Blackout in America s3

The Case of the Slippery Slope:

Black Gold in Paradise

Introduction

Gasoline and home heating oil prices skyrocket. The President is forced for the first time in the history of our country to tap the Nation’s strategic petroleum reserve (stored crude oil in the event of war). This sudden supply of oil into the market stabilizes prices in the short-term, but a continuous threat of rampant oil price increases threatens America’s economic prosperity. The fact is we import 60% of our oil from foreign suppliers (OPEC mainly), with the remainder coming from established oil production fields in the states, offshore on the Pacific coast, and offshore in the Gulf of Mexico. These areas are at full production, and new sources must be found to meet our future consumption demands. The President and Congress are working together to allow for the exploration and development of newly discovered oil reserves in two environmentally sensitive places.

The first, a billion barrel oil reserve offshore south Florida (near the Florida Keys).

The second, a billion barrel reserve recently found in the Artic National Wildlife Reserve (ANWR) in Alaska – also offshore.

The government will allow drilling in only one of these areas. Your group is charged with presenting a comprehensive plan to develop and produce one of these oil reserves. The one "best" proposal will be selected and awarded the proprietary oil lease. You have 11 business days to conduct your research, prepare, and present your proposal to the President’s representatives.

Links to more information are included below under the heading "Resources."

Learning Vignette -- The Case of the Slippery Slope: Black Gold in Paradise

"OIL SHORTAGES! America on the Brink of Energy Disaster" are the leading headlines in newspapers around the nation this morning. "Interesting," you think, "just as your group begins discussions on the developing oil shortage in the United States – and the new opportunity for offshore oil drilling in previously banned areas of the country."

As you meet in a ‘round table discussion’ with a room full of entrepreneurs and business executives, you are given a summary of recent events, which has led the President of the United States to declare the opening of several unexplored areas to potential oil exploration and production.

Mr. Payne Hall, a high-ranking representative from the U.S. Department of Energy, has been sent over to initiate discussions with groups of entrepreneurs.

"First of all, thanks for assembling your team and attending this briefing today. I am here to provide you with all the objectives and details of this new oil exploration – the potential profits to your companies, the drawbacks, the requirements for submitting proposals, and the timelines…and believe me, we are ‘fast-tracking’ this process."

Mr. Hall sits down and pulls out his briefcase stuffed with papers, and slaps it on the edge of the table. It falls to the floor, and he scrambles to gather the important looking documents. "Please excuse me, I’ll have this together in a minute."

As Payne Hall gets situated and prepares to begin his discussion, you look around the room, and wonder to yourself, "Who will win the big contract? What kinds of talents do these various teams bring to the table?" As you ponder your own questions, you realize that Mr. Hall has gotten well underway in describing the bidding process to explore for and produce a huge amount of oil.

"This decision to dig for oil has come with lots of political fireworks from many groups around the country," said Mr. Hall as he began pacing the room. "We feel that we have a very short window of opportunity here to establish this drilling operation, so we have set the timeframe for proposals to be submitted to 12 working days." He goes on, "Now listen carefully to the requirements. Your team must submit a proposal outlining your plan for one of two site in the U.S."

"The first site is a One billion barrel newly discovered reserve about 15 miles off the South Florida coast in 3000 feet of water – down near Key West..."

He is abruptly interrupted by one of the invited guests sitting at the far end of table.

"What!" rumbled Mr. D. M. Crats from across the room, "The South Florida coast, you must be nuts! The environment is delicate and tourism dollars are much too important for oil production in that area…"

Payne Hall reasserted his position in the meeting, "It’s a federal decision, but I admit, they are not happy with it. Now, if you don’t mind, let me get on with it." He points to a national map of the United States hanging on the far wall.

"The second site is also a One billion barrel newly discovered reserve about 15 miles of the coast of Alaska in 3000 feet of water, in the Artic National Wildlife Reserve."

Again, Mr. Hall is interrupted to an experlative echoing from the far side of the room. Dr. E. X. Valdez clamors to his feet, "Alaska! You can’t expand drilling in Alaska. The environment and fishing economy is too fragile…"

Mr. P. Hall gives the doctor a nod and moves back to the podium, "These are the only two sites available, and the President and Congress will authorize only one of the sites to be awarded for drilling. All indications are that they both contain the same amount of oil in each reserve – about a billion barrels."

