McKinsey, Averting the Next Energy Crisis.

Let me make it clear. The reason that I have pursued this issue over the past five years is due to the extensive nature of the threat. Our energy supply and demand balance is in serious jeopardy of becoming the biggest issue man has ever faced. When I look around I see a handfull of people at People, Ideas & Objects and McKinsey working on this problem. We have received no support and have consistently been kicked to the curb as a lunatic Cassandra, Chicken Little, Boy who cried Wolf or what have you. Now our lone voice is joined by a chorus of people calling for action.

First up is McKinsey, (Click on the title of this entry to be taken to the report.) At 150 pages this article deals with tthe demand side of the equation. This should be mandatory reading for the many reasons captured in this quotation.

It would be all too easy to respond with complacency to a short-term easing back of energy-demand growth. Once the global economy begins to recover, energy demand will bounce back too, imposing costs on consumers and businesses and on the climate in the form of CO2 emissions. There is even potential for oil market demand to grow more quickly than supply, risking another oil market shock. In these circumstances, losing the momentum on action to rein back energy demand could turn out to be a high-risk strategy -- particularly given early evidence that policy to boost the economy's energy productivity is already having an impact. p. 18

Fair comment from a demand point of view. For an understanding of the supply side concerns, the pre-eminent authority on that topic is Matthew Simmons of Simmons Consulting. He has a 49 page slide presentation that reflects the appropriate concern. On slide 45 he calls for the need to go to an "immediate war footing" with the following actions. 

• Step one: Enact genuine "data reform" on all key producing oil and gas fields. 
• Step two: Begin blue prints for rebuilding our energy infrastructure. (Where I think the Draft Specification fits in.)
• Step three: Get oil and gas prices high and create a floor. 
• Step four: Adopt global Plan B to reduce our oil and gas use ASAP. 

Here we have the number one consulting group in McKinsey, and arguably the number one oil and gas consulting group in Simmons both warning in the most dire terms regarding the situation that we find ourselves in. 

Who else is warning us about the concern for the energy industry? Bloomberg reports that oil executives tell the Obama administration "to get real on energy independence". Rigzone quotes the CEO of Chesapeake that we are;

Current low natural gas prices are setting the stage for a dramatic price rebound that should begin this fall or winter, Chesapeake Energy Corp.'s chief executive officer told analysts Tuesday. 

I hold the CEO of Chesapeake in high esteem. Recall he is the individual who,in three days last September, lost his $2 billion fortune in a cascading series of margin calls. An individual driven by more then just the financial rewards of the business. 

The prices of oil and gas have only recently collapsed, however, we see the long term damage this has done. Many projects are cancelled and will return slowly. Here Reuters reports that Shell has shelved their Beaufort exploration program. As I have mentioned before, I'm a Shell brat, and I recall when my dad was seconded to an industry joint venture to build a pipeline to bring this gas to market. This was during the mid seventies, and we're replaying this history again. 

Where is this all leading? To a very dire situation with tragic consequences for society. Those are my words and the motivation that has fueled this desire to reorganize the industry around the Joint Operating Committee. As the chicken little who has been squawking about this issue for over five years, I am pleased to see the quality and quantity of similar calls to act on this critical issue. I'll leave you with one more voice that should be considered. This one is from The Rand Corporation. Yes, that Corporation. Which is described as the "original non-profit think tank helping to improve policy and decision making through objective research and analysis." On Monday they released a report regarding the scope of the energy issue. Here's what they have to say. (From Reuters).

HOUSTON (Reuters) - The greatest threat to the United States from crude oil imports is a long-term disruption of world supply and the higher costs associated with that loss of imports, according to a RAND Corp study issued Monday.

"The fact that the United States imports nearly three-fifths of its oil does not pose a national security threat," said Keith Crane, the study's lead author and senior economist at RAND, a nonprofit research organization.

"There is an integrated world oil market, and embargoes do not work. But a large, extended drop in the global supply of oil would trigger a sharp rise in oil prices and significantly affect the United States, no matter how much or how little oil the United States imports," Crane said in a statement.

If we believe that the same ideas and approach that brought us to this point is the solution to this problem, then I leave you with that task. If however, you agree that this is an issue that can be solved by first re-organizing our approach to the business of energy, then please join us here.

Technorati Tags: People's Call-to-Action Energy Leadership McKinsey Simmons

Energy declines

Calgary's Herald newspaper has an article in Thursday's issue that supports the many initiatives inherent in this software development project. My actions have been to convince the industry that the need is great for the delivery of an ERP styled application such as People, Ideas & Objects. This began in February 2003 with a proposal that dealt with the two significant constraints of any software developer, code and customers. In September 2003 I then proposed a comprehensive research proposal. This proposal would test my hypothesis of an ERP system that identifies and supports the Joint Operating Committee; would provide the producers with a more innovative footing.

All well and good but it was at this time the producers turned against any idea of using the JOC. Or so I thought. Throughout the months of 2003 my proposals were steadily moving up the chain of command of the large intermediate producers. Reaching most of the CEO's in these firms was a reflection of the effort and the scope of the idea. Or so I thought. The one comment that in retrospect resonates with me is the comment that "we don't hire small research firm's." When none of the producers were interested in spending any money on this idea, I decided to conduct the research my self at my own cost.

In March 2004 I was informed that my thesis was complete and passed. I then set out to rewrite the document in commercial form. This was completed in May 2004 as the "Preliminary Research Report." Upon publishing this I was approached by some one in the industry who gave me two documents from Cambridge Energy Research Associates. These research documents were obviously on the same track as I was on in establishing the JOC as the key organizational construct. Their problem was it was well behind my completed work. I therefore won the right to the copyrights of these ideas. This also brought to mind the comments about "not using small research firms". I concluded this was a deliberate attempt to steal what was now mine. Understand the proposal I made in September 2003 was to conduct the research. The intellectual property was to be for the industry as they would be the ones that financed it. And since I financed it, the IP was mine.

Nonetheless it was around this point that I knew I was now an outsider to this industry. Any attempt to find work became useless and frustrated. Resigning myself to this fact I sought employment in other businesses and industries. And began writing this blog. After over 600 entries and 700,000 words I have been able to take the initial concept of using the JOC and detailed the research and results of the Draft Specification. An overall vision of what the oil and gas industry would look like and operate as by using the JOC.

I mention this bit of history as the basic need for People, Ideas & Objects was evident in the difficulties of finding and producing oil and gas. Finding energy was becoming substantially more difficult. Instead of developing these ideas and applications the industry chose to remove me and my ideas from the marketplace. Instead of doing anything constructive the industry has done nothing about their business but line their pockets with inappropriate levels of compensation.

That is a strong indictment of the brain trust of the Canadian oil and gas industry and particularly its management. And today we see the evidence that they are challenged by the difficulties in finding and producing oil and gas. From the Calgary Herald article.

Natural gas makes up two-thirds of all activity in the oilpatch and production has fallen almost 15 per cent over the past two years, taking the biggest contributor to the government’s revenue stream down with it. From a peak of about 14 billion cubic feet a day in 2001, Alberta’s gas production has steadily slid to a little more than 12 billion cubic feet at present. That figure is widely expected to fall as much as a billion cubic feet a day in 2009 as a result of spending cutbacks by big producers such as EnCana Corp. and Canadian Natural Resources Ltd., which are the two biggest drillers in the province.

It is important to remember that it was during this past two years that record activity in the field was taking place. More money was spent then in any prior period, and a 15% decline is the result? If doing all that activity lead to a significant decline in production what will doing nothing bring?

