(Technology Review Magazine) – Conversations between people include a lot more than just words. All sorts of visual and aural cues indicate each party’s state of mind and make for a productive interaction.

But a furrowed brow, a gesticulating hand, and a beaming smile are all lost on computers. Now, researchers at MIT and Tufts are experimenting with a way for computers to gain a little insight into our inner world.

Their system, called Brainput, is designed to recognize when a person’s workload is excessive and then automatically modify a computer interface to make it easier. The researchers used a lightweight, portable brain monitoring technology, called functional near-infrared spectroscopy (fNIRS), that determines when a person is multitasking. Analysis of the brain scan data was then fed into a system that adjusted the user’s workload at those times. A computing system with Brainput could, in other words, learn to give you a break.

There are other ways that a computer could detect when a person’s mental workload is becoming overwhelming. It could, for example, log errors in typing or speed of keystrokes. It could also use computer vision to detect facial expressions. “Brainput tries to get to closer to the source, by looking directly at brain activity,” says Erin Treacy Solovey, a postdoctoral researcher at MIT. She presented the results last Wednesday at the Computer Human Interaction Conference in Austin, Texas.

For an experiment, Treacy Solovey and her team incorporated Brainput into virtual robots designed to adapt to the mental state of their human controller. The main goal was for each operator, capped with fNIRS headgear, to guide two different robots through a maze to find a location where a Wi-Fi signal was strong enough to send a message. But here’s what made it tough: the drivers had to constantly switch between the two robots, trying to keep track of both their locations and keep them from crashing into walls.

As the research subjects drove their robots toward the strongest Wi-Fi signal, their fNIRS sensors transmitted information about their mental state to the robots. The robots, for their part, were programmed to focus on a state of mind called branching, in which a person is simultaneously working on two goals that require attention. (Previous studies have correlated certain fNIRS signals to this sort of mental state.) When the robots sensed that the driver was branching, they took on more of the navigation themselves.

The researchers found that when the robots’ autonomous mode kicked in, the overall performance of the human-robot team improved. The drivers didn’t seem to notice or get frustrated by the autonomous behavior of the robot when they were multitasking.

“A good chunk of computer and human-computing interaction research these days is focused on giving computers better senses so they can either implicitly or explicitly augment our intellect and assist with our tasks,” says Desney Tan, a researcher at Microsoft Research. “This work is a wonderful first step toward understanding our changing mental state and designing interfaces that dynamically tailor themselves so that the human-computer system can be as effective as possible.”

Treacy Solovey suggests that such a system could potentially be used to help drivers, pilots, and supervisors of unmanned aerial vehicles. She says future work will investigate other cognitive states that can be reliably measured using fNIRS.

BY KATE GREENE

(Reuters) – JPMorgan Chase & Co sacrificed investment chief Ina Drew on Monday in response to trading losses that could reach $3 billion or more and which have tainted the reputation of the bank’s high profile chief executive Jamie Dimon.

The biggest bank in the United States by assets said Drew, its New York-based chief investment officer and one of its highest-paid executives, would retire. The statement confirmed what sources close to the matter had previously told Reuters, that Drew would depart the firm.

It also said Matt Zames would take Drew’s position, while Daniel Pinto, currently co-head of global fixed income with Zames, would become sole head of the group.

Mike Cavanagh, CEO of the Treasury & Securities Services (TSS) group, will lead a team of executives overseeing and co-ordinating the group’s response to the recent losses.

The statement made no mention of two of Drew’s subordinates who were involved with the costly derivatives trades, London-based Achilles Macris and Javier Martin-Artajo, who the sources had also said were expected to leave.

Neither could be reached for comment earlier on Monday. A woman who answered the door at Macris’s London apartment in a grandiose 19th century mansion block overlooking Westminster Cathedral said he was at work.

JPMorgan said Cavanagh “will ensure that best practices and lessons learned are carried across the firm.”

