Managing Energy: Risk, Investment, Technology ( MERIT )

Section OPRE 6389-501 Term Spring 2020

Professor Metin Çakanyıldırım [email protected] JSOM 3.408
Lecture hours 7:00-9:45 pm on W JSOM 2.102
Office hours 4:30-5:30 pm on M JSOM 3.408

Teaching Assistant: Fariba Mamaghani , [email protected] , JSOM3.424.

Office hours: 5:30-6:30 pm on T at JSOM3.424.

Course Description: MERIT is designed for students or professionals interested in the energy sector. This
sector houses applications from several academic disciplines: Operations Management, Engineering and Tech-
nology, Risk Management, Economics and Finance. Students currently involved in these and similar academic
programs can take MERIT to learn the fundamentals of the energy sector. MERIT prepares such students and
professionals for entry- to mid-level management careers in the energy sector.
MERIT has 4 modules: i) Resources, ii) Technology, iii) Transformation & Transportation, and iv) Risk &
Investment. These modules loosely correspond to the material covered by Energy Risk Professional (ERP) certi-
fication of Global Association of Risk Professionals. Hence, students upon completing MERIT will find it easier
to pass GARP-ERP exam to obtain the certification; see https://www.garp.org/#!/erp. The next exam is on May
16, 2020.
MERIT is not a pure macroeconomics course that studies aggregate demand and supply relationships in the
energy sector. Nor is it a pure finance course that studies energy trading and associated financial instruments.
Despite embracing principles from economics and finance, MERIT mainly aims to equip students with essential
knowledge so that they can function and communicate successfully with various professionals in an energy
company.
The energy industry needs qualified professionals. Employment prospects are fueled not only by the growth
of the industry but also by an aging employee base, with up to half of the current workforce expected to retire
over the next 5-10 years. Even relatively young working professionals can benefit from updating and retooling
their skills in the face of important industry developments, including hydraulic fracturing, emergence of new
fields and associated logistics challenges, oil-gas price decoupling, smart grids, renewable energy resources and
environmental regulations. Home to over 500 energy companies, the DFW metroplex can provide many employ-
ment opportunities in the energy industry for the graduate degree holders.

Objectives: MERIT includes discussion so that students

1. Acquire energy terminolgy and become aware of energy issues.
2. Learn of new technologies for generating/finding/distributing/storing energy.
3. Appreciate the challenge and creativity associated with managing energy.
4. Understand how energy affect businesses, people, society and environment.
5. Offer qualitative and quantitative potential solutions to the issues.

Students will
1. Build analytical skills to objectively evaluate alternative actions of energy firms.
2. Design methods and strategies to improve operations and efficiency of energy firms.

Pre-requisites: Elementary knowledge of calculus & probability, or consent of the instructor. Most importantly,
patience & willingness to learn new concepts and methods.

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Required Materials:
• A Guide to Oil and Gas Industry (GOGI). 495 pp by Deutsche Bank, Jan 25, 2013. Available online.

Case studies, choose 2 out of 4:

• 1. Case Study: “Deepwater Horizon”, by Metin Çakanyıldırım. To be distributed.
• 2. Case Study: “Nilchi Wind Farm in White Deer”, by Metin Çakanyıldırım. To be distributed.
• 3. Case Study: “SunRun in 2017”, by Cameron Lehman, Steven Callander, Josh Richman. Harvard Busi-
ness Publishing Case # P93A-PDF-ENG, Jan 8, 2018.
• 4. Case Study: “Coal, Nuclear, Natural Gas, Oil, or Renewable: Which Type of Power Plant Should
We Build?”, by Gary Clendenen, Paul W. Thurston, Fang Zhao, Stephen M. Kidwell. Harvard Business
Publishing Case # NA0007-PDF-ENG, Jan 15, 2010. Also appeared in North American Case Research As-
sociation’s www.nacra.net Case Research Journal, Vol.30, Iss.3.
Case studies 3-4 are to be purchased from Harvard business publishing https://cb.hbsp.harvard.edu.

Supplementary Books - under development:

You do not need to buy/read these books/material unless you have a special personal interest. Some of
them are available at the UTD library.
• Principles of Sustainable Energy Systems. By C.F. Kutscher, J.B. Milford and F. Kreith, 3. edition by CRC
Press, 2019.
• Energy Technologies and Economics. By P.A. Narbell, J.B. Hansen and J.R. Lien, Springer 2014.
• Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production. By Norman J. Hyne.
Third edition published by PenWell Corporation in 2012. Available at UT-Dallas Library as e-book.
• Electricity Markets: Pricing, Structures and Economics. By Chris Harris. Published in 2006 by Wiley. ISBN-
10: 0470011580. ISBN-13: 978-0470011584.
• Petroleum Refining in Nontechnical Language. By William Leffler. Fourth edition published by PennWell
Corporation in 2008. ISBN-13: 978-1593701581.
• Liquefied Natural Gas: A Nontechnical Guide. By Michael D. Tusiani and Gordon Shearer. First edition
published by PennWell Corporation in 2007. ISBN-13: 978-0878148851.
• Optimal Supply Chain Management in Oil, Gas, and Power Generation. By David Jacoby. First edition
published by PennWell Corporation in 2012.
• Oil and Gas Production Handbook. https://library.e.abb.com/. By Håward Devold. Published in 2013 by
ABB. ISBN-13: 978-8299788632.
• Offshore Oil & Gas. http://www.offshoreenergy.dk/Files/Filer/Publications/OffshoreBook 2014.pdf. By
Offshore Energy 2014.
• Project Management for The Oil & Gas Industry. By Abedeji B. Badiru and Samuel O. Osisanya, published
in 2013 by CRC Press.
• Fundamentals of Oil and Gas Accounting. By C. Wright and R. Gallun, PennWell 2008.
• Oil, Gas Exploration and Production. 2007. By Institut Francais du Petrole.
• Managing Energy Risk: An Integrated View on Power and Other Energy Markets. By M. Burger, B. Graeber
and G. Schindlmayr, John Wiley & Sons 2007.
• Fundamentals of Power System Economics. First edition in 2004 corrected in 2010. By Daniel Kirschen and
Goran Strbac. ISBN 13: 978-0-470-84572-1. Available at UT-Dallas Library as e-book.
• Energy Trading and Investing. By D.W. Edwards, McGraw-Hill 2010.
• Energy Risk: Valuing and Managing Energy Derivatives. By D. Pilipovic, McGraw-Hill 2007.
• Competitive Electricity Markets. 2008. Ed. by Fereidoon P. Sioshansi. ISBN 13: 978-0-080-47172-3.
• “The Energy Report”, by S. Combs, Texas Comptroller of Public Accounts, 2008.
http://www.window.state.tx.us/specialrpt/energy
• “Texas Power Challenge”, by S. Combs, Texas Comptroller of Public Accounts, 2014.
http://www.window.state.tx.us/specialrpt/electricity/96-1767.pdf

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Assignments & Grading Policy:
4%: Class attendance and contribution to discussion.
+ 7% * 3 Homeworks: Homeworks will have short questions and computations to prepare for quizes. A
student may discuss homework solutions with others but must write it up on his/her own with the full
understanding of what is written. Each HW is to be written individually and be submitted to eLearning by
6 pm on the due date. Only 3 highest hw scores will be considered for each student.
+ 14% * 3 Quizes: Four quizzes will be administered, each after the completion of the associated module.
Only 3 highest quiz scores will be considered for each student.
+ 10% * 2 Case Reports: Course has 4 cases: “Deepwater Horizon”, “Nilchi at Wind Farm in White Deer”,
“SunRun”, and “Coal, Nuclear, Natural Gas, Oil, or Renewable”. Each student will choose 2 cases out of 4
and submit reports for only 2 cases. Each report is to be written individually and be submitted to eLearning
by 6 pm on the day of its discussion.
+ 13% = Project proposal 1% + Project report 8% + Presentation 4%: Students will form groups and choose a
topic on their own or from suggested ones; more details in projectMerit.pdf on the course web page.
Feb 12: 1-page project proposal. Apr 22: Project report. Apr 29: Presentation. Each group member has the
option to write a report to evaluate others’ contribution to the project.
→ MERIT students earn a letter grade according to their merit of mastering the course material. Their grade is
not based on any type of need, amount of effort, family, personal circumstances, or grades in other courses.
The following catalogue scheme will guide the grading: A for [90, 100]; A− for [85, 90); B+ for [80, 85); B
for [75, 80); B− for [70, 75); C + for [65, 70); C for [60, 65); C − for [50, 60); F for [0, 50);

UTD & Online Resources

• UT-Dallas Student Organization: Energy Association, contact https://www.eautdallas.org.
• Linkedin Group called “Managing Energy: Risk, Investment, Technology ( MERIT )” is at https://www.
linkedin.com/groups/8219265. You are welcome to join the group and meet the alumni of the course.
• Practice Lecture Series: We expect to host 1-2 lectures on campus. They will be on Energy Sector and be
given by practitioners from Dallas area companies. Lecture dates will be announced later on the course
web site.
• Relevant UTDallas Centers: International Center for Decision and Risk Analysis (ICDRiA) performs in-
terdisciplinary research and develops cooperation in risk management and decision-making by exchang-
ing knowledge and experience among academia, industry, and public agencies. For more info: http:
//som.utdallas.edu/icdria. Also see http://mgmt.utdallas.edu/c4isn for Center for Intelligent Supply
Networks (C4ISN).
• E-Access to Journals via UTD Library: Library electronically subscribes to many journals such as Harvard
Business Review, Management Science, which are of interest. To access such a journal go to the UTD Library
web page. Click on “E-Journals”. You will see an alphabetical list of journals. Click on ”H” for ”H”arvard
Business Review. You will see that HBR is listed 15-20 from the top among the journals starting with letter
”H”. Click on HBR link, you will be transfered to EBSCO web site which keeps the journal. To access from
a non-UTD computer, you need UTD ID and password. Please respect the copyright laws.
• Career Center: SOM Career Center http://som.utdallas.edu/somResources/somCareerCenter provides
the following services: Career Counseling, Resume Assistance, Interview Assistance, Job Search Assistance,
Career Resource Library, Web Resume Database, On Campus Recruiting, Active Internship Program.

The Rest
More details on topics in each MERIT module, list of readings for each topic and a tentative course schedule is
provided to students on the first day of the course.