Herring was poring over numbers that showed only seven per cent of available rigs were drilling in Alberta.

Now granted some of that activity is attributable to road bans. But nonetheless budget cuts have been deep and systemic through out the producers involved in Alberta. In order to resolve this the solution that is suggested is;

The only way to increase production is to punch more wells to offset declines, said Don Herring, president of the Canadian Association of Oilwell Drilling Contractors.

The only way? Doing more of the same thing, expecting different results reflects a mental disability, not a solution.

Its time for the independent actions of people who are concerned about the effects of these irresponsible, selfish and criminal people. The CEO's of the major Canadian independent firms who were party to the discussion of using the JOC should be held accountable for their actions. The opportunity to do otherwise has passed, the damage is done and they are responsible. The road these producers are heading is towards their ultimate decline. Based on their performance in the province of Alberta, they will be out of business fairly soon. Please join me here.

Technorati Tags: People's Call-to-Action Energy Management Failure

Workforce 2020

Another Strategy + Business article talking about the impact of Information Technologies on organizations success. (Click on the title of this entry) This "Leading Ideas" article is subtitled;

For many companies, success in the next decade will depend on how well they implement information technologies that transform when and how people do their jobs.

People, Ideas & Objects falls well within the scope of this article. The work force is changing, mostly as a result of the changes driven by the current poor economy. I would expect that this economic trend will be augmented and supported by further calls to change driven by IT. This article provides us with an understanding of the scope of the challenge that is in front of us.

If business decentralization is a long-running trend with more stutter-steps than successes, it’s primarily because the technology to make decentralization work deftly has yet to be perfected or adopted by skittish organizations unwilling to fully take a chance on the unproven. But by 2020, innovative competitors — and inevitable gains in remote, mobile, and virtual devices — will make it impossible for most companies to deny that information technology is profoundly reshaping the workplace. By then, in many businesses, workers will no longer be bound by geography or by clocks.

First off the understanding that an innovative mindset is to try many things and discover many of the reasons that it won't work. These will be applied in this development process and enable us to approach this challenge constructively. This applies to the oil and gas industry and specifically to the earth scientists and engineers that will / are finding their volume of work growing.

The article rightly notes the geographical and time driven needs of a nine-to-five existence will become a thing of the past. The Draft Specification considers the "always on" and greater flexibility in a workers schedule are necessary for the future. Weather this is a demographic change or a reality brought on by the futile need to be in your office at 9:00 is unknown. I think the motivation to do so will be as a result of the existing technologies and the reality of the economic consequences of not changing. How this happens is also captured in the following;

The blended workforce. Over the next decade many employees won’t be employees at all; they will be temporaries, contractors, contingent workers, outsourced workers, freelancers, and, in business-to-business transactions, customers. Today, there are more than 42 million independent workers in the United States, or about 31 percent of the workforce.

The trend is well on its way and unstoppable. This is more of a quality of life issue with respect to the workers within the various industries. It should be asked how the oil and gas industry, already challenged with, a shortage of workers, retirements, increased workload per barrel of oil and gas and now competition on a worker quality of life issues. Good luck trying to hire people who are expected to use SAP or other bureaucratic supporting systems. But then again, I am biased. This trend will also bring new issues into play.

With outsourcing sure to be even more common in the future, managers will have to pay attention to project hand-offs and coordination costs between partners.

Something that should be considered is the specification and design of the People, Ideas & Objects application modules.

To keep their blended workforce happy, they will also need to create interesting work in an engaging workplace and pay workers’ invoices on time or risk exacerbating turnover, creating yet another fissure through which knowledge can drain.

As I indicated yesterday, the oil and gas producers have much to gain in getting involved in People, Ideas & Objects. Progress is being made on a day to day basis in Internet time. That is to say the accelerated pace of change of the Internet is the time table this project is following. I'd like to think the producers are progressive enough to start pulling some of the weight of this project.

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Where are the major producers

I want to clarify that everyone involved in the oil and gas industry is affected by the changes in moving to the Joint Operating Committee. It is important that everyone has some representation in which to have their concerns and needs aired and met. What I mean by this is that the individual who conducts the billing of NGL's for a major producer, has the say in how and what their job involves. How it can be improved and integrated with the many new and innovative ways that are incorporated into this system. 

The Joint Operating Committee (JOC) is systemic and culturally ingrained, therefore it applies to global oil and gas industry. It affects producers, suppliers, governments and most of all People. Everyone needs to be represented. The objective of this systems development is to ensure it and the Community of Independent Service Providers provide the oil and gas producer with the most profitable means of oil and gas operations. 

One of the deliverables in the Preliminary Specification is the geographical reach of the application. The minimum has been set in the Draft Specification as to handle North American needs. What about the other regions. Most of the intermediate and larger producers have a global reach. These producers have to be involved in making these decisions. As the Preliminary Specification is the current task at hand, now is the time to get involved. 

So where are the major producers?

Lets look at their choices. Currently SAP and Oracle are in the marketplace as providers of ERP systems to the producers. Are these producers happy with these limited options? Are they pleased with the costs and never ending difficulty in making even the slightest changes? What are SAP and Oracle's business models? Will these be affected by the economic changes that all organizations should be contemplating? I think it is reasonable to suggest these software developers business models are fine and they know they have the upper hand in ensuring their future profitability. Is this "plan" of continuing to use these applications adequate to meet the escalating needs; in terms of the earth science and engineering that is necessary for each future barrel of oil?

What will the year 2020 look like? What will the demands for energy be? How will firms operate in a world that may be fundamentally different from what we experience today? Have producers the necessary systems in place to support the innovation and change dynamics for this time period? Without People, Ideas & Objects I believe they don't. Energy is the life blood of any advanced economy. With out an abundance of energy, we will not fulfill our potential. It is these points that I would suggest are possible as a result of having all parties come together and build the People, Ideas & Objects application modules . 

In light of the oil price run up, the major producers are flush with cash. As a result of the current down turn, I see little downside in reviewing their operations during the development. Therefore what is the risk of putting resources toward People, Ideas & Objects? What would they get for their investment?

• A system based on the vision of the Draft Specification.
  
• Coverage of their geographical areas of operation through input in the Preliminary Specification.
  
• Producer can be in the front row in terms of working with users to develop innovative ways and means of defining profitable operations.

So whats the hold up? The economy is changing. Moving away from the focus on this quarters performance and more towards a longer term perspective. I hope so, that is to say we need the producers to be involved but not just for the next quarter. How is it that we can progress over the long term with a sustained effort without producers resources? How do we ensure that producers are committed to this project for the long term? This is the big question that I have no solution for at this time. 

Technorati Tags: People's Call-to-Action Community Funding Governance

McKinsey Where Innovation Creates Value

Once again we have a McKinsey article that is timely and topical. The point of this article is on innovation, and mostly talks about how firms are able to garner the advantages of research and technology. Clearly the importance of these attributes in the competitive toolbox of an innovative producer is unmistakable. "How" is the difficult question, and is why this software fills a key role in the delivery of value created by innovation.

In a nutshell, it is derived through the Community of Independent Service Providers (CISP) that are being recruited here. This communities role and purpose is clearly identified and explained in this article. I strongly suggest you download the article and keep it handy for future reference in what ever you do professionally. Yes it is that good.

McKinsey begin by suggesting that services will not follow the same demise that manufacturing did in the U.S. That the value generated by research and innovation are available to everyone who may want to use it. The problem isn't so much where to get it, but how to use it.

