A couple of weeks ago we held our annual Energy Moving Forward (EMF) conference – a lot of you may have been there. I am happy to report to you that the conference was a great success. We had a full house, great speakers & panel discussions, and almost universally positive feedback from people who attended.
As you probably saw from the marketing campaign, even if you weren’t at the conference, our theme this year was North American Energy Independence. We had two keynote speakers: Robert Bryce was the headliner with the opening Keynote; the closing keynote was from Dr. Ram Shenoy, Chief Technology Officer at ConocoPhillips. In between we had two panels. Panel 1 discussed political and economic dimensions of the issue, and Panel 2 discussed infrastructure and regulatory dimensions.
In this blog entry, I want to give you my take. Personally, I think that energy independence kind of lies in how you define it. We could define it as standing completely apart from the rest of the world on energy – nothing in, nothing out. With the shale revolution, we are actually at a point where that might be technically possible in a very few years. To me, though, that’s energy isolation, not energy independence, and even if it’s possible I don’t think it’s very sensible. I would define energy independence as a net positive balance of payments on energy, with the freedom to choose what we import and export and what we don’t. Defined this way, energy independence is highly desirable and probably possible for North America within the next year or two.
Canada is already our biggest source of energy imports and Mexico, as it deregulates its oil & gas and electric power sectors, is poised to become a big export market, for gas if nothing else. There is also a lot of potential for cross-border flows of electricity. The key to this is a greater degree of market integration across our three countries. There are both technical and regulatory challenges here, but nothing that can’t be solved. The issue will be less about what we move within North American that what we can move out of North American and how we can do that.
The United States needs to increase development of its liquefied natural gas (LNG) export capacity and remove legal barriers to the export of crude oil. LNG growth is happening already but should accelerate – the barrier here is mainly a market one. The landed price of LNG in Europe and Japan is much less than it was in 2014, and the very great arbitrage opportunities for LNG have largely evaporated. I am told the business is still profitable but not as wildly profitable as it looked a year ago. LNG plants have relatively long paybacks and building them without guaranteed contracts is risky business. The barrier to crude export is a legal one, going back to the first oil embargo in the 1970’s – at that time Congress passed legislation banning the export of U.S. crude and, even though there are strong technical and economic reasons for removing the ban, Congress fears that doing so will raise the price of U.S. crude and nobody wants to leave themselves open to being tarred with the brush of having raised the pump price of gasoline.
In any case, we have plenty of supply, both for export and for domestic consumption. Our Canadian partners are scaling back their expectations for export to the U.S., simply on the grounds that we don’t need to import as much, and they’re actively looking for other places to send oil. We should also expect additional supply from Mexico as their deregulated industry increases productivity.
It wouldn’t hurt to add $15 to the crude price and a dollar or two to natural gas. It’s true that consumer prices would probably rise slightly but we would also be able increase capital investment, ease the pressure on smaller operators as they try to comply with increasing environmental regulation, enable better management of carbon, and ease pressure on the still-fragile development of renewables, not to mention improving profitability in the oil & gas sector. On the whole a modest price increase would do a lot more good than harm, but it’s not likely to happen until we begin exporting more.
Three members of the Global Energy Management Community created a startup, PetraFluids Energy, that recently took first place at The Jake Jabs Center for Entrepreneurship Pitch Night at the University of Colorado Denver Business School.
“The competition brought in a number of local business leaders and CU Professors to serve as ‘mock investors,’ and we gave them all brief elevator pitches in order to secure mock investment funds,” said GEM alumnus Matthew Jorden. “We were practiced and confident in our pitches, and I think the judges could really see our knowledge and drive to make this idea work.”
PetraFluids Energy is now one of the six finalists in the business plan competition. The team will present a final pitch to the competition judges on Wednesday, June 10. Prizes will be given out, including in-kind services as well as cash.
“PetraFluids Energy is fundamentally designed to generate renewable electricity,” Jorden said. “The team has several pathways to provide clean electricity to local utilities, all of which utilize enhanced geothermal systems in the Front Range area. Unlike traditional renewable efforts, we want to rely heavily on the local oil and gas industry, with partnerships with local producers and service suppliers.”
Some of the main factors Jorden contributes to the team’s initial success at Pitch Night are the potential market size, knowledge of the industry, and unique position to bring industries together (when they’ve traditionally not worked well together).
“By leveraging the expertise of the petroleum industry with the growth opportunities of the renewable industry, we truly believe we have immense potential for success,” Jorden said. “I believe the primary benefits to local communities will be carbon free energy, jobs and long term economic exploitation of geologic resources to benefit the local governments. One of the primary strengths of the business model is bridging the gap between the petroleum and renewable industries, and being able to leverage the strengths and talent of both.”
