1. As Global
As It Gets
Two-way knowledge
pipeline links Thunderbird
to oil and gas industry

2. as
GLOBAL
as it gets
Two-way knowledge pipeline links
Thunderbird to oil and gas industry
By Daryl James
E
d Barrett didn’t inherit much when he took over Thunderbird Thunderbird Emeritus
executive education in 1990 after arriving from Southern Meth- Professor Ed Barrett,
Ph.D. opened the
odist University in Dallas. A staff of two or three people worked
pipeline connecting the
out of a trailer on the edge of campus, and Barrett needed new school to the oil & gas
corporate clients to jump-start revenue. sector. Photo by
“I had contacts in the oil and gas industry, so that’s where I started,” he Tim Clarke.
says. “I knew who the players were.”
Barrett worked with Gulf Oil in Geneva while on the faculty at Harvard
Business School and then taught for more than a decade at SMU’s Maguire
Energy Institute. He followed his friend, Roy Herberger, to Thunderbird
when Herberger became president of the school in 1989.
Barrett picked up at Thunderbird where he left off in Dallas, bringing
rising stars in the oil and gas industry to the Arizona desert — far from any
oilfields or refineries. Things went better than expected.
“The tie was stronger than we thought,” says Barrett, an emeritus profes-
sor who remains active in executive education. “It’s hard to find an indus-
try more global, and therefore more complex, and therefore more interest-
ing than oil and gas. It affects every country in the world, and that ties very
nicely to who we are at Thunderbird.”
Global partners such as Chevron, Shell, British Petroleum, TNK-BP and
ExxonMobil started coming to Thunderbird — along with oilfield services
companies such as Baker Hughes, Integra and Smith International, and
state-owned enterprises such as the Oil and Natural Gas Corp. of India.
Thunderbird Corporate Learning, which grew out of the cramped trailer
on the edge of campus, has modern facilities today that include the Thun-
derbird Executive Inn, four auditoriums and a two-story administration/
classroom building.
A second site in Geneva oversees operations in Europe, Africa and the

4. oil & gas connection
Middle East. different.”
Many factors have contributed to Corporate Mueller arrived at Thunderbird 20 years ago
Learning’s growth, but the specialization in oil and moved to Corporate Learning in 1997 —
and gas remains key. Professors such as Kannan after going back to school and earning a degree
Ramaswamy, Michael Moffett, Andrew Inkpen as a widowed mother. She says Barrett hired her
and William Youngdahl have joined Barrett over and taught her how to nurture relationships
the years as industry experts who speak the lan- with corporate clients.
guage of global energy executives. She eventually took over the ExxonMobil ac-
“We’re doing something right, or they wouldn’t count and helped expand the partnership into
keep coming back,” Barrett says. “We’re winning its current form. She meets with senior execu-
contracts with oil and gas companies because we tives on a regular basis, gathers feedback and
understand the complexity with which they live resolves concerns.
and can offer them some hope or help in trying “Relationship management is a significant part
to deal with that.” of the business development team’s job descrip-
tion,” Mueller says. “Our business development
Relationship managers directors touch their clients six or seven times a
Jan Mueller, Thunderbird’s vice president of week. We’re never done.”
global business development, says many oil and
gas companies seek out Thunderbird. But com- A Thunderbird industry
petition for corporate clients has grown fierce Oil and gas companies are never done, either.
in recent years, with an increasing number of Their search for new energy deposits often leads
business schools and consulting firms claiming them to remote locations that other industries
global business expertise. simply ignore. Geopolitical, cultural and organi-
“We can’t just sit around and wait for the busi- zational complexities come with the territory.
ness to come to us,” she says. “We need to be ag- “A lot of times when people talk about go-
gressive in explaining what makes Thunderbird ing global, when you drill down, they’re talking
about doing business in prominent places like
Singapore, London, Tokyo or Shanghai,” Barrett
says. “The oil and gas industry is everywhere, in-
cluding some very culturally and socially differ-
ent places in very difficult regions. You’re likely
to find new oil in places like Turkmenistan,
which, as best as I can tell, is on nobody’s vaca-
tion list.”
