YP's Guide To...

The Young Professional’s Guide to Continental Savvy: Energy Entrepreneurship Worldwide

Shruti Jahagirdar, Harshad Dixit, and Jim Stiernberg

In this issue, “A YP’s Guide to” takes you to three continents—North America, Asia, and Africa—each with a story that shows how rooted in geography and how varied energy entrepreneurship can be.

NORTH AMERICA: Los Alamos, New Mexico, USA

Los Alamos is renowned for various reasons, most notably for being home to one of the locations of the Manhattan Project, a US-led initiative from 1942 to 1945 (during World War II), devoted to development of atomic bomb technology. However, what is not so well known is the connection it has to the oil and gas industry.

Technical Area 3, Los Alamos National Laboratory, Los Alamos, New Mexico.
Photo courtesy of and as taken by Los Alamos National Laboratory (14 December 2012).

The Los Alamos National Laboratory

Opened in 1943, the Los Alamos National Laboratory (LANL) currently employs 10,312 people and is located 98 miles from Albuquerque, the state’s most populous city, and 35 miles northwest of Santa Fe, New Mexico’s capital city. LANL is managed and operated by Los Alamos National Security, LLC (LANS), under contract to the US Department of Energy’s (DOE) National Nuclear Security Administration. LANL’s more than 2,000 individual facilities are housed on 26,500 acres of DOE-owned property, most of which is open space.

LANL’s mission is “to develop and apply science and technology to ensure the safety, security, and reliability of the US nuclear deterrent; reduce global threats; and solve other emerging national security and energy challenges.” In November 2004, the Energy Technology Company (ETC), the research arm of Chevron, established an alliance with LANL to develop novel solutions to various problems the oil and gas industry faces, such as how to improve downhole telemetry. Improvements in seismology and drilling techniques continue to push our exploration boundaries deeper within the Earth and along longer horizontal sections, but communicating with these new-found depths eventually becomes a significant problem. Valuable reservoir condition information, including temperature, pressure, and flow rate data, is required for optimizing production at the surface.

LANL introduced Chevron to technology used by the military to transmit a signal from a faraway source in the field without using any power. Known as Radio Frequency Telemetry and Sensor Technology, it was adapted by the Chevron/LANL alliance team for use downhole. By 2010, field trials had been conducted, in which real-time communication was established between deep wells and the surface without the need for wires, cables, or batteries. This is achieved through manipulation and recording of electromagnetic reflectance, which is effective even in high-temperature (over 315°C) environments. In 2010, Chevron commercialized this wireless technology, which delivers real-time, continuous electromagnetic data on reservoir conditions—temperature, pressure, and flow rate—from sensors in oil and gas wells, including very deep wells already producing oil and gas and drilling operations for new wells.

LANL not only contributes research in oil and gas-related hardware, but also aids in the development of software. Simulation is crucial to many aspects of the industry, such as reservoir surveillance and flow assurance. Other disciplines, such as oceanography, also play into hydrocarbon exploration, for example when considering the consequences of deepwater blowouts like Macondo  that began 20 April 2010 in the US Gulf of Mexico.

LANL ocean scientist Mathew Maltrud obtained results from his first supercomputer simulation of the Macondo oil spill plume less than a month following the blowout. But currents in the Gulf of Mexico are too complex to be accurately predicted more than a couple of weeks into the future. So Maltrud and colleague Phil Jones, with collaborators from the US National Center for Atmospheric Research and the University of Kiel in Germany, carried out dozens of plume behavior simulations, each based on a different but realistic Loop Current scenario. The researchers were able to draw a number of timely conclusions that held up well a year after the blowout.

These projects only offer a sample of the problems the highly trained scientists of the Los Alamos National Laboratory are working to unravel.

The Town of Los Alamos

Around 12,000 people (2010 number) populate the four mesas that constitute the town of Los Alamos census-designated place (CDP). Los Alamos’ population is the best-educated in New Mexico, with nearly 60% of all adults holding a bachelor’s degree. Its counterpart and sister city in Russia, Sarov, was also a nuclear weapons research city and birthplace of its country’s atomic bomb. Los Alamos indeed has an interesting history due to its crucial role in the Manhattan Project and its US military “highly classified” security status that extended well beyond the end of World War II.

