In May, the first cohort of 18 students, all of them with significant work experience in the energy industry, will graduate with an executive master of business administration (EMBA) in energy from a new program at the Michael F. Price College of Business at the University of Oklahoma in Norman. While not strictly unique, the program is unusual because energy is not just a focus or concentration, but the sole frame for the coursework.

The program is also unusual in that it is offered primarily online, with three one-week residencies. Two of the residencies take place at the university’s campus in Norman for the first and last weeks of the program, and a third week is in London, U.K. The rest of the 15-month program is through online classes that include self-paced learning, live lectures from professors and industry professionals and group interactions and discussions.

“In the real world, it is not practical to take a year or two off to get an MBA,” said student Drew Deaton of Ward Petroleum Corp. “I’m an engineer and I really wanted to come and gain business acumen. We were all very excited to learn energy accounting.”

Those sentiments are echoed by classmate Michael Denton of Denton Exploration Inc.: “I am part of a small E&P firm, and I wanted access to other perspectives, how things are being done at the top 50 or 100 firms.”

In the Energy Policy & Regulations class at the University of Oklahoma, Nancy Sauer, instructor, and students (shown left to right) Matt Francis, Michael Denton, Brandon Hughes and Adam Robinson discuss coursework.

The importance of executives not taking a year or two away from their business was underscored over and over among the students in the first cohort, as more than a few of them saw their firms grow, buy, sell, be acquired, divest or otherwise change significantly. Not only could they continue to participate in their companies, but the flow of practical learning went both ways. Students were able to apply what they learned in the program on a daily basis. At the same time, they were able to take back to their classmates and professors real case studies, challenges, questions and issues for discussion, debate and insight.

“I had a list of things I wanted to get out of the program,” said student John Argo of Continental Resources Inc., “and a lot of that was connecting with other industry leaders. I had no idea of the breadth and quality of the knowledge brought together in this program.

“I am a petroleum engineer for a large independent that was formed from several smaller E&P firms. I knew the business management skills I was seeking, but once I got here I saw how much I didn’t know that I didn’t know. Our CEO has relied very heavily on our CFO and treasury people for business and financial guidance, and now I will be able to provide more support in those areas.”

Many of the students and even many of the faculty were skeptical of the online format at first, but all came round to praise the structure of the program. “During the 15 months of the course I changed jobs and moved cities. I was able to continue with my work and with my studies without missing a beat,” said Stephanie Stewart of Pioneer Natural Resources.

Students to a one commented on the cohesiveness and camaraderie of the cohort. Stewart said, “The intensity and the dynamic here is really like a band of brothers. That started the very first week. We challenge each other’s thinking and push each other out of our comfort zones.”

Denton concurred. “When we finish, it will be good to be done, but we will all miss the weekly intensity, and getting together.”

A further distinction from other MBA programs, even those at OU, is the focus on energy. “This program is 100% energy, 100% of the time,” Denton added. “That is important because we have a lot of leaders in this industry who are retiring and there is a need for new leaders to step up. Not just to succeed those who are leaving, but to be transformational in the industry.”

Denton is very much in earnest. “We, as a generation, can do more on social responsibility. It is not a bad thing to make money, but if we can turn a drillstring sideways, we can change the way the industry is perceived.”

The business of energy

Within the industry, Stewart stresses the integration of disciplines. “Beyond our official duties and personal areas of expertise, we learn the industry end to end, upstream, midstream and downstream; operations, finance and leadership. It is all connected.”

Dean Daniel Pullin likes to emphasize that the EMBA program is a natural outgrowth of the long history of energy education at OU. “Our College of Earth and Energy has graduated more petroleum engineers than any other program in the country, and our law school has a special concentration in energy and natural-resources law. The Price College even has a one-week boot camp for mid-career executives.”

“We designed the program to meet private-sector needs,” Pullin added. “It was developed with an advisory board from OU faculty and from industry. We have a vast energy-centric faculty here on campus, and we also identified experts from around the world to layer in additional expertise that was not confined to time and place.”

He also observed that the EMBA in Energy program reflects changes in the energy industry. “With technology [including 3-D seismic, directional drilling and stimulation] we have removed some of the risk that was inherent in oil and gas discovery. Now the emphasis is more on cost structure and efficient production and operations. There is more of a focus on the business of energy than ever before.”

To underscore the reality that the business of energy stretches beyond just oil and gas, the curriculum includes a project on coal economics early in the program, as well as a course in renewable power and alternative energy. Ron Bolen, who teaches that course, comes to the faculty after a long career in energy law, investment banking and venture capital.

Bolen likened the “challenge” that “alternative” energy poses to “traditional” energy to the status of the duckbilled platypus. “It’s a funny creature, and scientists argue back and forth about how to categorize it. It’s a mammal, but it lays eggs, and so forth. But the problem is only for the scientists. The platypus doesn’t care where it is categorized. It just goes on doing what it does. The same with energy. We argue about what to categorize as what, but all that matters is what the consumers need.”

He offered an example: “In Houston, alternative energy can cost about 37 cents per kilowatt-hour, versus coal- or gas-fired power at about one cent. But in a fishing village in Alaska where they have to fly in drums of diesel fuel for the generator, hydrocarbon-based power can cost about 55 cents per kilowatt-hour. So you tell me what makes more sense.”

The essential understanding, according to Bolen, is the economic underpinning for energy. What matters is the optimum for each situation. “In the future I think it is much more likely that today’s hydrocarbon industry will expand to be truly energy companies, supplying whatever is needed, including things that are today considered alternatives.”

