Technology Development Network

Dragon Shale Moves Forward Cautiously – Joins NOSA

Dragon Shale has been carefully developing its partners, plans and investors. In yet another step forward, we are today announcing that we have become a Sustaining Member of the National Oil Shale Association (NOSA). To learn more about NOSA and view an excellent video on oil shale visit: http://oilshaleassoc.org/ .

Dragon Shale is a Utah based LLC that it working on responsible development of oil shale resources. These are vast resources of kerogen that can be turned into oil by heating. The US could have 3.7 trillion barrels of kerogen-based oil available. For a good overview of the oil shale (kerogen) industry, consider getting the eBook: Oil Shale: Treasure Trove of Pandora’s Box, by Ron Stites, Lee Yuan Ming and Matthew James.

These resources have remained untapped for several reasons. Among these are:

• The vast size of proposed projects (billions of dollars) have given regulators and investors pause
• Potential environmental issues with many of the proposed technologies
• Infrastructure constraints (electricity, water, pipelines, refineries and roads)
• Environmental, land use and esthetic issues – especially for extremely large projects

Dragon is a unique approach. It was one of the first oil shale companies to propose smaller projects, challenging the conventional wisdom. Beginning around 2013, Ron Stites of SALLC and O.J. Schneider of Ettanet began taking a new look at the oil shale industry. They puzzled over the lack of progress on this resource and began looking for new approaches. They discovered that it would be practical to launch small projects where logistics, markets and infrastructure matched with existing technologies. Instead of a “one size fits all” mega-project approach making a low-grade synthetic crude oil, SALLC and Ettanet showed that the right match of resource, technology and differentiated products could make a smaller project work. After many years of study and seeking partners, SALLC and Ettanet launched Dragon Shale, LLC, in 2016.

The key features of Dragon Shale are:

• Small Scale – first project 960 acres of private land ~ 7,500 barrels of total product per day
• Differentiated High Value Products – Sell ultra-low sulfur diesel feed and asphalt fractions with more differentiation into chemical products in the queue
• Develop in “Best” Places – only in the most accessible, highest yield areas
• Cooperate with other kerogen oil producers on infrastructure and technology

To learn more about Dragon Shale, LLC, visit http://www.dragonshale.com/ .

 

Ron Stites is the Founder and Principal at Stites & Associates, LLC, a group of technical professionals who work with clients to improve decision making in technology driven companies by applying good management judgment based on objective evidence and sound scientific thinking. For more information see: www.tek-dev.net or email us at [email protected] .

Professor Stites?

We live in strange times, but hardly anything is stranger than me being called “Professor Stites.” Nevertheless, it happened.

I have just completed teaching the Spring Semester of MKT-310, “Marketing Research and Consumer Behavior” at Colorado Christian University (CCU) in Lakewood, Colorado. I have to say that it was one of the most rewarding experiences of my life. Of course, there’s a story here.

It began last fall with an email from the Dean of the School of Business and Leadership, Dr. Gary Ewen. Because of an illness, Dr. Ewen needed someone to teach “Marketing Research and Consumer Behavior” in the spring. The course was due for an update and this would require selecting a newer text and designing the course from scratch. Dr. Ewen had heard of me through a mutual friend and thought my background in general business, my previous experience teaching at a university level and my experience with business statistics would make me a pretty good fit. He assured me that he would be supportive in helping me through the many issues with teaching a revised class in a new environment. Honestly, I had long been hoping for such an opportunity and jumped at the chance.

The first task was to find a textbook that was reasonably up-to-date. The field of marketing research is in transition. Traditional marketing research has tended to be consumer behavior oriented, using focus groups and surveys to elucidate consumer preferences and buying habits. Texts that focus on these aspects tended to be psychology and social science oriented.

The newest trends in marketing research focus on the many different forms of digital marketing. That is, using digital communications to find, understand and influence buyer behavior. Digital marketing is the “hottest thing going.” Some texts seemed to go a bit overboard in their enthusiasm and read like a “Social Media Selling for Dummies.” It wasn’t easy to find a text that taught the fundamentals of marketing research while doing a reasonable job of recognizing the changing landscape.

I was able to find a newly updated text, the 8^th edition of Marketing Research by Dr. Alvin Burns, Dr. Ann Veeck and Dr. Ronald Bush. This new edition had added Dr. Veeck, as a co-author. Dr. Veeck added the new dimension of digital marketing research and data analytics. I had the great pleasure of communicating directly with Dr. Burns during the process of selecting the book and in the early design of the course. His help was instrumental to the overall success of the teaching effort.

Then came the really hard work – actually designing the course. This meant writing out the syllabus in detail, scheduling the lectures and tests, deciding between papers and projects and laying out the grading schedule. Dr. Ewen was extremely helpful in this area as were the many tools provided by authors of the text.

Perhaps the greatest contribution to the success of this class came from the students themselves. They definitely wanted to learn and were quite open about how things were going. They responded very positively to hands on projects and anything that seemed like practical knowledge.

The first project we did was with Craig Hospital. With the help of Lisa Stites (daughter-in-law) and her boss, Jake Manley, the students were able to review Craig’s marketing program and suggest improvements. This was such a success that we decided to modify the course schedule a bit to allow for a Final Project rather that a Final Exam.

The Final Project was a complete Marketing Research Project from beginning to end. The Research Question was:

How do CCU students perceive changes at CCU and how do those perceptions impact student retention?

