Plans, Hopes and Prayers

What we have seen in the past few weeks is the absolute failure of the bureaucracies strategy of “hoping and praying for a cold winter.” We all know this has been their key point to building value in the industry for the past two years. And when we had the cold winter it certainly seemed like the need for the Preliminary Specification tanked with the temperature. Why would you need the Preliminary Specification when the natural gas prices had returned to the point where producers could earn a profit? Well you wouldn't necessarily, other than for the many other reasons it provides. But in terms of the decentralized production model the value of that model would be diminished in an environment where higher natural gas prices existed.

In January and February of 2014, all was well as the temperature of the continent was icy cold and forecast to continue. What the bureaucracy didn’t understand is that the prices are also determined by supply and a large part of the supply is from shale gas. And there is no end to the shale gas reserves. Certainly one winter is not going to affect the supply of shale gas reserves in the North American marketplace.

Now prices have reached a point where they were for the last five years on average. That’s surprising! So what has really happened here is that the bureaucracies strategy of hoping and praying for a cold winter is nothing but a pile of you know what. It is, and always was, bubble gum for the masses. They never really had a plan for how they are going to run the industry. They're just hoping and praying for things to get better. They haven't a clue.

I suspect that the natural gas marketplace is going to figure this out pretty soon. And when it does the floor on pricing is going to drop out from under our good friends the bureaucrats and leave them with a price that is truly jaw dropping. That’s what markets do to the unprepared. They punish them. Continued overproduction is a systemic problem that is in the bureaucrats DNA. They can not do anything about it. If they could, would they be hoping and praying for a cold winter?

Expect to see some grand strategy being formulated by the powers that be that will address the business model coming out of central command. Some industry wide initiative that is systems oriented to deal with the problem. And yes it will violate our copyright in some form. But its the only chance they have to baffle the brains of anyone who might still happen to be listening to them.

The fact of the matter is that natural gas prices are destined to stay well below their marginal costs until the industry puts in place a business model that can address the needs of shale gas. The Preliminary Specification with the decentralized production model does that. The other attribute of the model is that it eliminates the bureaucracy in the oil and gas industry. Which at this point is not just a good thing, its a great thing. This past season has shown they don't have a plan for how they'll manage the industry. Its now they don't even have a hope and a prayer.

Winston Churchill once said that you can always count on the Americans to do the right thing. That is after they had exhausted all the other possibilities. Now that they have no plans, hopes or prayers. Maybe they will do the right thing and build the Preliminary Specification.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Putting the Cart Before the Horse

Its a difficult question to answer, why do we need to develop the user community before the industry will fund these developments? If there is so much value generated by the Preliminary Specification, why doesn't the industry just fund it? I understand the point of these questions and the logic is obvious. It seems that I am putting the cart before the horse in trying to have the user community developed before the industry funds the developments. I have to say its a bit of a Mexican standoff right now in that everyone sees the value, and everyone is expecting someone else to act. However with the scope of the undertaking, who decides?

And there’s the bureaucracy. If you read the Preliminary Specification the bureaucracy has been effectively dispatched to the trash heap of history. It wasn't a deliberate thing it just happened as a result of using the Joint Operating Committee and the effects of the Internet. They're just gone. No need for them. Yet they still effectively control the industry and are not stepping aside for anyone no matter what. And they don't care that they're losing money with their current business model. What is anybody going to do about it, they will state. And they have a point, there is nothing that anyone can do to challenge the bureaucracy, their control and their position in the oil and gas industry is secure.

We therefore have to organize ourselves to put ourselves in the position to offer the investors in the industry with a choice as to how they want to operate the oil and gas industry. The bureaucracy and its business model, or this user community and the Preliminary Specification. And then, when we can show that we have a solution that is committed to providing the oil and gas producer with the most profitable means of oil and gas operations, the bureaucracy will be swept aside and we will proceed with our solution. I don't see an alternative. This is the ultimatum that the bureaucracy has put forward to the investors in the industry. They have had plenty of opportunity to do the right thing and have chosen not to do it.

Even with so much value at stake they choose to do nothing. Natural gas prices were looking promising a month ago, and now it is evident that waiting for a cold winter as a strategy is a failure too. That won't matter. They'll continue on without doing anything. They may pick up some nonsense strategy to make themselves look good, and make it look like they're doing something but the real strategy will be to push a “bullshit baffles brains” strategy.

I know its a fair bit of work in order to organize ourselves for the ability to provide industry with an alternative means of organization. But this will have to be how it is done. In the traditional business world it doesn't maybe make a lot of sense. However, we are not dealing with a rational group when we are talking about the self interested bureaucracy.

The alternative is that we wait. And for what I don't know. The bureaucracy would like that. I have been fighting them on this for ten years now and they will not proceed with these developments on their own initiative. They will have to be physically removed. And that is in a nutshell what we are doing here by developing the user community now. Building an alternative means of organization for the oil and gas industry. We have the technological infrastructure in Oracle Fusion Applications. We have the overall vision in the Preliminary Specification. Now we need the third critical component, the user community to make this a viable alternative to the bureaucracy.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

A Plan to Deal With a Possible Scenario

We have to guard against a scenario that might play out like this. And then, just as everything starts to pull together and the user community is developing the software that they want and need. The producers decide that the business model inherent in the Preliminary Specification is, on second thought, not something that they really want at this time. How many times have we been at that point in a major project only to have the funding pulled and all the work and effort of the people turns out to be for a lost cause. These disappointments happen frequently in business. Things happen and priorities do change and there is risk involved in every project.

I would hope that no one would be subject to any career risk in participation in the user community. That however is the naive part of me that doesn’t recognize the politics of major change initiatives. The reality is that the work that we will be doing here in the user community will be unique and of interest to those that can handle the risks that they take to their careers. We are changing the industry significantly, and for the better. One look at the user community vision and you can see that the power and authority that the community has will make the work exciting and rewarding. Risk is a part of that.

What I can do is assure you that once we commence the developments of the project we will complete them. And that is because we provide the oil and gas producers with the most profitable means of oil and gas operations. They can not attain that profitability without the user community, People, Ideas & Objects, the service providers and cloud computing infrastructure, “the sub-industry” becoming operational. Therefore it is in their best interests to continue to push forward until the completion of the project.

If there were small increments of value being attained by the business model then we would be subject to greater risks than we are. With shale gas, and the prolific nature of the resource, a new business model must be brought into the industry. And that is what this sub-industry is doing. It’s a big problem, the unprofitable nature of the natural gas business. It can’t be sustained. We as a community have a solution to the specific problem of shale gas profitability. But also to a variety of other operational, administrative and accounting related problems that have been present in the industry for years. The Preliminary Specification addresses many of the current issues and is a framework for resolving future problems.

