Remember these engineers and earth scientists are highly educated. Probably average ten years of specific oil and gas experience. Are in their mid thirties and are facing a layoff! Not because of anything they did, only because the bureaucrats were too self interested and uncaring about the business to concern themselves with the long term. Remember too that I have been writing about these issues for almost ten years. Plenty of time for the powers that be to have done something. These engineers and earth scientists may be fully committed to the oil and gas industry. Have it flowing in their blood and are willing to cut the bureaucrats some slack. However, the poaching that technology and other industries may do of highly educated and dedicated people, as these other industries pick up, will be one of the key reasons that the capacity and capabilities of the oil and gas industry are permanently degraded.
Under the current scenario we will however have a fully staffed bureaucracy at the controls. And as the prices turn up, as the Saudi’s strategy has become successful and the shale era slides into the history books as the latest .dom, real estate, shale bust, we can sit back and think that with the endowment of those shale resources, with all that value that was unlocked by those brilliant technologies. We didn't have enough sense to make two nickels to rub together. It will be at that time the retirement of this brain trust, I’m talking about the bureaucrats and being sarcastic here, will occur and the complete collapse of the industry will have taken place. There are always imports from less reliable countries that aren't as advanced as we “enlightened” people are.
This doesn't have to happen. And by no means should it happen. But it is. In the Preliminary Research Report (2004) I noted that there were similarities between the former Soviet Union and the way in which the industry was operating. The Soviets collapsed due to the inability of letting markets decide what to do. The same thing is happening here. The bureaucrats don't do anything. They produce whether or not they should or shouldn’t. No one looks to the price as the determining factor as whether or not they should produce. Who cares what we get for the product, just produce it. It was foolish in 1986 and it is really foolish today. It will lead us to our demise in the same manner that the former Soviet Union faced. Complete collapse.
The Preliminary Specifications decentralized production model implements the price maker strategy on an industry wide basis. Using the profitability of the property as the determination of why a property should be produced or shut-in. A producer can maximize their profits at any level of its production profile due to the nature of all costs becoming variable in the industry under the Preliminary Specification. If the property doesn’t produce, then it incurs no costs, not even overheads. Therefore maximizing the profitability of the producers profitable properties, saving the reserves for the day in which they can be produced profitably and most importantly, removing the marginal production from the commodity marketplace.
Funding the Preliminary Specifications budget is how we will avert the nightmare scenario the bureaucrats are leading us down. The stock market is repricing itself on the expectation that interest rates will be rising over the next few years. This means that all asset classes will have to perform at higher levels, and that can be most easily achieved through lower asset values. This is killing the bureaucrats stock portfolios and their pension plans. They therefore are going to want to hang on for a little longer than they originally planned for. So the total destruction of the industry is pretty much assured if we keep them in control.
The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful 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.