Once the team finishes the Jake Jabs Competition, the teammates will begin investigating both the NREL Industry Growth Forum and an upcoming City of Denver Business Plan competition.
The making of PetraFluids
This entire business enterprise is really a GEM business from start to finish, according to Jorden.
“The initial idea was developed over coffee in the hallways of the CU Denver business school, multiple versions of the business plans have been vetted by GEM professors, our initial advisory council is made up of GEM professors, and the three co-founders are all GEM alumni (or very close to being alumni),” Jorden said. “We couldn’t have done any of this without the skills and opportunities provided by the CU Denver Global Energy Management Program.”
The PetraFluids teammates have a diverse skillsets. GEM alumnus Matthew Jorden will bring his insight into the geosciences, utilizing over a decade of geologic analysis in oil and gas basins across the world. GEM student Adam DeRito has skills in operations and equipment. GEM alumnus David Beeson will help the team navigate the land leases and business development.
“All of us bring a drive to accomplish and strong work ethic, as well as the view on the energy industry provided by the GEM Program at CU Denver,” Jorden said.
Jorden and Beeson began working on an Enhanced Geothermal Systems (EGS) business plan during their GEM studies, while taking an Advanced Finance course with GEM Professor Jack Mason, who is also the Director of Entrepreneurial Studies at Duquesne University in Pittsburgh.
“Their team of two truly set the standard for plan quality and completeness,” Mason said. “Because I have a lot of experience and have started several businesses in the power generation side of the energy industry, I thought their idea had real potential and encouraged them to pursue the idea after graduation. I suggested a few ideas, some leads for potential support or partners, including NREL and Xcel, and the business plan competition I have stayed in touch and met with them a few times subsequent to their graduation. It has been exciting to see them continue to pursue an idea with significant potential for success and scale.”
Jorden and Beeson continued working on the project in Professor Herb Rubenstein’s Strategic Management class, eventually using the project as part of their capstone project. “While working in Prof. Rubenstein’s class, several students encouraged us to contact GEM Student Adam DeRito, who had similar ideas,” Beeson added.
Jorden and Beeson reached out to Adam and were impressed with his knowledge, drive, and skills.
“We quickly invited Adam on board,” Jorden said. “Adam has brought a lot of industry specific knowledge and guidance as we develop this idea, he has been a great addition to the team.”
Raised in Iowa, I joined the U.S. Navy right after high school in 1996 and was trained as a mechanic to operate nuclear power plants. I continued working for the US Navy until 2009, during which I operated nuclear power plants onboard two aircraft carriers and spent more than four years as an instructor. After my time in the service, I was hired by Ormat Technologies to be a Maintenance Manager at a geothermal power plant in Brawley, California. Earlier this year, I was transferred to the corporate office in Reno, Nevada to lead the development of an integrated training program.
My choice to enter the GEM Program was greatly influenced by a good friend who I served with in the military. He knew I was looking to further my education and wanted a curriculum that would be beneficial to furthering my career, as well as increasing my marketability as an employee. That is exactly what GEM has done for me so far, and I am sure it will continue to do so in the future. The program opens your eyes and educates you on multiple facets within your organization that may currently not be your direct responsibility.
The Global Energy Management (GEM) Program is a profound and insightful program that challenges students, while being flexible enough to accommodate their full time jobs. Students who successfully navigate the program course load gain invaluable knowledge, network contacts, and perspectives.
The Global Energy Management Program will host its fifth annual Energy Moving Forward forum in June. Panelist discussion will focus on North American Energy Independence and current obstacles from making it an immediate reality.
“It’s an issue that will take on increasing importance over the next few years and EMF 2015 is of the first to address it in Denver,” said GEM Executive Director Jim Marchiori. “Plus, it’s just an interesting afternoon and a good way to network with peers across the Denver energy community. I am really happy that GEM is able to bring these global issues to Denver, and I hope to see everybody there.”
Author Robert Bryce is the keynote speaker, and his presentation will focus on the energy independence mirage, the shale gale, and the second American Century. The closing keynote speaker Dr. Ram Shenoy, chief technology officer at ConocoPhillips, will discuss technology drivers behind the energy revolution.
“It’s a chance to hear top-level experts discussing a topic of major importance across the industry,” Marchiori said. “The drive for energy independence – or interdependence – for North America is going to be a major source of growth for our industry and the economy as a whole, not to mention security for the United States and our Mexican and Canadian energy partners.”