Interestingly, according to a post on the US Library of Congress site by Margaret M. Wood, one of its librarians, the sale of the first home in Los Alamos to a private citizen did not occur until the 1960s. The reason for this was the US Atomic Energy Community Act of 1955. One of the three major purposes of this Act was to provide for the “orderly” sale of property within the community to private purchasers. This Act laid out the procedures for the sale of residential property to private persons. However, Los Alamos was not included, as the town was still considered a security risk.

In September 1962, an amendment to the 1955 Act was finally passed “to provide for the disposal of federally owned properties at Los Alamos, New Mexico.” This provided for the sale of residential properties to private purchasers once each residential structure had been appropriately classified as to what type of dwelling (e.g., single-family house, apartment house, dormitory) it represented.

Los Alamos could not be situated in a more scenic environment, which seldom reaches extreme temperatures below freezing or highs above 32°C. The formation of this area deals with geology of an entirely different nature than what most petroleum geologists work in. The land has been shaped by volcanoes dating back several million years up to as recently as approximately 50,000 years ago.

The town of Los Alamos and LANL adjoin the eastern side of the Jemez Mountains. There are two prominent calderas within the Jemez Mountains that typify intracontinental volcanism and provide a large, flat surface convenient for settling. The Ancestral Pueblo people farmed this land, and carved out dwellings in the volcanic facade or constructed homes with blocks of the same material. Bandelier National Monument, a 34,000-acre park whose northeastern boundary is shared with LANL, is open to the public. Bandelier offers a lot of insight into the Ancestral Pueblo people who once lived in this area and provides amazing vistas for those brave enough to climb to the highest kiva (religious chamber used by male Pueblos) at Alcove House.

ASIA: Kuala Lumpur, Malaysia

Kuala Lumpur is the capital city of the island nation of Malaysia. It is a “global city” with a diverse population estimated at 1.6 million people as of 2012, spread over an area of 243 km2. The Greater Kuala Lumpur area, comprising 10 local authorities including Kuala Lumpur, is an urban agglomeration of 5.7 million people as of 2010. Kuala Lumpur is one of the major oil and gas industry hubs in southeast Asia due to its proximity to shipping lanes and its close economic ties to other southeast Asian nations.

Skyline of Kuala Lumpur, Malaysia. Photo courtesy of Leung Cho Pan.

Malaysia had 3.7 thousand million barrels of proven oil reserves at the end of 2012 (BP Statistical Review of World Energy, June 2013). While this may account for only 0.2% of the world’s oil reserves, the location and developed infrastructure of Kuala Lumpur make it preferred by oil and gas service providers as a place to locate their southeast Asia regional offices. Petronas is the national integrated oil company of Malaysia which owns all the nation’s petroleum resources.

As the business hub of Malaysia, Kuala Lumpur hosts a number of opportunities for young professionals with an entrepreneurial spirit. Many international conferences, high-profile events, and programs are starting up in or drawn to Kuala Lumpur to ride the wave of global interest in growing Asian economies.

Opportunities abound in Kuala Lumpur and entrepreneurs find the environment conducive to developing ideas and implementing their plans.

An interesting business venture is Sona Petroleum, a special purpose acquisition company (SPAC), formed to acquire exploration and production (E&P) oil and gas assets, started by E&P industry stalwarts from Malaysia. Sona Petroleum was able to raise more than USD 160 million from its oversubscribed initial public offering (IPO) in July 2013—making it the largest-ever SPAC IPO in Malaysia.

A SPAC raises money through the stock exchange without a single asset other than the experience of its board and management and a plan to buy assets or other firms that will form the core business of the SPAC. Sona Petroleum does not have any operational experience as an entity but the management team is composed of experts across the E&P value chain. They are currently looking to acquire equity interest in production assets in southeast Asia, Africa, and the Middle East.

The dynamic business environment, flourishing oil and gas industry, and numerous tourist attractions make Kuala Lumpur a promising destination for young professionals. It is a melting pot of different cultures and ethnicities. The population consists of a mix of people of Malay, Chinese, and south Indian origin and a large number of expatriates from all over the globe. English is widely spoken, while Bahasa Malaysia is the official language.