The departure of Drew after 30 years at JPMorgan comes after the unit she ran, known as the Chief Investment Office (CIO), mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives.

The portfolio included layers of instruments used in hedging that became too complicated to work and too big to quickly unwind in the esoteric, thinly traded market.

One hedge fund manager who previously ran a proprietary (or prop) trading book at JPMorgan said the bank’s public commitments to trim balance sheet risk were at odds with its network of trading silos, who were making bets independently with only a handful of the bank’s most senior executives notified of their vast, complex exposures.

“This (CIO) group was completely separate, completely distinct from the prop trading unit. We had no clue about their prop book and they would have no clue about ours for that matter,” the manager said.

“They were all totally independent. All the activities were reported to New York and they ran the allocation of capital to each and every strategy … those decisions were definitely not taken in London. These things were very, very opaque. Every bank is, whether you’re Goldman, Morgan (Stanley) or JP.”

PAST PERFORMANCE

Drew had repeatedly offered to resign in recent weeks after the magnitude of the debacle became clear, according to one of the sources, but the resignation was not immediately accepted because of her past performance at the bank.

Until the loss was disclosed late on Thursday, Drew was considered by some market participants as one of the best managers of balance sheet risks. She earned more than $15 million in each of the last two years.

“Ina is an amazing investor,” said a money manager who knows Drew, but who declined to be quoted by name. “She’s done a really good job over a lot of years. But they only remember your last trade.”

Departures had been on the cards in the wake of the trading losses, though in disclosing the losses on Thursday, CEO Jamie Dimon said only that the bank was continuing to investigate and would take disciplinary action with those involved.

Dimon said the bank’s losses could reach $3 billion or more as it unwinds the positions in coming months.

The losses have marred JPMorgan’s reputation for risk management, prompted a downgrade in its credit ratings and thrown an unflattering spotlight on Dimon, a critic of increased regulation who had become one of America’s best-known bankers.

On Sunday, Dimon’s reputation was tarnished when the New York Times reported remarks he made recently at a dinner party in Dallas. Dimon called arguments about too-big-to-fail banks – arguments made by former Federal Reserve chief Paul Volcker and Richard Fisher, president of the Federal Reserve Bank of Dallas – “infantile” and “nonfactual,” according to the Times.

STOP THE CYCLE

Dimon is himself a board member of the Federal Reserve Bank of New York. Elizabeth Warren called for him to resign that post on Sunday. Warren, who chaired the congressional committee that oversaw the bank bailout program known as TARP and is running for the Senate, said he should not be on the panel advising the Fed on bank management and oversight.

“We need to stop the cycle of bankers taking on risky activities, getting bailed out by the taxpayers, then using their army of lobbyists to water down regulations,” Warren said.

Dimon has struck a more contrite pose since revealing the losses. In an interview that aired on Sunday, he told NBC’s “Meet the Press” the bank’s handling and oversight of the derivative portfolio was “sloppy” and “stupid” and that executives had reacted badly to warnings last month that the bank had large losses in derivatives trading.

He said executives were “completely wrong” in public statements they made in April after being challenged over the trades in news reports. “We got very defensive. And people started justifying everything we did,” Dimon said. “We told you something that was completely wrong a mere four weeks ago.

The loss, and Dimon’s failure to heed the warnings, have become major embarrassments and have given regulators new arguments for tightening controls on big banks and requiring them to hold more capital to cushion possible losses.

Issues relating to the bank’s internal controls were raised in 2010 when it was fined 33 million pounds by Britain’s Financial Services Authority for failing to segregate client month from its own in the UK – an incident that also led to its auditor PwC being fined 1.4 million by its professional body for failing to spot the transgression.

No-one at PwC, JPM’s global auditor, could immediately be reached for comment.

JPMorgan lost $15 billion in stock market value the day after the latest loss announcement.

Dimon is scheduled to speak on Tuesday at the bank’s annual meeting in Tampa, Florida.

