LOUISVILLE, Ky. (WDRB) -- Amanda Dirkes, a recent graduate of the University of Louisville, rifles through the images so fast that her computer screen almost becomes an animated flipbook. Only she can understand the story.
From her desk at Genscape's office on E. Market Street, Dirkes pores over black-and-white images of big, static objects hundreds of miles away – oil refineries in Texas and Louisiana.
She's looking at the smokestacks – which ones are hot, which are cool. She knows the rhythm of the plant as it makes crude into gas or diesel fuel.
And like a doctor looking at an X-Ray, Dirkes knows when something isn't right.
Around 5 p.m. on June 8, Dirkes told Genscape's paying customers that the main unit at Valero's refinery in Meraux, La., had gone down. She spotted an unusual flare from a smokestack. It was probably a power outage, she thought.
Considering 135,000 barrels of crude a day can move through the refinery, traders who make million-dollar decisions buying and selling oil and gas want to know about such hiccups. It could mean changes in prices.
Directly above the Wild Rita's Mexican restaurant on E. Market Street, Genscape's Louisville headquarters is a huge repository of real-time information about the world's energy. Now, more than 15 years after its founding, the company has outgrown the downtown office space and is preparing to move to Old Louisville.
Once there, workers like Dirkes will continue to monitor refineries and gather intelligence that is packaged and sold to Wall Street traders, utilities who want to know more about the supply and demand for power, and analysts who make predictions.
Across the aisle from Dirkes, shipping analyst Eddie Goodman watches a continually updating map of oil tankers coming into Gulf Coast ports like Corpus Christi, Texas. Goodman knows what the ships are carrying, and where they came from.
On the other side of the pod, Kyle Archer, who did a post-college stint in corporate accounting at Brown-Forman before joining Genscape six years ago, looks over a map of every significant power plant in the country.
The map shows whether the plants are running, how hard they're working and the path of electricity flowing all over the country's grid.
This is valuable information not only to traders who deal in electricity, but to the power plant operators themselves.
“They basically make decisions everyday – do we buy power, or do we make it ourselves?” said Genscape CEO Matthew Burkley.
On the morning of June 10, Genscape's system detected a sudden, 500-megawatt drop in power generation in the southwest U.S., and alerted its customers within 45 seconds.
It took only three more minutes for Genscape to pinpoint the cause of drop – a coal-fired plant on the New Mexico / Colorado border, where a generator had tripped offline.
How an energy information business ended up in Louisville
Fifteen years since its founding – and nearly 10 years since it was sold to a British conglomerate – Genscape continues to grow its headquarters in Louisville, despite the fact that the company's presence here was “a little bit of an accident,” according to one of its co-founders.
“It's an energy information business, and Houston is the energy capital of the world. And that's where we were immediately prior to starting it,” said Sterling Lapinski, who started Genscape with fellow Louisville resident Sean O'Leary. “But it wound up here and that ended up being a good thing for the business.”
Now ensconced in the city, Genscape has outgrown its space at the Cobalt building on E. Market Street and plans to move in November to a new headquarters in Old Louisville.The company is renovating an old brick warehouse on Garvin Place
, where it plans to grow from about 100 to 180 employees over the next few years
To be sure, the majority of Genscape's 350 employees are not in Louisville, but in small offices spread around the U.S., Europe and Canada -- Zurich, London, Amsterdam, Hamburg, Boston, Austin, Houston, Boulder, Calgary.
Burkley, the CEO, is in Louisville, but other senior leaders are dispersed, such as the company's marketing and technology strategy groups based in Boston.
And Genscape's website gives little hint that the company's headquarters is Louisville.
“We don't really advertise we're from Louisville,” said Burkley, a Harvard MBA who succeeded co-founder O'Leary in 2011. “We're very proud we're from Louisville, but it's not really a core message of the business…It doesn't matter to our customers. Our customers just care that we're delivering a great product.”
How it started
Genscape's first product – which today remains one of its main lines of business – was a way to figure out how much electricity a power plant is producing and where the electricity moves along the grid.
In the late 1990s, Lapinski and O'Leary briefly lived in Houston, where they started a power trading operation for a company called Columbia Energy Group. Lapinski grew up in Louisville and went to Ballard High School, and O'Leary was among the first graduates of the University of Louisville's entrepreneurial MBA program in the mid-1990s.
They had met the year before in Atlanta, where they both worked for a power trading subsidiary of electric utility Southern Company, O'Leary said.
In Houston, Lapinski grew frustrated about the lack of public information about how much electricity plants were generating – information that go a long way to explaining wild shifts in power prices.
, the company was conceived amid the peak of the dot-com bubble, and Lapinski said the name came from combining power “generation” and “Netscape,” the web browser company that went public in 1995.
In 2000, Lapinski ended up following O'Leary back to Louisville – where O'Leary and his wife wanted to raise their three young kids closer to her parents in Ashland. O'Leary had also worked briefly at Louisville Gas & Electric, and his contacts there proved valuable in helping validate the company's technology.
With the help of John Carroll Hill, an electrical engineering professor at U of L, Lapinski and O'Leary built a device that can tell how much electricity is moving through a power transmission line and which direction by using electric and magnetic fields.
It looks like a lunch box on top of a metal pole. Powered by a solar panel, the box sends its readings back to Genscape by cellular signals. All they had to do was place it within about 100 feet of a power transmission line.