Ramaswamy, a native of India who now has
U.S. citizenship, has spent much of his career
studying emerging markets and the business
challenges they face. He says this research led
naturally to a specialization in the energy sector.
“It is probably an industry that is tailor-made
for our mission at Thunderbird to educate global
leaders who create sustainable prosperity world-
wide,” he says. “The resources in this industry
are concentrated in the developing world, and
the customers are concentrated in the developed
world. It’s a fascinating industry to look at.”
Moffett has come to a similar conclusion. “I
can’t think of an industry that represents more
what the Thunderbird challenge is all about,” he
says. “It’s a global industry. It’s got a unique his-
tory, and it’s integral to every human on Earth.”
Inkpen, who arrived at Thunderbird in 1995,
says the discovery of energy resources in remote
Thunderbird Professor Michael Moffett teaches a global
energy class in April. Thunderbird first offered the elective
course in 2008 for full-time degree students.
Tim Clarke

5. locations around the world has required the de- able real-world experience. Companies such as
Chevron, Shell, British
velopment of a new set of management skills to “We are focused on managing in a global set-
Petroleum, TNK-BP,
deal with political and operating uncertainties. ting,” Barrett says. “To understand what is differ- ExxonMobil, Baker
“God didn’t make much oil in France,” he ent about global, you’ve got to be involved with Hughes, Integra and
says. “So you’ve got to go find it where it is.” people who are global, who have to wrestle with Smith International turn to
Oil and gas companies have plenty of practice the issues on a regular basis.” Thunderbird for its unique
global expertise in the oil &
executing massive projects in unstable political Thunderbird professors teach oil and gas pro-
gas sector.
environments, Inkpen says. The Nobel brothers grams on at least three continents on a regular
from Sweden helped turn Baku on the Caspian basis, and this involvement often puts them in
Sea into the oil capital of the world more than the middle of the action. Moffett and Inkpen
100 years ago in Azerbaijan. The region later be- traveled to Central Africa in January, for exam-
came ensnared in the Russian Revolution, and ple, to observe an oilfield and pipeline project
things got ugly. managed by one of their clients.
“Doing business in difficult environments “When you become heavily involved in Cor-
goes back to the beginnings of the commercial porate Learning activities,” Moffett says, “you
oil and gas industry,” Inkpen says. move from 10 miles behind the front lines to
Ramaswamy says Thunderbird, which started giving lectures in the foxhole.”
in 1946 as the first graduate school focused on Moffett says much of this knowledge returns
global business, can make a similar claim. to the classroom and benefits Thunderbird’s
“Oil and gas is one of those industries that was full-time degree students. “There are times when
global way before everyone else became global,” I learn things from working with the executive
he says. “So in some sense the industry is like participants, that I can’t wait to develop further
Thunderbird.” and take into the classroom with my degree stu-
dents,” he says.
Theory and practice One outcome has been the development of
Benefits from Thunderbird’s long relationship a new global energy class that Moffett, Inkpen
with oil and gas flow in both directions. From and Thunderbird Professor Gregory Unruh
Thunderbird’s perspective, professors gain valu- teach together.

6. Thunderbird Professor The class covers everything from engineering, people from Turkmenistan who just came out of
Kannan Ramaswamy, economics and markets to career opportuni- a socialist economy.”