We will have our setbacks and there will be times when progress is interrupted unnecessarily. Those situations happen. We are however making wholesale structural changes to the way that the industry is configured. This level of change will invite a few hiccups. What we need to do is look beyond the bureaucrats to see the movers and shakers in the oil and gas industry. It is these people that I am certain that we will resonate with. And as far as their concerned we will be moving far too slowly for their liking. They'll be wanting to operate that stripped down version of an oil and gas producer that is focused exclusively on their earth science and engineering capabilities, and land and asset bases as their competitive advantages. The administrative and accounting work being done for them out “there.”

The other aspect that members of the user community can be assured of is that there will be revenues for the user community and service providers. People, Ideas & Objects have $667 million in user community funds budgeted in the initial developments. And the service providers will have the current producers G&A expenses diverted to them as revenues. Currently in North America the producers spend $40 to 60 billion on G&A. Therefore a large portion of these funds would become the revenue streams of the service providers. With risk there is also reward.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

A Sub-Industry

Our commitment to user community developments in our software is comprehensive. With the scope and scale of the Preliminary Specification it is necessary to have the user community define and design what it is they need and want in their oil and gas ERP systems. Not only do we provide the oil and gas producer with the most profitable means of oil and gas operations. We provide the user community with the software that they want and need. The only way to achieve that is to provide them with a sound vision of what a system could be. A vision such as what the Preliminary Specification provides, and let the users take it from there.

What People, Ideas & Objects provides the oil and gas industry and the user community with is the software development capabilities they need to achieve the objectives we have set out for them. Currently software development is an ad-hoc and cottage industry approach where either small software firms or employees of producers themselves stitch together applications of limited scope and scale. It is assumed that the employees of the producer firm will figure out the nuance of either integrating the applications with other applications, or shuttle data between the two applications in order to have the applications work together in the producer firm. This is how the bureaucracy likes to keep busy. Taking upwards of a dozen applications and making them all work as one.

Now many have criticized People, Ideas & Objects for having a scope and scale that is too large and will be impossible to manage. Of course many of these critics are the bureaucrats who are somehow stitching together the same scope and scale of application functionality out of dozens of applications with very limited budgets. Also under a cloud computing delivery infrastructure, which is what People, Ideas & Objects will be using, the centralization of all of the operations in one virtual location reduces the logistical difficulties of these tasks.

There is also the point that needs to be considered regarding the service providers and the software that they will be using. Much of the administration and accounting work of the producer firm will be done by these service providers on software provided by People, Ideas & Objects. These service providers will be derived from the user community and will work closely with them at all times. In fact service providers and the user community participants will for all intents and purposes be the same people. The software they use to process the oil and gas producers information will be purpose built by the user community to meet the needs of the service provider and the producer.

The point that I want to make here is that the user community, the service providers, People, Ideas & Objects developers, and our cloud computing platform all make up a sub-industry that is new and dedicated to the profitability of the oil and gas producer. This sub-industry is being created between the oil and gas industry and the traditional technology providers as a “gap filling” measure. What we know about specialization and the division of labor is that when a “gap” forms where someone can fill it with a new job, that is how specialization expands. This sub-industry is being created to fill the gap that exists between the oil and gas industry and the traditional technology providers. On the one hand we have the oil and gas producers as our clients and on the other hand we have Oracle as our supplier. We as a sub-industry have a fundamental understanding of oil and gas. We are trained in the disciplines of business. And we have a strong aptitude towards technology.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Business Model Transitions

What we can all agree on is that sixty years of shale gas reserves is an opportunity that the North American society can build significantly upon. Its too bad that the bureaucracy has its interests in front of all those in the oil and gas industry. But lets be honest they do need their paychecks, their pensions, their bonuses and stock options. Without those perks they just wouldn't show up. And that’s the threat that they keep over the investors in the business. Without the bureaucrats, you have no alternatives.

And that is why we are building the user community here at People, Ideas & Objects. To offer the investor community with an alternative means of organization to the oil and gas industry. The problem is we have no funding, and we have no support because the bureaucracy sees us as a threat to their franchise. That’s because we are a threat. There is no bureaucracy in the Preliminary Specification, it has been eliminated. So we are reduced to building the user community brick by brick, and stick by stick, the long and hard way. We are planning on doing this for the next five years. The time it will take to incur those additional $325 billion in opportunity costs to 2019. And then we will be able to begin the software developments. Surely by then some sanity will have overcome the industry and the loss of $705 billion by 2019 will have frustrated someone to act. Or we might have to wait until it hits a trillion dollars or more.

Either way we'll be ready with the user community that is focused on providing the oil and gas producer with the most profitable means of oil and gas operations. A fundamentally different business model. One that is a business. Not one that is a charity, which is a charitable way to describe how the oil and gas industry is operated today. We understand how the business grew to become what it is today. And we know why the business operates the way it does. That doesn't mean that the business has to stay that way. New business models are brought into industries all the time. If the old business model fails to build value, then replace it with one that does. It is a simple process of change and renewal that should be supported by all that are in the business.

The one cautionary note we raise in the Preamble to the Preliminary Specification is that we do stand on the shoulders of giants and we need to fully appreciate and understand this. Making changes at this point without fully understanding the consequences of our actions could be highly detrimental to the industry. It requires planning and in this day and age the software necessary to support any changes. Nothing will last unless the software exists to support the changes that we want. And that is the role that People, Ideas & Objects is taking in this business model transition. We have laid out the vision of what the industry would look like. People can see how that will work and how they will interact with it. And now we have to build the infrastructure, the software, that will enable those interactions to occur.

As important as the software is today, the software must be user community defined and supported. Having a group of developers in a room by themselves is useless. Its like having an engine mounted on a table. Without the users defining and designing the needs and wants of the systems, the developers will not know what is needed. And that is why we are so focused on the user communities development. And if it takes us the long hard slogging of the next five years, that is what it will take. If industry decides to join us now then we can do it much quicker. But that seems to be such a big “if.”

What we can do today is promise the industry that we will provide them with the most profitable means of oil and gas operations. We can prove it in the Preliminary Specification, and if we can prove it there we can prove it when the user community is developed and the software is operational.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

#Shale Gas Dynamics

If we look at the nature of shale gas we understand why there is a need for a new business model in the oil and gas industry. One that moves the industry away from its role as a price taker to that of a price maker. Here is the U.S. Energy Information Administration's Natural Gas Weekly Update. There you can find a variety of information regarding the situation in natural gas. Of note are the natural gas inventories, and this winters drawdown was substantially greater than the five year average. In any market that would be a sign of significant changes in the marketplace. And a positive signal that suppliers should look forward to stronger pricing power. However in natural gas, it is necessary to look at the next graph which shows the shale gas production.