(Additional reporting by Carrick Mollenkamp in New York, Rick Rothacker in Charlotte, North Carolina and Drazen Jorgic in London; Editing by David Holmes)

(Reuters) – Stocks edged up on Friday after a strong outlook from chipmaker Nvidia and surprisingly robust consumer confidence offset a slide in bank shares after disclosures of huge trading losses at JPMorgan Chase & Co.

JPMorgan (JPM.N) said it lost at least $2 billion from a failed hedging strategy. The Dow component was down 7.3 percent at $37.76 and weighed on the entire sector.

Nvidia Corp (NVDA.O) rose 8.3 percent to $13.45 after reporting adjusted first-quarter earnings that beat expectations. The stock boosted the Nasdaq and was the S&P 500’s top percentage gainer.

U.S. consumer sentiment rose to its highest in more than four years in early May as Americans remained upbeat about the job market. The survey was a welcome sign amid worries that the economic recovery may be slowing down.

“It sort of runs against expectations,” said Sean Incremona, an economist at 4Cast in New York. “We were looking for a bit of a pullback here but consumers appear to be happy.”

Still, the S&P 500 was on track for its second weekly decline, although investors were encouraged after the index has rebounded from 2-month lows hit on Wednesday and looks set to close once again above April lows.

Marc Pado, a U.S. market strategist at DowBull.com in San Francisco, said traders had helped the market bounce by closing short positions – bets that stocks will fall – after gains at the start of May.

“The trader types see that we came down to that 1,340 area on the S&P 500, started to bounce, started to see some buying, some bottom fishing, then you got that consumer sentiment number and that was compelling enough,” he said,

The Dow Jones industrial average .DJI was up 5.41 points, or 0.04 percent, at 12,860.45. The Standard & Poor’s 500 Index .SPX was up 1.30 points, or 0.10 percent, at 1,359.29. The Nasdaq Composite Index .IXIC was up 15.16 points, or 0.52 percent, at 2,948.80.

JPMorgan estimates the business unit involved in the trading loss will lose $800 million in the current quarter, excluding private equity results and litigation expenses. The bank had previously expected the unit to earn a profit of about $200 million.

Jamie Dimon, the chief executive of the biggest U.S. bank by assets, cautioned that losses could grow by another $1 billion, another hurdle for a sector already besieged by the sovereign debt crisis in Europe and fears of slowing growth globally.

JP Morgan’s news weighed on bank shares as investors feared both a greater risk of more regulation and the potential for more such losses at other banks. However, the stocks were off their lows of the morning.

Citigroup Inc (C.N) lost 3.2 percent to $29.67 and the Financial Select Sector SPDR (XLF.P) was off 0.4 percent to $14.72. The S&P financial sector .GSPF fell 0.5 percent, extending its month-to-date losses to 3.4 percent.

“There is no investment bank in the country that is more respected and viewed as more capable of dealing with risk management than JP Morgan,” said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

“This makes it clear that derivatives are risky for anybody to run and we have to be more careful with exposing the system to the risk of derivatives,” he said.

Financial stocks have been among the most volatile in recent months as investors question what the growth outlook for the United States and the debt crisis of Europe will mean for the group’s profits. JPMorgan has fallen 12.2 percent this month.

The CBOE VIX Volatility Index .VIX is up 9 percent this month in a sign of growing caution, although it eased somewhat on Friday.

Thomson Reuters/University of Michigan’s preliminary consumer confidence index for May improved to 77.8 from 76.4 in April, topping forecasts of 76.2.

Of the 453 companies in the S&P 500 that have reported earnings to date for Q1 2012, 66.2 percent have reported earnings above analyst expectations, according to Thomson Reuters data.

That compares with more than 80 percent at the start of earnings season and is below the average for the past 4 quarters of 68 percent.

