A Different Tactical Approach

We see in the natural gas storage volumes a rebound forming from last winters significant drawdown. Due to much prayed for cold winter. Natural gas storage volumes were drawn down substantially and were the primary reason for the increases in the natural gas prices. Prices remain higher than they were last year as the storage volumes remain below their five year average. However their trajectory appear to be putting the North American storage volumes on target to breach above their five year averages sometime this summer or fall. A complete reversal of the situation. This is as a result of the enhanced prices that are still being realized, the production that has come on stream as a result of the higher prices and the prolific nature of the shale gas reserves.

I would propose an alternative tactical approach be taken by the oil and gas producers. If the Preliminary Specification and decentralized production model were the business models that were operational in the industry. This drawdown in the natural gas storage facilities would be the opportune time in which the producers could establish control of the natural gas prices and become the price makers that the decentralized production model enables them to be. By removing the unprofitable production from the marketplace at this time the buildup in the natural gas storage would lead to higher prices at a much more rapid pace. Now would be the time to implement the decentralized production model and establish the price maker strategy that the producers would have under the business models available with the Preliminary Specification.

What we have learned however is that bureaucracies don't change. They certainly won’t come within a million miles of People, Ideas & Objects or its Preliminary Specification. We have also documented the accounting and logistical difficulties that the bureaucracy would have in trying to conduct a reduction in G&A costs. And that volunteering for any work is counter to the best interests of the atypical bureaucrat. So instead they will continue to produce at capacity until the natural gas prices collapses some time in August or September and in the mean time practice that deer in the headlights look in the mirror.

Being profitable is for fools anyways. The oil and gas industry has cash flow. The practice is you report the cash coming in and don't say anything about the commitments or the flows going out. And it seems that everyone buys it. The only thing you have to do is be able to stand up during annual report season and have a “plan” that sounds reasonable for the next year. And you're good. Party on till next year. This is how its done in the oil and gas industry. So instead of thinking about a different way to deal with the natural gas storage volumes, forget about it. Thinking hurts don't you know. Just go with the flow and don’t say anything that upsets the show.

And another year of shale gas reserves are wasted in a long procession of wasted shale gas reserves. It is the investors money, and there are a lot of them remember. So we should not worry about it. The inertia that is behind this continuous waste of resources is quite surprising. With $705 billion in opportunity costs for the decade of not using the decentralized production model. You would think that there would be adequate motivation for the bureaucracy to do something about it. But after almost four years of expressing the value of this model, the only interest generated by the bureaucracy is to take the Intellectual Property. And we know that the taking of the IP was not to develop the idea it was only so that it could be proven to be unworkable.

One day we will have put together our user community and presented it to the investors as a viable solution to the issues that we are discussing here today. And the investors can choose which form of administration they want, the bureaucracy or People, Ideas & Objects with its Preliminary Specification, the user community and the service providers that offer a better way to administer the oil and gas industry. And we can be done with these foolish ways of losing money.

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 same, but different.

First there is an article in the Wall Street Journal energy blog about $100 oil. In it the following comment is made;

“The two arguments against $100 oil, the ability of technology to raise new supply and the ability of price to limit demand, are falling quickly by the wayside."

This blog entry is going to address the differences between what I am writing about and the assumption that technology will ride in to save the day. To do that, I want to refer to an article posted in the "ArchDruid Report" by John Micheal Greer. Firstly the "ArchDruid Report" is a blog that everyone should subscribe to, the quality of his entries are second to none.

Secondly, it is important to recall that Peak Oil, as a theory, is statistical in nature. Denoting that 50% of the overall supply of oil has been produced. The other 50% of the oil remains in the reservoir and needs to be produced. These last few barrels require the producer to innovate on the sciences and learn new ways in which to produce the oil and gas. Much of these barrels are located in remote areas and can come in different forms. I would however, not count the tar-sands as reserves that fall into the traditional 50% of remaining reserves. I think Peak Oil can safely preclude the tar sands reserves from the calculation and effectively consider those resources a bonus. I believe the innovation necessary to produce the remaining 50% of oil and gas reserves will require significant technological increases in the earth science and engineering disciplines. The increase in the science and the associated innovation will only come about after a reorganization of the industry around the Joint Operating Committee. (JOC) This reorganization needs a dedicated software development capability, the purpose of this blog.

The great technology hope is addressed well in John Greer's blog entry "Innovation Fallacy". In which he uses a science experiment to draw an analogy of why the hope of some great technology will save the day is truly misguided. I agree with him that this technological wonder thinking is misguided, and feel the need to assert the difference between what I am writing about in this blog and the hope of some great technology.

I would add to John Greer's point that the installed base of gas furnaces and internal combustion engines makes the change to any other type of technology very costly as well as daunting. How anyone could retrofit the industrial infrastructure to a new technology in less time then the past century it took to install today's infrastructure, would be dreaming. The thoughts that food could be converted to energy is an either / or situation. We either eat or we drive, your choice. This discussion needs to be more openly debated to help the majority of people understand the true marvel of engineering that mother-nature has provided us in the oil and gas endowment. The ArchDruid Report accelerates this discussion.

I would also add that best analogy that I can think of is that you had 300 workers doing a job. Paying them enough for adequate food and housing is the cost of getting the work done. We need to think in these terms and learn that the value of mechanical leverage available through oil and gas is significant. The ability to replace those 300 workers with one 200 horsepower forklift using 10 gallons of gas / day brings into focus the true dependence we have on energy. Without it we are dead, or at least the civilization we are currently familiar with is. I hope the energy industry will soon adopt this thinking so that we can get on with the thinking necessary to produce that last 50%.