A similar complexity characterizes globalization. A variety of cross-border flows can be important to innovators—for instance, the diffusion of scientific principles and technological breakthroughs, the licensing of know-how, the export and import of final products, the procurement of intermediate goods and services (offshoring), equity investments, and the use of immigrant labor. Many kinds of global interactions have become more common, but not in a uniform way: international trade in manufactured goods has soared, but most services remain untraded. Of the many activities in the innovation game, only some are performed well in remote, low-cost locations; many midlevel activities, for example, are best conducted close to potential customers.

It is the CIPS who are on the frontlines in determining the producers needs, developing with People, Ideas & Objects developers the software applications that dovetail with the services they provide to their producer clients. But this is not the important aspect of this article or the method that the community is forming. It's in this next quote here.

Techno-nationalists and techno-fetishists oversimplify innovation by equating it with discoveries announced in scientific journals and with patents for cutting-edge technologies developed in university or commercial research labs. Since they rarely distinguish between the different levels and kinds of know-how, they ignore the contributions of the other players—contributions that don’t generate publications or patents.

There is a clear divide in most people's lives between the elite journal publishing academics and those that make oil and gas producers profitable and successful. This divide is not new, and it's important to note that in this article McKinsey says the relationship and interaction will remain relatively the same. What also remains the same is the value creating innovation will be with the same people, the difference is the mechanism and organization in which this craft will be applied, through the People, Ideas & Objects software applications and its Community of Independent Service providers. (Emphasis added).

The willingness and ability of lower-level players to create new know-how and products is at least as important to an economy as the scientific and technological breakthroughs on which they rest. Without radio manufacturers such as Sony, for instance, transistors might have remained mere curiosities in a lab. Maryland has a higher per capita income than Mississippi not because Maryland is or was an extremely significant developer of breakthrough technologies but because of its greater ability to benefit from them. Conversely, the city of Rochester, New York—home to Kodak and Xerox—is reputed to have one of the highest per capita levels of patents of all US cities. It is far from the most economically vibrant among them, however.

This next quotation puts in context the value of a community as is conceived and discussed in this blog. That the opportunity that we have in re-organizing the oil and gas industry and providing society with the ample energy we need to fully explore our economic opportunities is at hand. But it is the fact that the community is the producers most effective and efficient means of attaining its most profitable operations.

More than 40 years ago, the British economists Charles Carter and Bruce Williams warned that “it is easy to impede [economic] growth by excessive research, by having too high a percentage of scientific manpower engaged in adding to the stock of knowledge and too small a percentage engaged in using it. This is the position in Britain today.”2 It is very much to the point that the United States has not only great scientists and research labs but also many players that can exploit high-level breakthroughs regardless of where they originate. An increase in the supply of high-level know-how, no matter what its source, provides more raw material for mid- and ground-level innovations that raise US living standards.

If you feel that this post is too much of a reach, I would beg to disagree. We live in a time when the challenges and opportunities have never been better. Starting off with this economic transition to the new and better ways, we have this opportunity to take for ourselves, and in turn provide the producers and society as a whole with greater value.

But excelling in the overall innovation game requires a great and diverse team, which takes a very long time to build.

Please join me here.

Technorati Tags: People's McKinsey Community Call-to-action Capabilities

Social Collapse - Best Practices

This article provides a fascinating and entertaining story. It is written by Dimitri Orlov and is well written and topical. He has the unfortunate experience of living through the decline in the Former Soviet Union (FSR). And quite bluntly suggests that it's the Americans (where he now lives) or the West's turn.

In my original thesis I asked if the American economy was potentially headed down the same road as the FSR, Orlov says yes. It was also in my thesis that I made it quite clear of what I thought of Best Practices. Needless to say I don't have anything positive about this ridiculous practice that businesses some time waste their time on. But the title of this resonates loudly with me.

Orlov's article is located here. He has also written a book "Reinventing Collapse" and has another article located here .

But this talk is about something else, something other than making dire predictions and then acting all smug when they come true. You see, there is nothing more useless than predictions, once they have come true. It’s like looking at last year’s amazingly successful stock picks: what are you going to do about them this year? What we need are examples of things that have been shown to work in the strange, unfamiliar, post-collapse environment that we are all likely to have to confront. Stuart Brand proposed the title for the talk – “Social Collapse Best Practices” – and I thought that it was an excellent idea. 

To make the fundamental wholesale changes that are contemplated in the Draft Specification assumes this level of collapse of the old systems. And who wouldn't encourage the demise of the redundant and pathetic performance of the bureaucracy.

In organizations, especially large organizations, “best practices” also offer a good way to avoid painful episodes of watching colleagues trying to “think outside the box” whenever they are confronted with a new problem. If your colleagues were any good at thinking outside the box, they probably wouldn’t feel so compelled to spend their whole working lives sitting in a box keeping an office chair warm. If they were any good at thinking outside the box, they would have by now thought of a way to escape from that box. So perhaps what would make them feel happy and productive again is if someone came along and gave them a different box inside of which to think – a box better suited to the post-collapse environment.

Now I know why I am considered an outsider. It all makes so much sense. Here is the box that I have custom tailored to those that are concerned about the industries performance and the effect that a lack of energy has on society, please join me here .

Here is the key insight: you might think that when collapse happens, nothing works. That’s just not the case. The old ways of doing things don’t work any more, the old assumptions are all invalidated, conventional goals and measures of success become irrelevant. But a different set of goals, techniques, and measures of success can be brought to bear immediately, and the sooner the better.

This has to go down as one of the more valid calls to action for this system to be built.

We are always either months or years away from economic recovery. Business as usual will resume sooner or later, because some television bobble-head said so.

So if your question is "are we here yet" you'll now know the answer. What is terminal failure can not be resurrected by all the money from all the printing presses.

Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next.

Please join me here.

Technorati Tags: People's Call-to-action Failure Development

So much to do, so little time.

We are reminded today that we have to deal with the transition from the old economy to the new. The poorly managed companies are begining to fail and the demand for energy is affecting the energy prices in a material way. Although I suggested that the Western economies "may" go through a similar period that the Former Soviet Union experienced in the late 1980's. This was premised on the works of Sir Anthony Giddens and Carlota Perez. There is not much difficulty in gaining a consensus on this basis, but I would suggest the time to build the new systems and organizations is limited. 

Today shows why. We have three articles that suggest the energy industry will be changing again as fast as it has changed in the last 18 months. First up is the head of Total Petroleum in France talking to the Financial Times with the following prognosis. 

The world will never be able to produce more than 89m barrels a day of oil, the head of Europe's third-largest energy group has warned, citing high costs in areas such as Canada and political restrictions in countries such as Iran and Iraq.

Christophe de Margerie, chief executive of Total, the French oil and gas company, said he had revised his forecast for 2015 oil production downward by at least 4m barrels a day because of the current economic crisis and the collapse in oil prices.

He noted that national oil companies, which control the vast majority of the world's oil, and independent producers, which play a key role in finding new sources, were "substantially limited in their ability to fund investments in the current [financial] environment"

A serious problem is being created by the lack of focus by the producers. Prices and production are going to become a problem again.

Next up we have the Fox News network article entitled "IEA Sees Risk of Oil Supply Crunch From 2010 ".

LONDON--The International Energy Agency (IEA) said on Monday there could be an oil supply crunch from 2010 once global demand recovers and the impact of delayed investment crimps future supplies.