Shares of Arena Pharmaceuticals Inc (ARNA.O) rose 64.5 percent to $6.01 after a panel of experts recommended approval of the company’s obesity pill, a big step toward making it the first new diet drug on the U.S. market in more than a decade. The stock was the most actively traded on the Nasdaq composite.

(Editing by Dave Zimmerman)

(Reuters) – LinkedIn Corp (LNKD.N) and private equity firm Silver Lake Partners are among a number of parties that have expressed interest in a potential deal for Monster Worldwide Inc (MWW.N), according to people familiar with the matter, as the Internet jobs-search company is preparing data for potential buyers.

Monster, which runs Monster.com and HotJobs.com Websites, said in March it has retained Stone Key Partners and Bank of America Merrill Lynch (BAC.N) to review strategic alternatives, including selling all or part of the company.

New York-based Monster has since received expressions of interest from a broad range of strategic and financial buyers, including Internet powerhouse LinkedIn and technology-focused buyout firm Silver Lake, the sources said.

The company plans to send out financial information to the interested parties by the end of next week, they said.

Shares of Monster surged 19 percent to $9.33 in afternoon trading on the New York Stock Exchange, giving it a market valuation of more than $1.1 billion.

Monster’s 2012 share of online recruitment is estimated at 23 percent, below CareerBuilder.com’s 32 percent but ahead of LinkedIn’s 16 percent. The online recruitment market is estimated at more than $5 billion.

Representatives for Monster and LinkedIn declined to comment. Silver Lake, Stone Key Partners and Bank of America had no immediate comment.

Analysts have identified several possible avenues for Monster: an outright sale; the sale of a stake or some of its territories, such as its Chinese or South Korean assets; or a leveraged buyout.

The company’s model of job ads is facing new competition from social media such as Facebook and LinkedIn, and the company said in January it would cut 7 percent of its staff, or 400 jobs.

Its technology initiatives include Power Resume Search, which makes it possible to identify workers with specific skills, and BeKnown, a way for employers to reach candidates via Facebook. That “app” could make it easier to find so-called passive job candidates who are currently employed.

Monster, which bought rival HotJobs.com in 2010, also competes with operators of specialized job sites, such as Dice Holdings Inc (DHX.N), which focuses on financial, IT and other sectors, and with hundreds of small operators.

Aggregators of listings, such as SimplyHired.com and Indeed.com, have also emerged as rivals.

Although it’s an Internet company, Monster is susceptible to the same economic forces as traditional staffing companies like ManpowerGroup (MAN.N) and Robert Half International (RHI.N). The industry has seen a recovery in U.S. demand for workers, but softer staffing markets in Europe.

But SunTrust Robinson Humphrey analyst Tobey Sommer said recent U.S. job trends make the company more attractive. The types of jobs being created in the current U.S. labor recovery play to Monster’s strength in mid-level job categories, Sommer said.

(Reporting by Nadia Damouni, Soyoung Kim and Greg Roumeliotis in New York; Additional reporting by Nick Zieminski; Editing by Tim Dobbyn)

For a couple of years, Face.com has offered websites and apps a facial-recognition service that can identify people in photographs, figure out how many faces there are in the picture, which is male or female, and how old they might be. Facebook is widely believed to be one of its customers, though Face.com refuses to comment on their relationship.

But with mobile photo sharing gaining popularity, Face.com CEO Gil Hirsch says the company—which started out by building face-finding and -tagging Facebook apps—wanted to build a mobile app that, unlike existing apps that use the company’s technology, would give users real-time feedback about who their cell-phone camera is pointed at. It has done so with Klik, a free smart-phone camera app with the ability to recognize faces in real time and, if it can’t recognize them, learn who it is you’re shooting.

Originally released in January, the latest version of Klik rolled out on Thursday for the iPhone (an Android version is coming, but Face.com won’t say when). It’s a bit like Instagram, but with an AI twist.

