I am pleased to welcome you to the first issue of SPE Economics & Management, SPE's newest online peer-reviewed journal.  I'm Frank Koch, the executive editor of SPE E&M.  I work for Chevron as Decision Analysis Practice Leader. At the end of this column I have included a short biography for readers who would like to get to know me better.  SPE E&M was chartered by SPE leadership in response to the growing interest in the business side of petroleum engineering. The journal covers a wide range of topics of interest to petroleum engineers, managers, and others involved in the energy business, topics including resource and reserve evaluation, portfolio and asset management, project valuation, strategic decision-making and processes, uncertainty/risk assessment and mitigation, systems modeling and forecasting, benchmarking and performance indicators, information and knowledge management, digital energy, and petroleum economics. Quite a broad scope! It is my goal that this journal will become an invaluable resource for SPE members who play key decision-making roles, as well as members in the research and academic world who are developing new and improved practices and concepts to support better management of our energy resources.   

This peer-reviewed journal will complement SPE's Hydrocarbon Economics and Evaluation Symposium (HEES), Intelligent Energy, and Digital Energy conferences. It will initially be published every April and October, with a quarterly schedule planned for the near future. Our editorial review committee is made up of a distinguished group of seven associate editors: Steve Begg (University of Adelaide), Reidar Bratvold (University of Stavanger), Gary Citron (Rose & Associates), James Crompton (Chevron), John Howell (Portfolio Decisions Inc), Wumi Iledare (Louisiana State University), and Chris Jablonowski (University of Texas at Austin).   

We are launching SPE E&M with four interesting papers that represent the wide breadth of topics we are addressing in Economics and Management: 

• We have two papers by John Lee focusing on the new SEC reserves reporting requirements.  "Modernization of the SEC Oil and Gas Reserves Reporting Requirements" provides an overview of the major changes and a clarification of their intent.
• "Reserves in Nontraditional Reservoirs: How Can We Account for Them?", also by Lee, discusses the new SEC reserves definitions for nontraditional reserves. As these definitions are newly adopted, both papers give key insights to their proper interpretation. It is essential reading for anyone involved in managing their companies’ reserves.   
• "A Game Theoretic Approach to Conflicting and Evolving Stakeholder Preferences in the E&P Industry" illustrates how basic game theory approaches can supplement and improve stakeholder analysis in E&P decisions. I have found that the industry is facing increasing complexity in stakeholder relationships, with more partners, including partners with diverging interests. Game theory provides a potentially powerful tool to help decision-makers navigate and negotiate their way to successful outcomes.  I recommend that paper as a good starting point to understand how game theory might help you.
• "Corporate Venture Capital as a Conduit for Early Adoption of Emerging Technology: A Decade of Experience" reviews Chevron’s experience with a venture capital approach to gain access to new technology across a diverse range of E&P applications. If you are involved in managing your technology portfolio, especially focusing on how you might leverage from new technology, this paper is a must-read.

In addition to our peer-reviewed papers, we are launching a feature we call "Worth a Second Look."  Although SPE E&M is a new SPE journal, SPE has published landmark papers on economics and management subjects for decades. Many of our current members may not be aware of these papers, and although our thinking in economics, decision making and management has evolved over the years, many of these articles have true relevance today. Therefore, in each issue one of our associate editors will select a paper that SPE has published in the past that we believe deserves renewed attention. In this, our first issue, Reidar Bratvold has suggested we take a second look at a paper (SPE 309) that was presented by C. Jackson Grayson at the annual AIME meeting in February 1962. In fact, Grayson's “The Calculus of Common Sense” is a paper worth a "first look." After all, it wasn't on my fifth-grade reading list in 1962; I expect a significant percentage of our current SPE members were yet to be born when Grayson presented this paper, but it addresses a topic germane to our decision making today. In his introduction, Grayson refers to a December 1961 Oil & Gas Journal article: "…it appears that the future success of the industry, and particularly, that of individual companies, is going to depend on wise courses of action, or as he (the subject of the Oil & Gas Journal article) puts it, 'hard-headed decisions'."  As we roll out the initial issue of SPE E&M, we appear to be still in an era in which "hard-headed decisions" will be needed to succeed in our increasingly competitive business. I hope Grayson's words ring as true to you as they did to me.

I will close with a bit more information about my background.  I have been with Chevron for 30 years, a member of that shrinking class of folks who have spent their entire career with one company. I started as a geologist working in development geology and exploration, then made a dramatic shift transferring to the corporate analysis and planning staff at Chevron’s San Francisco headquarters. From my technical peers’ perspective, this was going over to the Dark Side. After 3 years, I returned to E&P and spent much of the 90s as planning manager for Chevron’s North American upstream, where my interests in decision analysis, portfolio management, and the business side of energy continued to grow. My volunteer activities with SPE and economics began in 2000, when I served on the steering committee for the SPE Forum on "Adding Value by Leveraging Risk, Options Portfolio Management." Following that, I  participated in a series of SPE Forums and ATWs, including "Decision-Driven Asset Development and Management" in 2002, "Theory and Art of Asset Valuation" in 2003, "Delivering E&P Performance in the Face of Risk and Uncertainty" in 2005 (Joint SPE/AAPG), and "The Future of Project Profit Prediction" in 2007. As many of you know, volunteering for SPE becomes a habit, so here I am helping SPE create its newest journal. I invite you to join this important initiative. If you would like to serve as a technical editor, please let us know. If you are ready to publish a paper, please consider submitting to SPE E&M, and of course please invite your peers to join us by subscribing. I am happy to hear your comments and suggestions about SPE E&M; please feel free to contact me at fgko@chevron.com.