Russ: Welcome back to The EnergyMakers Show, brought to you by PKF Texas. And this is the Digital Leader Series #8, brought to you by Comcast Business, built for business. This is our quarterly event featuring a discussion with a technology leader in front of an audience – a live audience – of digital leaders. And I’m very pleased to have as my guest technology and energy industry veteran, today Principal of Innovation Impact LLC and prior to that 4 years as CTO of Conoco Phillips and 20 years in technology leadership positions at Schlumberger, please join me in welcoming Dr. Ram Shenoy. Welcome to the Digital Leader Series.
Ram: Thanks very much for having me Russ.
Russ: You bet. So I’ve been listening to you lately give speeches, write papers and have discussions and you’re always talking about this thing called creative destruction and that’s what what attracted me to do this interview. But I’ve also been talking to you a lot and I keep sensing this interest – that your interested in startups, in small companies, in entrepreneurship opportunities; am I sensing that correctly?
Ram: That’s absolutely right. So you might ask what would someone who spent 24 years in large corporations be thinking looking at entrepreneurs and such?
Ram: And I think I’ve had the privilege of working in the lead – one of the premier leading technology organizations in oil and gas. I’ve learned a lot, primarily in sort of getting fun stuff to do and a lot of good relationships but there have been sort of two things that have caused me to sort of think a little bit about well, can corporations innovate and what sort of innovation can they do? And the first one really is over a very long time scale. And over my time what was interesting was there was sort of a debate about well what’s the right way for corporations to innovate? And so you’ve got this debate about should they be in academic clusters? Should they be in Silicon Valley? And then should they be inside or outside? That’s where I got into looking at venture capital as a means of corporations accessing technological innovation better than internal R & D. So that’s sort of something that’s spanned over my career.
If you think about what’s happened in oil and gas, the industry sort of revolutionized and disrupted itself, right? So if you think about 15 years ago when people were saying we’re going to run out of oil, prices are going to go up to $250 or $300 a barrel, and what’s happened? The industry has had the shale gas and oil revolution, added 2 trillion barrels of resource, maybe 500 billion to a trillion barrels of economically developable oil and gas and instead people today are asking can we get to $60 or $80 and can the industry survive this environment? And so that struck me prototypical example of creative destruction happening because of people say the current status quos can’t persist, well that’s where I think entrepreneurs come in and change how business is done.
Russ: I also enjoyed some of the exchanges you and I had about your observations of entrepreneurs and why they do what they do and kind of searching for the Holy Grail; did you find the Holy Grail? Is there one path that’s real easy to take?
Ram: I wish there was some sort of curriculum, like some academic institutions may portray, for entrepreneurship. So I’ve had the opportunity in the last year or so the meet people who are entrepreneurs of all shapes and forms. I’ve met people who’ve not succeeded multiple times and then eventually got to a going enterprise. I’ve met people who’ve started a company, worked at it for a decade or 2 decades and it’s a perfectly respectable growing business which gives them a lot of satisfaction and serves a market need. And I’ve met serial entrepreneurs who have just started one company after the other, sold them at great success and just kept going on. And I for the life of me cannot really see – I think it’s an intensely personal, individual thing in fact. When you think about it, I think commerce is all ultimately very personal despite all the technology around it.
I wouldn’t have said this when I graduated college out of being a hardcore science, math, physics person – the older I get the more I appreciate the liberal arts and communication and the fact that business is ultimately a human activity.
Russ: And when we talked about that you said that you did notice a high level of passion in almost any of them that were making it, some even that weren’t.
Ram: It’s true that there are certain common things. I’m struck by – the importance of passion is even when the going gets tough you still persist because you like what you’re doing, I think that’s what it is. I found some individuals with amazing clarity of vision that I don’t think I could have in fact and then some who are incredibly insightful at seeing opportunities and seizing them. That’s why I say that I really couldn’t find one recipe for entrepreneurship. What I do know is this, if you look at where we are in oil and gas today and people are asking – I don’t know, oil is between $40 and $50 a barrel today – so if you look at 150 years of price history, inflation adjusted, about 70 – 80% of the time the oil price is below $30 – $35. So I don’t know what the future is but all I will say is everyone who is saying that prices have to go up are going against the past data.
And that’s partly because it’s really difficult to envisage where technology and innovation makes the production of oil and gas cheaper.
Russ: I want to talk more about oil and gas and the industry, but I even want to go up a notch too back to creative destruction and particularly that category of just major, multi-industry disruption that’s happening, share your perspective on that.