Since 2009 when shale gas production appears to be in the neighbourhood of 8 billion cubic feet (BCF) per day. It has grown to 32.5 BCF / day today. An increase of almost 25 BCF / day in a 5 year period. Total production for the U.S. is around 72 BCF per day. So that shale gas in a period of 5 years has grown to almost 45% of natural gas production. Remarkable. And that has been during a time period where the average price was $3.77. I would hate to think what producers could do if they were motivated.

At $3.77 no one made any money on this natural gas. We don't need a graph to tell us that. With the prolific nature of the resource, both in terms of the size of the reserves discovered and the deliverability, these natural gas reserves are exposed to the natural gas marketplace immediately. Causing the natural gas price to collapse, and as we noted recently, the pricing structure fundamentally changed from a 10:1 factor to a 23:1 factor in comparison to oil.

Producers are their own worst enemies. They drill wells and throw the production on the market with little thought to the consequences of their actions. Its not the bureaucrats fault that the price declines, “we are only a small part of the marketplace” they will state. And there it will stay producing irrespective of the financial losses that it incurs. Because it has too. They have all these people employed at the company and they need the cash to pay them. Otherwise they would be out of business.

They say that shale will be around for 60 years. This certainly looks like an interesting business to invest in. With the breakdown in the pricing model to 23:1, its obvious the marketplace believes the producers will never be able to regain control of the pricing situation to the point where they can reassert the old markets 10:1 dynamics. And the bureaucrats are providing evidence of that each and every day. Therefore shale will lose money every one of those sixty years.

What is needed is a business model that enables the producers to allocate production based on the profitability of the property. If the property can produce a profit at the current price it produces. And if it can't produce a profit then it doesn't produce, but should not create a financial loss on operations, saves those reserves for a day when they can be produced profitably and removes the excess production from the natural gas marketplace. And also reduces the overhead and administration costs incurred by that producer in line with the declines in revenue. People, Ideas & Objects does this with the decentralized production model. A business model based on the Joint Operating Committee that provides the oil and gas producer with the most profitable means of oil and gas operations.

By reducing the footprint size of an oil and gas producer to the C class executives, the earth science and engineering resources, land and legal, with some support staff. The producer is focused on their competitive advantages of their earth science and engineering capabilities, and their land and asset base. The remainder of the resources of the producer are allocated to service providers who are focused on a process or subprocess and use the entire industry as their client base. Then these service providers are able to use their competitive advantages of specialization and the division of labor and provide their clients, the producers, with the services they need to be the most profitable oil and gas operations.

The charges for the service providers services will be charged directly to the Joint Operating Committee where the services are provided. Then if the property is shut-in due to the commodity price being too low to produce a profit, the events, activities or production does not trigger the service provider to conduct any of their services on the property for that month, and as a result no charges for any of the services will be charged to the Joint Operating Committee. Creating a null operation, no profit and no loss on the property. The reserves are held for a time when they can produce a profit, and the commodity marketplace has the higher cost production removed from the marketplace, placing a floor on the commodities price.

We have lost $380 billion in opportunity costs since 2009 as a result of not using the decentralized production model. The time when shale gas production began in significant volumes. We are potentially losing another $325 billion in the period up to 2019 by not using it now. The only people that are happy in the industry are the bureaucrats. And they are the ones that are holding People, Ideas & Objects software developments up. I say that an industry that can operate $705 billion more efficiently is something worth pursuing. But then I am biased.

I am biased because the industry can’t make this transition without having the software in place before any of the other changes are undertaken. We have to plan this next step with care and diligence and that is the role of the user community and the People, Ideas & Objects software development capabilities.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

And We Could Have More Cold Winters

One third of a trillion dollars is a lot of money to waste. I’m sure everyone in their right mind would take steps to mitigate the loss of these kinds of resources. And with the People, Ideas & Objects decentralized production model the oil and gas industry has that capability within its grasp. Not so fast says the bureaucracy. They will still have nothing to do with People, Ideas & Objects, and never will. It is completely against their better interests to have anything to do with us. And that goes for the user community as well. And that is why we will build this user community brick by brick, and stick by stick. Without the resources of the industry, we are forced to do it the long, hard way.

Just out of curiosity, I wonder when we do sit down to commence the developments in 2019 what the opportunity costs for the 2014 to 2018 time frame will have been. There may have been five, count them, five cold winters in that time. Raising the average price of natural gas as high as $4.00. The point I guess is that their will at that time, from the bureaucracies point of view, ten years less of shale gas reserves left. Out of the approximately sixty from the very beginning of the shale revolution. And that will have an impact on pricing, they will assert. Lets be conservative and say that the opportunity costs that are incurred, while we quietly build the user community, incurs another $325 billion more in wasted resources.

I can see the investors lining up to volunteer their capital now. Nothing like a losing cause to instill the community spirit. But what can you do. The bureaucracy has to have it their way and until we can generate the user community on a scale large enough to approach our development needs, there is nothing that we can do. That involves picking off like minded employees of the producer firms who will work for the “other” side (us) in a covert fashion. One at a time over the next five years. Then when we have the mass necessary, offer ourselves as a viable alternative to the losing ways of the bureaucracy.

I think its a good plan. Its the only one we have. Its the plan that we have based on the financial resources that have been provided to us by the oil and gas industry. Which is $0.00. Which I can add to the total revenues of People, Ideas & Objects since my breakthrough in using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer, of $0.00 for a total of $0.00. As I've said before the industry should be embarrassed that its problems are being solved by people who are not accepted by the mainstream “thinkers” in the business. Those that are outcast by the ones that are “running” the industry now.

Billions, trillions, at this point what difference does it make. Technology has had no effect on any industries business models. So why would it now have an effect on oil and gas. If we listen quietly to the hum of the bureaucracy going about their business then we can all just do as we are told and not think of any other opportunities or possibilities. Its time to get in line and accept that theirs is the better way. Now my addition could be incorrect on such large numbers but if we add the opportunity costs that have been lost, to the opportunity costs that could be captured, we come to a total of $705 billion. So maybe we should keep on going for one more day. And this user community could make a difference.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

It Was a Cold Winter Wasn't It

Natural gas prices have been strong for the winter months of 2013 and 2014. Its been cold and the gas inventories have been drawn down significantly during the January and February time frame. And prices have responded. At the low end of $6 they eliminated much of the value of the decentralized production model would provide. If you recall we have used the industry supplied price of $6.70 as the factor where profitability begins, and therefore how we have calculated our opportunity costs. The last few days has seen the price fall precipitously back into the mid $4 range as the weather forecast is for the spring season.

I have stated repeatedly that the industry operates on the basis of the two human emotions of fear and greed. Fear of the bank manager calling the loan when gas prices are low. And greed when the gas prices show some strength as they had been. We will see which emotion is the operational mode when the fall in natural gas prices begins and the market has sorted out the cold winter of 2013 and 2014.