Ph.D., says oil and gas
ties and company cultures. “The students get a He says the increased emphasis on doing busi-
companies that want
to thrive must learn to chance to see how all the different elements are ness in unstable regions also will create chal-
understand state-owned combined in one industry,” Moffett says. lenges in corporate governance — especially for
companies, which The knowledge pipeline that brings real-world companies from places such as the United States
often care about social practice to Thunderbird also carries classroom that must follow high standards. Contracts that
performance as much as
theory in the other direction. are binding in the United States, for example,
the bottom line. Photo by
Kristen Jarchow. “We stay on the relevant edge of theory,” Mof- are not always binding in different parts of the
fett says. “Our executive participants don’t al- world.
ways have time to acquire that because they’re “You’ve got to succeed while being very clean
busy with the brushfires. They’re busy with the in an industry that deals in parts of the world
practice. So they look to us for the theory.” that are not always seen as being — in a political
sense — clean,” Barrett says. “It’s either frustrat-
To Africa and beyond ing or exciting, depending on the day.”
The brushfires that keep oil and gas executives Another major trend that will shape the fu-
up at night increasingly happen in Africa, the ture of the industry is the emergence of national
former Soviet Union and the Middle East. Ink- oil companies as more than just guardians of
pen says those three regions will be the hot spots their resources. Petrobras in Brazil, for example,
for the industry on the production side of the has emerged as a world leader in deep-water
global value chain in the future. drilling.
This will require oil and gas managers to pay “Some of these national companies have be-
close attention to cross-cultural issues — espe- come truly global companies doing a lot of busi-
cially in places where corporate strategy involves ness outside their own countries,” Inkpen says.
local hiring to “indigenize” the company.
“You have to make that work,” Barrett says. Lifting the resource curse
“You have to make a combination of highly tech- Ramaswamy says multinational oil and gas
nical people from Europe, America, Singapore companies that want to thrive in the future
or Australia learn to work with not-so-technical must learn to understand these state-owned

7. oil & gas connection
companies, which often care about social per- be to remain ignorant of one of the most impor-
formance as much as the bottom line. tant parts of the worldwide economy.”
“The challenge is moving from a culture that The sheer size of oil and gas giants triggers
is shareholder value-driven to stakeholder value- some of the cynicism. The world’s three larg-
driven,” Ramaswamy says. “National oil compa- est nonstate-owned energy companies generate
nies function in a different world.” more than $1 trillion a year in combined rev-
He says he has gravitated toward working with enue. That kind of money brings power and in-
these national companies in his career. “That is fluence, but also close scrutiny.
where we make the greatest impact, by giving “It’s hard to find anybody who’s big and vis-
them exposure to the right kind of tools, tech- ible and important who is universally loved,”
niques and strategies,” Ramaswamy says. “It’s a Barrett says.
great role for Thunderbird to play.” But size is unavoidable in oil and gas. Com-
Unfortunately, he says, many underdeveloped panies that run long-term projects involving so-
countries with rich endowments of oil and gas phisticated technology and huge capital invest-
have failed to tap into these reserves fruitfully ments in unstable political environments need
for their populations. Industry observers call this deep pockets to survive.
the “resource curse.” Inkpen says a single setback, such as nation-
“Many national oil company advocates be-
lieve that the international oil companies are
alization of assets, would kill a small company
doing a single project in a remote country “The indus­
here to rape, pillage and plunder their resourc- “Size is a necessary part of the business,” Ink- try is wildly
es,” Ramaswamy says. “Well, that’s a one-sided
perspective that originates in nationalism. The
pen says. “If we didn’t have big oil, we wouldn’t
have oil.” misunder­
other side of the story is the fact that many of the The industry is full of examples of what can go stood and
national oil companies are not adept at manag-
ing the energy resources they control.”
wrong. The Soviet Union confiscated private oil
wells and factories in Azerbaijan after the revolu- somewhat
He says state-owned oil and gas companies tion started in 1917. Iran kicked out British Pe- demonized.
seeking a role model might look at the Abu
Dhabi National Oil Co. in the United Arab
troleum in the 1970s. As recently as two years
ago, Venezuela seized ExxonMobil assets in that The role of a
Emirates. “They have done a good job of man- country. university of
aging resources, investing in the right kinds of
things, building the right kinds of partnerships
“This is why you don’t put all your eggs in
one basket, which is why you need very large oil this stature is
with foreign oil companies and helping to uplift companies,” Inkpen says. “Very large oil compa- to try to un­
the local population,” Ramaswamy says.