And lastly on the BBC , the market for crude oil was up today as the IEA made its comments. If anyone believes the existing bureaucracies are the way that these problems will be solved we could just sit and wait for the upturn in the prices. If we thought that this time was was more then just a recession, but an opportunity to make wholesale changes, now would be the time to start developing the People, Ideas & Objects application. 

In the past five years I have been able to think through the development of the system to create the eleven module Draft Specification . This took a lot of time and energy for me to do. Now the much needed work of thousands of people needs to begin putting some building materials on the foundation of this design. That is going to be done through participation in the Preliminary Specification . And it will take more time, possibly as much as another five years. We need to get started, so please join me here .

Technorati Tags: People's Call-to-action Development Economics Leadership

Professor Paul Romer on Banks.

First of all Professor Romer is someone we follow pretty closely here at People, Ideas & Objects. His new growth theories are short listed each year for the Nobel Prize in Economics. In a nutshell those new growth theories provide the replacement for the old growth theories of investing in Communications, Transportation and Financial infrastructure to expand an economy. His new growth theories are none other then simply People, Ideas and Things. The precursor to the name of this project.

As one of the chief architects of "New Growth Theory," Paul Romer has had a massive and profound impact on modern economic thinking and policy-making. New Growth Theory shows that economic growth doesn't arise just from adding more labor to more capital, but from new and better ideas expressed as technological progress. Along the way, it transforms economics from a "dismal science" that describes a world of scarcity and diminishing returns into a discipline that reveals a path toward constant improvement and unlimited potential. Ideas, in Romer's formulation, really do have consequences. Big ones.

Professor Romer is in the February 6th version of the Wall Street Journal with an interesting article entitled "Lets Start Brand New Banks" and in the February 6th Economist Magazine with "Lets Start a Bank". Romer suggests that instead of investing to recapitalize the banking system, it would be more effective to start new banks, and capitalize them with the remaining $350 billion in TARP funds. Noting that with the fresh cash in new banks, the ability to fund up to $3.5 trillion in new lending would occur under existing banking legislation.

This type of thinking resonates with me. Why not skip the failed capital restructuring? The first half of the TARP funds did nothing to spur lending, its intended purpose. Throwing more money at the banks will only provide the same results. Doing the same thing over and over, expecting different results is ...

I have another suggestion. Lets invest in new oil and gas companies. Firms like CNRL can be picked over by those that prefer to kick dead horses for a living. What we need is new organizations based on new and more innovative organizational constructs. Just as the Joint Operating Committee is the legal, financial, operational decision making, cultural and communication frameworks of the industry. Lets build a system that provides the software and services to support the Joint Operating Committee. A system that moves the hierarchies compliance, governance, tax, royalty and SEC requirements and aligns it to the Joint Operating Committee and its frameworks. The investors would then have the tools to manage the assets that they can cherry pick off the CNRL asset auctions. Providing as clean a break as Romer suggests for the banking system. Resurrecting old dinosaurs may make for great story lines in Hollywood, but not at this time and place in terms of the future capabilities of old organizations vs. new.

The investors that are disenchanted with the treatment and results of the previous managements, should fund these software developments and build these new organizations to make them profitable and productive for themselves and society. Carl Icahn was in the Wall Street Journal on Saturday, commenting on the topic of "Capitalism Should Return to Its Roots".  Mr Icahn states:

I have initiated United Shareholders of America to empower shareholders to institute changes, and I encourage you to join our cause. A majority of the U.S. population owns shares. Their voices need to be heard -- now -- on Capitol Hill and in the boardrooms of corporate America.

Mr Icahn's difficulties in dealing with management are well documented. I can assure you that I have faced many of the same difficulties in presenting the ideas around People, Ideas & Objects to the management of oil and gas concerns. Their attempts to steal these ideas and obstruct them from being developed is known by myself, and I can assure you I do not have the scope of Mr. Icahn's resources. 

Nonetheless I think we are in a time, and have a need that makes this software development project real and timely. Please join me here. 

Technorati Tags: People's Romer Economics Call-to-action Funding Icahn

Former Talisman CEO Jim Buckee

I have always valued energy based on the potential price of gasoline. My projected $600.00 / barrel translates into approximately $5.00 / liter of gasoline, which includes taxes. This would be the deal of the century if it were not for the current price of oil is around 5% of my projected $600.00 price.

This qualifies as the deal of the century on the basis of the mechanical leverage we have achieved for each barrel of oil, as calculated in the book "Profit from the Peak", is 18,000 man hours per barrel. On that basis the $600.00 / barrel replacement cost is only $0.03 per man hour. 

Along comes Jim Buckee, former CEO of Talisman Energy in January 15, 2009 Calgary Herald suggesting the price of a liter of gasoline will reach $20.00 / liter. This would make the replacement cost of one hour of man labor escalate to $0.12, what is he thinking? Dr. Buckee's reputation in the oil and gas industry is unimpeachable. Building Talisman up to approximately 500,000 barrels per day of production, $20.00 / liter is a legitimate and serious claim. 

We can all assume that the types of claims made by a former CEO would be different then one that occupies that office. Those that are the CEO's of today's organizations are guarded in their comments and would never be able to make such a claim. Shareholders and the public would run scared and frightened. A former CEO carries the credibility of the office, yet has the ability to speak the truth of the situation that they are familiar with. 

What is difficult to comprehend is the scale in which we have become dependent on 86 million barrels of oil per day. Energy production provides for our way of life and standard of living as a result of not having to be occupied with the menial tasks of our ancestors. Who amongst us will be the first to volunteer to reduce their consumption by 2% (1.72 million barrels per day). And if we can find the willing volunteers for that I am certain that we can find the volunteers for the next years 3% decline. This is a slippery slope where the end doesn't necessarily involve our survival. 

My aim is not to frighten people. I want people to join me in solving this problem by building the software that will identify and support the type of energy producers necessary to sustain, and expand our standard of living. Needless to say I find this to be an important task and would welcome those that are able to help, to please join me here. 

Technorati Tags: People's Call-to-action Energy Change

Starting off in 2009.

Jeffrey Immelt, CEO of General Electric is quoted in a speech this last November.

The economic crisis doesn't represent a cycle; it represents a 'reset'. ... People who understand that will prosper. Those who don't will be left behind." MSNBC Meet the Press December 28, 2008.

We are quickly approaching the point in time in which we are changing the ways and means of economic organization and development. People will soon realize, on scale, that the economic problems are associated with the inefficiencies that our organizations conduct their operations. The continuation of business as usual has and will fail completely. The opportunity to address these problems and re-start from a clean slate is both the opportunity and necessity. 2009 is the point in time in which this software development becomes critical to the future of the energy industry. Pompous words, but the fact is that software defines and supports the organizations we depend upon today. If we want to make the necessary changes and design more efficient economic organizations, the software must be built first. We are well beyond the point where "spontaneous order" will provide the solutions that are necessary. We must actively define our future organizations through the development of People, Ideas & Objects software for the future of the oil and gas industry. If we do not address these points, then we will be relegated to the status quo, at best, or barbarianism from manual systems.

We all need to take some action for 2009. Each of us shares a responsibility for making this project happen. I have chosen the following priorities for myself with respect to this blog and People, Ideas & Objects.

• Actively recruit the 100 individuals necessary for defining and developing the Preliminary Specification. (You can join me here.)
• Re-focus on the point that innovation in oil and gas is the responsibility of everyone. There are no "Chief Innovation Officers", and restate the research that has determined what is necessary for innovation to be the industry focus.
• Continue to define the value propositions to users, developers and producers.
• Secure development dollars from governments, disgruntled oil and gas investors and possibly from the producers themselves.