If we look at the past five years of pricing information we see a fundamental change in the pricing structure of natural gas. Gas has traditionally been priced in the range of approximately 10:1 to oil. This recognizing the differences on a heating value basis. As a result of shale, this range has ballooned to over 23:1 on average over the past five years. A fundamental breakdown in the manner of natural gas pricing. It is this breakdown in the pricing that will not be resolved in the term of one cold winter. It is this breakdown in natural gas pricing that requires producers to adopt a new business model to bring pricing back in line with the traditional heating value basis of the commodity.

The average price of natural gas for the past five years has been $3.77 / MBTU in the North American marketplace. If we were fair and reasonable about our claim as to the amount of opportunity costs that the Preliminary Specification provided to the oil and gas industry we should make that claim based on the past five years. Then we can factor in the positive effects of the cold winters and remove any negative bias in the number. We will continue to use the industry cost factor of $6.70 / MBTU as the threshold to profits. And in doing so we find that, on average, the total opportunity costs for the past five years would total $380 billion U.S. And I believe that is a fairer representation of the value of the Preliminary Specification and the decentralized production model.

If we are going to be as ridiculous as to think that one cold winter is going to solve the natural gas pricing problems. I am going to promote the decentralized production model as providing that value. Producers need to think what it is that they are doing. They are wasting good resources and capital while they dither. They have forgone ⅓ of a trillion dollars without even thinking whether it is a concern or not. This is why the bureaucracy has to be removed from the scene and sent down the river. Their way is too destructive to continue.

The Preliminary Specification and the decentralized production model provide the oil and gas producer with the most profitable means of oil and gas operations. It does this through an innovative business model that uses the Joint Operating Committee as the key organizational construct. What we do is we strip down the prototypical producer to the C class executives, the earth science and engineering resources, some land and legal, and some support staff. The remainder of the producers resources are reorganized into service providers that are focused on a process or subprocess and use specialization and the division of labor to provide their clients, the industry, with the administration and accounting capabilities.

When a producer determines that a property is not profitable, they will shut that property in until it can be produced profitably through some innovation or higher commodity prices. As a result none of the service providers in the industry will be charging the Joint Operating Committee for any of the administrative or accounting services for that property, as there was no activity generating any work for the service provider and hence no billing for services. As a result the property records a null operation, no profit but also no loss, the reserves are held for a time when they can be produced profitably and the commodity is held from the marketplace keeping a floor on the commodity prices.

This is a far more effective plan than going to Church on Sunday’s and praying for another cold winter. $380 billion is a reasonable amount to assign to the decentralized production model as that is how long the pricing structure has collapsed as a result of the shale gas effects. The only solution to the shale gas effects, in the long run, is a new business model that deals with overproduction. That is what People, Ideas & Objects decentralized production model does. It provides the industry with a means to allocate production based on profitability. And is the only reasonable method to use. Some might think the Preliminary Specifications key drawback is that it also eliminates the bureaucracy. And it does. However, I feel that is a feature.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The #User #Community #Vision Part VI

I was in a record store the other day. No scratch that. There are no records and there certainly are no stores. Technology has disintermediated that business. Apple did it with iTunes their iPods and iPhones. Steve Jobs disintermediated a few industries. What People, Ideas & Objects, the user community and the service providers is doing is disintermediating the oil and gas business. Ending the life of the archaic business model that no longer supports any of its users needs and ceases to build value for its stakeholders. Disintermediation is necessary, no industry will be immune, and timely. We are scheduled to commence software developments in 2019 which gives us five years of user community development. Enough time to be able to provide an alternative means of organization to the oil and gas industry. And we will finish developments for our first commercial release in 2021 and be operational on the software in 2022. That is our plan and we have much to do.

Just today deep down in the Oracle organization a developer, using D-Trace solved a bug that had been present in the code of the Solaris operating system for over 20 years. This was done with no fanfare, no recognition other than a few high fives with team mates. The technological infrastructure that we are using as the base for People, Ideas & Objects has matured, I would say about five years ago. Matured to the point where something like what we expect of the technology can be done. To do it five years ago would have required superhuman strength. Today it could be done much easier, however it would still require a hope and a few prayers. In five years time kids will be assembling this kind of technology out of gifts that they get from Santa Claus.

A bit of an exaggeration but you get my point. There are no large technical issues that need to be solved. Everything that we need to do can be done with today’s technological infrastructure. There is no technical risk in our business. If you look at the last two keynote addresses by Larry Ellison at his Oracle conferences they reflect his absolute brilliance. Although there are no large issues to resolve it hasn't stopped him from moving the technology forwards in significant ways that will make our job faster, better, smarter and higher in quality. Five more years of this and we will be able to do anything that we as a community can think of.

I mention this as this technological infrastructure is what is enabling the disintermediation of the industry. It will be a new oil and gas industry. One that is limited by the user communities imagination. One based on the Preliminary Specification and built from there. This is the opportunity that we have in front of us in the next five years. The user community has the power as was documented in this vision. No one is going to grant you approval to proceed. We will act in our own best interests and provide the oil and gas producer with the most profitable means of oil and gas operations. Those are our limits.

Now for the relational database geek in all of us I provide you with the videos of the last two keynote presentations of Larry Ellison. These are very technical. And if you don't understand what it is that he is talking about I suggest you take some time to learn what it is that he is discussing. Understanding relational databases will provide any participant in the user community with a better knowledge of how the system is put together. It should almost be mandatory understanding. And the best place to get that understanding is from C. J. Date, An Introduction to Database Systems

Here are Larry Ellison’s last two keynote addresses.


And the url to the keynote on Oracle's site.

http://medianetwork.oracle.com/video/player/2685494045001

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The #User #Community #Vision Part V

I suggested that the oil and gas industry should participate in the user community. And to do so quickly. When I mean the industry I mean the individual oil and gas producers. Participation is imperative for them if they want to proceed with the developments around the Preliminary Specification which includes the decentralized production model, the Joint Operating Committee, the three marketplaces and the eleven modules. And in turn achieve the most profitable means of oil and gas operations. Non participation in the user community will preclude the producers from the benefits of the software, the user community and the service providers.

But there is more. Non participation will also make it that the producers particular requirements, your unique way of administration, accounting and operations are not accommodated or considered. That none of the software is built for the situations that your company has experienced. And that premier asset of yours doesn't have the software to handle the particular nuances of how it makes money. The bureaucrats will say they have it covered with their current administration, and they do, to the extent that it makes money today.

There is also the fact that your people are not participating in the user community itself. I expect the user community to be dynamic and fast paced with significant iterations being made over the business model that uses the Joint Operating Committee. Your people won't know what these changes are and they won't know what the implications are to the assets that you hold. As an analogy you're the four year old that has closed his eyes and covered their ears and shouted they're not listening. Yours will be a very effective strategy.

