energy industry

Bruce Zimmerman, CEO of UTIMCO, met with UTIMCO board members Thursday morning. The conference covered topics such as UTIMCO investments and how foreign oil activities may affect the University’s endowment and the Permanent University Fund.
Photo Credit: Griffin Smith | Daily Texan Staff

University of Texas Investment Management Company officials released a report Thursday detailing the effects of falling oil prices on the Permanent University Fund (PUF). 

The PUF is an endowment containing 2.1 million acres in West Texas that was created by the Texas Constitution in 1876 to benefit the UT and Texas A&M University systems.

According to Mark Warner, managing director of natural resources investments, falling oil prices over the course of the last four months slightly hampered the assets UTIMCO manages, which total $34.5 billion. Domestic oil prices declined by 60 percent from a peak in late April 2014 before bottoming out in late November 2014. However, over the five months, the endowment maintained a return of 4 percent.

Bruce Zimmerman, UTIMCO chief executive officer and chief information officer, said the investments made under UTIMCO are made safely to protect the funds that support the UT System schools.

“Our first line of defense is a diversified portfolio because, generally, not everything is going up at the same time, and, generally, not everything is going down at the same time,” Zimmerman said.

Zimmerman said falling oil prices from April to November could actually help raise the endowment’s value.

“Our best guess, our best projection, is that the supply shock — excess supply, lower prices — is actually a slight positive for the endowment,” Zimmerman said. “Now, it’s clearly a negative for the energy industry, clearly a negative for the state of Texas … but this really gets at around 10 percent of our exposure is in energy; 90 percent is outside of energy.”

Zimmerman said only 10 percent of the total investments made by UTIMCO are in the energy industry. The other 90 percent of investments are made in sectors of the economy that ordinarily improve when oil prices decline. For consumers, lower oil prices mean cheaper gas, cheaper goods and more spending money to stimulate the economy.

“Our investment returns, we think, will be slightly helped by the reduction in oil because there are more consumers than producers, and the consumers get a benefit,” Zimmerman said.

Warner, the managing director of natural resources investments, said he looked at the correlation between the value of the energy portfolio, the investments in the energy industry and the price of oil. The report established that, when the price of oil drops, the value of the portfolio drops 10 percent of the price. 

Warner said he has watched the energy industry’s downturn closely.

“What I can tell you is that we’ve looked back at history, particularly the ’08-’09 time frame, and this is historic by any measure,” Warner said.

According to Warner, lenders are more willing to make investments in the current economy because it is much healthier than it was during the 2008 recession. Warner said this makes him feel optimistic about the energy portfolio’s future value.

“We’re hoping our partners are able to be opportunistic; this way, they have the money to do it,” Warner said. “We’re very encouraged by where we are in the cycle and by the partnerships that we have.”

Clay Butler, a managing partner at The Butler Firm, speaks about the growing solar industry at the UT Energy Symposium on Tuesday evening.

Photo Credit: Rachel Zein | Daily Texan Staff

Three members from the energy industry discussed the future of renewable energy in an on-campus panel hosted by the UT Energy Symposium on Thursday.

The panel, held in the Peter O’Donnell Jr. Building, addressed the specific aspects of how to move toward a solar powered society.

Clay Butler, managing partner at The Butler Firm, a consulting firm focused on clean and renewable energy transactions, said citizens need to turn their attention and actions to the solar industry.

“What are you passionate about?” Butler said. “Whatever you are passionate about, you can do it with the solar industry. The market is being born and it is unlimited.”

The speakers said that the solar industry is new, though, the idea of solar-derived energy has long been established. The panelists said people usually oppose solar energy because they do not have enough information about its benefits.

Spivey Paup, solar development manager at the energy company E.ON, said several preliminary actions need to be taken in order to build solar fields and wind farms.

“Environmental analysis, historical survey, permitting, geotechnical engineering design, energy sales, financing and construction are some of the factors that are taken into consideration,” Paup said.

After the speakers finished their presentations, members of the audience had time to ask questions or bring up concerns about solar power. Several audience members discussed the economic impact of solar powering, including the potential tax revenues and other incentives for local communities to make the transition.

Colin Meehan from First Solar, an American provider of photovoltaic solar energy solutions, said cost is an incentive for switching to solar energy.

“Under current [Electric Reliability Council of Texas] assumptions, solar [will be] cost-competitive in 2021,” Meehan said.

Allan Aw, a global policy studies graduate student who attended the symposium, said it was his interest in solar power that specifically brought him in to listen.

“I was part of the Alliance for Energy Public Policy club that hosted this talk and I think, in general, all of us that are in that club in the LBJ school are very interested in energy policy,” Aw said. “In general, I think all of us have interest in utilities and power, and that is what brought me here.” 