Klik connects to your Facebook account and scans tagged photos of your friends, a process that can take a few hours. Once it’s ready, though, Klik can determine who you’re looking at before you’ve pressed the shutter. It also recognizes faces in photos that are already stored on your phone.

You can take photos, dress them up with simple filters, annotate them with messages and location data, and share them on Facebook or Twitter, through e-mail, or with other Klik users.

Hirsch can think of all kinds of applications for his company’s facial-recognition technology, from organizing family photos to enabling a service that could tell you more about whoever is standing in front of you.

Basically, Hirsch says, Klik picks up the presence of faces on the screen by scanning the video feed on the phone, frame by frame and pixel by pixel, searching for specific patterns it thinks make up a face. It tracks the face so it can still identify it even if it’s in profile. Klik sends that visual data to the company’s servers for processing, and returns with its best guess as to who’s in the picture.

(Reuters) – Sony Corp predicted a return to profit this year as it looks to halve the losses in its TV business that pushed the Japanese consumer electronics giant to a record loss of $5.74 billion in the year just ended.

Sony shares, valued at around $15 billion or just 3 percent of rival Apple Inc, this week slipped to a quarter century low, a sign of how the Walkman and PlayStation maker has lost its innovative edge and fallen behind Apple and Samsung Electronics.

Under new CEO Kazuo Hirai, Sony is slashing costs – 10,000 jobs, or 6 percent of the global workforce, will go – in a bid to turn around its struggling TV unit. At a briefing last month, Hirai sketched a future driven by mobile devices such as the Xperia smartphone, gaming and cameras, as well as medical devices and electric car batteries, along with big cost cuts in the TV business that has lost more than $12 billion in 9 years.

The company said on Thursday it expects to sell more than 33 million smartphones this year, up from 22.5 million last year. In preparation for that mobile push, Sony last year bought out Ericsson from a phone joint venture to integrate the business with its other consumer electronics units.

“In handsets, without big innovations, Sony will still be a second-tier smartphone market player,” said SR Kwon, an industry analyst at Dongbu Securities in Seoul. “I’m just not impressed by Sony smartphones.”

“Will Sony get much better as time goes by? I’m not that optimistic. Currency is not the only problem, the bigger problem is that Sony has failed to catch up with consumer trends in TVs and handsets.”

Sony expects an operating profit of 180 billion yen in the year to next March, slightly ahead of market estimates, but a rebound from a loss of 67.3 billion yen in the year just ended. It forecast a full-year net profit of 30 billion yen.

“The operating profit forecast isn’t far off the level seen two years ago … This suggests we’re on a recovery trend and last year was definitely the bottom,” said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo. “But I think not everyone in the market is convinced of this, especially since the company lacks a solid plan to turn around its TV business.”

Sony’s net income forecast, though, was not as high as some had anticipated. “The net profit came in below expectations, but they’re projecting a strong operating profit, which I’m still doubtful they can achieve,” said Hiroyuki Fukunaga, chief executive at Investrust.

“It looks like they’re trying their best, but just looking at the figures it’s hard to see exactly how they’re going to increase margins.”

HIRAI’S BATTLE

Sony predicted sales of its liquid crystal TVs would fall 11 percent to 17.5 million in the current year, but forecast its losses from the LCD TV business would halve to 80 billion yen.

As TV technology moves on, Samsung reiterated on Thursday it plans to sell organic light emitting display (OLED) TVs from the second half of this year and reckons this will become mainstream TV technology within 2-3 years.

Hirai, who succeeded Welsh-born Howard Stringer last month, hopes to reduce Sony’s TV costs after exiting a joint LCD panel venture with Samsung. The Japanese firm in December agreed to sell its 50 percent stake in the panel production firm that had locked it into buying expensive panels as a market glut triggered a drop in the price of the main TV component.

Sony also sees an 11 percent decline in sales this year of its PlayStation games console, to 16 million. Sales of its new Vita handheld games console hit 1.8 million in the previous year, Sony said.