Technorati Tags: Genesys, Alternative, Energy, Peak-Oil, Organization

Google and CapGemini in agreement.

As I have indicated here before, "Google Apps for your Domain" is the collaborative environment chosen for www.people-ideas-objects.com. Today Google and CapGemini, Ernst and Young's technology division, announced that CapGemini would be supporting users for the use and integration of Google Apps.

CapGemini will be a resource that will be available to help the users of People Ideas and Objects collaborative environment. I look forward to using CapGemini's services in this area.

The warning that CapGemini notes in the announcement, about these collaborative environments being used within a company in an unauthorized manner, is similar to the warning I issued 42 months ago. That port 80 was able to allow these types of applications through the firewall was as big a danger then, as it is now. I can also assure you that when a major accounting firm is announcing the risk, it's too late to do anything about it. And I can certainly provide you with a domain name that is already being used in this manner for oil and gas. ;-)

Technorati Tags: Genesys, Alternative, Governance, Software

What I would do.

In the instance of having some companies with qualified opinions on their financial statements. If this project was proceeding as it should, I would have struck a committee of the large accounting firms to discuss what would be necessary to ensure that the companies had unqualified opinions next year. And then set out to do just that.

The source of this problem is the sale of Qbyte last year by IBM. The new vendors gave notice that it would not support Qbyte after 2009, and therefore has put the energy companies in a situation where on a go forward basis they have to qualify their opinions in the financial statements.

Why did IBM sell? Their frustration with the industry to do anything with their systems on a go forward basis was discussed many times in the past. What were they to do? I can't blame them in the least.

The industry reaps what it sows.

Technorati Tags: Genesys, Team-Failures, Call-to-Action, Alternative

Hydrogen isn't it.

That is of course just one man's opinion. Thankfully the scientific community has taken up President's Bush's challenge on alternative energy sources. This video is also a continuation of the MIT Energy Research Council announced earlier and is a part of the excellent series on the challenges of energy.

The problems are derived from the energy security point of view. This video provides an understanding of the challenges that are faced in using hydrogen as an alternative energy source. This Professor stands out as being one of the recognized leaders in physics and electronic engineering and has a great delivery. As with many of the videos presenters, she identifies the problems that we face in terms of the global energy challenge from her own particular point of view. The growth in populations that are increasing their standard of living, China and India to name a few, are where the demand is increasing. Professor Dresselhaus mentions that this demand is not linear. Noting also that the U.S. consumption does not change necessarily with respect to the GDP increases.

As we are aware, the higher quality fossil fuels, are mostly located in the difficult areas of the globe. The use of coal by the U.S. and China are probably going to continue and may increase as demand for energy increases and the supply becomes more constrained. It is also projected that fossil fuels will supply 30% of the energy in the future, down from 80%, however I find that to be a surprising reduction. Some interesting points in the discussion include hydrogen provides twice the "power" of gas.

Professor Dresselhaus talk is mostly on working with hydrogen, and particularly the storage challenge it provides, and how Nano Structures provide a fresh look at these hydrogen issues. What is required in order to use hydrogen is a variety of catalysts to produce it, to store it and then to use it. The Nano Structures change the properties of catalysts. This provide three benefits during the catalysts phase. They increase the volume of hydrogen storage, they reduce the storage temperature requirements, and "borazene" gets trapped. Professor Dresselhaus also notes that gold is a catalyst in nano application even though gold is not normally a catalyst for hydrogen. She also draws a parallel to the benefits that Moore's law has provided in terms of computer processing capability. This she notes is this scope of benefit that is necessary to solve the worlds demand for energy in the future.

Hydrogen is a transmission agent of energy that were inspired by fuel cells. The use of hydrogen today is specific to its application and the U.S. produces 9 million Tonnes per year. The source of this hydrogen is from hydrocarbons and therefore limits its upward growth opportunities. What is needed is to extract the hydrogen from water which requires a catalyst and hence is very costly and difficult to do, particularly at what would be expected as commercial volumes.

Many of the areas that progress is beginning to be made seem to be more on the energy demand side of the equation. Light can be provided for half of the energy demands by using LED's and Photonics. The demand side is the area where most of the scientific advances are of benefit at this point in time. Professor Dresselhaus stresses again that the most critical issue here is the storage of hydrogen, noting that Hydrogen needs five times the storage size of gasoline. Hydrogen molecules are separated quite far apart. What is needed is a Nano particle as a binding agent to reduce the storage requirements. One binding agent Ammonia was shown to be benign and inert as a storage medium.

One can clearly see the issues that storage of hydrogen makes. The costs of these materials, the energy they consume themselves and their safety has prioritized the science community to focus on these first and foremost. One opportunity Professor Dresselhaus notes is the recent discovery in sunlight conversion multiples. Soon the output of solar cell could increase from its current 12 -13% efficiency, and with nano technologies, this can be brought up to a 30% efficiency. Professor Dresselhaus noted that an ideal application of solar may be in the production and storage of Hydrogen, this would reduce the hydrocarbon footprint of production. And a surprising comment that all of these scientific findings have been discovered since the Presidents 2003 announcement of a new energy initiative.

Technorati Tags: Genesys, MIT-Video, Science, Alternatives