Your shareholders will be wise to your actions and wonder why you are not participating. Is their profitability not an issue with you? Or are you unaware of the technical progress that has occurred in the past 20 years. They will have questions and will need answers.

One answer might be that it is best to sit out and see how things develop. I think in this case sitting on the side lines will be the tragic choice. You should choose to be in or out and have your reasons, but to sit on the fence will be the worst choice of all. When the user community iterates on the model in the first phase of development the software will be quite advanced. More advanced than your organization can handle or understand. The user community and the developers will not stop iterating on the model. What you will find is that the ability to catch up doesn’t exist. The software will be bringing in new concepts and features on top of the previous features that you didn’t participate in, and therefore can’t understand or implement. Leaving you unable to make the transition.

This sounds very similar to President George Bush’s claim that you're either with us, or against us. You have to chose. There is no middle road. And I am sure that the bureaucracy could all decide that they are against participation in the user community. Their reasoning would be financial they don't want to pay the fees to get to the point to where they can participate. But there will be a day when the decision is taken away from them and the investors can assert their needs for profits. And demand that the Preliminary Specification and associated business models be implemented in the industry. Until then we will keep building the user community that will eventually build the alternative means of organization to what the bureaucrats feel is acceptable. Then we won't need either. The producers in their unprofitable form, or the bureaucrats. Just the investors and the user community is all that will be required to establish a profitable oil and gas industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

The #User #Community #Vision Part IV

As we get deeper into this user community vision we begin to see the amount of effort that needs to be undertaken to make this transition from the bureaucracy to the user community work. One thing we do know for sure it is a self selecting process in terms of keeping the bureaucracy out. For them its all about securing the pension, the bump in pay and the potential for bonus. Additional work is not what bureaucrats volunteer for. Therefore they will not be participating in this initial phase of organizing the user community as that would require them to actually do something.

It is with that little tirade that I bring up an important point about the user community. Lets assume for a moment that we have built the capabilities necessary to provide an alternative means of organization to the oil and gas industry. And the investment community, furious with our friends the bureaucrats, decide to proceed with our alternative. What would be their first step in dealing with us.

It would be to implement a service level agreement between the industry and People, Ideas & Objects for the providing of the systems, software and services. And it is at that point that I laugh and point out to them, I or People, Ideas & Objects only work for the user community. You’ll have to speak with them in terms of what you'll need. It would be hypocritical and condescending for me to entertain a service level agreement with industry when we have taken the efforts to build the user community.

It is the user community that is defining what and how the software needs to be and that is what People, Ideas & Objects is working towards. I will never have an agreement with the industry. I will issue invoices for the use of the Intellectual Property contained within the software, the services of the user community, and the cloud computing infrastructure. It may be that the industry will have service level agreements with service providers but I only have end user license agreements with those people for their use of the software, and no other business with them. That will be their choice as to how they run their operations.

If the industry wants to have elements of their organization included in the People, Ideas & Objects software then they will have to involve themselves in the user community. This is what makes the People, Ideas & Objects user community so effective, it has power. They are not a committee that have been established to make it look good for some purpose other than for good software. The user community first of all has revenues. A total of $333 to 667 million in the initial development phase. They will be able to budget what they do with that. People will be able to specialize in terms of being user community participants.

Secondly users will have the power to make the changes in the software. People, Ideas & Objects Revenue Model is based on change. Without change we would generate no software development revenues. We are oriented to change. Ours is a fundamentally different basis in which to base our software product on. Therefore the user community will have the software development capabilities of People, Ideas & Objects to affect changes that they need and want, when they want. They will be the ones who determine the configuration of the software. Not the technical architecture or some business cycle.

Thirdly the user community will have the power that they are the ones that are in control of the business model. Changes to the underlying Intellectual Property can be made by anyone and everyone in a model that allows free access to those that are licensed in the user community. Use of the Joint Operating Committee is a powerful model that solves the administrative, accounting and operational issues and opportunities of the industry. And it is in the hands of the user community.

And as we have justed pointed out the user community is the point where industry deals with their issues and opportunities. The user community is the exclusive point of contact for industry to deal with their administrative, accounting and operational issues and opportunities. There will be no other place for industry to go. People, Ideas & Objects is mute and dumb other than to the user community.

What we have configured here is a fundamentally different, far more powerful user community to deal with the way the oil and gas industry is operated. The oil and gas producers can certainly participate, that is their choice. A choice they should make quickly.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

The #User #Community #Vision Part III

The Preliminary Specification defines a vision of how the oil and gas industry will operate in the most profitable manner. We are working on defining a user community vision that defines how that community operates in the most profitable manner. It is the user community that is the key to the success or failure of the oil and gas industry. Without the people necessary to operate the industry, the industry will not operate. Without a clear definition of the users needs and wants in the software, the People, Ideas & Objects software will be useless. The user community is the key to all of these elements success. This community, and I include the associated sub-industry of the service providers, will understand this responsibility and will expect to be compensated for it.

The value proposition contained within the Preliminary Specification has been quantified at $170 billion for the 2012 and 2013 calendar years. It will be determined what value it will provide in the future. With the characteristics of shale gas, I am suggesting here the annual value of the business model in the Preliminary Specification will only go up. For industry to realize the value proposition provided in the business model requires the user community and service providers. Their costs are an inherent cost of doing business and the value proposition is an increment of revenues. The producers get something of significant value for the normal course business administration and accounting costs. Therefore for the user community to expect to be profitable is therefore not an unreasonable expectation.

There will be a shift in power from the bureaucracy to the user community as a result of the work that we are doing. The bureaucracy that currently runs the industry is self serving in its desire to keep itself satisfied. It has long ago distanced itself from value accretion and the interests of others. The user community is being founded on providing the oil and gas producer with the most profitable means of oil and gas operations. Our costs involved in operating the industry, the user community and service providers will be single digit percentages of the industries total costs.

Our future and our value is derived through our financial health. If our members are satisfied in their work then their work will be their focus. I don't expect to see the service providers to be owned and operated by a small handful of individuals. I see them owned and operated by the people who are working within the service providers themselves. An allocation of ownership based on some value contribution to the organization. Each year an additional 10% of the stock of the service provider company being issued to the highest contributors as a bonus.

It will be these people who operate the industry on behalf of the oil and gas producers. It is they who the producers will rely on to deal with the administrative and accounting issues and opportunities that they as producers face. But that’s not what the Preliminary Specification does. It certainly addresses the administrative and accounting issues and opportunities. We however also see that it controls the business model of the industry. Therefore it can affect the operations of the oil and gas producer. Like the manner in which the decentralized production model allows the producers to deal with low commodity prices. It is a method to deal with the administrative, accounting and operational issues and opportunities that the industry will face in the 21st century.