Sony’s January-March operating loss of 1.4 billion yen was narrower than the average 10 billion yen loss estimated by five analysts.

Hirai has set a target for group sales of 8.5 trillion yen ($106.85 billion) in two years, with an operating margin of more than 5 percent, but he has yet to spell out just how Sony will achieve those mid-term targets, and investors are concerned about Sony’s prospects as consumers flock to gadgets made by Samsung and Apple. Since the start of the year, Sony shares have dropped 12 percent, while the benchmark Nikkei 225 index has gained nearly 7 percent.

Hirai “seems to have the will to turn the company around, but he’s a young CEO and it’s unclear whether he will actually be able to,” said Investrust’s Fukunaga. “Until we see some progress it’s hard to judge whether they can meet their goals.”

Ahead of the results on Thursday, Sony shares closed down 1.2 percent at 1,213 yen, while the Nikkei average slipped 0.4 percent.

($1 = 79.5500 Japanese yen)

(Additional reporting by Mari Saito and Sophie Knight in TOKYO and Hyunjoo Jin and Miyoung Kim in SEOUL; Editing by Edwina Gibbs and Ian Geoghegan)

(Reuters) – Import prices in April recorded their largest drop in 10 months as energy costs tumbled, according to a government report on Thursday that also showed tame underlying inflation pressures from imports.

Overall import prices fell 0.5 percent, the Labor Department said. March’s data was revised to show a 1.5 percent increase rather than the previously reported 1.3 percent gain.

Economists polled by Reuters had expected prices to fall 0.2 percent last month. In the 12 months to April, import prices increased 0.5 percent, the weakest reading since October 2009.

Stripping out petroleum, import prices were flat as weak capital goods costs offset the largest increase in automobiles prices in 10 months, indicating that broader inflation pressures remained benign – in line with the Federal Reserve’s view.

Data on Friday is expected to show that weak energy costs held down wholesale prices in April for a second month in a row, according to a Reuters survey.

Outside food and energy, producer prices are expected to have moderated, with a gain of 0.2 percent forecast after a 0.3 percent increase in March.

Last month, imported petroleum prices fell 1.8 percent, the largest drop since August, after rising 4.9 percent in March.

That should pull down gasoline prices from their recent highs and support economic growth, despite signs of cooling in activity.

Imported food prices ticked up 0.1 percent after increasing 1.8 percent the prior month.

Elsewhere, imported capital goods prices were unchanged after advancing 0.2 percent in March. Imported motor vehicle prices rose 0.4 percent after increasing 0.3 percent the previous month.

The Labor Department report also showed export prices rose 0.4 percent last month, above analysts’ expectations for a 0.2 percent gain. Export prices increased 0.8 percent in March.

(Reporting By Lucia Mutikani; Editing by Neil Stempleman)

The world isn’t running out of oil and natural gas. It is running out of easy oil and gas. And as energy companies drill deeper and hunt in more remote regions and difficult deposits, they’re banking on information technology to boost production.

Data, in this case, really is the new oil. “It’s pretty sweeping,” says Paul Siegele, president of the Energy Technology Company at Chevron. “Information technology is enabling us to get more barrels of each asset.”

Oil companies are using distributed sensors, high-speed communications, and data-mining techniques to monitor and fine-tune remote drilling operations. The aim is to use real-time data to make better decisions and predict glitches.

The companies began to employ such technologies more than a decade ago, partly to help its aging workforce multitask remotely. But the technologies have gained speed along with the underlying trends: cheaper computing and communications technology, and a proliferation of data sensors and analytical software.

The industry term is the “digital oil field,” though the biggest companies have trademarked their own versions. At Chevron, it’s the “i-field.” BP has the “Field of the Future,” and Royal Dutch Shell likes “Smart Fields.”

Whatever these programs are called, they’ll play a huge role in the future of energy companies. The ones that are most successful at operating remotely and using data wisely will claim big rewards. Chevron cites industrywide estimates suggesting 8 percent higher production rates and 6 percent higher overall recovery from a “fully optimized” digital oil field.

