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Local Motors: a model for oil and gas?

Friday, August 3, 2012

The opening speaker at the Intelligent Energy conference was a man who set up an open source car manufacturing facility in Arizona. Does he have a model for the oil and gas industry?

The opening speaker at the 2012 Society of Petroleum Engineers 'Intelligent Energy' conference was John B Rogers, president and CEO of Local Motors, a company based in Arizona which helps people design and build their own cars.

He was invited by conference co-chairs Derek Mathieson, President, Western Hemisphere Operations at Baker Hughes, and Edwin Verdonk, Vice President of Subsurface Expertise and Technology Deployment at Royal Dutch Shell.

Derek Mathieson told Digital Energy Journal that he first met Mr Rogers at a Baker Hughes conference for its 200 high potential employees, where he gave a talk on leadership.

'He blew everybody away,' Mr Mathieson said. 'A lot of the younger staff thought he was great.'

Mr Rogers' car manufacturing company, Local Motors, is unique in that all of its designs are put together by 30,000 contributors over the internet, rather than by company employees.

Could this be a model for the way the oil and gas industry develops its equipment?

Mr Rogers believes that 'atoms are the new bits' - or to put it another way, the most exciting frontier for industry is not the internet and data any more, but how that data is used to build and move physical items (such as cars, heavy machinery and oil).

'The browser cannot allow you to small, touch and taste things,' he said.

Mr Rogers is also sceptical of the idea that some things need centralised control for safety reasons, citing the Linux operating system, which is developed open source and extremely stable, as providing a counter argument.

Car manufacturers place tough restrictions on people fixing their own cars today, but at Local Motors everything is open, with wikis for how to fix everything.

Mr Rogers ended his talk by asking, 'someone is going to create a platform for information sharing (in the oil and gas industry). Could it be you?'

Local Motors

Mr Rogers got the idea for Local Motors following a posting as company commander for the US Army in Iraq in 2004, where 2 of his friends lost their lives.

'The region was primarily war torn over energy production,' he said.
'I decided to make a difference on the side of consumption.'

So he decided to start a car company in Phoenix, with funding of just $200,000.

Industrial engineers, modellers, designers and fabricators, amateur or professional, can collaborate online with their designs, and then build the cars themselves in Local Motors' factory.

There are over 100,000 projects currently under development.

People who build cars on Local Motors get a lot of attention. 'People say, the best and worst thing about it is that I have to plan an hour to talk to people about my vehicle when I go to the grocery store', Mr Rogers said.

The company was a winning entry submitted by Mr Rogers in Harvard University's annual business plan competition, as a way of harnessing the creativity of the world's underemployed car designers.

Mr Rogers had some knowledge of traditional vehicle manufacturing - his grandfather owned a motorcycle manufacturing company in the 1940s, which subsequently closed when faced with competition from the UK and Japan.

Mr Rogers thinks it is ridiculous when he hears car industry executives saying that the future of the car industry will be software running inside the car - he thinks it is new ways of actually building the cars.


The benefits of Local Motors are worth paying attention to.

The company put a new car design on the road for a $3m investment, a tiny fraction of what larger car companies spend developing their designs and production lines for a new model. It also got the car onto the market five times quicker than conventional car manufacturers do, Mr Rogers claims.

The company also developed a military vehicle for $350,000, which Mr Rogers personally handed over to Barack Obama in June 2011.

People working on the project have also seen many personal advantages - some engaged their children in the work. 'People say, I took my 7 year old and 11 year old, taught them process, it taught them pride in tools,' he said. 'We're giving people pride in making things.'

Motivation and steering

Motivating and directing 30,000 volunteers is somewhat different to motivating 30,000 company employees.

The trick is to understand that money is just one of people's primary motivations, Mr Rogers said. People also want to 'Learn, socialise, achieve and win,' he said. 'Then you are getting at the basic motivation. That's a big change.'

The role of Local Motors is to lead the community by developing a vision, and managing tasks which the community can't or won't do itself.

It also has to keep people focussed on a narrow range of goals, similar to how Wikipedia makes careful definitions about what it does and does not want people to do on its encyclopaedia entries.

Local Motors also needs to get people engaged. 'The people you steward, is the new currency,' he said.

Energy efficiency

So did he achieve his original aim, to build cars which were more energy efficient?

Mr Rogers says that Local Motors cars achieve mileages of between 30 mpg and 300 mpg.

But he has come to understand that vehicle efficiency is not a technology issue, it is an issue of choices.

Shell built an experimental vehicle in 1973 which could do 376 miles per gallon, called the Opel P1.

'It's a question of the trade-offs people want to make, not about technology,' he said.

Getting people uncomfortable

The conference co-chairs made an effort, in the words of Baker Hughes' Derek Mathieson, to take the audience 'slightly out of their comfort zone,' with the opening session.

'Conferences tend to fall back on a formula, but don't get to the heart of it,' said Mr Mathieson. 'We want to get people uncomfortable. We were trying to create a different trajectory.'

It included actors playing TV news presenters in the year 2020, announcing a new technology which could generate electricity from oil reservoirs in situ (without taking the oil to the surface).

The session can be viewed online at

There were actors playing the role of 2020 energy industry executives, talking about how all of their technical staff happily work together without worrying about who owns the intellectual property.

Many oil industry researchers privately complain about how they could work much more efficiently, in terms of developing new technology and getting it used, if they did not have to keep what they are doing secret in order to protect the company's Intellectual Property.

The audience was also treated from a range of comments from industry figures around the world presented by video, including that:

An important metric with any new technology is how large it could potentially be - can it change all of society or just a part of it

The US National research laboratories don't co-operate as much as the oil and gas industry needs them to

In future we'll use more gas than we do now, and less coal - and probably more nuclear

Oil companies have gradually become 'oil and gas' companies and now more 'energy' companies

In most parts of the world, energy companies work closely with government, but that's not the case in the US

There are many people with just a small knowledge about the oil and gas industry but which get a very big audience for their remarks on it

If there was more training about economics in high schools, people might understand more about resources

Although people are likely to have more problems finding energy in future, they are unlikely to have world wars about it, because nations trade a lot more with each other than they used to

If people didn't have to put so much effort and tension in energy, they'd be able to do all kinds of other things like go to Mars and extend the human lifetime.

Are these ideas useful?

Baker Hughes has 500 to 1000 different engineering projects going on at any time, and might be able to learn from Local Motors in the best ways to pull the work together, said Derek Mathieson, President of Products & Technology at Baker Hughes, and event co-chair.

'I don't think anyone understands the length and breathy of the technology we have in place.'

Conventional 2 dimensional company organisations have their limitations.

Edwin Verdonk, Vice President of Subsurface Expertise and Technology Deployment at Royal Dutch Shell, also event co-chair, said that you could have a crowd sourcing model for company employees, to decide which direction the company should take.

However it might be a step too far to allow the general public to participate in business discussions and equipment design, as Local Motors does.

Mr Verdonk said he was keen that the discussion shouldn't be seen as one about IT. 'I'm really hopefully that people take the technical discussion to a more industry changing discussion,' Mr Verdonk said. 'That was our idea between 2020 scenario. Technology is not a gadget any more.'

An intelligent energy company could be described as one which is fast and nimble, adapting to changing circumstances, and achieves very good results, Mr Verdonk said.

One of the most important themes for the conference is helping people interpret data, Mr Verdonk said. 'It makes no sense for the engineer to have 1tb of data. You need to filter this data to a decision space,' he said.

Associated Companies
» Local Motors
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