It is therefore a mutually beneficial relationship that the industry will have with the user community. One in which the industry, if it were smart, should realize they should be part of.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The #User #Community #Vision Part II

Following on the brief introduction of a user community vision. We also need to discuss what types of work the users will be doing. We will be offloading a lot of the work that is currently being done in the industry to the computers. No one would dispute that fact. The time and effort in maintaining disparate databases of the same information, the reliance on paper and multiple layers of bureaucratic red tape will be gone. In addition using the Joint Operating Committee and aligning the compliance and governance frameworks with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks eliminates significant redundancies within the producer organization and their interactions between working interest partners. There will also be efficiencies of using the service providers who focus on their process on behalf of the industry, as their client base.

Therefore there will be significantly less paper used in the process. A lot of the jobs that were consumed in that task will be gone, as will many of the jobs that are involved in the inefficiencies today. So what will people be doing? The first thing they will be doing is providing the oil and gas producer with the most profitable means of oil and gas operations. The industry will understand that it is an investment in its people that provides them with the best return in terms of how their money is managed in the oil and gas industry. Secondly, in the short term, they will have an alternative means of organization for the oil and gas industry to rely on for when the bureaucracy either ultimately fails or just quits.

Focusing on the business of the oil and gas business will be what is the mindset of those that are operating in the user community. The Preliminary Specification is an oil and gas ERP system that is designed for its unique character, and particularly the Joint Operating Committee. This user community is being built upon the Preliminary Specification.

Therefore it will be the decisions, the ideas, the collaborations, researching, the creative, and solving of problems that people will be doing. All focused around the oil and gas business. Now those that are in the user community will be working with the developers of People, Ideas & Objects defining what it is they need and want in terms of software to do these things. That is their job. Developers know how to write code and make systems work and need the explicit direction from users in order to develop the appropriate software. When we look at the Preliminary Specification we need the user community to be large and robust in order to capture the needs of the industry. That is the scope and scale of the effort that we are doing here in the user communities development.

It is therefore reasonable to assume that this will be different software from what is available today. And the reason that it will be different is that it depends on the Preliminary Specification which is unique to the industry but more importantly, it will have the user community that will have been developed over the next few years. The user community participants will have had the time to fully understand and appreciate the opportunity that this is. And they will be able to define what the software is, how it is different and what they need and want. The user community will have at their disposal, not just during the initial development period, but always, the software development capabilities of People, Ideas & Objects for the changes and improvements that they want and need.

In terms of portraying a user community vision this helps to show how this important work will be undertaken. I will continue in further posts to try to portray more of how I see what I think the industry needs from this new form of organization.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

A Vision of the Beginning of the User Community

Its difficult to lay out a vision of what the network, user community and service providers will look like when they are built. Its an entirely different way of working for pretty much everyone in the oil and gas industry. Instead of showing up one day at an office provided to you by someone else, with a desk provided to you by someone else with a computer provider by them as well. A brief introduction to those that are around you and the stack of papers that you will become more intimate with. You'll be faced with nothing but your toes at the end of the bed.

And that’s a good thing as Martha Stewart would say. You have those degrees, that experience, those skills you worked hard in building. You have the knowledge of the oil and gas industry and how it operates. Your own computer of which you're connected to the @piobiz network. This is sounding a bit better than a few minutes ago and then you'll realize its that specific thing that you have always wanted to do.

Its 2014 and what you need to do to enable yourself to do that thing that you want to do will require some time and effort and organization to put it together. Thankfully the People, Ideas & Objects developments are not scheduled until 2019 so you have some time, and you're going to need it. Thankfully you can drone on in the office we noted above for many more years while you configure this offering for the future. The question would be where do you start.

The first thing everyone needs to do is to read the Preliminary Specification and become familiar with the global scope of the application. And all of the other aspects of the projects. The more you understand the business model the better you will be able to fit within it and configure yourself with others. Then everyone will need to Think, Act and be Patient as first the network, and eventually the user community develops into what they need to be to provide the oil and gas industry with an alternative means of organization.

People will figure out the rest from this point. Collaborations will begin and the self organizing nature of the network should begin to start. That is how this works. No one will control it, no one will tell it what to do. It will exist to provide the oil and gas producer with the most profitable means of oil and gas operations. It will have the software development capability of People, Ideas & Objects to build the software it wants and needs to meet that objective.

Collaborations and participation in this user community will be how the oil and gas industry is operated. The bureaucracy doesn't want to hear such nonsense. But as I noted yesterday they won't be around much longer. They will either quit or continue to fail. Our appeal is to the investors who are of like mind and will need the solutions that we are developing here. Both to replace the bureaucracy and to ensure that they achieve the most profitable means of oil and gas operations.

We have time and as more people join, we will gain mindshare. This is the way things will be operated in the future. In other industries as well. Bureaucracies are finished. Networks are taking over. And this is how they get started. With like minded people Thinking, Acting and being Patient.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

A Cold Hard Assessment

What we are faced with may seem like a long road where there is much risk and a lot of hard work. That is a fair assessment. What we are doing in the user community will be hard to accomplish. The question we need to ask ourselves is, will it be worth it? But before we answer that it probably make sense to take a step back and look at how the bureaucracy perceives us.

Although I have never crossed a mother grizzly bear and her cubs, I don’t think she would have anything on the bureaucracy when you cross their domain. They are a nasty bunch. And they are not a fan of People, Ideas & Objects or the work that we are doing. As we mentioned yesterday we are looking to throw them in the river. They have a nice setup now and do not see the need to upset the makeup of their empire. As I have mentioned in the past, even the CEO’s don’t venture into our territory for fear of a mutiny.

I look at those as the good old days when things were relatively calm in the oil and gas market space. Today, that is since the 2008 financial crisis, things are not necessarily as they appear. The bureaucracy has been losing much of its hold on power in all areas of its domain. It’s in retreat and having to pick its fights. The investors have risen and are asserting their dominance in the corporate domain. So the CEO’s have to pick. Harmony with the bureaucracy or profits with the shareholders. And it looks more and more like the shareholders are winning the war. It’s still too early to pick a winner, but what industry can continue on without making any profits.

And what is so great about profits. Its just that in reality the oil and gas industry hasn’t produced any. The accounting treatment of valuation of assets and hence income can make anyone an oilman. The fact that there are ceiling test write downs in an environment with $100 dollar oil and $5.00 gas should make you laugh uncontrollably. Anything and everything that is spent is capitalized. And little is expensed in the current year. In good years this balloons income and inflates assets of everyone to the level of a super achieving oilman. On an accounting basis you can’t tell if the CEO is an idiot or a genius. That is until they declare bankruptcy.

So earnings have been a bit of a shell game for the past three decades. All your mistakes and skeletons stay in the closet as long as you keep drilling and the commodity prices eventually rise. The investors are now wise to this game and they want to earn some real money now. They have invested faithfully in the industry and have expected returns from the business. During the past decade there has been significant increases in commodity prices and the bureaucracy have not performed. The results are the same as when the prices were $20 per barrel. The bureaucracy feels this should be adequate and the investors need to check their expectations.