That’s significant, says Siegele. Despite advancing renewable technologies, the International Energy Agency projects that global oil demand will still be growing by 2035 as more people use cars. And, as extraction becomes more difficult, almost $20 trillion in investments will be needed to satisfy these future needs.

Chevron is currently deploying up to eight global “mission control” centers as part of its digital program. Each is focused on a particular goal, such as using real-time data to make collaborative decisions in drilling operations, or managing wells and imaging reservoirs for higher production yields. The purpose is to improve performance at more than 40 of its biggest energy developments. The company estimates that these centers will help it save $1 billion a year.

At one machinery support center, opened in Houston in 2010 and expanded last year, shift engineers monitor visualizations and analytics from operations in Kazakhstan and Colombia. The center’s staff diagnosed a gas-injection compressor that showed subtle signs of overloading at Chevron’s Sanha Field off the coast of southern Africa. Operators there fixed the problem and avoided a potential loss of millions of dollars in downtime. Now there’s an automated early detection system based on the symptoms observed at that site.

Chevron first tested the i-field program in its century-old fields in California’s San Joaquin Valley, where it is using advanced thermal technologies to squeeze heavy oil from what might have once been considered a depleted reservoir. In the past, workers would drive around inspecting thousands of wells a day, says David Dawson, general manager of Chevron’s upstream workflow transformation organization. Now they use sensors and remote monitoring, and visit a well only when repairs are needed.

Since this early trial, real-time data analysis, imaging, and remote collaboration has become key to the setup at some of Chevron’s newest and most complex projects. These include projects in the deep waters of the Gulf of Mexico, off the coast of Nigeria, and 130 kilometers off the coast of Australia—the controversial $37 billion Gorgon Project, the single largest natural gas project in Australia’s history.

Real-time safety backups are also crucial as production gets more complicated, says Morningstar oil services equity analyst Stephen Ellis. Today, for example, Chevron is under fire in Brazil, where the company took responsibility for a 3,000-barrel offshore oil spill in November caused by an unanticipated pressure spike in a well. Siegele says Chevron’s i-field program will help prevent accidents and improve safety.

Much of the software innovation that’s key to the digitization of big oil is happening at oil service contracting companies, such as Halliburton and Schlumberger, and big IT providers including Microsoft and IBM.

Not every problem has been solved, however. It’s still tough to ensure reliable communications from the Arctic’s outer continental shelf, via fiber optic lines or satellite. Another limitation is data transmission speeds to relay pressure and temperature information from thousands of feet below the surface—although in recent years, electrically “wired” drill pipes have been able to relay this data an order of magnitude faster than before, at one megabit per second.

Already, Chevron’s internal IT traffic alone exceeds 1.5 terabytes a day. “The fire hose of data that comes up every minute and every hour is incredible,” says Jerry Hubbard, president of Energistics, a global nonprofit consortium working to standardize data-exchange formats within the energy industry.

Even startups are exploring the digital oil field. “The code in the old software platforms being used today, a lot of it is 20 years old,” says Kirk Coburn, who started Surge, a new Houston-based energy software startup accelerator with a digital oil section. “This technology can still be massively modernized.”

(Reuters) – In the weeks before Chesapeake Energy CEO Aubrey McClendon was stripped of his chairmanship over his personal financial dealings, he arranged an additional $450 million loan from a longtime backer, according to a person familiar with the transaction.

That loan, previously undisclosed, was made by investment-management firm EIG Global Energy Partners, which was at the same time helping arrange a major $1.25 billion round of financing for Chesapeake itself.

The new loan brings the energy executive’s total financing from EIG since 2010 to $1.33 billion and his current balance due to $1.1 billion, this person said. It was secured by McClendon’s personal stakes in wells that have yet to be drilled by Chesapeake – and by his own life-insurance policy.

