December 2019 /// Vol 204 No. 12

Features

What industry leaders expect for 2020

As 2019 began, our editorial advisors, like many of us in the industry, had hopes for an improved market during the course of the year. Unfortunately, that has not come to pass, and 2019 will be remembered as the year that the U.S. shale revolution sputtered and leveled out. The confinement of the oil price in the low-to-high $50s for most of second-half 2019, for WTI crude, is remarkable. This also will be remembered as the year that OPEC+ frequently had to defer to the U.S., as the new swing producer, to help balance supply with demand. And while the “quieting” of U.S. shale should continue through most of 2020, there are some brighter spots in the global E&P market. There is ample evidence that offshore activity is slowly, but surely, improving, particularly outside North America. And conventional oil and gas, outside the U.S. and Canada, are showing some life, due in part to increased spending and activity by NOCs, particularly in the Middle East. Meanwhile, the six most senior members of World Oil’s Editorial Advisory Board again provide their thoughts on this year’s market and what might be in store for 2020. In the process, they examine a wide range of industry trends, including the pillars of success; the unique, continuous transition of the UKCS; hydrogen’s role in the energy mix; getting the message right to the public; going back to the top of the slide; and entrepreneurship helping to foster good energy policy.

Kurt Abraham, World Oil

The pillars of success

DOUGLAS N. VALLEAU, President, Strategia Innovation and Technology Advisors, LLC; Senior V.P., Business Development, Piri Technologies LLC; and Chairman, World Oil Editorial Advisory Board

The pillars of a healthy business are Growth, Profitability, Sustainability and Safety. Every company seeks to maximize all four pillars. The devil is in the details.

Growth in unconventional plays comes from finding new resources and converting these into producible reserves. But finding new resources is not really a problem; any source rock is a potential target, provided it is mature, within an economically drillable depth, has sufficient brittle mineralogy to be completed, and production can be delivered to market.

So, the focus on growth in most companies today is increasing the recovery efficiency of these challenged resources. Current tight oil recovery is a pitiful 3% to 10%, and from shale gas, it’s a measly 10% to 30%. At the 2019 Unconventional Resource Technology Conference in Denver, Colo., it was evident that increasing recovery from tight oil and shale gas is of keen interest. Papers presented included case studies of enhanced recovery field pilots using gas-injection (both CO2 and field-gas), huff-and-puff production strategy, and use of nano-surfactants and friction reducers to improve the recovery of these challenging plays. Early encouragement from applying such methods in the Eagle Ford has propelled some operators to test these methods in other plays.

Industry-government partnerships are ​also in the works. In July 2019, DOE announced a $40-million investment in enhanced recovery research. While $30 million of this DOE funding goes to conventional EOR, $10 million are directed to an unconventional field-pilot test of foam-assisted rich-gas injection in the Bakken formation.

Profitability remains a concern. Several investment analysts have stated that unconventional resource plays may not be profitable, as spending exceeds income generation. The U.S. Energy Information Administration recently looked at 43 publicly traded oil and gas companies in the unconventional space, finding most had negative free cash flows. Much of this is legacy from 2014 to 2017, when commodity prices were in the toilet.

 Today, prices have stabilized somewhat. The U.S. now produces over 12 MMbpd, becoming the world’s largest oil producer. But this production comes at a cost—increased spending, to maintain and grow production volumes that are declining rapidly. Compounding this, many companies have already drilled their top-tier acreage and now have to access second-tier or even third-tier acreage.

Some analysts suggest that the higher commodity prices we see today, along with operational efficiency gains from applying lean manufacturing methods, are just not enough to overcome negative cash flow. However, a more optimistic view is that the negative cash flow seen during this unprecedented growth in production is simply a result of companies’ leaning-forward on investment to increase production volumes. These volumes will turn cash flow-positive in the future, as recovery and operability improve. Indeed, seven of the 43 companies tracked by EIA have already turned positive.

Sustainability may be the key. The production volumes that have propelled the U.S. to energy independence will be challenging to maintain, as the quality of second- and third-tier acreage is assessed. While improving recovery is critically important, operability of these assets will need to be improved substantially. Technology will lead this charge, with a focus on surface facility integrity and reliability. The rise of artificial intelligence and data analytics will allow operators to predict critical equipment failure and introduce mitigation before a failure event.

Ultimately, these efforts will have a profound positive impact on free cash flow. Capturing flare gas to power electrical micro-grids will reduce facility costs, reduce greenhouse gas emissions, and improve a company’s social presence and license to operate.