Please note this is my first mention that producers are part of our revenue model. If, as Jeffry Immelt suggests, those producers that understand this is an economic reset will be able to prosper. Those who don't will be left behind. We should therefore open our doors to those progressive producers that understand this is an opportunity for them to prosper. (However, no piggies.)

Technorati Tags: People's Economics Change Call-to-action

Software, and Eisenhower's Interstate.

President Eisenhower started the Interstate and Defense highway system in 1956. Many have credited this system with providing a solid foundation of which the U.S. economy has grown. In 2006 President Bush noted:

Today, 50 years after the Federal-Aid Highway Act of 1956 was signed, the Eisenhower Interstate System has made our society the most mobile in the world and contributed to the continuing growth of our economy.

Progressive governments have always had a role in developing the infrastructure for their societies to prosper. This has established a clear line of separation between what is a capital works and private activities.

Today our economies are globalized and very sophisticated. The dependency on others to provide for our needs has never been greater. Most people would agree that the ability to survive on their own for the long term is not a skill that has been developed. Our dependence on one another has never been so great, and therefore, fragile.

I've been harping on a theme in this blog since the Preliminary Research Report was published. Suggesting that SAP is the bureaucracy and the heightened role of software in the oil and gas industry. At times I have felt that this message is not well received, and I attribute that to the Y2K fiasco. Y2K has made software, and the people in the technology business, less influential. Leading to what I would suggest is a patent disregard for the value and significance of the technologies.

I am only realizing myself why this is the wrong point of view for society to have taken. So many of our organizations are failing that we are unable to achieve the reliability that we had achieved and expected in the last 50 years. On Wednesday, I showed up at my regular Starbucks and asked for my usual Venti Mild coffee. They said they were out of coffee. Dumbfounded I said what and struggled to keep myself from waking too quickly.

The concern that I have is these events are happening too frequently to be a random or isolated event. The systems that we have grown to expect are in a state of failure that will only expand as the organizations that we depend upon face one financial Tsunami after another. We need to address these points by building the systems that are replacements to the current systems that are failing. Otherwise we are faced with the prospect of using our survival skills to make due.

The sense of urgency in which we approach the development of our replacement systems is accelerated by the storm clouds on the horizon. On Bloomberg this weekend I saw this commentary that in the day to day of the past fifty years we could never have imagined. Entitled "The Shipping News Suggests World Economy is Toast". Chronicling the slowdown at Volvo, the second largest truck manufacturer in the world, in the third quarter. In the third quarter of 2007 Volvo received 41,970 heavy trucks orders . In 2008 the number was 155. The article also documents how the shipping industries Baltic Dry Index has collapsed. Rendering revenues for ships at 10% of normal. These events were probably triggered way back in August 2007 at the beginning of the market problems.

This is after the world has pumped unknown trillions of dollars to prop up the systems. We need to start concentrating on these types of issues. Or the food and other necessities on those ships will never make it to the consumers that need them. This is a warning sign of bad things to come and we need to heed the call.

The Eisenhower administration was not faced with these dire situations in 1956. Peace had broken out and the depression had subsided from immediate memory. The role of government is to ensure that the systems and infrastructure are able to meet the needs of its people. That is why the governments, in addition to providing liquidity and interest rate relief should fund industry supporting software development projects.

The role of government has been discussed many times in Professor Carlota Perez' papers. In her Strategy + Business "Thought Leader" interview she stated:

Government needs to be reinvented, using as much imagination as it took to design the welfare state in the first place. It all seems impossible now, but things always seem impossible at this point in the surge. p. 7

Governments need to be involved in the financing of software development projects such as People, Ideas & Objects. Providing the software that enables local economies to function may be the new dividing line between have and have not.

Because left to itself, it might not happen. Historical regularities are not a blueprint; they only indicate likelihood. We are at the crossroads right now. It is our responsibility to make sure that the enormous growth potential of the next golden age will not be lost. p. 7

We have a choice, be constrained by our current organizations and their poor performance, regress to manual systems and barbarianism, or build the software for tomorrow's organization today. Join me here.

Technorati Tags: People's Perez Call-to-Action Software Organization

The State of the Energy Industry.

Quotes from ASPO-USA.com

The price of oil and natural gas have both tanked as a result of the market meltdown. What is most impressive about this changing marketplace is its speed. The rapid decent has caused the commodities to be brought down with the rest of the market. For oil and gas that spells more trouble down the road. What we lose in terms of capacity to conduct operations may turn out to be substantial. The further we get behind the natural decline curve, the harder it is to reclaim lost positions.

I continue to believe one day within the next five to ten years we will see oil at $600.00 / barrel. When demand does return, the product lag may be severe with investors committing to long term projects on much much longer lead times. The Canadian oil sands will be seen as the white elephant that it is, with most projects being scaled back in order to mitigate the losses.

This market is much more dire then I suspected. Professor Perez suggests the turning is necessary to institute the changes between the old economy and the new economy. What we forget is the reality of the situation when we are in it. What I suspect will happen is the stock markets to drop more in the next two years. The liquidity crisis is contained and the markets will ease into a steady decline. Now the tough bit comes. Choosing who stays and who goes. The solvency of companies in all industries will be as brutal a drop as we have seen in this liquidity drop.

Canadian Natural Resource Ltd will be announcing their third quarter results on November 6th. This may be the end of the firm as we know it, I can't even see how they've been able to make payroll this month. There will be the need to address the credit crunch and their Mickey Mouse approach to financing. For the firm to make money will be as a result of the valuation of mark to market coming on September 30, a time when energy prices were lower, therefore lowering their unrealized loss on commodity sales. The point will be made very clear to them that they can't finance a $3.2 billion working capital deficiency and $26 billion in total debt. I am sure the Horizon project is sinking beyond the horizon of what is possible. The ability to have this project propped up is next to impossible. CNRL is insolvent and needs to be shut down.

The ability to have a partner come in and take over the remaining development will be difficult. The heavy oil plant is generally an overall strategy of the firm, companies need to dedicate natural gas for fuel and condensate for diluent. A company coming in can't create this situation and as such getting into the Horizon plant will be difficult.

Nonetheless the following quotations are from the ASPO USA weekly bulletin. The first item is very disconcerting in that I am not aware of any attempt to deal with the difficulty mentioned, the retirement of the human resource in the industry. We know that the retirement of the brain trust is going to happen in the next five years. Weather this market meltdown stops many from retiring is too optimistic to suggest. This problem must be dealt with, and in the Draft Specification I have proposed that building redundant capabilities in each company is the source of the problem and its ultimate solution. The producers need to pool their capabilities in order to mitigate this problem. Pool them on the basis of their interests in the JOC. Using the Military Command & Control metaphor to provide the governance mechanisms that the producers need.

Despite falling costs for steel and other materials, the oil and gas industry again finds itself confronting a shortage of people with the skills and experience to lead new developments. If efforts to plug the skills gap don't succeed, senior industry executives say oil companies' ability to tap new and challenging hydrocarbon resources fast enough to meet demand may have already have reached its limit. (10/23, #17)

The speed and ability of the industry is in question, imagine that, someone should have suggested a new organizational structure for the industry to follow. Please excuse my sarcasm, I really can't help myself.

