Paul Gaynor, CEO of First Wind, speaks at the Apr. 5 Energy Forward Conference.
The Energy Forward Conference held on Apr. 5 and hosted by the Booth Energy Group, was a resounding success. Over 150 people attended, many flying in from Houston to join the conversation. The conference provided an invaluable opportunity for students and professionals to come together and debate some of the biggest topics in energy today. For instance, what are the potential black swans that could fundamentally disrupt the energy landscape? Is North American energy independence feasible or even desirable?
Dan Pickering, Co-President of Houston-based energy investment and merchant banking firm Tudor, Pickering, Holt & Co, provided attendants with "An Overview of the Oil Patch." Pickering shared his view on the story of shale gas and its impact on the cost curve for US production, but also gave his audience a bit of advice on breaking into the energy industry and succeeding post-MBA. Pickering advised students that the current environment is "a good time to be in the oil patch!"
The conference also hosted William Van Hoene, Chief Strategy Officer for Exelon Corporation. Van Hoene suggested that it is time to reassess outdated subsidies on wind, and that the subsidies had been entirely appropriate to this time but are now sending the wrong signals to the marketplace. The conversation eventually came full circle when Paul Gaynor, CEO of First Wind, joined the conference later in the day. Gaynor argued that the wind business used to be all about the environment, but that now, in true Chicago Booth fashion, it is all about the economics. He made the business case for wind and suggested that there exists a long-term scenario under which wind can be sustainable without subsidies in as little as two cycles of improvement, or five to six years away. How do we get there? Gaynor believes it would take reducing capital costs by 10-15%, improving turbine efficiency, lengthening turbine life and reducing cost of capital. While certainly not easy, Gaynor argued that there is a path to success.
The rest of the day was filled with panels on various topics including oil and gas, power and utilities, private equity and venture capital, and alternatives and renewables. A number of these became very lively discussions that continued well into the breaks that followed each session. The oil and gas panel, for example, sparked an energetic dialogue on shale gas and the tremendous disruptive force that it has exerted on the industry. But the conversation quickly took a turn to the future – that is, what is the next black swan? There was broad consensus among the panelists that technological advances (such as horizontal drilling and hydraulic fracturing) are what drive us to the edge of the frontier and beyond, making fundamental disruptions possible. Hence, we should be looking to technology to get ahead of the next wave of industry transformation.
This only begins to scratch the surface of the kind of engaged and lively discussions that were part of the conference proceedings. Booth is unique among its peer schools in the vibrancy of its energy community. The Chicago Booth Energy Group invites anyone with any interest in energy to join and actively participate in the group (http://www.boothenergy.org).