Safety is everyone’s concern. Our industry has made great strides in health, safety, and environmental stewardship, as behavioral-based awareness has taken hold. Technology also has played a key role in HSE improvements, with sensors and data analytics to help identify root-cause processes and behaviors.

However, despite technological advances, accidents still happen, either from equipment malfunction or human error. Malfunction gets back to operability, reliability and integrity of the equipment, for which predictive analytics have great promise to mitigate.

Human error is quite another conundrum. Behavior-based awareness and employees looking out for each other are very successful strategies. Each company’s culture ultimately drives this behavior. If the CEO, COO and all the management embrace HSE as a cornerstone of daily operation, with positive reinforcement for employees and contractors, then incidents should drop precipitously.

Pillars of success. Growth, Profitability, Sustainability and Safety form the fundamentals for a successful company. The U.S. conventional and unconventional resource players have achieved phenomenal success in growing production volumes and propelling the U.S. to energy independence. Continued production growth will be challenging, as lesser- quality reservoir rock is accessed. Profitability will require better technology to unlock the rock and improve recovery.

Profitability is further linked to sustainable development, not only by recovering more than just 10% of the resource but by reducing operating costs. Growth, Profit and Sustainability are interwoven, glued together by Safety. Safety is critical to growing a company, creating profit, providing a sustainable future and enhancing environmental stewardship.

UK Continental Shelf in continuous transition

ALEXANDER G. KEMP, Professor of Petroleum Economics, University of Aberdeen, and Director, Aberdeen Centre for Research in Energy Economics and Finance

The UK Continental Shelf (UKCS) is a mature petroleum province, in continuous transition. The collapse in the oil price during the second half of 2014 precipitated a dramatic fall in capital investment, from around £12 billion in 2015 to around £5 billion in 2018, and just over that amount in 2019.

Operational stats. Operating costs also have been reduced substantially, as cash flows declined. But actually, production has increased, from 1.57 MMboed in 2015 to around 1.74 MMboed recently. Total employment supported by the industry fell from nearly 464,000 in 2014 to a low of 260,000 in 2018, with an estimated recovery to 269,000 in 2019.

The net effect of the above dramatic changes is that unit costs per barrel are now more competitive, but still higher than in some other petroleum provinces where field sizes are much larger. The average new discovery size on the UKCS is now little more than 20 MMboe, with the most likely size being less. The exploration effort also has been very low, compared to the 1990s and first decade of this century.

Changing cast of players. Another notable feature has been the decisions of some of the majors to exit the UKCS or to sell off mature assets. The result has been a substantial growth in the number of new entrants, often backed by private equity finance. Assets could be acquired at advantageous values, when the oil price collapsed. Given their substantial share of current production, there is much interest in the longer-term plans of these companies. Normally, private equity companies have exit strategies, when they make investments. The indications, to date, are that the new entrants have serious plans to enhance recovery and to undertake further investments, but the possibility exists that in due course, public share offerings will be made.

The UK government has responded to the changed investment environment. To facilitate the sale and purchase of mature assets, a scheme of permitting the transfer of tax history from seller to buyer, as part of an asset sale contract, has been in operation since November 2018. The scheme enables buyers to obtain fuller tax relief for decommissioning costs. These can be very large on mature fields and could discourage new entrants from acquiring the assets.

Climate/emission factors. The industry on the UKCS also has had to respond to the climate change debate. The UK government has made a legal commitment to procure net zero emissions by 2050. The Scottish government has a corresponding target date of 2045. On the UKCS, CO2 emissions have been declining for some years. In 2018, they amounted to 14.6 million tonnes, which equates to 3% of the total emissions in the UK. Most of the offshore emissions emanate from power generation (from diesel and natural gas) and from gas flaring. Currently, many studies are in progress, with the objective of supplying electric power from renewable sources to replace the use of diesel and gas. Examples are windfarms located near oil fields supplying electricity, with large batteries on the seabed supplying back-up power.

The commitment of the UK Government to obtain net zero emissions by 2050 also has resulted in renewed interest in CO2 capture and storage schemes. These have been studied for many years. The capture and injection costs into North Sea fields are very large, and several schemes have been cancelled because of the costs involved. The collapse in oil prices during 2014 made CO2 EOR schemes unattractive. The current renewed interest is based on obtaining attractive prices for the electricity generated from sources where the CO2 has been captured. Given the commitment of the UK government to net zero emissions, there is some hope that some financial help may be made available. But this may depend on the costs of capture, transportation and storage being reduced. This will require demonstration plants to procure the necessary “learning by doing,” which has happened in a spectacular way with offshore wind technology in the UK.