I have heard a few CEO’s talk about value instead of volumes. As a matter of fact it was the CEO of Encana in their fourth quarter conference call that brought up that as their new strategy. Well that will be a surprise if they actually pull it off. They could always call us if the mood strikes them. As we have a solution that is somewhat consistent with that idea.

We’ll see how long this flavor of the month strategy lasts. If it’s a trend precipitated by the investors, which I think it is, the bureaucracy should purchase some luggage. Maybe even a canoe. The point being that the time for the user community and People, Ideas & Objects gets closer each day, the risks are less, and the rewards for us as a community are more than worthwhile.

The question was asked at the beginning if we developed the user community would it be worthwhile. If we assume for a moment that the bureaucracy is in decline. And their ability to battle is waning. Then providing the oil and gas industry with an alternative means of organization will not only be a good thing from a profitability point of view, it will be a necessity. What will happen is that when the situation gets to be too untenable for the bureaucracy, they’ll quit. That is their history. They’ll either run out of paper or find opportunities in other locations and leave their skeletons in their closets for someone else to wrestle with. They are not fighters or builders, they’re bureaucrats. We need to have a replacement for them when they abandon ship just as much as we need to replace them to enhance the profitability of the oil and gas industry. And that is why we need to do what we need to do, build the alternative.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

#Specialization and the #DivisionOfLabor for Higher #Profit

I want to stress that we as a community are not looking to anyone or any group for approval of what we are doing. We are acting in the best interests of the oil and gas industry by providing the oil and gas producer with the most profitable means of oil and gas operations. When this community achieves a certain level of organizational capability the resources necessary to fund the development budget, and hence the user community and eventually the service providers will arrive. Its a bit of a leap of faith. Organizing ourselves does not cost anything of a material nature. Providing the industry with an alternative means of organization is what is necessary to set the revolution in place and throw the bureaucracy in the river.

As of today we stand on the vision that is contained within the Preliminary Specification. One that provides substantial value in terms of its enhanced profitability to the oil and gas producer. The bureaucracy will continue to produce shale gas at a loss, making it a wasted resource. People, Ideas & Objects have a better way. The second pillar of our offering is the Oracle Fusion Middleware and Oracle Fusion Applications as our technical base. These two pillars form the foundation of which we are building the user community upon. When we have the three pillars in place it will be hard for the investors to deny themselves the opportunity to earn greater profits by joining us.

Yesterday we discussed the toolset of specialization and the division of labor. And this is an important element of how we provide the most profitable means of oil and gas operations. Some may feel that the use of computers will be taking away jobs in the future. I sure hope so. They can take away all of the low end jobs that they can handle as far as I am concerned. And leave us with the thinking, deciding, innovating, creating, collaboration, research, problem solving and ideas that we can handle. Thats the future that I am building.

What the future of the oil and gas industry has in store for us is a little different as well. Even today the production costs on oil are in the $70 range. How many people are being employed in those cost figures as compared when oil prices were $20 and production costs were $12. The future sees a continued escalation in the costs of production. And the demand for production will increase as well. The volumes demanded by the world will grow. Therefore the level of work needed at all levels within the industry is going to need to expand significantly as production costs continue to rise, and production rises to meet demand.

Where will these people come from? And that is an age old question that economic principles have solved since the 1790’s. They have solved it through the toolset of specialization and the division of labor. As more is demanded from the workforce we will adapt by bringing more people into the industry. But that is limited. What we need to do is to continue to specialize and divide the labor so that the efficiency and productivity of each individual is increased. And it is in that way we will be able to approach this increasing workload.

The way that the bureaucracy has structured itself today provides no further upside in terms of specialization and the division of labor. Each silo’d corporation is constrained by its ability to specialize and divide the labor because it is not exposed to large enough of an area to really specialize in. Take yesterday’s example of the lease rental payment service provider or even Exxonmobil's ability to specialize in that process. The service provider, particularly with the People, Ideas & Objects software development capability, will win every time. So there is no opportunity for the bureaucracy to increase their throughput of more oil and gas production or deal with the rising costs. They only have the ability to hire more people to do more stuffing of reams of paper in the printers. And they have already shown the inability to make any money with that business model.

So when we talk about the toolset of specialization and the division of labor we are talking about the capability of increasing the throughput of the industry to meet its future demands. Demands of rising costs per barrel of oil equivalent, and higher production volumes. Without this toolset the industry might not be able to increase its productivity, or address the higher throughput, leading to further declines in its profitability. Specialization and the division of labor, in addition to the decentralized production model, are reasons that this community will provide the oil and gas producer with the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

How the #ServiceProviders Will #Compete

We noted before that the glue that holds the user community and service providers together is the Intellectual Property (IP) that is derived from the Preliminary Specification. Users are licensed to access all of the IP that makes up the Preliminary Specification for the work that they do in the user community. It is a similar case for the service providers. They will be granted an exclusive license, and the software from People, Ideas & Objects to manage a process. For the purposes of this blog post lets assume that it is the lease rental payment process for the United States.

Other than for other geographic regions such as Canada, no other service provider will be granted a license or be given access to the software that manages the lease rental payment process in the United States. It is an exclusive engagement. Some might think that without the competitive elements driving the service provider, the lease rental payment process will become inefficient. And that would be the case. However I would ask what competitive elements are we looking for. The oil and gas industry consistently looks to establish multiple vendors in every category of offering. The innovator or inventor of a product or service is left to fend for themselves against half a dozen “me-to” competitors who provide low cost and low quality services to the industry. The original providers IP or advantage washed away by the oil and gas industries lack of respect for anyones IP. This has been the traditional manner of operations in oil and gas for many years. And these days are gone.

Now what will happen is the service provider will have the exclusive rights to manage the process. However they will also have the competitive forces from other service providers managing other processes driving their efficiency and effectiveness. It will be the toolset of specialization and the division of labor that they will be able to rely on to make their service offerings more valuable to their producer clients. This they will do without the risks associated of losing their market share to someone who thinks they can do it cheaper. The competition will be between the service providers in terms of how they use specialization and the division of labor to increase their efficiency.

The ability to concentrate on the process and its efficiency will be the success in the long term. The team of people that will be employed at this service provider will be able to use their advanced educations, their ideas, the software development capabilities of People, Ideas & Objects, the most recent and advanced sciences and make themselves profitable and efficient for their producer clients.

Being a licensed service provider will require demonstration of significant skills in the marketplace. The experience, skills, knowledge, and understanding of the industry will be what we are looking for in a service provider. Their participation in the user community will be a mandatory requirement, particularly in the process that they are looking to manage. And to get started with that it is necessary to join our network (@piobiz on Twitter). Granted this development will take time. And time is what we have. We are not currently scheduled to go into developments until 2019 so there is plenty of time for people to organize themselves for these opportunities.

