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Houston … Dubai … Truckee

The whip-smart founders of BetaZi are changing the oil production forecasting system
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Part 1 of our You’re Based Where? series, which highlights local tech-related businesses that are outside of the tourism trade, looks at the oil analytics firm BetaZi.

The Rock complex on Brockway Road is probably best known as the home of FiftyFifty Brewing Co. and Drunken Monkey. But tucked away on the third floor of the building is a firm that is revolutionizing the oil and gas industry. Not from Houston. Not from Dubai. But from Truckee.

When walking into BetaZi’s office, you are first struck by the luminous glow cast by the soft lighting. Your gaze falls to the collaboration space, which feels like walking into a chic friend’s living room, furnished with upholstered chairs, throw rugs, and a chandelier. Then, you meet the women behind this company, and they are all Truckee love. None of the stiff handshakes, business suits, or 10-gallon hats that I expected from oil industry giants. Janette Conradson, co-founder, CEO, and CFO is a hugger from the start. Co-founder, CTO, and CInO Dr. Heidi Kuzma’s face is filled with bright-eyed optimism, and lights up when she talks about the technology she has created.

But don’t let the stylish decor and warm smiles fool you. The minute these women begin to discuss their business, I feel my head spinning listening to jargon and science that I can’t begin to comprehend.

BetaZi is a company that does oil and gas production forecasting using the most advanced scientific methods currently available, which they know to be true as they created those methods themselves.

They explain that production forecasting makes the oil industry go round. Everyone from producers, large oil companies, banks, insurance companies, and stock brokers need to know how much an oil well can expect to produce in the future. The amount of oil in a well, and therefore the value, declines exponentially over time. So investors or banks lending to producers need to know how much output to expect from a given well, and what the decline rate will be.

In the past, forecasters made these estimates by hand, and the spread of uncertainty was significant. A single well forecast could take several hours to complete. BetaZi’s proprietary technology can do the same work in 30 seconds. Yes, seconds.

Using her background in geophysics, Kuzma came up with an algorithm to increase the accuracy and efficiency of forecasting, and brought it to her friend Conradson, who worked in the office next to hers, on one of her frequent visits to grab some chocolate from her and chat. The two friends had talked about starting their own cheesecake bakery in downtown Truckee. But looking at Kuzma’s findings, they knew they had a much more lucrative and innovative business idea on their hands.

“To my knowledge, this is the first time that a physical problem has been solved this way,” said Kuzma, referring to the application of an algorithm to natural resource predictions. “I’m totally googly-eyed over the technology, but Janette is actually practical.”

Breaking Through

Kuzma wanted to publish her findings, which she now says would’ve just been ignored, as many scientific journals are, and their lives would’ve gone on unchanged. Conradson, however, saw the monetary opportunity within her findings. The science can be applied to many natural resource markets, but Conradson figured they should start in oil and gas, because it’s a trillion-dollar market. But that was easier said than done. It took years of pounding the pavement to get people to meet with them, just for the chance to show them what their technology could do.

“They always laugh at us because we’re like two Truckee housewives,” said Kuzma. “They completely discount us when we walk in the room.”

While to an outsider it seems that this technology that is revolutionary and obvious should have quickly become the industry standard, it took them some time to get people to buy in. As oil and gas is an established industry, they were frequently met with a sentiment of, “if it ain’t broke, don’t fix it, darling,” Conradson said.

But they let the science speak for itself, and gained some important fans in the process. They had one assignment for a bank running the numbers for a deal where an oil exploration production company was seeking an $800 million loan. The first — highly reputable — consulting engineering firm confirmed that the wells checked out and the deal was good. A second one also OK’d it. Then it got to BetaZi, and they found the original numbers to be way off. They checked them multiple times before going to the bank and showing their findings. BetaZi was right, and the person seeking the loan had much skimpier oil reserves than they had asserted.

They have since signed a contract with the largest re-insurance company in the world, Munich Re, to be their sole forecast provider. They also received an investment from billionaire businessman Mark Cuban, who Conradson reached out to via a cold email. Those big name deals helped their credibility in the business, and they are now at their “exponential growth phase,” as Conradson put it, and taking on new clients every day. They are looking to branch out into water, electric and geothermal technologies in the future.

But being from Truckee and being industry outsiders was a high hurdle to clear. They estimate that their location, rather than being in the epicenter of U.S. energy, Houston, slowed growth. But Tahoe girls at heart, they wouldn’t have it any other way. They see the potential that Truckee has to attract businesses in various industries, and think Truckee’s culture and people have desirable characteristics that companies should be paying attention to.

“Pretty soon there’s going to be critical mass,” Kuzma predicted. “We’re very affected and related to Silicon Valley, but we have a laid back piece. In Silicon Valley, they are so exact about what they want, but they almost miss the point. In Truckee, you’re forced to live a little bit more in reality.”

“It’s rugged individuals, that’s who ends up in Truckee,” said Conradson. “There’s just a way people are in Truckee that makes us stronger and better.”

Visit betazi.com for the full rundown on the ins and outs of oil forecasting.

 
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March 14, 2019