Finding a B-School Niche

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University of Houston

Houston is home to the U.S. headquarters of oil giants BP (BP), ConocoPhillips (COP), and Royal Dutch Shell (RDSA), as well as hundreds of other smaller energy companies. But until 2001, when the University of Houston's Bauer College of Business launched the Global Energy Management Institute, there were no business school programs nearby that focused on the industry. "The energy industry is desperate for trained people," says Christine Resler, director of mergers, acquisitions, and new ventures at Smith International, and executive professor in the GEMI program. "They're fighting over each other for employees, so they are excited to have a program like this."

It's not only the oil companies competing for GEMI grads. Many students get jobs as commodities traders at investment banks such as Goldman Sachs (GS) and Morgan Stanley (MS) and garner salaries in the $50,000 to $60,000 range, considerably more than regular business students at Bauer, whose average starting salaries are about $43,000.

To be accepted into the program, students must have studied calculus, linear algebra, and trigonometry, and must have completed three upper-level science courses—pretty much what is required of engineering majors. That may be why there are only 31 juniors and seniors enrolled as energy business majors at Houston.

Already, the program is evolving to keep up with changes in the energy industry. Alternative fuel? Not a single course in the original curriculum dealt with that. Now administrators are rethinking their approach. "We have decided that any new electives or courses are going to emphasize energy alternatives and renewables," says Praveen Kumar, chair of the finance department. He predicts by the 2009-10 academic year the program will be able to offer a certificate in nonconventional energy. The first course, Carbon Trading, will start next spring.

The school has also brought in executives from Valero Energy (VLO), Marathon Oil (MRO), and Exxon Mobil (XOM), along with representatives from the National Renewable Energy Laboratory, to discuss what the future holds for the energy industry. "Ideally," Kumar says, "this is a niche that can become a real competitive advantage for us."

One of the reasons GEMI grads are so attractive to employers is that they are taught by retired energy executives. "There is a huge pool of executives in Houston who have retired young," Kumar says. "A lot of them want to teach and share their knowledge." So Kumar and his team tapped into this valuable pool of human capital and talked some into designing and teaching courses in the GEMI program. Some teach on an à la carte basis, others, like Stephen Arbogast, former treasurer at Exxon Mobil, teach fulltime. "This is a unique opportunity," Arbogast says. "We're looking at the energy industry in a way that no one else is."

Senior Mario Bejarano was a petroleum engineering major before switching into energy management. Bejarano, a native of Colombia, chose engineering because of his strong math skills, but while attending a conference at the Bauer School he was surprised to learn the energy management degree required the same math courses. "I thought it would be a good idea to combine my engineering background with business," he says. "I feel like I have a lot to offer a company."