Other uncertainties face the offshore industry, due to the continuing Brexit debate. The North Sea industry currently complies with the EU Emissions Trading Scheme. This was designed to encourage companies to reduce their CO2 emissions or face the requirement to buy the related CO2 allowances. Following the banking crisis in 2007–2008, the price of these allowances fell to such low levels that they were ineffective in achieving their purpose. Recently, their value has been around €27 per tonne. There are indications that the price could become still higher, but there is much uncertainty about the position of the UK, post-Brexit. It is possible that the UK will continue to be part of the scheme or to instigate a similar one. In the meantime, companies in the North Sea can only make precautionary moves. This could include incorporating a shadow CO2 price in making investment decisions. A carbon tax would, of course, be an alternative instrument which the government could introduce in its pursuit of net-zero emissions.

Hydrogen can play a role in the energy transition

DR. D. NATHAN MEEHAN, President, Gaffney, Cline & Associates

In 2003, then-President George W. Bush announced an ambitious plan to encourage the use of hydrogen for powering vehicles and generating electricity. Doomed from the start, this effort’s progress has been slow, while $3 trillion of public investment have poured into renewable technologies.

Early acceptance of these technologies depended on government subsidies; however, wind, solar and battery technology costs have dropped 80% and are routinely competitive with new fossil fuel facilities for power generation. More money is spent on electricity than on oil and gas supply, and over half of all new electricity generation is from renewables. The pressure for “zero carbon” energy is growing with increasing shareholder resolutions, concern from the public, and pressure from financial institutions.

Hydrogen as an alternative. Hydrogen (H2) is used today to make ammonia for fertilizers, refining metals and methanol for plastics—and the CO2 emissions are simply vented, increasing GHG emissions. Hydrogen use is a good choice for zero emissions transportation, where it can refuel vehicles in comparable times to liquid-fuel vehicles and generate no local emissions.

European countries are considering H2 for all segments of the economy and have tested electrolysis techniques extensively. Hydrogen can be used for “hard to abate” energy-intensive industries, including iron and steel, and for specialty chemicals. New efforts for global H2 production focus on using fossil fuels, coupled with carbon capture.

Although biomass, coal and other hydrocarbon liquids can generate H2, natural gas can be converted to H2, using well-established technologies of steam-methane reforming (SMR) or autothermal reforming (ATR). Either method makes capture of CO2 simpler than other methane combustion applications, making it relatively easy to sequester. Methane also can be used to generate H2 via pyrolysis techniques, leading to solid carbon instead of CO2 as either carbon black or potentially graphene. Natural gas is abundant and relatively inexpensive; some discovered resources may outlast demand. Advances in electrolysis technology hold the potential to be price-competitive with natural gas.

Hydrogen can be a competitive source of low-carbon heating, if there is a developed gas grid and high seasonal loads. A project in northern England (H21) is attempting to convert more than 3.7 million homes, plus local industries, to H2, coupled with CO2 storage in the North Sea. Other major projects are underway in Europe and the U.S.

Where to start. The largest near-term use for H2 is for transportation. It is the preferred fuel for forklifts and other devices used indoors. Japanese automakers continue to develop excellent H2 vehicles, and hydrogen could be an excellent choice for zero-emissions vehicles (ZEV). Compared to electrical vehicles, H2 vehicles refill very quickly, have no moving parts, are easier to manufacture, have no heavy battery (increasing capacity), and have stable performance characteristics.

The lack of a hydrogen distribution infrastructure suggests that fleet vehicles may be the best starting point. While this may seem daunting, the infrastructure demands for widespread electric cars will also be staggering. To reach California’s aggressive goals for ZEVs would require doubling California’s electrical supply by 2030, and quadrupling it by 2050.

Hydrogen fuel cells to generate electricity are scalable and will have significant localized markets. In many places, solar and wind generate excess power when demand is low, which can be used for H2 generation that can be readily stored for peak shaving demands. It is an excellent choice for certain microgrid applications and offers a zero local emissions power-generating option.