Wei Ren explains his energy saver experiment to Travis Wilson at the UT Energy Saver Forum at the Texas Union. The forum brought together scientists who have been developing ways to save energy.

Photo Credit: Gabriella Belzer | Daily Texan Staff

The two-day UT Energy Forum, a conference addressing energy issues and discussing improvement of the energy market, began Thursday morning in the Texas Union. 

This is the UT Energy Forum’s third year. The mission of the conference is to provide a platform for experts from industry, academia and government to discuss the future of the energy industry. Through workshops and panels focusing on energy policy and energy technology research, the Energy Forum aims to develop environmentally sustainable solutions to global warming and its effects. 

The Energy Forum is hosted by McCombs CleanTech Group, an organization that works to promote a future economy that is energy efficient and sustainable.

Arpit Desai, CleanTech member and business administration graduate student, said he appreciates the mix of attendees attracted by the forum.

“You have people who are in all different aspects of energy,” Desai said. “This forum is a good way of keeping discussion going between those groups. The experts that attend bring their knowledge, and the students bring innovation and an entrepreneurial spirit.” 

Thursday’s schedule included six workshops covering subjects like the promotion of economic development in Central Texas through clean energy practice and the legal and technical obstacles expected in the energy industry in 2013. 

A workshop titled “Influencing and Measuring an Individual’s Impact on Energy Use” discussed ways faculty and students can help meet goals set by the President’s Sustainability Steering Committee to reduce energy and water consumption. The workshop was led by the UT Energy Stewardship Program, an organization that works to promote conservation on campus.

“There are a lot of energy initiatives just here at UT,” business administration graduate student Jacob Lohman said. “This gives us an opportunity to showcase what’s already going on and recruit individuals who can get something new started.”

Thursday’s keynote speaker David G. Victor, an international relations and pacific studies professor at the University of California San Diego, discussed the energy industry’s current concerns and ways government and policy can make change possible. 

“Past treaties have yielded 0 percent impact,” Victor said. “These are faux treaties, treaties designed to produce a high level of compliance that accordingly have little to no effect. We need to offset climate change, and the current policy won’t do that.”

Victor works with the Laboratory on International Law and Regulation, exploring which international laws work and why. He founded a research program at Stanford University which focuses on the energy markets of emerging countries. 

“What everyone wants to know is how long,” Victor said. “How long will it take to make this transformation in our energy system? If we work, and really work, we can make a major impact within 50 years.”

Published on February 22, 2013 as "Forum talks key energy issues". 

Winning the second consecutive National Energy Finance Challenge for the McCombs School of Business proves that the school has one of the best energy finance courses in the country, said members of the team that won this year’s title and $10,000 in prize money.

The seventh-annual challenge concluded last month and required five graduate students in the MBA program to present a finance plan for energy development to some of the energy industry’s most influential leaders. The McCombs students went up against 15 other top schools in the nation including Yale, Purdue and Columbia.

“We were really thrilled to win against a lineup of really tough competition,” said team member Chris Wolf. “It shows McCombs is one of the best in the nation.”

Wolf said the team, comprised of himself, John Shaddix, Jake Stroud, Sudamsh Bai Reddy and Ben Beyer, had one weekend to research a case written by Chevron. The team had to come up with a hypothetical finance plan that would not only develop an oil field in an impoverished African nation, but also finance social programs that would benefit citizens of the nation.

Wolf said the team knew they had submitted a good plan for the challenge, but understood winning would be difficult.

“We knew we had a good product and had worked really hard, but we also knew the talent of the other schools,” Wolf said. “We were pleasantly surprised to win at that level of competition.”

The challenge, which began seven years ago under the direction of the McCombs Energy Finance Group, a student organization, makes participants think critically about current issues facing the industry, said John Butler, clinical associate professor at the McCombs School’s Energy Management and Innovation Center.

“The idea is that Chevron, who writes the case every year, stops and looks around and focuses on real issues they are dealing with right now,” Butler said. “They make it into a case for our students.”

Butler said the event also gives leaders in the industry such as sponsors Chevron, ExxonMobil, ConocoPhillips, Bank of America, Merrill Lynch, Morgan Stanley and EMIC a chance to meet with students.

Sudamsh Bai Reddy said he knew the competition would be stiff when they presented their plan for financing social programs to a hypothetical government, but he said he never expected the judges in the final round of competition to be so tough.

“They tried to show what happens in a real negotiation with a country’s government,” Bai Reddy said. “We started to present three or four slides but after we started they began questioning us like an actual negotiation.”

Beyer said the ability to interact with leading industry officials was a great part of the challenge.

“We presented to the CFO of Chevron and got to represent McCombs on a national stage,” Beyer said. “It was an honor. You don’t get to do that every day in the classroom.”