Another ‘gasp’, this time from Miss Whoopie Bird, who is sitting near Mr. Payne Hall. She stands up and circles the table, "The President must be out of his mind, both of these sites are extremely environmentally sensitive, and the least little spill will enrage the people living near each area. Whether it is a little oil on the beaches of Florida or a few birds and otters in Alaska, we’ll get ripped to shreds! Just remember that oil spill disaster a few years ago."

Mr. Righty Wings points at Miss Whoopie Bird, matter of factly states, "The real question here is not about a little oil spill and the public’s reaction, but rather, it is about finding the energy our country so desperately needs – and keeping the jobs to produce this oil in the United States. This is about our economy!"

"Relax, just relax," exclaims Mr. Payne Hall. The federal government will provide some help with these issues. The most important thing though, is that your teams submit a business plan for this drilling operation in 12 working days. The plan, like every good business plan, must include all aspects of potential income, expenses, political outlook, risks, capital costs, environmental concerns, safety issues, etc…"

"We are in the process of setting up a website for each of you to access that gives a lot more background information on each of the areas I have mentioned. I suggest you search each of these areas as you work through building your business plan. We will make available experts, which you can gain access to though email."

Samantha Clandestine - Sam, as she has been affectionately called since childhood takes her turn, "So, let me get this straight. Each team can only bid on only one of the sites. And whatever project and presentation you deem the best, will be awarded the sole contract?"

"That is exactly correct Sam!" says Mr. P. Hall. "Just follow the guidelines on the website we have set up for you –which better explain the guidelines, and MAY THE BEST TEAM WIN! I look forward to your presentations in three weeks. Good Luck!"

"If there are no other questions, the meeting is adjourned. Gather your teams and get started on your proposals!" concludes Mr. Payne Hall. He packs up his briefcase, and walks out of the meeting hall. A buzz of chatter erupts in the room, as you quickly head for the door yourself.

Resources

Online Experts and Their Roles in the Project

Mr. Jim Oldfield, Exploration Supervisor, Chevron Oil Company

Mr. John Karpa, III, Senior Staff Geologist

Mr. Harv Denaclara, Oil Field Manager, Schlumberger

Mr. Todd Meaux, Engineer, Oil Phase

Mr. Kirk Trujillo, Seismologist Manager, Schlumberger

Dr. Mark Cantrell, Senior Engineer, Material Sciences, Lockheed Martin

Ms. Barb Carleton, Finance/Geologist, Deepwater Exploration, Chevron U. S. A.

Mr. Rick Eisenberg, Geologist, Chevron, U. S. A.

Mr. Steve Smith, Subsurface Team Leader - Deepwater Producing Operations, Chevron, U. S. A.

High School Discussion Forum

Go to this discussion forum page to interact with others who are working on your case. Do you have similar ideas? Do they know something that you need to know? This is where you go to find out!

General Resources

Here are some Power Point Slide Shows that will help "orient" you to the oil business!

Maps Related to Oil in Alaska and Florida

Oil Industry Beginnings

Oil and Gas Production Process

Genesis Project

Guiding Questions

Why is the president and congress willing to open sensitive areas of the United States to oil exploration and production?

What will be the potential impacts of opening up these areas to oil exploration and production?

What are the biggest "pros" and the biggest "cons" to this exploration project (in all areas of concern)?

How can a well-conceived plan of action get the project approved? and the contract awarded?

What are projections concerning the economics of your proposal? Revenues and profits vs. loss?

What are the major factors (and limitations) to your team winning the contract to explore and produce the oil?

Products

Phase One-Where Do I Stand?

Complete the initial planning and research the fundamental areas that need addressing in you business plan.

- 2 pages, typed outline highlighting your focus. Include arguments for and against each pressing concern.

Due: After day 4 of the project.

Phase Two-Doing the Research

Clearly and succinctly describe each segment of your business plan.

- 3-4 page essay.

Due: After day 8 of the project.

Phase Three-Taking it Public!

Submit a well-documented and informed business plan (capstone project). The oral presentation to the committee should be multi-media oriented, creative, informative, and professionally delivered. (8-12 minutes).

Due: The final day

This case was developed by Jeffrey Burgoyne, EdD and was the case used for his dissertation. It can be used as the framework for other similar situations.