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A traditional MBA may well help you to run a hedge fund says Len Waverman, dean of the Haskayne School of Business at the University of Calgary. “But I don’t think it means you can manage a multibillion-dollar energy company.”
Haskayne is the latest business school to launch a specialist MBA aimed at working executives in the energy industry. The initial cohort of 15 students enrolled on the Global Energy Executive MBA in April. Their first field trip was to the nearby Fort McMurray oil sands deposit, also in Canada’s Alberta province.
From next year, the University of Oklahoma’s Price College of Business is offering an evening course to suit working professionals in the local oil industry. The University of Tulsa is inviting applications for an online-only course. Meanwhile in April Alex Salmond, Scotland’s first minister, visited Iberdrola, the Spanish power company that owns ScottishPower, to launch a bespoke energy MBA for Iberdrola employees that will be delivered jointly by Strathclyde Business School and Comillas Pontifical University in Madrid.
The growth in energy MBAs at universities in North America and Europe reflects not only the increased financial complexity of the energy business, but also the fast-moving economic and political changes affecting the industry that senior managers must master to lead their organisations effectively.
The Fukushima nuclear disaster, the political convulsions of the Arab uprising, the changing consumption forecasts associated with the electric car and the carbon-neutral home – are just some of the recent developments that have to be factored in as businesses try to predict the future shape of the global energy map.
“Leaders need to be able to relate to multiple stakeholders, not just to the government regulator, or the contractors or their partners as before,” says David Hobbs, chief energy strategist at IHS Cambridge Energy Research Associates, which runs the degree with the Haskayne School.
Texas university was one of the first institutions to offer a specialist energy MBA in 1997. One of the original sponsors for that programme was Enron, the energy trading company that collapsed in 2001 in one of the largest corporate bankruptcies in US history.
But all big energy companies periodically have a need to send those they have chosen for leadership roles to business school. Finding the right candidates, however, is more difficult, with a key skills shortage in the critical 35-40 age group. This is a direct legacy of the decline in the number of graduates studying geosciences in the mid-1990s, the last time the oil price dipped to about $10 a barrel.
However, Mr Hobbs believes the real driver behind the present interest in energy MBAs is linked to what is happening at senior management level in the state-owned energy companies in developing countries.
National oil companies such as Saudi Arabia’s Aramco and Pemex of Mexico together account for 80 per cent of world oil and gas production. Many of the more forward-looking companies depend on western business schools to bolster their management capabilities as they aspire to global roles in increasingly uncertain energy markets.
“The energy industry has always been global in nature but it was organised along national lines. That is changing and managing that process requires different skills,” says Jonas Puck. He runs the MBA in energy management at the University of Vienna, where its overseas recruitment efforts are helped by the fact that Opec has its headquarters in the Austrian capital.
The Haskayne School too is targeting overseas applicants, the main reason for its partnership with IHS Cera.
“We felt it was good to have a partner that had a worldwide footprint. We’re a degree-granting university. But we also now have this link with this private sector consultancy, which gives us a great network and access to great research,” says Harrie Vredenburg, academic director of the energy MBA at Haskayne.
According to Mr Hobbs:“At IHS, we have often been approached by oil companies in these markets to help with training. A link-up with Haskayne was attractive because Calgary is a big energy centre. But it’s also important that Calgary is not the US because it gives us a broader range of political alliances.”
Prof Vredenburg concedes that the first-year intake “was smaller than we would have liked”. But Mr Hobbs believes that applicants in the Middle East and elsewhere wanted to see local Canadians backing the programme before becoming involved. This has largely been achieved with all of the current intake representing either local Canadian or US companies. The expectation is that half of next year’s students will be from these emerging markets.
As part of that ambition, IHS Cera is in talks on a possible link with the King Abdullah Petroleum Studies and Research Center, a non-profit organisation in Saudi Arabia.
At Warwick Business School, which has been running its executive energy MBA since 2009,international students are already a key component, with 70 per cent of the 30-odd intake every year representing companies outside the UK.
Aeshwar Deonarine is typical of Warwick’s intake. He is deputy chief executive of Guyana Power & Light, the largest state-owned electricity company in the Caribbean country. “The course has been the best investment in my life. And I know about investments, I am a chartered accountant by profession,” he says.
David Elmes, the course director, says: “If we hadn’t managed to achieve that level of national diversity, we wouldn’t have such good debates in class.”
Mr Elmes joined Warwick after a 20-year career in the energy industry, first with BP, before switching into consulting with Capgemini and latterly with Schlumberger. He has seen vast changes over that period but nothing to compare with the turbulence of the past few years, he says.
He cites the example of renewables and the development of solar or photovoltaic cell technology, which harnesses the sun’s rays.
“Anybody who has done a business case analysis of a solar development, if it was done more than six months ago, is out of date because the costs are all wrong. It’s become much cheaper. And that’s the reason Germany is confident it can shut down all its nuclear power stations.”
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In the past, he adds, when global economies were growing, an investment in an oilfield was a fairly straightforward decision.
“Today you have to consider what’s happening in solar. What’s the political dimension. Electric vehicles could come along. All of this means making those sorts of decisions in a capital intensive industry is much tougher.”
But he believes any understanding of the energy industry is incomplete without taking account of changes in consumption
“We cover energy consumption as much as we cover supply. The future picture is going to be as much about how we change consumption, how we change the methods of consumption, as it is about how much unconventional gas we are developing.”
The overall objective of the Warwick programme, says Mr Elmes, is “to build people’s capability for managing companies in industries that are transforming”.
“We’re trying to help people and their companies make decisions which could change the course those companies take, whether it’s going to different markets or different locations. This is quite different from just helping executives better manage what they already do.”