This next article / quotation is from Jim Gray who had built up a strong natural gas company that is now buried somewhere in Connoco Phillips. He and his partner, John Majors were able to solve some difficult geological problems in the late 1980's building up a firm by the name of Canadian Hunter. Here he suggests there is more at stake then just the money issues that are in the news headlines.

“I’m strongly of the opinion that we’re on the cusp of a global liquid fuels crisis. The forthcoming energy crisis, should it develop, could result in economic, political and social stresses, and turmoil on a scale not experienced for half a century.”
-- Jim Gray, former CEO of Canadian Hunter Exploration

As the Canadian industry moved towards its ultimate strategy of "me too" and we have 10 or so heavy oil projects. The rest of the industry has waned substantially. Natural gas production is down 12% and as our former Governor General stated, Canadian conventional oil production is in steep decline as well.

Ed Schreyer in the Q&A, Ed noted that tar sands are now 50% of Canadian oil supply, as conventional production is declining steeply. With the current financial crisis and very high capital costs for tar sands development, turbulent times are coming for the oil & gas industry in Canada.

So here we are faced with an impossible situation in an impossible financial meltdown. What will these boy geniuses think of to make this problem workable. Fund this development? Not on your life. They want nothing to do with working for a living.

The funding has to come from the two previously identified sources. The disgruntled shareholders who are fed up with the management and can see the vision as it is layed out in the Draft Specification. And the various governments who have royalty regimes in place in oil and gas producing regions. And are able to see that society is too complicated for Hayek's Spontaneous Order to occur. And realize that the "new" economy after this meltdown has had all its fun, needs to have the software built first before we can reorganize based on specialization and define a new division of labor. Please join me here.

Technorati Tags: People's Energy Call-to-action Vision

No one's fault but our own.

On this blog I have documented many of the possible scenarios we may be faced with. Not that these have created a sense of calm, but more to fully explore where we are, and what we should be doing.

We are also not moving forward. The Preliminary Specification needs to define what the scope of the application is. Recruiting of the 100 individuals for this task continues. And by all means, particularly if you have some good ideas, use this process to join me here.

We have specified our alternatives as consisting of 1) Regressing to barbarism with manual systems, 2) Motivating SAP and Oracle to accept our never ending stream of big cheques, or 3) Follow the vision as defined in the Draft Specification and based on a fundamentally more affordable business model.

Not to belabor the point, but it has taken me since September 2003 to produce the Draft Specification. It is a compelling solution that offers a vision that reconciles many of the conflicts & contradictions inherent in the oil and gas industry. The time that it will take for some one to offer a fourth alternative is a time frame that society can not afford.

So our time to consider alternatives has passed. We are now in the full force of the crisis or turning as Professor Carlota Perez calls this time. The need for IT to begin to carry the weight of the economy on its own is our ticket to the very good times, as she so ably describes.

I have used the Intellectual Property (IP) built up in this project to achieve 2 different but critical objectives.

1. To establish that the users will have free and unencumbered access to the IP, and to prepare a derivative service offering to the oil and gas producer.
   
2. Focus the resources of the industry on this one solution.
   

I think it is reasonable to assume, that over many years of development, and even if our scope is determined in the Preliminary Specification as only North America, that our multi-year budget will most assuredly breach the $1 billion mark.

And with all of this there is a heightened sense of urgency. We must not fail.

To add insult to injury the current custodial management have done everything they could to eliminate any and all competitive choices to run the industry. Theirs has now failed and I suspect they will undertake 2 possible directions. They will either continue on in a lame duck fashion, irrespective of the consequences of more time wasted. Or abandon ship. Either way this further constricts our actions.

It has been my experience in the past 10 years that the management have abandoned ship far to often. The floor of "corporate responsibility" has been established by these managers. There seem to me that there is nothing left but the shouting and finger pointing to occupy management's so precious of time.

So what should we do. Our first priority is to establish the revenue streams that are necessary to support the users and developers in the Preliminary Specification. (See the proposed budget and charter.) For it is "different this time". The last great turning was 1929 to 1941. We were at war for much of this time, a war that mitigated the negative economic effects of the turning. It was also a time in which we had barely begun to leverage the use of oil. A leverage that stands at 18,000 man hours per barrel of oil today. And it was a time when businesses, industries and societies pace was dictated by the speed of which paper physically moved, we no longer share these luxuries of our past.

We therefore face two crisis.

1. The declining reserves and production of the oil and gas industry. (Peak Oil)
2. The credit crisis / turning.
   

Living through only one of these crisis has the capability of moving society within inches of hell. Two crisis provides us with a much higher probability of reaching that unwanted destination. Expecting anything from management to mitigate the potential of these crisis is foolhardy and dangerous.

Join me here, and lets restore this industry, brick by brick and stick by stick to its full potential, or face the consequences. If we expect anyone, or specifically management, to do this for us, we will have indeed failed. As of today, we now have no one to blame but ourselves. If you know of an investor or government representative to help establish our revenue streams, please send them the URL to this blog and encourage them to join us here.

Technorati Tags: People's Call-to-Action Funding Management Vision

Easy Come, Easy Go.

Or is it.

I documented the $3.3 billion in stock options for the four little piggies, (Encana, CNRL, Nexen and Petro-Canada.) in a posting dated July 16, 2008. As of Friday's October 10, 2008 closing prices the value of those options now total $57.2 million. (Values based on 2007 weighted average options and prices.) The problem is that the investors in these companies have experienced a far more substantial haircut in their share holdings. (Piggies are down 53.4% to 65.5%).

From my point of view these alleged management types are better understanding the market and the scope of their greed. This provides justice to those who were so slovenly in the past. I wonder what Monday's trading will have in store for these wonder pigs. Recall they were in the forefront of rewarding and congratulating themselves for the higher stock valuations from commodity price increases. Therefore we should ensure that they are also compensated for the damage to these companies from the decline in commodity prices. These pigs brought that upon themselves, and in the future these management should understand that you reap what you sow.

But wait, not only are they incompetent, they have also lost their motivation. I wonder if they'll quit before anyone has the chance to be fire them? I've always believed a firm that loses greater then 53.4% of their market value is considered a non entity. That large of a loss in a firm is a reflection of the future of the firms opportunities. All the Kings Horses and All the Kings Men. (Ricky Gervais provides some insight and comedic relief.) 

The investor class is now forced to act in recovering their assets and value. Kick these bastards to the curb and lets start building the oil and gas industry for the 21st century. As I said these managements are now unqualified, unmotivated and unproven to hold the offices they occupy. They have damaged the firms to the point where they will be walking corpses for the next several decades, and that is being optimistic. Fire the bunch, you certainly can't trust them. I don't trust them, as any group of companies that would attempt to steal ones Intellectual Property, as these firms attempted to take the idea of using the Joint Operating Committee, are crooks.

Pig courtesy of http://designedtoat.com/pig.htm

Technorati Tags: People's Pig Call-to-Action Management Failure

A Community of Independent Service Providers.

With the preparation of this next years fiscal budget. I made the call to recruit 100 individuals to be involved in this first phase of development. These people will be involved in taking the Draft Specification and adding many of the necessary details for when the developers begin the job of the applications development. The deliverable will be the Preliminary Specification which will have rounded out many of the missing details in the Draft Specification and seek to provide creative solutions to the problems they discover.

Who are these people? They are the ones that are currently employed in the oil and gas industry, or have retired and have many years experience. They are the people that have worked for an oil and gas firm in all the different capacities and professions. Landman, accountants, geologists, engineers, field staff and many who were employed in the traditional energy service industry. People who understand and can articulate their point of view on the differences in using the JOC as the key organizational construct.