Ram: So if you think about that right now one hears a lot of talk about artificial intelligence, robotics and automation and I’m sure there are lots of favorite anecdotes. The one that really struck me is this – I was in a meeting where I happened to meet the Provost of Georgia Tech, Professor Rafael Bras, and he told me something which really completely dumbfounded me. So Georgia Tech has an online Masters of Computer Science course. They’ve been running it for 3 years; it’s literally online which means all the content, the education is delivered remotely through basically video and the students interact with teaching assistants through web chat, messaging apps and email.
And so in the last academic year the students wanted to vote a teaching assistant named Jill as an outstanding teaching assistant – and this is based on a semester’s worth of interaction where they’re sending email and the teaching assistants give them help with homework assignments, exams. So Jill’s last name was Watson. Jill Watson was actually a software app by IBM which Georgia Tech decided to make as a teaching assistant and the really stunning thing for me was the fact that through an academic year of interaction that the students couldn’t figure out that it wasn’t a human they were interacting with.
Russ: Wow, that’s disintermediation. You and I saw I think a friend of yours present on disruption and said that oil and gas is toast, it’s over; it’s going to be disrupted as well and simultaneously you can’t watch the news without hearing about climate change and it’s been totally decided by the news media it has and I think the people in the United Nations – I interview a lot of climate scientists, I interview both sides – and from what I see and hear it’s not over. It’s not scientifically proven. In the meantime it seems very disruptive to our economy to do what it takes with today’s sustainable energy and replace it. What you hear about the Paris agreement, this recent Canada/Mexico/U.S. thing; I mean they’re just making decisions to wipe it out. I don’t think it’s possible to wipe out oil and gas anytime soon and it almost seems impossible to wipe it out completely to the degree that you and I saw presented by your friend.
Ram: I think we should always recognize that oil and gas are a means for us to consume energy and so I think if you ask the question how does the world get cheap, affordable energy and let’s stipulate that that’s a pretty fundamental requirement for having a good quality of life and standard of living. One of the things I’d probably say first is in the United States we enjoy a really high quality of life and standard of living because of the cheap energy we have. So to just give some perspective on this, there are about 350 to 400 million people in the world out of 7 billion who burn energy at the same rate as the 300 million in the U.S. And that’s twice as much as another 300 million who are primarily in Europe, Australia, Asia, Southeast Asia – we burn twice as much per head per year as them.
And on the other end of the scale there are about 1.5 billion to 2 billion people who have a standard of living that we have not seen, at least in the U.S., for about 500 or 700 years. They burn biomass for heat and cooking, they have no running water, they have none of the things that energy enables; sanitization and so on. And as a result in developing countries they’re lucky if they get to 30 or 40. And energy is a key fundamental thing that’s lacking that enables all the other things. And so when you put it in that context and when you hear institutions talk about well oil and gas is going to be around, how do you extrapolate because developing countries want to grow the standard of living for the populations, a key point is you have to grow a GDP, a GDP you grow with access to energy.
If you start saying those 400 million people and you say now 2 billion more or 3 billion more you’re getting to numbers where even today’s oil and gas production is nowhere near enough to juts provide the energy at economic rates. And so I think that’s one thing that we should all bear in mind.
When it comes to climate change I wish people would not look at just climate change but just environmental impact; you should look at land, water and air. Funnily enough probably the most precious commodity in the world, and probably a bigger growth business than oil and gas in the next 50 years is pure water because there’s going to be a real scarcity of it. And when you look at energy sources you can’t just look at carbon emissions or greenhouse emissions, you’ve got to sort of look at all the other environmental factors as well. So if we’re going to run out of water, which is going to be a critical thing, then you have to look at agricultural methods which can today consume 60% of water usage in the world.
So when you look at climate change and particularly for carbon emissions I think the key thing that one should really know is the switch from coal to natural gas has been the biggest dent in carbon emissions in the last 20 years. In fact it’s a little known fact, because the DOE doesn’t trumpet it, that the only country which made the targets for the Kyoto Protocol even though it didn’t sign on to it is the U.S. primarily because – and it wasn’t a policy decisions – it was economics which was natural gas was much cheaper than coal and so it switched around.
Russ: Okay, so before I let you go, and not to be persistent, but if you had to say this is where I want to be 5 years from now – just a ballpark – what would you be doing?
Ram: Say, you know Russ, I think there needs to be some suspense and I think you know what, you should invite me for an interview 5 years from now.
Russ: Okay, we’ll do it. Let’s hear it for Dr. Ram Shenoy. And that wraps up this episode of The EnergyMakers Show, brought to you by PKF Texas and The Entrepreneur’s Playbook. Thank you very much.
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