Its important to recall the revenue streams and value proposition that we are working under here. The user community is budgeted to receive $333 to $667 million in direct payments from People, Ideas & Objects for their contributions during developments. And the service providers will have the tens of billions of dollars that the producer firms are incurring in G&A diverted to them as annual revenues for their service offerings. And that is in consideration that in 2012 and 2013 the opportunity costs of not having the Preliminary Specification operational with the decentralized production model cost the oil and gas industry $170 billion. Software has such an impact on what we do these days. Its important we get a handle on these things by joining our network (@piobiz on Twitter).

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

The Importance of the #User in #Systems #Development

Within the network that we are building here in People, Ideas & Objects. It is our long term objective to provide an alternative means of organization to the oil and gas industry. We are not looking for anyone’s approval to do so. We are not waiting for the bureaucracy to fund our initiative and provide it with the momentum that they will control. We are not waiting for someone’s decision to proceed with what we know is the right thing to do. We are the critical point of success or failure in terms of the how the industry operates in the future. We are focused on providing the oil and gas producer with the most profitable means of oil and gas operations.

The industry as it stands today has proven that it can not change. The bureaucracy is in control and will not cede its position. It is self serving and uninterested in the needs of any other stakeholder groups. Individuals and society have issues and opportunities that the bureaucracies refuse to consider. It is time to remove them from their comfortable seat and throw the bums out. Our appeal is to the oil and gas investors who are as equally frustrated with the profitability of the industry. They can direct the bureaucracy to fund People, Ideas & Objects, our user community and the service providers.

It is the people in the user community and service providers who will run the industry in the future that are being organized around our network (@piobiz on Twitter). This is the critical next step in our development. And the determination of whether we will be successful or not. Significant talk about the user and their role in the development of software is discussed in systems today. However, once the budget is fixed and the dollars start flowing, the realization that the user communities development is slow, hard and difficult work. Not something that fits into the gantt chart. Therefore user community development continues to be spoken of and very rarely implemented in terms of its potential. Everyone glosses over the fact that no one did any user community development and the system is deployed to widespread user disappointment.

This has been the traditional means of software development and implementation in the industry. This is unacceptable to me. User community involvement is the difference between success and failure in systems development, in my opinion. It takes at least six months for an individual to get a handle on their position in the organization. Multiply that by the hundreds of different positions in the industry and we understand the unique and difficult characteristics of how systems are to support these users. To not have the users involved in the development to portray this knowledge to the developers, then what exactly are the developers doing.

And what we are doing in People, Ideas & Objects in terms of user community development is not your fathers user community developments. We are creating a permanent user community for these developments, a dynamic revolutionary movement away from the bureaucracy, and a sub-industry of service providers that is derivative of the user community. If we had the money necessary to complete our developments we would sit on it until the user community was fully developed to the point where we could begin developments with them in place. This is something that we can do without the financial resources. And what we choose to do now. Develop the user community, the long, hard and difficult work of finding the people who are like minded in their desire to provide the oil and gas producer with the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

A New #BusinessModel For #Shale #Gas Production

We have seen in the last few weeks a number of spikes in the natural gas price due to the cold weather we have been having. It is winter and this is to be expected. We should thank all of those who prayed for a cold winter this past summer. Their efforts have certainly been successful. With the higher natural gas prices this eliminates the need for industry to adopt the Preliminary Specification. Or so the bureaucracy would like to think. However, it would be typical of the bureaucracy to manage the industry on the basis of the current conditions. It makes me wonder what happens to these people when it gets dark at night.

What we really need to focus on is the two hundred year supply of global natural gas that is available as a result of shale gas. And ask ourselves how are we going to produce it. Continually at a loss, or can we organize ourselves in a manner that would provide the industry with the opportunity to actually earn a profit? I can assure you what these price spikes in natural gas have done is dusted off some old drilling locations that will be spud here in the next quarter. By summer we should be back to $3.00 or less for the gas price. If shale gas is anything, its prolific.

Its comedic, predictable and destructive. The industry is operated on the two human emotions of fear and greed. Nothing in between. Its also inherent in the bureaucracies current business model. One in which requires them to always produce at capacity. This is in order that they can pay for the large overhead costs associated with managing the production, operation, administration and accounting organization. The organization is fixed in size, capabilities and capacity. It is custom built to support producer “A” at production levels of 100%. Not 80% or even 90%. To scale back production would trigger the demand to scale back the organization. And that can't be done. It is a unique one of a kind organization that has no redundancies. Everything is needed at 100% as it is at 80%. And if you make any cuts to the organization you'll damage your capabilities in the long run and hurt yourself in the long term. Its a catch 22 that no one in the industry wants to or will play. And rightfully so.

What is needed is a different way in which to organize the industry, a different business model and that is the Preliminary Specification. Contained within it is the decentralized production model that addresses the ability of the producer to shut-in production that does not meet the marginal costs. Therefore the only production that would be produced would be that which is profitable.

The decentralized production model does this by taking the prototypical producer and reducing their footprint to the C class executive, earth science and engineering resources, some land and legal, and some support staff. All the other resources that were traditionally employed by an oil and gas producer are reorganized into service providers who are focused on the process and have the entire industry as their client base. Then for example the service provider who manages a process to calculate royalties for the purposes of the Texas Railroad Commission will process their work for the client and bill the associated Joint Operating Committee for that work. And this will be the same for all of the processes that are managed by all of the service providers. What we are doing is moving the producers reliance on the firms administrative and accounting capabilities to the Joint Operating Committees reliance on the industries administrative and accounting capabilities. And in turn making the Joint Operating Committees administrative and accounting costs variable.

So when it comes time for the producer to shut-in the property because it is not producing a profit. All of the service providers will therefore not receive any work units associated with that Joint Operating Committee for that month. And as a result will not be processing any billing for any of the administrative or accounting work that is traditionally done for that Joint Operating Committee during the time that it is shut-in. And it will be understood that during times of commodity price volatility the service providers will have declines in their revenue streams as a result of some of the properties being shut-in.

What this does for the producers that own the property is substantial. It first of all keeps the reserves in the ground until the time in which they can be produced for a profit. Secondly they eliminate the loss on operations from the companies performance. The company will only have profitable producing properties and shut-in or “null” operations that don't produce a profit or a loss. And lastly the commodity marketplace will have less of the commodity in the market setting a floor on its pricing and keeping the steep declines we have seen in the past, in the past.

It is this business model that, may not be needed today, that might be needed tomorrow, that will provide a profitable return on all of the shale gas reserves, all of the time. Something that the bureaucracy should give some thought to, and how their mindless, self serving ways are currently destroying the industry. But then I am biased.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.