Even the architecture in the city reflects contrasting origins—from its ultramodern skyline featuring the famous Twin Towers (Petronas’ headquarters) to colonial-style buildings, Asian traditional buildings, and buildings inspired by Malay Islamic art. The offices of most oil and gas companies are concentrated around the Twin Towers in the Kuala Lumpur Convention Center area.

AFRICA: Global Village Energy Partnership

Africa is the world’s second-largest continent after Asia, with a total surface area (including several surrounding islands) of 30,221,532 km2. The eastern region of Africa is home to the great wildlife sanctuary of the Serengeti plains and the Rift Valley lake system which stretches across the countries of Ethiopia, Ruanda, Burundi, Kenya, Uganda, Democratic Republic of the Congo, Tanzania, and Zambia.

The kitchen in Zigu English Medium School in the commune and town of Mahina, Mali,
used to have four sets of three-stone fires, but now has four improved boilers and four cookers—
all produced by Fausta Ntara. Photo courtesy of Global Village Energy Partnership.

While African countries are rich in natural beauty and cultural diversity, they also are still regarded as developing nations. According to the United Nations, the majority of the population lives under the poverty line. Significant oil and gas discoveries in Africa have put the continent on the world map as a major contributor to world energy demand. However, the irony is that most African countries struggle with getting daily electricity supplies and fuel for daily household activities like cooking.

The Global Village Energy Partnership (GVEP) was launched at the 2002 United Nations World Summit for Sustainable Development in Johannesburg, South Africa. It works mainly in Africa and the Caribbean. GVEP International is a nonprofit organization that works to increase access to energy and reduce poverty in developing countries. To achieve these goals GVEP helps entrepreneurs establish and grow small energy businesses. According to GVEP, there are 2.5 billion people who rely on wood, charcoal, animal dung, and kerosene for fuel, and 1.5 billion people in the developing world who live without electricity altogether.

GVEP had a 5-year Developing Energy Enterprises Project (DEEP), operating in Kenya, Uganda, and Tanzania, that started in March 2008 and ended in February 2013. It aimed to deliver energy access to 1.8 million people in Kenya, Tanzania, and Uganda. The target was substantially exceeded, as it reached 4 million beneficiaries by the program’s end.

DEEP provided services such as business and technology training plus a loan guarantee scheme to energy entrepreneurs. With focused training in technology and business, each entrepreneur was taught to set realistic production and sales targets. A mentor, who also assisted in getting loans approved, was assigned to each entrepreneur.

Over 900 micro and small energy enterprises were supported by DEEP. The program created around 3,000 jobs in the region. Here are two outstanding examples of entrepreneurs supported by the DEEP program contributing to the energy industry in a small way but surely making a difference:

Fausta Ntara produces various kinds of improved cookstoves that she sells to households, wholesalers, schools, and hospitals. She is based in Tanzania and started her business in 2003. In the beginning, she attended several seminars in Dar es Salaam where she learned about charcoal stoves and acquired the technical knowledge that would provide the foundation for her business.

She received further training in management, record-keeping, and planning after enrolling in the DEEP program. This enabled her to improve her customer relations and the quality of her products. As her revenue increased, Ntara used the extra savings to send her daughter to school. Her business contributes to the preservation of the environment since her clients use less charcoal and firewood.

Patrick Mwangi is Kenyan and a trained aircraft technician who produces and sells biomass briquettes as well as briquette-producing machines. He started designing his machines several years ago but faced serious technical difficulties. Mwangi came across GVEP by chance while making general enquiries about renewable energy, and then enrolled in the DEEP program. He benefited from the training he received in the program, leading to increased sales, and he is now considering new activities for his company, including recycling. Mwangi has reinvested his extra income to buy an office and new equipment. He takes part in training workshops to share his knowledge and know-how on briquettes.

The Global Spirit of Entrepreneurship

The energy industry is very dynamic and is faced with new challenges every day with the prospect of depleting fossil fuels on the one hand and the discovery of oil and gas in ever-challenging frontiers on the other. There is constant tension between humanity’s desire to use renewable sources of energy and at the same time create new technologies to tap oil and gas in difficult environments.

The spirit of entrepreneurship can be seen across the world, and the oil and gas industry is no exception. Entrepreneurial ambitions are not restricted by continents or countries; opportunity exists everywhere and young professionals clearly make the most of it!