What exactly will they be doing. Building off the Draft Specification and taking it to the "Preliminary Specification" stage. This may include gathering the details of the various regulatory and compliance requirements of an application, working within the scope of the oil and gas marketplace as they define it. Adding their creative ideas of how an application should provide support to an oil and gas firm. I think it is only reasonable to establish a minimum scope of operations being North America and the maximum is any energy jurisdiction. The one advantage here is the Joint Operating Committee (JOC) is culturally systemic the world over.

These people will also be the critical first group that will join People, Ideas & Objects. What I expect is that they will be the first, or in on the ground floor of the opportunities that will develop for themselves and others. What I expect will happen is they will also be charged with developing the "Community of Independent Service Providers". Who will develop within their own businesses the service capabilities that will work with the software in the oil and gas firms. This first and foremost should be looked at as a business opportunity they can build in the new economy.

One hundred people sounds like a lot, and in many ways it is. However, they are all not going to be full-time. Recall as I have mentioned in the budget I expect this time to be invested by them in establishing their "Service Provider" operations. (In subsequent years work on the software will be fully compensated.) The broad diversity of the service offerings that have to be developed to augment the software is their domain of operation. By signing the license and registering with this community is how to get started. Recall all participants (users, developers, project managers and oil and gas investors) are entitled to leverage off this software applications intellectual property in their own service based offerings. The first 100 that participate in developing the Preliminary Specification will naturally have a significant head start in starting their service operations. People, Ideas & Objects provides the software and the developers, the Users provide the problems and our clients needs.

Where these people will be located is anywhere they are needed. Based on the scope that they decide they will be able to establish Service Providers in their region as they see fit. None of these licenses are exclusive, and therefore being first has substantial advantage. They are also the ones that will establish initial contact with the producers in preparing them to move to the system when it is operational. This marketing will be done jointly by People, Ideas & Objects and the Service Provider. We will be using some form of Salesforce.com applications to ensure that the oil and gas firms are managed by one Service Provider who will sub-contract the work for that oil and gas firm. I will reiterate, being first has substantial advantages.

When should they sign up? What's wrong with now? Follow the process as described here, please note that we need senior oil and gas individuals, this is not something I don't think anyone should attempt that does not have 10 years of oil and gas experience. Not to discourage anyone, but the detail in the Preliminary Specification will be somewhat high level but detailed, if that makes any sense. So please follow the process and sign up as soon as you can. In a lot of ways I think this opportunity fits the somewhat tech savvy early or soon to be retiree of the industry.

If I have not mentioned this next item on the blog before I would not be surprised. It is in the private wiki as one of the project policies. Users, Developers, Project Managers are compensated for their time, however, People, Ideas & Objects will only contract for 110 days out of each calendar year. The reason for this is to increase our scope of understanding of the industry by essentially doubling the number of people in the project. And ensuring that the individual is also actively engaged with the oil and gas firms through their Independent Service Offerings. Learning, anticipating their needs and guiding the developers in the development of the solution to those needs.

I have talked about the response that I have received from the oil and gas companies. I would certainly not wish this treatment on anyone else. Therefore I should state that all of the operations in the wiki and this work of the first 100 will be in complete confidence. Access to the wiki is through the People, Ideas & Objects account that will be provided. The communications are all encrypted in https. Therefore if you were to be using the wiki in your office your boss would never know. (Not that I would encourage that, but I would certainly endorse it.) The only way that your "boss" may find you are involved in this project is if s/he is a participant in this project. There is no need for anyone to be associated with this project and as such be affected by the companies apparent insistence that it not be built.

If you know of an investor in oil and gas that this project may appeal to. Please forward the URL to their attention and encourage them to commence the financial support of this project. And please, join me here.

Technorati Tags: People's User Proposal Call-to-Action

Long-Term Funding Concerns.

This entry attempts to describe how I see the current and long term funding of this project. What roles individuals may play in this project and how this application ultimately gets built.

The name of this software development project is People, Ideas & Objects. These three attributes are what are necessary to solve the worlds demand for energy. Innovation based on the principles established is captured in the Draft Specification; are supported through identifying and enabling the Joint Operating Committee (JOC) as the key organizational construct of the industry. The JOC is the legal, financial, cultural and operational decision making frameworks of the industry. This is on a global basis.

This development is not a small task. In May 2004 I quoted the cost to the Canadian producers of this application at approximately $78 - $85 million over a four year period. These costs did not include the producers cost of providing people to define and support what the application should be. The scope of the application is now global, as defined and based on the users needs, which include multiple currencies, languages, royalty and compliance frameworks. These frameworks have conspired to increase the budgeted costs substantially. Another component of the cost increase will be the 36 hour work day that we will be in development. Increasing the intensity of the work being undertaken creates a similar budgetary effect. Lastly expecting the companies to forward the money to compensate the users will not happen. We therefore need to raise the necessary funds to compensate our user base for their ideas and leadership. How much this application will cost in the long run is unknown at this point, and it should not be a concern. The oil and gas industry is moving to a $4.7 trillion annual turnover and that is the point. The producers General and Administrative costs of building and using this application will be incidental to the impact it will have on their innovativeness.

Continuing to wait for the oil and gas companies to fund these development will be both fruitless and long. They can not transition from what they are, to what is described in the Draft Specification. If they could change their stripes they would have done so by now, as this software development opportunity was presented to them in September 2003. Expecting them to put money where they can not use it is a short, vain and career limiting activity.

Who else, other then the People who work in oil and gas, are motivated to build and iterate on the concepts described here? What is the motivation? Do People own their own industries? Yes, but indirectly. The future will be the same only direct ownership will be enabled through the Information & Communication Technologies (ICT). Intellectual Property (IP) is collectively held within the People, Ideas & Objects code, blog and wiki's. The license in use here grants an irrevocable license to use the IP in any manner other then the compilation of the code to its binary, and hosting of said binary on a service basis. Everything else is limited by the knowledge, skills, experience and education of the People who use the People, Ideas & Objects application in their day to day work for their oil and gas clients / employers.

How does this application get developed? People from beginning to end. People who are oil and gas investors, that are of a like mindset and realize the bureaucracies can do nothing to transition to this new innovation based environment. People who are developers who want to tackle a difficult project and work hand in hand with the applications user base. People who are involved in defining this application and tailoring it to the needs of the users and producers. People who are the producers of oil and gas who need systems and organizations that are able to meet their challenging engineering and earth science demands.

These are the People that will make this happen. What we need now is to establish our revenue from this investor class. The sooner that they are able to see the make-up of this marketplace, and the need for the bureaucracy to accelerate its pace, and how futile that expectation is, the better. After all they will be the first to be affected by the bureaucracies slow pace, and therefore they are the ones that need to start funding these developments. Funding them so that they, the producers, have competitive options in how they'll manage their oil and gas assets.

Next I feel that the affected governments need to carry some of the financial load. They have an interest in accessing the mechanisms used to calculate their royalty income. After the government has stepped in to carry some of the freight. That is when we will see many of the investors become the producers. Simply by eliminating the bureaucracy and the corporate mechanisms that developed over the last century. Mechanisms that keep the management and legal professions well ensconced. That is when the investors will be able to pay to support this community through sales of oil and gas commodities. A community based on providing the needed software application, and the associated service based offerings of the People who work in oil and gas.