Transporting hydrogen presents additional challenges. It is possible to blend hydrogen in natural gas lines, up to about 20% by volume (7% by energy content). Overseas transportation of large volumes of high-pressure hydrogen is challenging. While liquid hydrogen transportation is possible, conversion of hydrogen into relatively stable liquids with high hydrogen content, such as ammonia or methyl cyclohexane, offers a more economically attractive option. In one case, ammonia is produced from H2 and nitrogen, using the Haber-Bosch process. H2 is recovered at the destination. In the other case, toluene is combined with H2 to form methyl cyclohexane; recovered toluene can then be reused.

The economics of large-scale hydrogen use will continue to require governmental subsidies for some time, and numerous technical challenges remain. Hydrogen holds the potential to provide a new market for natural gas that will (coupled with CCUS) lower the carbon intensity of our industry.

It’s The Message, The Message, The Message …

ROBERT E. “BOB” WARREN, President, Baclenna, Inc.

“What we’ve got here is failure to communicate” – The Warden, Cool Hand Luke

“This is not a partisan debate; it is a human one. Clean air and water, and a livable climate are inalienable human rights. And solving this crisis is not a question of politics. It is our moral obligation.”Leonardo DiCaprio

“People demand freedom of speech as a compensation for the freedom of thought, which they seldom use.”Søren Kierkegaard

The classic line from Cool Hand Luke obviously was not relevant to the fossil fuel equation in 1967, but it should have been, and most certainly is now. It has been said by a cross-section of very learned people, that the fossil fuel industry is losing the message battle in the court of public opinion. The raging debate for the high ground of authority among activists, pandering politicians, media darlings, academics (include impressionable students), and pampered celebrities over energy produced from oil and gas vs. alternative energy sources has become an epic struggle for the soul of this nation.

The struggle. There are countless websites, non-profits, and very well-funded organizations, whose only mission is to radically decrease fossil fuel usage. Witness the influence through contra-legislation, lawsuits, and protests, not to mention the steady 24/7 drumbeat that the resulting carbon emissions are slowly but surely strangling life on planet Earth. According to some of our more progressive elected officials in the nation’s capital, we are doomed to extinction by 2035, if we don’t redesign and redirect life as we know it—regardless of cost, whatever it takes. Climate change is about to extinguish our existence, and only The Green New Deal can save us. Forget that without the contribution of this remarkable resource in World War I and World War II, people in the Allied countries might all be speaking German today.

Still, we need to accept that we are surely doomed—the policies of this nation must be turned against an industry that has sustained us and underscored a way of life unprecedented in civilization. No credit is extended for the continuing reduction in GHG emissions, nor the massive investment in technology and innovation that has driven a revolution in energy development. But that progress has only flamed the wrath of the “Keep it in the Ground” Movement: How dare you make the United States energy sufficient…and how dare you make the United States energy-dominant while exporting incremental energy production. How dare you.

Benefits ignored. But the gift of abundant, clean-burning natural gas as a fuel and energy provider has been lost in the rhetoric of debate. While it is well-documented that fossil fuels produce a substantially greater energy output with an enormously smaller footprint than wind and solar, consider our neighbors in California who champion the anti-fossil fuel lecture, ban the use of natural gas in new home construction, and proudly mandate zero emissions by 2045—then have us watch as electrical power is curtailed to millions of citizens (including their electric vehicles), due to wildfires. If that’s not enough, the electrical grid is in shambles, due to a tightly regulated system with a bankrupt power utility. “Visionary leadership” at work?

But wait—there’s more. New York’s governor, who blocked hydraulic fracturing in upstate New York and the construction of natural gas pipelines from Pennsylvania into New York, also vetoed pipeline construction under New York Harbor—that would have delivered natural gas to Long Island. When it’s cold and the lights go out, there will, no doubt, be ample applause for more “visionary leadership.”

Consider the case for natural gas: abundant, clean-burning, transportable, exportable, and very cost-effective. From production here, north of 100 Bcfgd, and offering the lead solution to an increasing energy requirement around the globe, why do the opponents of fossil fuels demand the impossible perfect rather than the achievable good?

The end game. But that’s not the real goal of the opposition. The real goal is to cripple and then shut down an industry in the interest of a utopian existence. Most certainly, the only acceptable conclusion for them is … “Keep it in the Ground,” regardless of the destruction to your, and my, way of life. Can the problem just be … the message?

The sad truth is that we have become a society of comfortable, complacent people who—for the most part—have never experienced the absence of products and energy from abundant fossil fuels. There’s a qualifier in much of the world beyond our borders, and it’s the word, without. We have, but there is no comparison for the billion souls who exist without electricity, fuel, cell phones, fertilizer, petrochemicals, plastics, makeup and medicine. The world in which we live has no relativity to that existence—and we wouldn’t know what we’d lost until it was gone.