A new trend is shaking up Texas and has the potential to bring wealth and employment to thousands of Texans and UT graduates.

New hydrofracking projects in South Texas have already made millionaires out of dozens of small town farmers, and new drilling projects have the potential to completely reinvigorate the Texas energy industry. Considering the impressive engineering department here at UT (among the best in the world), UT petroleum engineering graduates may be looking at a new field of opportunities. Larger numbers of UT freshmen may also consider the petroleum tract to take advantage of the new industry, and rightfully they should. But petroleum engineers may not be the professionals who receive the most attention; it may be our peers in the smaller hydrogeology program who find themselves in high demand.

In the fracking process, drillers shoot high-pressure jets of sand, chemicals and water into the ground to crack sheet-rock and release trapped deposits of crude oil and gas. The technique has spurred a new on-shore drilling boom from Poland to New Zealand. Though the technique has been celebrated by the oil industry, environmentalists and wildlife activists naturally have some issues with the trend.

Apart from the fact that the process is just another way to exploit fossil fuels, fracking also uses up a lot more water than more conventional drilling processes. The proposed fracking technique would use water in an area of the state that shares an aquifer with Mexico and that has only received two inches of rain since last October and is experiencing the worst drought in the state’s 116 years.

State government is not helping the issue either, as was evident this past week when the Legislature’s attempts at revamping Texas’ water policy for the state was sidelined over the word “vested.” The new policy would have given local elected officials more autonomy over their city’s water supplies.

For this industry to thrive, fracking scientists will have to find a good solution to this issue, or we will see the already overwhelming water crisis in Texas expand exponentially. Exonn Mobil is trying out a process of recycling their frack water, and infrastructure updates in the region are already on the way. But these solutions will only be short-term. If these energy companies want to continue sucking the life force out of the land of Texas, they are going to have to find a better way to do it. Experts in geology and all things water are going to find themselves front and center in the energy game.

The hydrogeology department at UT is a prestigious institution with well-respected professors and researchers such as Jay Banner, who already has a reputation of positive dealings with
policymakers.

Moreover, this problem may be a huge opportunity for new hydrogeology graduates to work in the field of a massive industry and produce work that will have a powerful impact on people’s lives. Environmentally conscious graduates of UT still mulling over their career options post-graduation shouldn’t shy away from these new projects. The input of innovative and creative young Texans is needed now more than ever.

Young professionals can still participate and push for a more environmentally friendly and sustainable Texas, and they may now have the opportunity to do it from inside the energy industry — if they can stomach a little fracking.
Fisch is a rhetoric and writing senior.

Many of the panels, speeches, issue sessions and awareness campaigns I attend focus on the same few facts and issues. People working in similar areas often joke that they could give each other’s presentations because they’re pretty much the same every time. In a lot of situations, this is appropriate — a strong message should be presented to as many people as possible, and using a lesser example for the sake of novelty isn’t that useful.

But more and more I find that it’s difficult to find the new ideas, the new examples and the in-depth coverage that a lot of challenging topics really need. My field is energy and the environment — and though I agree that everyone needs to be taught a few key facts that can help explain broader trends, I’m fascinated by how often conferences targeted at the energy and environment community don’t bother to go beyond those few facts. I guess a lot of work gets done behind closed doors — or at least, I hope so.

I spent the past week at the World Energy Congress in Montreal, listening to lecturers from all over the world. Representatives from governments, major companies and research institutions were out in force at this conference, which only happens every three years. Most of the speakers had about half an hour to get their main messages across. Given the audience of thousands of energy professionals — including many making use of simultaneous translation into five languages — they had obviously given some thought to what they were going to say.

Over the course of the week, I was surprised at how homgeneous the speeches were. Admittedly, the conference is somewhat intended to streamline the energy industry’s message, so perhaps this was to be expected. And certainly, major themes should be discussed and assessed from many angles. But my conference experience didn’t go far beyond overviews of those major themes.

Almost every speaker alluded to global energy poverty, but many did so inconsistently — I almost started tallying the keynote votes for whether 2 billion or 4 billion people have inadequate access to energy (I believe it’s almost 2 billion with no access to modern energy and almost 2 billion more with very limited access). And almost every speaker commented that all forms of energy will be necessary for the future, though the environment is a concern, and we shouldn’t worry too much.

Audience questions were occasionally thoughtful, usually way too long and often Google-able. When given the chance to ask questions of major decision-makers, people asked about conversion factors and widely reported government data from fields that were only marginally related to the speaker’s profession.

