Plugging In

In addition to running her own company, Lazenby has a national advocacy role in the oil and gas industry, serving as Board Chair of the Independent Petroleum Association of America. Often the only woman in the room, she promotes understanding about industry concerns, including taxation, accessibility and regulation.

From the Fall 2012 edition of Vanderbilt Business

plugin-400A photograph of a smiling young man standing beside a gas pump at a Spur Gas station in Henderson, Ky., sits in the offices of Gigi Lazenby, BA’67, MBA’73. The year was 1931 and the young man—her father, Paul Banks Jr.—would eventually work his way to President of that same company, Spur Distributing.

Years later, in 1988, Lazenby would found her own oil and gas production company, Bretagne LLC. A second photograph reminds her why she keeps going when prices sag and equipment breaks. In that photo, 40 oil field workers—blue-collar guys in overalls living off the sweat of their brow—look happily into the camera at lunchtime. “Without Bretagne, they wouldn’t have a job,” she says. “This is why I keep going.”

In addition to running her own company, Lazenby has a national advocacy role in the oil and gas industry, serving as Board Chair of the Independent Petroleum Association of America. Often the only woman in the room, she promotes understanding about industry concerns, including taxation, accessibility and regulation.

“My job is to help lead the organization so that we explain ourselves to the larger community and to Congress and presidential candidates in a way that helps them understand the importance of the industry,” Lazenby says. Policymakers, she explains, don’t always fully comprehend the risky nature of the business, like the fact that most exploration doesn’t lead to discovery.

The energy business is not for the faint of heart, as Lazenby and many other Owen graduates who’ve gravitated to the industry can testify. Cyclical by nature, it is filled with controversies, challenges and setbacks. Yet energy is also a dynamic and growing sector full of opportunities for the next generation of leaders, and Vanderbilt is a part of that—from the brain trust of students who formed the thriving Owen Energy Club to an impressive cadre of Vanderbilt alumni and friends who are leaders in the field.

Unlocking Reserves with New Technologies

Contributing to a domestic energy business boom are new technologies for gas drilling that have unlocked untapped gas reserves, including so-called “tight gas,” which is difficult to access because of the geology surrounding the deposit. The increase in production, jobs and profits has been accompanied by some controversy about pollution and public health, particularly in regards to hydraulic fracturing, or fracking. The process involves drilling a deep vertical well, followed by a horizontal well, and next injecting large volumes of water, sand and chemical gels into the ground to help break the rock apart and release the gas.

Gigi Lazenby examines a traveling valve for a down-hole pump system with Bretagne employees Eric Spencer (left) and Larry Oliver.
Gigi Lazenby examines a traveling valve for a down-hole pump system with Bretagne employees Eric Spencer (left) and Larry Oliver.

New technologies like this one are being used to unlock long dormant reserves across large swaths of the country, from the Marcellus shale covering parts of New York, Pennsylvania, Ohio and West Virginia to the Barnett shale in north Texas to the Bakken shale in North Dakota.

The current boom is creating new jobs and will ultimately lessen the United States’ dependence on foreign crude imports, says Tim Perry, MBA’81, Managing Director for Credit Suisse in Houston. The outlook for the energy industry in North America is “very bright,” he says, adding that North Dakota is a case study in how recent technology innovations can boost growth and lower unemployment.

“The Bakken reservoir is an old reservoir that many of us in the energy business have known about for 30 years, but it was considered too expensive to drill, and now it’s not,” Perry says. “As a result, there’s a huge amount of drilling going on there now and, with that, a substantial amount of job creation.”

Martin Craighead, IEMBA’98, agrees that the energy market has been permanently changed by technological innovation. “The reservoirs that our industry targets today are more challenging, the environments are harsher, and the technology required to produce oil and natural gas is increasingly more complex,” he says. “The term ‘unconventional reservoirs,’ specifically with regard to shale development, seems to be on the tip of nearly every tongue in the energy industry. The so-called ‘shale gale’ hit the U.S. about five years ago today. The combination of horizontal drilling and hydraulic fracturing technology has enabled operators to produce wells more economically, particularly in the U.S. and Canada. Now this revolution is spreading to China, Argentina and Europe. Even Saudi Arabia plans to exploit both shale gas and tight gas eventually.”


Craighead adds, “While the geology of these reservoirs is lower risk than traditional wildcatting, say in an offshore environment, many of the shale plays are difficult to reach—often lying more than a mile underground—and even more difficult to produce. Hydraulic fracturing is simply a method of stimulating the reservoir to enhance oil and gas production.”