The plummeting crude oil prices have created a tidal wave of effects: rig counts in Colorado and Texas have dropped dramatically, capital budgets have been severely cut, employees are losing their jobs by the thousands, and lower oil & gas prices have made it more difficult for other energy sources to compete.
Has America’s dream of becoming energy independent faded along with this price decline, or has it highlighted our need to become energy independent? Many factors must converge for North America to become energy independent. Energy Moving Forward (EMF) 2015, presented by the Global Energy Management Program at the University of Colorado Denver Business School, will address the economic and geopolitical forces surrounding energy independence as well as the regulatory and infrastructure challenges that impede its progress.
Attendees of EMF 2015 will gain a greater understanding of the major questions facing energy independence. The event will begin at 12:30 p.m. Tuesday, June 9 at the Four Seasons Hotel Denver. Register here!
“I am overwhelmingly grateful for the opportunity to have served our country,” Zehr said. “The life and work experiences received during my time served are truly invaluable.”
Zehr embarked on several deployments, which mostly served as training opportunities for all crewmembers as well as the flight crews. In her second Western pacific deployment, known as a Westpac and typically involving a pre-scheduled deployment for six months or longer out to sea, there was a change in course as the ship was within a few days of entering the Strait of Hormuz after Sept. 11, 2001.
“In direct response to the terror attacks, we changed course and sped toward the North Arabian Sea,” Zehr said. “On Oct. 7, 2001, the Carl Vinson launched the first airstrikes in support of Operation Enduring Freedom. Needless to say, these activities and the months thereafter were when things ‘got real’ for me and I realized how important each one of us serving on this impressive vessel were to the mission of protecting the freedoms we enjoy in the United States.”
Zehr is a transmission regulatory support manager at Tri-State Generation and Transmission Association, Inc. She is responsible for analyzing Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) compliance standards and providing policy & strategy recommendations for all functional areas within Tri-State’s Transmission organization. She also provides support and recommendations to Tri-State’s Transmission organization functional area managers to improve upon internal transmission reliability standards, programs, and processes.
“This is an exciting time in the energy industry,” Zehr said. “I am privileged to work in an industry known for such a uniquely skilled labor force. I have had the good fortune of being able to have jobs that have allowed me to produce power, deliver power, and now influence and implement the rules set forth by our government to ensure the safe, reliable operation of our complex power grid.”
Zehr, who was a member of the GEM Program’s Cohort IV, values all of the relationships she’s made within the GEM Community.
“I met some amazing people, classmates and teachers alike, who were off and running already doing great things in all landscapes of the energy industry, oil, gas, and electricity,” she said. “I witnessed innovative, forward-thinking individuals propelling themselves even further in the industry which helped motivate me to expand my view into areas that were not only new and interesting, but also relevant to me in the electric utility industry.
“Not only did I gain valuable knowledge, I also gained the confidence to continue to push myself to pursue additional assignments that have allowed me to challenge myself and achieve previously unrealized personal and professional growth. I can directly attribute these successes to the knowledge and skill sets I was able to develop and refine while in the GEM program.”
During the Memorial Day holiday, the GEM Program would like to thank all military veterans who are a part of the GEM Community. Throughout the week, our GEM’s Gem blog will be celebrating the accomplishments of several of these patriots.
GEM Program veterans include: Greg Adam, Daniel Alexander, Charlie Barker, Eddie Billmeyer, Tom Briggs, GEM lecturer Terri Carver, Adam DeRito, Dustin Eiland, Bill Erhardt, Kyle Frazer, Michael Gallo, Jim Goodrich, Melinda Harrington, Michael MacFarlane, Doug Pearlman, Carl Perkins, Park Pratt, Marty Rodin, Jermaine Starks, James Steen, Matthew Willey, Mary Ann Zehr. . (These are the names of all the veterans that the GEM Program has on file. If you are veteran and your name is not listed please contact us so we can update our records.)
GEM student Charlie Barker was born in the U.S. Canal Zone in Panama and grew up on military bases for the first few years of his life.
“My father was a Master Sergeant in the Army Signal Corps and always took care of his Soldiers,” Barker said. “His service influenced me to attend the United States Military Academy at West Point to become a leader in the Army and similarly look out for my Soldiers as well.”