So, here’s a challenge to those who call for the dismantling of the industry that provides essential benefit, including our national security. After you have fought for this country, or served in a foreign hardship mission, or worked in the oil and gas sector in regions of the world where local citizens barely exist without what we have, THEN you may qualify to counsel the rest of us on the shortcomings of the fossil fuel story.

And as you set your thermostat tonight before turning off the lights, say “thank you” to the hundreds of thousands of men and women working in remote operations, who keep the lights burning and the wheels turning for the rest of us. The Warden was wrong—what we have got here is failure to appreciate.

When I get to the bottom, I go back to the top of the slide….

DOUGLAS C. NESTER, Co-Founder and Chief Operating Officer, Compadre Resources, LLC

The Beatles song, “Helter Skelter,” provides a good reminder of the cyclical nature of our business. History has shown that when we get to the top of our business cycle, then stop and enjoy the ride that follows, we often forget about our ultimate return to the bottom and the need to once again start the difficult, torturous climb back to the top.

As we enter 2020, geopolitical and economic indicators suggest that our industry is nearing the bottom of the ride for operators focused on resource plays. While another version of the resource ride will certainly follow, I am interested to see who will emerge to face the challenges associated with the next climb. This editorial briefly touches on three of the key challenges and uncertainties facing operators, who are willing to undertake this effort.

Access to capital. A problem with the current ride is that many operators are unable to internally generate the income sufficient to drill replacement wells, in an attempt to out-run historical decline curves. As a result, some companies borrowed capital from investors in the form of high-yield debt. Unfortunately, the inability to satisfy debt commitments for reasons including commodity pricing, underperforming wells and high entry costs has resulted in over 33 producers having to file for bankruptcy protection by Sept. 30, 2019. As reported by Haynes and Boone, this surpasses the 28 bankruptcies that were filed in 2018.

S&P estimates that about $9 billion of North American debt is to mature this year, and another $137 billion will become due between 2020 and 2022. Producing the oil volumes necessary to service this debt at current pricing is a highly daunting task. As a result, capital-constrained operators will continue to suffer through 2020.

Companies wanting to begin the climb back to the top of the next ride will need to operate close to cash flow. To help drive down operating costs, the successful companies will embrace the use of A.I. technologies to allow their streamlined staff to monitor field performance in real time. They also will analyze the enormous levels of digital data collected during drilling, completion and production operations, to better determine the most effective go-forward procedures. Their access to capital will likely come from providers, who have reorganized with much lower risk tolerances, and who now require unbiased asset valuations that are derived from these emerging technologies.

Access to technology. While some of the A.I. technologies will be developed by major service providers, I expect many will come from entrepreneurs, who focus on providing specific solutions for the end-user. With companies such as Schlumberger taking a $12.7-billion North American impairment in the third quarter, and Halliburton announcing a layoff of 650 employees across Colorado, New Mexico, North Dakota and Wyoming, it will be a challenge for large service companies to compete with these smaller technology providers.

To offset the ongoing North American slowdown, service providers will need to rely on increased activity from their international divisions in 2020. While predicting increased cash flow from these divisions is considered normal practice, international civil unrest and unpredictable domestic trade and foreign relation policies will add significant risk to such projections for 2020.

Political changes. Globally, 2019 has become the year of mass street protests. In such major cities as Santiago, Hong Kong, Beirut, London and Baghdad, citizens have mobilized to express their displeasure with varying governmental policies. The staggering number of participants, and the duration of these gatherings, have impacted businesses and caught governments by surprise. If ongoing protests prove effective in changing governmental policies, we may see even more citizen protests and disruptions in oil-producing regions, where oil companies and service providers have ongoing operations.

In the U.S., our ability to accurately predict future market conditions is hampered by a polarized democracy, and an administration that is often impulsive and unpredictable in its policymaking. In addition, the upcoming 2020 elections involve candidates, whose platforms include immediate bans on fracing and oil and gas leasing on federal lands.

Helter Skelter. Webster defines Helter Skelter as “in undue haste, confusion, or disorder.” Perhaps this is a fair assessment of the future market conditions that will greet us, when we get to the bottom of this ride. No matter the outcome of 2020, there is little doubt that our industry will provide the ingenuity, perseverance and leaders needed for us to once again restart the climb back to the top of the slide.