Genscape did not need a single power plant's permission to start calculating how much electricity it was producing in real-time. All it needed to do is get the box close enough to the line – usually by paying a farmer for permission to set the pole on his or her land.
Still, it was a business model that struck Kent Oyler, now the CEO of Greater Louisville Inc., as “bizarre.”
“I said, ‘Wait a minute – you mean you are going out in the middle of a cow field and placing a sensor, and the utilities don't want you to have it there?'” Oyler said.
Oyler was a founder of the business accelerator bCatalyst, where Genscape rented office space in 2001.
“I was getting pretty upset about all the muddy equipment they brought in (to the building),” Oyler recalled.
In the summer of 2001, O'Leary hired about 15 members of the Georgetown College football team to fan out to states like Alabama and Vermont and install about 100 monitors. Genscape now has 3,000 of the devices in the U.S. and another 3,000 in Europe.
At first, some utilities and power traders were reluctant to buy Genscape's data because “it felt like spying” and they weren't convinced it was legal, Lapinski said.
But then the Federal Energy Regulatory Commission, which regulates power plants, became a Genscape customer, and that gave the company an air of legitimacy, Lapinski said.
(A federal contract database shows FERC first spent $108,000 with Genscape in 2002).
No permission needed
In determining how much electricity plants are producing, Genscape's approach is no different than if someone were able to estimate sales at a WalMart by watching how many cars enter in the parking lot, Lapinski said.
Genscape now tracks cargo vessels all over the world using thousands of antenna that pick up radio signals that ships are required to broadcast.
The company monitors oil refineries with infrared cameras trained on the key parts of the operation, with analysts like Dirkes looking at heat signatures to understand how the refinery works.
“It kind of evolves; the longer we look at something, the better we have it calibrated to where we know that there might be a key pipe that we need to look at, and that might be our first indication of a problem,” said Dirkes, who graduated with an environmental science degree from U of L in 2013.
Genscape gets an idea of how much oil is moving through pipelines by detecting the amount of power consumed at the pumping stations that push the oil along.
The company uses satellite imagery to assess the health of crops on a county-by-county basis in the Midwest – information that helps predict the price of corn and soybeans.
Around 2008, O'Leary recalls, Genscape was trying to figure out how to tell how much oil was being stored at the largest hub of tanks in the United States in Cushing, Oklahoma.
Oil and gas traders pay close attention to a weekly report by the U.S. Energy Information Administration about the supply in Cushing, and Genscape wanted to predict what the government would report.
A Genscape analyst and mathematician, Walter Jones, went to Oklahoma and found a couple who gave helicopter tours of the tank farm, O'Leary said. He took a tour and took aerial pictures of the tanks with an infrared camera.
“We saw that, ‘Holy s---, we can actually see the oil in the tank,'” O'Leary said.
Genscape started releasing its report on the supply of oil in Cushing two days ahead of the government's report, and “pretty soon people started paying us a lot of money to get that number,” O'Leary said.
Genscape still flies over the Cushing tank farm with cameras twice a week.
Last Thursday, the benchmark price for oil in the United States rose in part because Genscape's latest data shows less crude in storage, according to reports byThe Wall Street Journal
The company uses the same process to monitor a handful of other big oil storage hubs in the U.S. and Canada, said Dierdre Alphenaar, a longtime employee who heads research and development.
“Poster child” for economic development
The Daily Mail & General Trust, a British conglomerate that owns a newspaper in London, bought Genscape in 2006 for an amount reported to be just under $200 million.
Genscape's financial information is not public, but federal contracting disclosures give a rough idea of how its annual revenue has grown: $1.7 million in 2003, $18 million in 2007, $29 million in 2010.
The last time Genscape disclosed its revenue was in 2013, when it was about $50 million, Burkley said. It's likely higher now as the business grew by 21 percent in 2014, according to its parent company's annual report.
When it became clear Genscape needed new office space in Louisville, Burkley said the company briefly considered whether it should move the headquarters to Houston or New York.
“The decision (to stay in Louisville) was not a hard one for us to make, and we made it fairly quickly,” he said.
Burkley, 43, said it's easier to find more career-oriented employees in Louisville.
The average salary at Genscape's headquarters is about $65,000 to $70,000, he said. An entry-level analyst starts in the "high 30s to low 40s," he said, but could expect to earn $45,000 to $50,000 within two or three years with good performance.
"As a person trains up, we obviously want to reward them," he said.
Genscape also has scientists -- like Nathan Pinney, who joined the company in 2013 after finishing a PhD in materials science at the University of Wisconsin, Madison – as well as engineers, mathematicians and software developers.
Lapinski, 45, and O'Leary, 46, remain in Louisville, but as of earlier this year, they no longer have any formal role at Genscape, having resigned their seats on its board.
Lapinski now runs Clipper Data, a company that tracks the shipping industry and in which Genscape has a small stake, Burkley said. O'Leary now runs Edj Analytics, a startup gleaning insights from data in healthcare, education and even professional football.
Oyler, the CEO of Greater Louisville Inc., said Genscape is the “poster child” for how companies should grow in Louisville. By getting venture capital from Louisville's Chrysalis Ventures and then selling to a private equity firm instead of a bigger company, Genscape avoided being moved to another city or consolidated away, he said.
By the time the Daily Mail group came along, Genscape had become a “global business” whose main location was irrelevant, he said. Then Lapinski and O'Leary “recycled their capital” back into new Louisville companies, Oyler said.
“That is how you build, over time, a vibrant (environment),” he said. “We need more companies like that.”
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