April 2010 Vol. 237 No. 4


ETRM Goes to School

By Patrick Reames, Managing Director, The Americas

With the aging of the workforce, the energy industry in the United States is facing the loss of the experienced and skilled resources that have developed, deployed and maintained the complex systems that underpin our energy infrastructure and the markets that operate within it.

Anticipating the industry’s needs, many universities in the United States have developed programs designed to equip new graduates with a broad understanding of many of the technologies that are required as this industry continues to rapidly evolve in the United States.

The breadth of these educational programs include the traditional engineering courses that focus on the skills necessary to design and maintain the wide ranging systems and infrastructures that delivery energy in its many forms, including recently developed courses focused on “green” energy and smart-grid technologies.

Others, like programs offered through the business colleges at the University of Texas, Tulane, and the University of Houston, are focused on the business of energy trading and risk management, acquainting students with the dynamics of the complex energy markets and equipping them with the analytic skills necessary to find employment in the energy-trading industry.

One area related to energy that has not been particularly well served by the universities until now, however, is the information technologies and systems that are required by, and specific to, energy trading and risk management.

Energy-trading companies have traditionally had to internally develop the skills and knowledge that are required of the IT resources supporting their trading operations. These requisite skills include a solid understanding of the terminology and processes of energy trading, in addition to the technical skills required to install, integrate and support extremely complex commodity trading systems.

Once trained, these IT resources become a critical component of the trading floor and, should they leave, the cost to replace them in terms of time and dollars can be very high.

The University of Houston’s Bauer College of Business, having recognized the challenge that these companies face, has designed and launched a first-of-its-kind Energy Trading System Track, covering the issues and complexities of energy trading and risk management (ETRM) software and technologies. This new Energy Trading System Track leverages the schools finance department course in Energy Trading and couples it with a new Management Information Systems (MIS) course for 2010, Energy Trading Systems.

The new program is the brain child of energy industry veteran, Ed Bell, who, through his long association with the university, has marshaled the necessary support to create the program and is serving as the instructor for the first iteration of the course. The Energy Trading Systems course will leverage the school’s existing classroom and lab space, including a dedicated network infrastructure on which students will get hands-on experience in the complexities of installing, integrating and supporting complex ETRM systems.

The university’s course description outlines the objectives for the class: familiarize the MIS/SCM undergraduate students with energy business processes related to risk in trading; provide hands-on exposure to the software and hardware tools used by firms to manage these processes; allow students to develop understanding of how to leverage and use the technology for profit and efficiency; and provide interaction between talented information-technology students and the energy trading community.

Bell notes that his priorities as an instructor are for his students to develop a working knowledge of energy trading practices, terminology and systems concepts; to acquire enough knowledge to evaluate a career as an IT or supply chain professional in an energy trading environment; and get substantial hands-on system experience from their lab environment that will mimic a trading floor infrastructure.

According to Bell, the students, in addition to getting a well-rounded understanding of the working of the energy-trading markets, will get valuable hands-on experience installing and implementing a leading commercially available ETRM system, GasPro, donated to the school by Data Management Solutions. That company’s founder and president, Frank Pena, will also play a hands-on role, working with the students to provide an understanding of the software and how to appropriately model within it, the energy markets that it serves.

CommodityPoint also notes that one of our “UtiliPoint Expert Series” books, “Selecting and Implementing Energy Trading, Transaction, and Risk Management Software” will be utilized as a supplemental text for the course; our organization will also provide a guest lecturer during the semester.

This new course has attracted a significant amount of attention on the U of H campus. Bell said all available seats are taken for the current semester and several students who wished to take the class were unable to sign up due to space limitations. The school is looking toward expanding the offering next semester to include an additional course in order to meet the current and anticipated demand.

This new course and the skills being taught should come as a welcome development within many of the country’s energy-trading shops, particularly those in Houston that recruit heavily on the University of Houston campus. The ability to bring onboard new employees already equipped with many of the critical skills in energy-trading IT should provide valuable savings, both in time and dollars, to companies seeking to expand and upgrade their workforce to meet the challenges of a constantly evolving industry.

Patrick Reames is the Managing Director – The Americas for CommodityPoint, a division of UtiliPoint International. He has been involved in the energy industry for more than 30 years, including upstream and midstream oil and gas operations, and energy commodity trading, transportation, and risk management. Over the last ten years, he has been focused primarily on information technology serving energy and commodity trading, and has been an executive for several ETRM technology companies. He maintains the ETRMCommunity blog and website (http://www.etrmcommunity.com) and is the co-author of the book “Selecting and Implementing Energy Trading, Transaction and Risk Management Software – A Primer”. He holds a B.S. in Business Administration from Oklahoma State University.

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