In many power systems, especially in oil power system, induction machine takes most part of the loads, which asks for continuous during operation. Now two-phase faults are usually made breakers of three phase trip. A single-phase breaking method for two-phase fault in small current grounding system is proposed considering capacitor compensating. The voltage and current under different fault locations are analyzed, the current of fault point is also considered with capacitor accessing, based on an oil system equivalent model. Finally, the simulation model is built in PSCAD/EMTDC in order to verify the principle analysis and the efficiency of capacitor compensating.