This is how I foresee the nature of the oil and gas industry developing. The only alternative has these same bureaucracies using the same applications producing the same results. Not something that society can afford to let happen. The ability to proceed and build off of the Draft Specification at this time will accelerate the opportunities for all those associated with this community. I ask that if you are able to pass this information on to an investor that fits this definition, I would appreciate it. We have to make this project "real" and the only missing ingredients are the funds and the People that will join this project. Please, join me here.

Technorati Tags: People's Call-to-Action Leadership Funding

Strategy and Business on Innovation

This article was written by A. G. Lafley the chairman and CEO of Proctor & Gamble, and has many valuable features and information regarding how innovation was implemented into P & G. I highly recommend the article, it can be downloaded from here. The article is introduced by Ram Charan who co-authored a book with A.G. Lafley entitled "Game-Changer: How you can drive revenue and profit growth with innovation". I am only going to review the opening comments of Ram Charan

The opening paragraph captures the relevance to this software development project and the need to enable the innovative oil and gas producer.

THE HEART OF A COMPANY’ S BUSINESS MODEL should be game-changing innovation. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business.

The cheap energy era has passed. This much is understood and agreed to by the consuming public and the energy producers. The earth science and engineering disciplines; which are at the heart of the industries value proposition are accelerating in speed and complexity. It is also agreed that the volume of earth science and engineering per barrel of oil is increasing and that it will not become easier to produce. From reviewing Professor Giovanni Dosi's paper in the preliminary research report, we know that innovation generates new science, which produces new innovations and so on. How can a firm based in the oil and gas industry compete on such a dynamic and changing field of knowledge?

One aspect of building an innovation culture deserves more attention than we could give it in The Game-Changer: designing a social system that would spark new ideas and enable critical decisions. In the article that follows, A.G. explains the human factors that fostered innovation at Procter & Gamble. It could be thought of as the “missing chapter” to The Game-Changer; a vital component that isn’t always obvious, even to experts, precisely because it is so fundamental.

And for oil and gas that has to be the user-based development of the People, Ideas & Objects application, based on the Draft Specification. This project has to find new sources of money and leadership to fill-in the many voids of the overall vision. If you know of someone who could help to financially support this project please do what you can to bring their attention to this. Ninety-five percent of the ownership of the oil and gas industry is held by individuals. Individuals who are the investors, users and developers of the People, Ideas & Object application. Join me here and lets build this software.

The PayPal button on this website will gladly take donations that can further us along in the road we are headed. Even if you can only contribute $10.00 we will be that much further ahead.

Technorati Tags: People's Call-to-Action MIT Innovation

A Budget and a Plan.

More and more I feel the case for proceeding with this software development project has been made. I need to move-on from griping to the more constructive activities of budgeting and planning for this projects development. So lets start slow and see what develops.

This is what I have come up with for year six.

• I would like to see up to 100 individuals contributing to the Preliminary Specification. Google charges $50 / user for the collaborative environment. ($5,000)
  
• Preliminary testing of the MySQL database with the PPDM data model on Sun Project Hydrazine. (approx $25,000)
  
• Hardware and software. Define technical architecture. ($50,000)
• Overhead. ($60,000)
• Contingencies. ($40,000)
  

A budget of $180,000.00 for the entire year does not seem like a bold move. I agree, however, we have no idea where the revenue will come from to make that possible. So instead of projecting an unworkable demand in our first year of development, I want to ensure that we aspire to perform and begin the difficult process of generating revenue; while also starting the comprehensive work of defining the Preliminary, Detailed and Final Specifications.

Some of the initial projects that I have established in the wiki include:

• A1) Develop a user-based definition of Security & Access Control requirements.
• A2) Develop User Archetype's with Military Command & Control Metaphor
• A3) Develop and test the Security & Access Control Module using Sun's Federated Identity and Project Hydrazine.
• A4) Go live with Security & Access Control with Single Sign On of People, Ideas & Objects
• B1) Algorithm research. Establish resource requirements for comprehensive algorithm research.
• B2) Determine the languages People, Ideas & Objects should have.
• B3) Develop global standard chart of accounts for upstream industry.
• L1) Preliminary testing of MySQL database with Petroleum Producer Data Model.
• L2) Determine the interface elements with Java WebStart and JavaFX.
• L3) Client, Producer, and JOC Client Side Application design and build interface framework.
• L4) Can Google Translate API dynamically convert language attributes in application modules.

These are only to start the process. The list of projects are open for all users to participate and post new or other projects. These projects are part of the Project Management Office that will develop in time with the Specifications. The process to begin your participation is as follows:

User and Developer Task List

Users and Developers are compensated for their time involved in this development. (Please note that with no revenue large enough to compensate the potentially 100 users. This policy is amended for year 6 only. The first 100 participants will have the advantage of establishing their own service based offering in their geographical location, and therefore will not be compensated until the beginning of year 7.) To initiate your involvement in this community please review the following.

- Review the Preliminary Research Report, the archives of the innovation in oil and gas web-log and Draft Specification. Gain a strong understanding of the differences of using the Joint Operating Committee. How the nature of the differences of this system contrast to traditional ERP systems. How these differences are captured in the module specification of which the Performance Evaluation™, Analytics & Statistics ™, Research & Capabilities Module™, Knowledge & Learning ™, Compliance & Governance ™ Financial Marketplace ™, Resource Marketplace ™, Accounting Voucher ™, Partnership Accounting ™, Petroleum Lease Marketplace ™ and Security & Access Control ™ Modules. How the division, or boundaries, of the firm and market definitions allocate roles and responsibilities. How the JOC provides the ideal "Market" solution to the oil and gas industry. And the changes in the firm definition and its somewhat expanded role and focus. Additional focus on the way that people interact through these systems and how accountants capture the changes in the business through the Accounting Voucher™ Module. Ideally reading the papers of Dosi, Langlois, Winters, Baldwin and Williamson (on the innovation blog) should be reviewed by Users in this application.This would only help in better understanding what needs to be done in this applications modules.

- Sign the Copyright License. (E-mail me paul.cox@people-ideas-objects.com ) I am the beneficial owner of the copyright of the ideas expressed in the blog, wiki, and software development. This intellectual property must be maintained and held in pristine condition for these ideas to help the industry, and be available to all the participants in this community. Therefore it is necessary that everyone involved in this software development project have unencumbered access to all of these concepts. Both for software development purposes and their own service operation. The Copyright or End User License Agreement provides for this, and, assigns the copyright for the work done by each User back to me where it remains available to everyone. As mentioned earlier in this specification, the users are compensated for their time and should consider this software development project as a cornerstone of their future revenue and income. And to particularly those Users that wish to generate their service businesses based on this software offering! Please consult a lawyer if you have any questions.

- Submit up to 2,500 words on how and what you could provide to this developing community. What are your experiences in oil and gas, where do you think the industry could be more innovative if it had the software to enable it. What would that software look like and how you could contribute to its making. These User and Developer summaries will be posted in the People's wiki and enable user search and discovery of like minded people and resources.

Ideally having 100 people sourced from Texas, Aberdeen and Alberta would provide the coverage to take the Draft Specification to the Preliminary Specification stage. If you have an interest in this software please start this process today.

This project has to find new sources of money and leadership to fill-in the many voids of the overall vision. If you know of someone who could help to financially support this project please do what you can to bring their attention to this. Ninety-five percent of the ownership of the oil and gas industry is held by individuals. Individuals who are the investors, users and developers of the People, Ideas & Object application. Join me here and lets build this software.

The PayPal button on this website will gladly take donations that can further us along in the road we are headed. Even if you can only contribute $10.00 we will be that much further ahead.

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