One of his current Corporate Learning clients
nies can afford to be involved in multiple proj-
ects around the world.” derstand the
is Libya’s National Oil Corp., which operated for Oil and gas companies also need capital to de- different per­
years with limited exposure to the outside world
due to United Nations sanctions.
velop technology and invest in massive projects
with long-term horizons. “You have to be very spectives.”
The repeal of these sanctions in 2004 triggered well-capitalized to wait 20 years to see your bil-
opportunities for Libya to collaborate with com- lions of dollars invested today come to fruition,”
panies from around the world, especially from he says.
Europe, Australia and the United States. Thun- The stakes are high in oil and gas, which is one
derbird’s role is to help develop senior manage- reason Inkpen welcomes Thunderbird’s involve-
ment programs to kick-start the talent develop- ment.
ment process within the company. “It is probably the most global industry in
“It is a very exciting opportunity for us,” Ra- the world,” Inkpen says. “And it touches on all
maswamy says. “Assignments such as this will sorts of elements of what we do at Thunderbird
help us bridge the mindset of national oil com- — managing political risk, financial risk and set-
panies and their international counterparts.” ting up organizations necessary to run a global
business.”
Land of the giants
Emotions often run high when people talk
about oil and gas, which can hinder reasonable Enroll now
discourse.
Thunderbird’s “Advanced Management Program for
“The industry is wildly misunderstood and Oil and Gas Industry Executives” will be offered Nov.
somewhat demonized,” Barrett says. “The role of 9-20 in Glendale, Ariz. For more information, contact
a university of this stature is to try to understand program director Joe Patterson ’08 at 602-978-7437.
the different perspectives. The alternative would

8. oil & gas connection
Know your energy
Q&A with Thunderbird Professor
Andrew Inkpen
P
Andrew Inkpen
Professor of
Management and
the J. Kenneth and
eople heat their homes and drive their
cars using oil and gas products. But many
people lack basic understanding about
A: Gasoline is the most important refinery
product in the United States, and diesel is
the most important refinery product in Europe.
Jeanette Seward where these products originate. “We don’t Other products include heating oils; solvents;
Chair in Global know much about the energy we consume, where propane; butane; kerosene for jet engines and
Strategy
it comes from and the impact it has on our life- tractors; asphalt for roads and roofing materials;
style,” says Thunderbird Professor Andrew Ink- coke for things such as electrodes and charcoal
pen, Ph.D. Here is a quick primer to boost your briquettes; lubricating oil base stocks for motor
“energy literacy.” oils, industrial greases, lubricants and cutting
oils; petrochemicals used in the production of
Q: Why do gasoline prices vary so much
around the world?
plastics, synthetic fibers, synthetic rubbers and
other products; and residual fuels used by ships,
power plants, commercial buildings and indus-
A: Prices vary because of government inter-
vention in the markets. Gas taxes in the
trial facilities for heating and processing.
United Kingdom make up more than 70 percent
of the retail price, which means gas prices in 2009
are more than $6 a gallon. In the United States,
Q: A private individual or company can
own an oilfield in the United States.
How does this compare with other parts of the
taxes vary by state and represent about 25 percent world?
of the retail price in 2009. In Venezuela, the gov-
ernment caps the price of gasoline at about 16
cents a gallon.
Government intervention in the fuels market
A: In most parts of the world, the govern-
ment owns the resources in the ground.
Companies that want access to these resources
leads to some strange regulations. For example, must work through governments.
customs officials check the fuel gauges of vehicles
leaving Singapore and require that fuel tanks be
at least three-quarters full, in order to limit the
importation of lower-taxed fuel from Malaysia.