Barker’s first assignment as a Lieutenant was to a Field Artillery rocket battalion near Frankfurt, Germany. It wasn’t long after the events of 9/11 unfolded that his unit was deployed for the start of Operation Iraqi Freedom. After Germany, he transferred to Fort Polk, LA where he assisted in the activation of 4th Brigade, 10th Mountain, and the 1st Maneuver Enhancement Brigade. While a member of the 4th Brigade, he was deployed for five months to Afghanistan as part of a multi-national force.
Barker is an Environmental, Health & Safety (EHS) Senior Compliance Specialist in the Natural Gas Business Unit within Kinder Morgan. His career in energy started with Kinder Morgan as an Operation Supervisor at the Argo Terminal located near Midway Airport in Chicago.
“My primary role as a compliance specialist is to be the point of contact for anything dealing with air pollution permits and compliance in the states of Iowa and Illinois,” Barker said. “I provide direct support for 15 natural gas compressor stations and also serve as the subject matter expert for EPA regulations on stationary engines.”
Barker applied to the Global Energy Management Program because he wanted to work towards an advanced degree. Being in the energy industry, he appreciated the focus of the program.
“I feel that in GEM, the students and professors all have a common language around energy,” Barker said. “GEM has really helped me better understand the way that my company fits within the industry. I have a greater appreciation of the roles of finance and accounting. I’ve learned a little bit about myself and have met truly inspiring people in my fellow cohorts.”
Along with balancing school and work, Barker has also added parenthood to the mix. He and his wife Joanna had a their first child Hunter William Barker in July 2015.
“I’m currently in my rookie year of parenthood and have been enjoying every spare minute that I have with my family,” he said. “I really appreciated the advice from the other parents in the program and am thankful for how understanding my fellow group members are. As we come up on Memorial Day I am thankful for the sacrifices of all of our service members, especially those we lost.”
GEM would like to congratulate students Jackie Michael Cárdenas, Carrie Dixon, and Mike Gallo who are recipients of the GEM Leaders Scholarship. This award was recently developed for new students entering the program who have demonstrated outstanding leadership and potential for future success in the energy industry.
GEM student Carrie Dixon, a trading analyst at Xcel Energy, plans to use the scholarship funding to take part in the Global Energy Management Program’s Washington D.C. and London travel courses.
“I anticipate that the experiences and knowledge that I will gain through the GEM Program will give me a distinct advantage, making me an even more valuable asset to my company,” she said. “GEM is strengthening my business expertise within the context of the energy industry. This exposure is something that I feel I would not get with a traditional MBA.”
While in the GEM Program, Dixon plans to build on her analytical career and eventually move into a forward-looking, strategic planning position.
“I want to drive successful integration of new energy initiatives, while maintaining compliance with evolving government mandates,” she said. “I believe a MS in Global Energy Management will take me from where I am today, to where I want to go. The unique focus will give me an edge to becoming a leader in the industry.”
For GEM student Mike Gallo, the award was reassuring evidence that he was on his way to achieving his academic and professional endeavors.
“My family also was very excited,” he said, “especially, since I am the only one with a bachelor’s degree and now on the road to achieving a master’s degree.”
Gallo is a Senior Right-of-Way Agent at Universal Field Services. Although he only recently started his coursework, Gallo has already benefitted from the expertise of the GEM faculty.
“After completing the first two classes, my outlook on the energy industry has changed drastically,” he said. “From truly learning and understanding the world’s energy issues and how important economics is to production, my career as a land man is prevailing. I can easily address all concerns and issues landowners have on the spot, which I credit fully to the GEM program.”
Gallo’s career goal is to work in Oklahoma City or Tulsa, Oklahoma as a director for a midstream land department.
“Enrolling and graduating from the GEM Program will give me the knowledge and career advancement that would normally take a decade to achieve,” Gallo added. “Upon graduation, I know that no job is out of the picture and I have many more doors to open to a brighter future.”
Jackie Michael Cárdenas
Cohort XIII member Jackie Michael Cárdenas was honored to receive a scholarship from the GEM Program.
“It was an important sign of support from the university that helped me to go through the first quarter in the sense that I had to worry for one less aspect and therefore I could focus more on my studies,” she said.
Cárdenas is a business developer for Cogenra Solar and part of a team that studies the implementation of renewables in Chile for the Chilean Ministry of Foreign Affairs.
As a GEM student, she has obtained invaluable knowledge, a broad network, and lasting friendships.
“I want to acquire further knowledge from the professors and classmates to be able to advance in my career path, because I felt that I had reached the highest position I could with the education and experience I had before starting the program,” she said. “The program is providing state of the art knowledge of a wide spectrum of energy resources. This knowledge is already a strong tool when talking with governmental authorities and high executives of energy companies.”