While the conference did have technical paper presentations, which usually go into some detail about processes, methods and new research, those sessions went almost unadvertised and were put in time slots against CEOs’ and Ministers’ keynote speeches. I don’t think many of them had more than 10 or 15 people attend. And that’s fine — technical papers are not the focus of that conference. But given the emcee’s constant references to our hard days of work and given that everyone at that conference is close enough to the energy industry to grasp the broad issues without too much explanation, I was left wondering where the work was.

As with any conference, the real value of this one was in the potential for interaction with other people interested in the same issues. The structure of large keynote speech to large panel to large keynote, with few highly focused sessions and little time for audience interaction beyond a few questions, made it hard to find people that must have been there somewhere. I leave this conference, as I have left many others, wondering what the solution to the problem of getting people together to actually do work on big issues might be.

Work gets done in companies, in research labs and in universities; it gets done when people meet each other briefly and collaborate; and it gets done through focused grants. Big conferences and awareness campaigns are valuable for bringing people together and making sure everyone has the same few facts, but they are not good fora for depth.

I’m not sure how, but I imagine there must be some way to better take advantage of the concentrated presence of hundreds or thousands of people who care deeply and have great knowledge of the issues at hand. Otherwise, attendees run the risk of being mere conference tourists, learning little beyond what we could have read in a newspaper. This problem is not unique to the energy and environmental communities, but given the tasks and opportunities at hand, it is something we might want to address soon.

<em>Grubert is an environmental and water resources engineering graduate student.<em>

Many of the panels, speeches, issue sessions and awareness campaigns I attend focus on the same few facts and issues. People working in similar areas often joke that they could give each other’s presentations because they’re pretty much the same every time. In a lot of situations, this is appropriate — a strong message should be presented to as many people as possible, and using a lesser example for the sake of novelty isn’t that useful.

But more and more I find that it’s difficult to find the new ideas, the new examples and the in-depth coverage that a lot of challenging topics really need. My field is energy and the environment — and though I agree that everyone needs to be taught a few key facts that can help explain broader trends, I’m fascinated by how often conferences targeted at the energy and environment community don’t bother to go beyond those few facts. I guess a lot of work gets done behind closed doors — or at least, I hope so.

I spent the past week at the World Energy Congress in Montreal, listening to lecturers from all over the world. Representatives from governments, major companies and research institutions were out in force at this conference, which only happens every three years. Most of the speakers had about half an hour to get their main messages across. Given the audience of thousands of energy professionals — including many making use of simultaneous translation into five languages — they had obviously given some thought to what they were going to say.

Over the course of the week, I was surprised at how homgeneous the speeches were. Admittedly, the conference is somewhat intended to streamline the energy industry’s message, so perhaps this was to be expected. And certainly, major themes should be discussed and assessed from many angles. But my conference experience didn’t go far beyond overviews of those major themes.

Almost every speaker alluded to global energy poverty, but many did so inconsistently — I almost started tallying the keynote votes for whether 2 billion or 4 billion people have inadequate access to energy (I believe it’s almost 2 billion with no access to modern energy and almost 2 billion more with very limited access). And almost every speaker commented that all forms of energy will be necessary for the future, though the environment is a concern, and we shouldn’t worry too much.

Audience questions were occasionally thoughtful, usually way too long and often Google-able. When given the chance to ask questions of major decision-makers, people asked about conversion factors and widely reported government data from fields that were only marginally related to the speaker’s profession.

While the conference did have technical paper presentations, which usually go into some detail about processes, methods and new research, those sessions went almost unadvertised and were put in time slots against CEOs’ and Ministers’ keynote speeches. I don’t think many of them had more than 10 or 15 people attend. And that’s fine — technical papers are not the focus of that conference. But given the emcee’s constant references to our hard days of work and given that everyone at that conference is close enough to the energy industry to grasp the broad issues without too much explanation, I was left wondering where the work was.

As with any conference, the real value of this one was in the potential for interaction with other people interested in the same issues. The structure of large keynote speech to large panel to large keynote, with few highly focused sessions and little time for audience interaction beyond a few questions, made it hard to find people that must have been there somewhere. I leave this conference, as I have left many others, wondering what the solution to the problem of getting people together to actually do work on big issues might be.

Work gets done in companies, in research labs and in universities; it gets done when people meet each other briefly and collaborate; and it gets done through focused grants. Big conferences and awareness campaigns are valuable for bringing people together and making sure everyone has the same few facts, but they are not good fora for depth.

I’m not sure how, but I imagine there must be some way to better take advantage of the concentrated presence of hundreds or thousands of people who care deeply and have great knowledge of the issues at hand. Otherwise, attendees run the risk of being mere conference tourists, learning little beyond what we could have read in a newspaper. This problem is not unique to the energy and environmental communities, but given the tasks and opportunities at hand, it is something we might want to address soon.

<em>Grubert is an environmental and water resources engineering graduate student.<em>