Entrepreneurship promotes good governance and policy

ART J. SCHROEDER, JR., CEO, Energy Valley, Inc.

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors (Plato). Discussion on governance in the United States is rising, will peak higher, and is generating more decisiveness with respect to policies than usual for this four-year cycle.

Faulty thinking. A long-standing political practice has been to create “bogeymen” to scare voters, in an effort to rally support for “new and better” policies. This season, the bogeymen are giant corporations generating huge bottomlines, accountable only to shareholders and not the wider group of stakeholders; billionaires hoarding their implied ill-gotten gains; and even capitalism, itself. The fact that unemployment in the U.S. is at its lowest level in 50 years; billionaires like Bill Gates helped generate a new industry and millions of jobs while earning his fortune; and poverty rates continue to fall; seems to be ignored by some.

The new and better ideas are a bigger and stronger government to re-arrange and expand the rules, and to re-distribute the wealth. As a student of history and someone fortunate to have worked across the globe in some 50 countries, I have seen this before—think Venezuela. It doesn’t end well. The good news on the international front is that according to World Bank, the number of people living in poverty ($1.90/day) has plummeted from 94% in 1820, to 50% in 1990 to 11% today.

Despite this progress, as most nation-states across the planet have moved to more market-based, capitalistic economies, it still leaves 700 million people living in extreme poverty. Our industry can help address poverty by providing heat, light and mobility at an affordable price, given a proper framework in which to operate. This is where the reader comes into the equation. New business startups— entrepreneurship, particularly in oil and gas, can be transformational.

A better vision through entrepreneurship. The National Report on Early-stage Entrepreneurship, published by Kauffman Foundation in February 2019, shows that the rate of start-up new business has been increasing recently. In Texas, it has gone from 0.36% (360 out of every 100,000 adults became new entrepreneurs in an average month) in 2014 to 0.43% in 2018, good for third in the nation. Kauffman data show immigrant start-ups at 0.53%, virtually double the 0.27% for native-born Americans. Today, immigrants comprise nearly 30% of all new entrepreneurs, a substantial increase from 2007, at 24.6%.

It is hardly surprising that Texas ranks so high, with its large and vibrant immigrant population. Also, not surprising, men are double women at 0.41% and 0.24%, respectively. While women are half the rate of men, their participation has actually been one of the largest areas of increase (29.1% since 2007). Meanwhile, the rate for men has been essentially flat over the same period. Entrepreneurship is typically a joint project—one spouse with steady W-2 income and the other betting the farm.

The rate of new entrepreneurs was highest among Americans aged 45–54 (0.39%) and 55–64 (0.38%), and lowest among Americans aged 20–34 (0.24%). Older adults also represent a growing segment of the total entrepreneurial population: adults between the ages of 55 and 64 made up 26% of new entrepreneurs in 2017, a significant increase over the 19.1% that they represented in 2007 (and 15% in 1996). New entrepreneurs increased most among the groups with the two lowest levels of education, high school dropouts and high school graduates.

The U.S. Census Database showing the share of new firms as a percentage of total firms today hovers around 8%, much lower than the average “business birthrate” of 11% between 1980 and 2010. That’s a big concern, because new businesses are engines of innovation, job creation and economic growth.

It’s not easy, but there is help. Entrepreneurship is a contact, full-emersion activity. With many of the new policy ideas being floated at a national level, it will make it still harder says Joe Ricketts, founder of TD Ameritrade and author of The Harder You Work, the Luckier You Get. Start with trying to get a mortgage with self-employment income versus W-2. Then, layer-on taxes, fees, filings, insurance, regulations, supporting documentation, etc.

Fortunately, in Houston there is help. The startup ecosystem is gaining momentum, with the Rice Alliance for Technology and Entrepreneurship, under the leadership of Brad Burke, providing the roadmap. Launched in 2000, more than 2,450 start-ups have participated, raising more than $8 billion with 52,000 participants. Rice recently announced the creation of Ion, an initiative that will aggregate the region’s entrepreneurial, corporate and academic communities into collaborative spaces and programs. It will support businesses at all stages of the innovation lifecycle and provide resources for participation in the innovation economy. Station Houston, a leading technology accelerator, will oversee the public programming efforts. Another great resource is the Houston chapter of the 15,000-member The Indus Entrepreneurs (TiE) organization (houston.tie.org). Entrepreneurship really is the rising tide that lifts all boats—stay tuned!

The Authors ///

Kurt Abraham kurt.abraham@worldoil.com

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