Members of the first cohort of the EMBA program gather for a photo: Front row (left to right), Aaron Peterson, Brandon Hughes, Michael Denton, Drew Deaton, Stephanie Stewart and Matt Hastings; middle row, Daniel Rossi, Ginny Albert, John Argo, Adam Robinson, Jamie Campbell, Mickey Friedrich and Drew Harrold; and back row, Jeff Lierly, Matt Francis, Bravis Brown, Aaron Wright and John Corbett.

Reaching the next generation

Keeping pace with realities on the ground resonates for Jay Jimerson, president of Cardinal River Energy, OU grad, industry attorney and member of the Energy Institute Advisory Board. “There are so many people in the industry today that are going to be the senior people in the next few years, and they need this sort of program. But they are busy at work, and they have families and lives. If we in industry want to reach out to these people, our future leaders, we had to do something like this. The EMBA program is clearly something we should do.”

As the program was being developed, Jimerson said, the advisory board stressed how it had to be “practical, relevant and very useful. And not just oil and gas. It had to be a comprehensive energy program. That was incorporated by design. We were looking to the future, what is best for the industry, for the country and for the planet. For the future of the industry we have to talk about alternatives.”

Jimerson added that the industry also has to talk about its position in society. “Generally speaking, we have done a poor job as an industry of communicating our message. That is something that we are starting to address in several different ways here.”

Dipankar Ghosh, executive director of the EMBA program and its architect, lauds the clear guidance that the advisory board gave during the development. “Energy is the most sought-after specialization within our traditional MBA program, so the next step was an all-energy program. We started developing it in the spring of 2012, and quickly came to the idea of a low-residency format that was three one-week residence sessions and the rest through online courses.”

In the opening week, the focus is on academics, networking among students and enfolding the students into the OU family with exploration of campus assets, including museums, laboratories, the National Weather Center and, of course, athletics—the Price College building is just steps from the football stadium.

The second residency week, in London, almost didn’t happen. “I wanted global exposure and experience,” said Ghosh. “But there was some question if the companies paying for their people to be in the program would accept that additional cost and complication. So we asked them, and got a resounding yes.”

Ghosh hand-picked the first cohort for diversity in every dimension of the energy industry, from engineering and information technology, from small privately owned operators to big independents and even some majors. As the program grows—the second and third cohorts have already started and the fourth is being enrolled—he hopes to get more international students.

To maintain the cohesiveness of each cohort and the executive nature of the program, Ghosh said he would like to limit each to 20 to 25 students, so class size will not grow much. There are two starts each calendar year, one in January and one in August. There is great anticipation to see how the first few groups fare after graduation, and to learn from them what made the most difference as they and their companies grew.

While the student body of the new EMBA program is not yet widely global, the faculty certainly is. One exemplar is Arvind Garg, international upstream business development manager for Shell Eastern Petroleum, based in Singapore. He holds a conventional MBA from OU, and now in the EMBA program teaches an economic project evaluation course in the last on-campus week.

“Risk has shifted in the industry,” said Garg. “The time of easy oil is gone, but there is more confidence than ever in the market that our industry will be able to provide energy. There is great expectation for supply. The industry leaders in the program will have to look at 15 different projects, maybe all of which look attractive, to decide which they are going to fund.”

In that evaluation, “you have your known unknowns, but there are always the unknown unknowns.” He is an advocate of probability-based planning, including Monte Carlo simulations. “Opex is variable. Capex is variable. Revenue is variable. How to make money is based on probability. It is not deterministic.”

At the other end of the industry, literally and figuratively, the midstream does not get short shrift even in the tight curriculum of the EMBA program. Mark Gorman, executive vice president of operations and business development at Plains All American Pipeline, teaches marketing strategy in the last week. “It is the role of the midstream to balance that supply and demand. This is not macroeconomics. It is very micro, down to PADDs and basins.”

Even in such a practical, granular topic there are shades of grey. “There is always the sliding scale from wellhead to refinery—where are you going to sell your molecules?” Gorman asked. “The choice varies with the size of the companies involved, their skill sets and competencies, and the conditions in that market. The tendencies of producers to build out or pipelines to build in tends to wax and wane as well.”

Students say that even in a rigorous program, the marketing course is tough but fun. “I see that from day one,” said Gorman. “We talk about real issues that students have struggled with, real contracts and business arrangements.”

Gorman noted an opportunity and a danger in the current slump in oil prices. “We have talked a lot in class that with producers cutting back on development, there is a chance for the upstream and midstream to coordinate more closely on project size and capacity. I really see an opportunity for more leadership within the midstream, and also for more leadership from the midstream across the whole sector.”

The danger, Gorman added, is that with the downturn, hiring and promotion may suffer as well. “Today’s leaders have an obligation to hand off what we know, but to whom? If you look at the demographics in the industry, there is a whole generation missing between my generation and the ones coming through the program. It will be very interesting to see how the industry handles this current downturn in terms of retaining and attracting talent.”

It is clear that in a 15-month curriculum, there is little room for nice-to-have topics. Every subject, every lesson plan is deemed essential. In that light, the presence of Nim Razook’s class in business ethics is telling. “We address the economics and ethics of organizations in the first week,” said Razook. “In the second, we go through the psychology of ethical decision making. That includes a writing assignment that is intensely personal. I cannot thank these students enough for their candor.”

Accentuating the necessity of business ethics, Razook noted, “There is good science here. There are very few cases where acting ethically does not inure to the benefit of the firm. What goes around comes around. There is truth in that. We don’t try to tell anyone what decisions to make, we try to equip them to make good decisions. We cannot change anyone’s mind, but we can help people who are genuinely earnest about making good decisions.”

From his perspective, the industry is in good hands. “These are the most engaged, least entitled, most knowledgeable students I have ever had in almost 40 years of teaching. These people are hungry. They are professional and they are self-aware. They are looking for genuine value and I think they have found it in this program.”

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