Q: Where does the real power lie? With
big oil companies, OPEC or other sov-
ereign states?
Q: How do fluctuating oil prices affect
production and global supplies? A: As in any industry, competitive power
will be held by those firms and entities
that have scarce resources and knowledge. In
A: Falling oil prices mean reduced profit-
ability for oil producers. High-cost pro-
duction areas, such as the tar sands of Alberta,
the oil and gas business, there are various scarce
resources: the oil and gas in the ground (the
reserves), the technology to extract the oil and
where each barrel of oil produced costs about gas, the project management and logistics skills
$50, will usually see a drop in production invest- to manage the development and production of
ment. Falling oil prices in the 1990s meant that large-scale projects, and the people to lead the
many marginal producers went out of business, development and production teams. OPEC
and other producers put projects on hold. As oil countries and other sovereign oil and gas pro-
prices rise, more production comes on stream, ducers have access to the hydrocarbon reserves
although this can have the effect of increasing but, in most cases, lack the technology, manage-
supply and driving prices back down. ment skills and leadership to develop their re-
serves. Thus, the power is shared between sov-
Q: Besides gasoline and diesel, what other
refinery products come from crude oil?
ereign states and the large oil companies. Both
sides need each other.

9. oil & gas connection
Q: Why are oil and natural gas so closely
linked together?
plies of crude to meet the demand for those end
products.
Reduced demand for refined products is
A: The production of oil and gas share many
of the same technological and operation-
al challenges. In the upstream part of the busi-
the primary reason crude prices have fallen
so much over the past year. In 2008, global
demand for all transportation fuels fell more
ness, the exploration and drilling processes for than 7 percent. Producers of crude, and OPEC
oil and gas are similar. As a result, it is logical that specifically, usually react by reducing produc-
the largest crude oil producers also have become tion in an effort to restrict supply and drive
large gas producers. crude prices up.
Q: What is the correlation between crude
oil prices and gasoline prices that mo-
torists pay at the pump? Global oil podcast
Thunderbird Professor Michael Moffett, Ph.D.,
A: Many people think crude oil prices drive talked about global oil trends March 6 during
Homecoming. Listen to an extended excerpt
gasoline prices, but it generally works
or download the file on the podcast page of
the other direction. Crude oil prices rise and fall the Thunderbird Knowledge Network, www​
based on the expected value of end products .thunderbird.edu/knowledgenetwork.
such as gasoline and diesel and the available sup-
Global oil & gas value chain
Upstream Transportation Downstream
(exploration and production) (refining and marketing)
Oil and gas transportation systems require
Long before oil and gas production begins, sophisticated technology and planning. Crude oil can be refined into a variety of
companies must negotiate access to explore The Chad-Cameroon project involved end products. Decisions are based on
in sovereign states and then to develop any laying 665 miles of 30-inch diameter pipe market demands and the type of crude oil.
resources discovered. This process often buried one meter in the ground through The oil and gas value chains sometimes
takes years or even decades. In the case terrain that was environmentally sensitive. overlap downstream with the production of
of the Chad-Cameroon project that came When dealing with natural gas, the product petrochemicals.
online in July 2003, attempts to develop oil often must be converted temporarily to
resources in the region date to the 1960s. liquid form (LNG) for storage or transport.
Lease Access Motor Fuels
(gas/diesel)
Oil Trading
Exploration
Transportation Jet Fuel
Ship, Pipeline Refining
R&D Development Heating Oil
Production Lubricants
Asphalt
Gas Oil Specialty Chemicals
Petrochemicals
Commodity Chemicals
Transportation
Gas Processing Pipeline Gas to Market
LNG Transportation LNG
Liquefaction Ship Regassification
Source: Thunderbird professors Andrew Inkpen, Ph.D., and Michael Moffett, Ph.D., with information on Chad and Cameroon from a case study by Thunderbird Professor Ed Barrett, Ph.D.