Craighead, who grew up in Pittsburgh near some of the world’s largest gas reservoirs, in 2012 became President and CEO of Baker Hughes, a leading supplier of oil field services, products, technology and systems to the oil and gas industry. Baker Hughes allocates nearly 3 percent of revenue toward research and development annually.

“We spend about $400 to $500 million annually on R&D, and our facilities are some of the best in the world,” he says. “When Baker Hughes goes on campus to recruit, we invite students to our research centers around the world and show them what we’re doing. Our ability to attract brilliant young minds to our industry has never been greater because helping the world find and produce the energy it needs is a very noble cause, and people want to be a part of that—maybe now more than ever.”

Craighead was a self-described “expat” living in Venezuela when he enrolled in Vanderbilt’s short-lived but visionary International Executive MBA program in Miami, flying in every third weekend to take classes. “I didn’t appreciate it as much then but it had a real international bias to it,” he says. “For the energy sector, a key criterion for success is having global-minded executives.” Last year Vanderbilt launched a successor program, the Americas MBA for Executives, which also has an international focus.

Perry also took a nontraditional road to Vanderbilt and the energy business, enrolling in the MBA program immediately after receiving a degree in finance from the University of Arkansas. When he left Owen in 1981, the U.S. economy in general was sluggish, but Texas was booming. While many of his fellow commercial banking aspirants gravitated to New York, he headed for Texas, to smaller but fast-growing banking opportunities.

“It wasn’t planned out when I was at Owen, as happens in most careers,” Perry says. “I gravitated from general corporate banking into energy corporate banking and from there into energy investment banking,” where he’s been for two decades. He is one of two energy heads for Credit Suisse, heading up operations in North and South America.

Making Connections through Owen

Jeff Olmstead, BE’99, MBA’06, for a long time resisted the call of oil and gas that was in his blood. Last year, however, he took Dallas-based Mid-Con Energy public as its President and Chief Financial Officer.
Olmstead’s father, Mid-Con CEO Randy Olmstead, got into the oil business in the early 1980s, working as an independent CPA but managing about 15 rotary rigs on the side. His son grew up helping with grunt work in the summers, building fences and painting alongside the guys in the field. “Having worked in the hot sun and watched my dad’s fortunes go up and down, I wanted to do something different,” Olmstead remembers.

The younger Olmstead majored in engineering at Vanderbilt and put that degree to work for several years in telecommunications before getting interested in the finance side of the energy business. He returned to Nashville for his MBA and then went to work for Bank of Texas, where he was an oil and gas lender. One of his customers, Primexx Energy Partners LLC, hired him as Chief Financial Officer in 2010. It is a family-owned company but many times bigger than the company his father began.


“I had intended to make a career there (at Primexx) but by that time Mid-Con, as it neared maturity, had entered its first round of private equity funding. Having the opportunity to work on an IPO with your dad is pretty unique and special,” Olmstead says. Going public was quite a ride, he admits, and there were parts of the process “I’d be happy never to do again.” On the upside, he says, a smaller company such as Mid-Con has the opportunity to make meaningful smaller acquisitions and even delve into some innovative research and development opportunities.

For example, the company has formed a partnership with researchers at the University of Oklahoma who have developed a surfactant—a surface active agent that makes it easier for water to interact with oil—to use in individual oil wells to increase production. The technology works, Olmstead says, but is not yet economically viable. Currently most of Mid-Con’s properties produce oil using a secondary method called water-flooding—injecting water in oil and gas wells and filling up the space voided by previous production to repressurize the reservoir. The process is not new or unique, he says, and the time from acquisition to production can take several years.

Representing a new generation of industry leaders, Tracey Gilliland, an MBA candidate for 2013, approached Olmstead when he visited Owen and asked him if he would consider hiring an intern for the summer. He accepted, and she soon was plunged into assignments that ranged from preparing investor relations reports to writing press releases to putting together an evaluation of a potential acquisition in the wake of the public offering.

The internship gave her renewed appreciation for her core curriculum at Owen. “My boss asked me to do a regression analysis and all I could think was, ‘Thank God for Bruce Cooil and statistics.’”

Like Olmstead, Gilliland initially resisted joining her family’s energy business, planning a career in government after graduation from the University of Texas at Austin. She spent two summers working for the U.S. Department of Homeland Security in Washington, D.C., before being pressed into service at her family’s power plant development company, Federal Power Company LLC. After a year, she helped work through the company’s sale to Australian-based Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Gilliland then spent the next three years working for Macquarie. Her decision to go back to school for her MBA “was about me taking control of my career,” she says.