A spokesman for McClendon declined to comment; a spokesman for Chesapeake didn’t respond to a request for comment.

The latest insight into McClendon’s personal financial deals comes in the wake of an April 18 Reuters investigation that found McClendon had borrowed heavily against his interests in wells owned by Chesapeake, mostly from EIG.

Last week, Reuters reported that McClendon had co-owned and actively invested in a $200 million hedge fund that bought and sold the same commodities produced by Chesapeake.

An outcry over potential conflicts of interest in the loans prompted inquiries by the Securities and Exchange Commission and the Internal Revenue Service. It also spurred Chesapeake’s board on May 1 to remove McClendon as chairman (though not as chief executive) and to declare an early end to a controversial perk at the center of the borrowings.

All told, McClendon has taken out loans worth $1.55 billion since 2009 from EIG and other lenders to fund his participation in Chesapeake’s Founders Well Participation Program. That perk enables him to receive a stake of up to 2.5 percent in all the wells Chesapeake drills in return for shouldering the same percentage of the wells’ costs.

The latest McClendon loan was arranged in late March through a McClendon-controlled company called Pelican Energy LLC, which was formed on March 6.

The deal was initially intended to be significantly larger, up to $750 million, said the person familiar with the transaction. It was scaled back last week after the Chesapeake board announced the early end to the well-stake perk, which is now slated to conclude in June 2014.

The newest financing for McClendon closed shortly before EIG joined with other investment firms and hedge funds, such as TPG Capital and Magnetar Capital, in purchasing preferred shares in a newly formed Chesapeake subsidiary that has an interest in some of the company’s wells. EIG invested $100 million in that deal, called CHK Cleveland Tonkawa, which raised $1.25 billion for Chesapeake.

An EIG spokeswoman declined to comment on the newest loan or on concerns of some analysts over EIG’s dual role as a financier to Chesapeake and its CEO.

In an April 23 letter to investors in two of EIG’s investment funds, EIG chief executive officer R. Blair Thomas said it is “simply untrue” that there was any conflict of interest in its loans to McClendon and dealings with Chesapeake.

The Securities and Exchange Commission has opened an informal inquiry into Chesapeake’s well program and the transactions involving McClendon.

In the letter, Thomas discussed two earlier loan deals that EIG had done with McClendon, involving McClendon-controlled entities called Larchmont Resources LLC and Jamestown Resources LLC. There was no mention in the letter of the financing deal completed in March to Pelican Energy.

The person familiar with the deal said Pelican was not mentioned in the letter because EIG clients “already knew about Pelican” and the loan hasn’t been disbursed yet.

This person added that when Pelican was launched, EIG sent a letter and “information packet” to clients advising them of the new financing and opening the loan vehicle up to investor participation.

EIG, which spun out of the Los Angeles-based bond shop TCW in 2011, has $13 billion of assets under management.

In the latest $450 million financing, EIG secured as collateral all the assets of Pelican Energy LLC. These include McClendon’s interests in wells Chesapeake might drill in 2013 and the first half of 2014. The EIG financing to Pelican will be used to enable McClendon to continue in the Chesapeake well program through June 2014.

For years, McClendon used companies he controls, including Larchmont, Jamestown and Arcadia Resources LP, to hold his stakes in the Chesapeake wells.

EIG funded Larchmont and Jamestown at $375 million and $500 million, respectively. EIG did not lend any money to Arcadia, which borrowed as much as $225 million in 2009.

The investors in the EIG funds that lent to McClendon include U.S. public pension funds, foundations and wealthy investors in Europe and Australia.

In his April 23 letter to clients, Thomas of EIG defended the two prior loans to McClendon, writing: “The crux of the story as it relates to EIG seems to be that we got too good a deal for our investors.”

(Reporting by Jennifer Ablan; additional reporting by Brian Grow, Anna Driver and Jonathan Stempel; Edited by Matthew Goldstein and Michael Williams)