The class organized and hosted a Focus Group, designed and administered an On-line Survey and performed a statistical evaluation of the data they collected using SPSS. The class developed a five-minute video on the Project and presented their findings to the President of the University and a group of Faculty members. Thirty percent of their final grade came from Administration and Faculty evaluation of the presentation. They received very high marks on clarity, thoroughness, persuasiveness and usefulness.

I have to admit that I learned a lot by teaching this class. I was especially struck by the similarities between the Marketing Research Process described by Dr. Burns and the more general process of Evidence-Based Decision-Making. We again see how careful collection and analysis of data results in good decisions unfettered by bias or hubris.

Naturally, the course can be improved, but all in all this class was a great success thanks to the help I received from many quarters. I would certainly do it again!

Ron Stites is the Founder and Principal at Stites & Associates, LLC, a group of technical professionals who work with clients to improve decision making in technology driven companies by applying good management judgment based on objective evidence and sound scientific thinking. Ron has served as an Adjunct Professor for Colorado Christian University. For more information see: www.tek-dev.net or email us at [email protected] .

The Monty Hall “Paradox”

Monty Hall hosted the game show “Let’s Make a Deal” for many years. One of the features of the show was to allow contestants to choose one of Door Number 1, 2 or 3 to win a big final prize. It might be a new car or a dream vacation, but it was much more valuable than the junk behind the other doors.

There grew a “paradox” around this selection process that went something like this:

Monty tells you that there is a brand new car behind Door Number 1, 2 or 3. Behind the other doors are goats. He asks you to pick one of the doors. You pick Door Number 1. To the horror of the sponsors, Monty decides to give you a hint. He knows the correct door, but he will not tell you that. Instead, he tells you that there is a goat behind Door Number 3. He gives you a chance to change your pick. Should you do it? Does it matter?

Most say that it doesn’t matter whether you change or not. They think that their odds of being correct have just gone up to 50%, but changing to Door Number 2 won’t improve those odds. Even Nobel laureates and statisticians tended to agree with this intuitive answer. They were wrong. You should ALWAYS change to Door Number 2 to increase your chance of success to 2/3!

Why?

This “problem” is often called a “paradox,” but it isn’t. The answer can be clearly demonstrated by computer simulations, physical experimentation and complex Bayesian probability. It is hard to “see” the answer without resorting to some form of demonstration.

Why is it so hard to “see”?

There are really three reasons:

1. We are loathe to think through the consequences of our first choice being wrong,
2. We are troubled by having to deal with the impact of new information, especially how it impacts the decision path we initially rejected and
3. It is hard for us to think about all of our choices resulting in probable outcomes and that our “best” solution is the one that “improves” our probability for “success” even though it does not make the outcome certain.

Because of these issues, we naturally gravitate to simple evaluations and fail to look deep enough into the possibilities to get to the right answer.

The right answer does NOT require a PhD in statistics. In fact, the most educated are often the most recalcitrant in their belief that the choice of Door Number 1 or 2 is of equal probability. Some have gone to great lengths to try to support their intuitive but incorrect conclusions. The solution is pretty simple, but the logic must be followed with care.

Event 1:

We pick Door Number 1. Our chance of being correct is 1 in 3 (or 1/3). Our chance of being wrong is 2 in 3 (or 2/3).

Event 2:

Monty looks at what is behind Doors Number 2 and 3 and tells us that behind one of them (in this case Door Number 3) is a goat. He gives us a chance to change our choice – obviously to Door Number 2.

Our logical choice will always be to switch to Door Number 2. That will double our chance of being correct from 1/3 to 2/3.

Event 2 does not change our probability of having chosen correctly the first time. It is still 1/3. What we do know, however, if our first choice was wrong and the car was behind Door Number 2 or 3, we now are CERTAIN that it is behind Door Number 2. This is known as assessing a conditional probability – that is figuring the chance of success after some other related event has occurred. The key to our understanding is assessing this second path, that is, the path where our first choice was wrong. It is this evaluation that give us the clue for what to do.

If we were wrong (and we will be wrong 2/3 of the time), then this new knowledge tells us with certainty that the car is behind Door Number 2. If we now switch to Door Number 2 our chances for picking correctly jump to 2/3.

Sometimes if we look at the options graphically it makes more sense:

 

 

What we see is that 2/3 of the time we will be going down the path we thought was wrong – that is the car was behind 2 or 3 and not 1. But, when Monty tells us that the car is NOT behind Door Number 3, we suddenly realize that IF we were wrong in our first guess, then the car MUST be behind Door Number 2. Since our first choice would be wrong 2/3 of the time, we can improve our chances of getting the car to 2 out of 3 times by changing our choice to Door Number 2. That is better than the 1 out of 3 we had at the outset. It is even better than some naïve guesses of 50/50 at Event 2.

If you don’t believe these results you are in good company. To prove it to yourself, simulate this with a friend using three playing cards. Try to pick one of the cards (maybe the Ace of Spades?), from among the other cards placed on the table face down. Have your friend look at the other two cards and tell you one of them that is NOT the card you are looking for (i.e. is NOT the Ace of Spades). In about 30 tries you will see that the analysis approximately matches your experience.

The moral of the story is that we often fail to evaluate new data correctly, especially when it appears to be contrary to or disconnected from our original hypotheses.

This is just another difficulty in staying on the path of Evidence-Based Decision-Making.

Stites & Associates, LLC, is a group of technical professionals who work with clients to evaluate, improve and deploy new technologies by applying Evidence-Based Decision-Making. The Founder, Ron Stites holds a BS in Chemistry and an MBA in Finance and Accounting. He teaches Business and Marketing Research at Colorado Christian University. For more information see: www.tek-dev.net.