She chose to pursue her MBA at Owen rather than a Texas school because, she explains, “at Vanderbilt I would have to choose to stay in energy.” Her choice seems clear now. She’s vice president of the Energy Club and in that role helped plan Owen’s first Energy Trek to Houston, along with Peter Veruki, Director of Corporate Relations, and Sylvia Boyd, Assistant Director of Employer Relations. The trip was part of a targeted effort to link the large Vanderbilt energy alumni network in Texas with current Owen students. The first stop was Gilliland’s former employer, Macquarie Group. The student group also visited Baker Hughes, JPMorgan Chase, Exxon Mobil and Credit Suisse.

The Right Kinds of Energy Leaders

Exxon Mobil has long been a pipeline for Vanderbilt MBA graduates, and there are numerous connections between the school and the oil and gas company. In fact, Mary Humphreys, daughter of Exxon Mobil’s Senior Vice President and Principal Financial Officer Donald Humphreys, is an Owen student on track for graduation in 2013.

Donald Humphreys has been with Exxon Mobil for 36 years and relishes being part of an industry that produces something people need. “It’s an industry that’s not always loved, but there’s a lot I can help people understand,” he says of his regular interaction with business students, including those at Vanderbilt.

People often are surprised by the analytical nature of the oil and gas business, he says. “We have a lot of MBAs at Exxon Mobil, but a lot of the MBAs have engineering, science, business and financial backgrounds,” he explains. As the energy sector’s workforce ages, Exxon Mobil and other companies, large and small, will be seeking out a new generation of leaders.

While he’s weathered some definite highs and lows during his long career, Humphreys has never seen a period as dynamic as the current one. Technology innovation has been a huge factor, but he also credits the industry consolidation that took place in leaner times for increasing efficiencies.

He predicts increased domestic energy production will have a continued positive impact on manufacturing and job growth. A next focus for energy companies, he says, will be advocating for “reasonable regulation” to protect jobs and balance of trade.

Perry agrees. “We literally could become energy-independent in this country, given less government regulation,” he says.

Meanwhile Lazenby is among those knocking on doors in Washington on that score. The industry has a responsibility to have a place at the table, she argues. “You have to be an advocate, you have to be a manager, you have to be able to explain what you do, have the facts, be civil,” she says. “You have to understand world finance and economics. That’s one of the exciting things about this industry—that you’re not insular. You have to understand what’s happening in the world, in politics, in regulation, in government. You can’t just plunk your oil well down and calculate your numbers.”

Her workers operate “stripper wells,” which produce less than 15 barrels a day by injecting nitrogen into the wells, letting it soak with the oil and then “puff” it back out. It’s slow going, but as much as 18 percent of the oil in the United States is produced in such a fashion, she says, adding that she sometimes begins presentations by jokingly referring to herself as “queen of the strippers.”

While a technological background would be beneficial to the next generation of industry leaders, Lazenby, Humphreys and Craighead say that the ability to think critically and strategically is the most beneficial. Perry notes that the energy business currently is experiencing “a real shortage of people” due to recent growth, but some of this, according to Craighead, can be attributed to the fact that the industry is looking for just the right kinds of leaders.

“There’s going to be a need going forward to develop leaders who can think critically and who are sensitive to more issues than just an income statement,” Craighead says. “We want leaders who are willing to do the right thing and who are open and transparent with the communities in which they live and work.”

Public scrutiny of the oil and gas industry has only heightened since the BP oil spill in the Gulf of Mexico in 2010, which exposed the dangers of deep-water drilling. (For more about the spill and other energy controversies, see the sidebar.)

The nature of the energy business is that there’s always going to be constant change and the potential for surprise, both of which Olmstead likes. “Most exciting is what some of us like to call the stumble factor,” he says. “Many times, you might be drilling a well and happen to drill through something you didn’t know was there and you make a new discovery. It can happen anytime, anyplace.” He chuckles and adds, “You try to keep it quiet so you can lease everything around it, but suddenly 10 of your best friend competitors are trying to beat you to it.” That, too, is the nature of the business.

Olmstead advises new graduates to be willing to start at the bottom. “There are so many things you would miss otherwise,” he says. It’s important as well to understand and embrace the risks. “There are plenty of booms and busts, and lots of very good business people get caught on the wrong side of a cycle, and it will happen again. It always does.”

Starting at the bottom is a humble lesson that Lazenby will never forget, thanks to her father. “You can always work—he always told us that,” she says. “You can find something. You should never stop trying.”

His persistence and dedication are characteristics that Lazenby has taken to heart in her own career, and one doesn’t have to look very hard to recognize the same traits in her fellow alumni in the energy business. Bust or boom, they will tell you that it’s important to carry on with what you believe in because you never know when you might hit pay dirt.