xonon Cool Combustion system. Mike Murry, president and CEO of Catalytica Energy Systems, said, "PXP is a demonstrated leader in its commitment to safety and protecting the environment. We are proud to offer PXP, through our partnership with Kawasaki, a solution that meets their power requirements while at the same time accomplishing their environmental objectives. We have demonstrated great success with this unit at other sites, and look forward to building upon that success at PXP's San Luis Obispo facility." Hiro Matsumura, president of Kawasaki Gas Turbines-Americas, said the electricity from this new installation will be used to power existing as well as new oil pumping systems. Exhaust heat will feed the facility's Heat Recovery Steam Generator (HRSG), which creates steam to be injected into the oil reservoir. This, in turn, reduces the viscosity of the oil so that it can be easily and efficiently extracted from the ground. "We are very pleased to be playing a role in PXP's continuing efforts to increase their productivity while simultaneously minimizing emissions," said Matsumura. The Kawasaki executive pointed to another of their California installations -- at the Sonoma Developmental Center in Eldridge -- where a similar retrofitted unit is regularly producing minimal NOx output while maximizing power delivery efficiencies. According to Matsumura, "No other gas turbine package is capable of offering users this combination of reliability, low vibration, and ultra-low emissions levels." The same system is also currently being installed at The Reader's Digest Association, Inc. headquarters campus in Pleasantville, N.Y., where it will provide approximately 75 percent of the facility's power. Again, the uniqueness of the Kawasaki package's environmentally-friendly operations was key to the selection process, as RDA management has said they "place a premium on being a good neighbor and responsible corporate citizen." About Catalytica Energy Systems Catalytica Energy Systems designs, develops, manufactures and services advanced products for the energy and transportation industries with a focus on cost-effective solutions for reducing nitrogen oxides (NOx) emissions from combustion-related applications. Our proprietary technologies include the application of catalysts to combustion systems and next-generation fuel processors to offer innovative NOx solutions that mitigate the environmental impact of power generation and transportation systems. We are marketing our first commercial product, Xonon Cool Combustion(TM), a pollution prevention technology that enables natural gas-fired turbines to achieve a significant reduction in certain air pollutants to ultra-low levels. Xonon(R) reduces the formation of NOx, a primary contributor to smog, through a proprietary catalytic combustion process. We are also pursuing adaptation of our core Xonon technology to develop and commercialize NOx reduction solutions for mobile, off-road and stationary diesel engine applications. These systems are being designed for incorporation in both new engines and retrofits of existing diesel engines. Additional technology development efforts related to fuel processing systems for fuel cells used in automotive applications are also actively underway Find Catalytica Energy Systems on the Worldwide Web at http://www.catalyticaenergy.com/. About Kawasaki Kawasaki has been manufacturing gas turbines since 1943 and has consistently been an industry innovator. From the GPB15X, which has the world's lowest exhaust emissions, to the new GPB180DLE, that has redefined the state-of-the-art for efficiency and design, Kawasaki has been offering advanced solutions for more than 60 years. Headquartered in Grand Rapids, Michigan, Kawasaki Gas Turbines-Americas offers turbine-based power generation solutions for applications from 1-50 MWe. The Company also provides application assistance, maintenance programs, parts and service. This news release contains forward-looking statements regarding the plans for installation of the Kawasaki GPB15X generator package, which includes a 1.4 megawatt gas turbine equipped with Catalytica Energy Systems' Xonon Cool Combustion system, at the PXP San Luis Obispo facility, the timing of such installation and commercial operation of the Xonon-equipped gas turbine, the ability of the Xonon-equipped gas turbine to perform with ultra-low NOx emissions levels of less than 3 ppm, and Xonon's ability to facilitate public acceptance and compliance with stringent emissions requirements. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, among others: the fact that there may be unanticipated technical, commercial or other factors related to the application of Xonon to Kawasaki's GPB15X generator package; possible delays or technical issues related to the installation and operation of the Kawasaki GPB15X generator at the PXP facility, possible fluctuations in economic conditions affecting the markets for Catalytica Energy Systems' products; the risk that a market may not develop or be maintained for Catalytica Energy Systems' products; changes in the environmental requirements for ultra-low NOx emissions and that results may differ from those stated and the other risks set forth in the Catalytica Energy Systems' Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed with the Securities and Exchange Commission on March 31, 2003. Catalytica Energy Systems undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances occurring after the date of this release. NOTE: Xonon and Xonon Cool Combustion are registered trademarks of Catalytica Energy Systems, Inc., Gilbert, AZ, USA CONTACT: Megan Meloni Investor Relations 650-940-6253 DATASOURCE: Catalytica Energy Systems, Inc. CONTACT: Megan Meloni, Investor Relations of Catalytica Energy Systems, Inc., +1-650-940-6253 Web site: http://www.catalyticaenergy.com/

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