Record Production, Record Inventories Part II

The impressive nature of yesterday’s natural gas production from shale gas reserves showed the prolific capabilities of these formations. Growing from almost nothing to 55% of the U.S. natural gas production in less than a decade is impressive. Today’s graph is no less impressive. It shows the history of U.S. oil production and the impact that shale (tight oil) based oil production is having in the U.S. See any similarities? I frequently point out that People, Ideas & Objects should be considered in light of the fact that the industry needs a new business model in which to operate for the next quarter century. One that deals with today’s issues and opportunities. That includes the new technologies like the Internet to disintermediate the bureaucracy. I think however there is a compelling argument that there is a need to have control over the power of these shale based formations as the one priority of the industry for today. Here is the graph of oil production from econbrowser.com

It won’t take long for the oil production from shale to emulate yesterday’s graph of the natural gas side of the business. How many more years before the tight oil production is 55% of the productive capacity of the United States? Certainly we have seen producers reduce their capital expenditure programs, and the number of rigs that are being used is down. However, these are very blunt tools that have limited effect. It is safe to assume that the same tools were applied to the natural gas business in the past five years and still the productive capabilities of shale gas grew to 55% of the deliverability of the U.S. What is needed is a new business model. One that eliminates the bureaucracy. That allocates production based on the profitability of the property. And uses the Internet and Joint Operating Committee as the replacement organizing mechanisms to the bureaucrats.

The prolific nature of these formation exposed on a go forwards basis for the next 25 years, the lifetime of People, Ideas & Objects in its current form. Will provide for energy independence. However the destruction to the commodity markets will also bankrupt everything in sight. A need to incorporate a new business model into the industry should be obvious. This isn't being discussed by the bureaucrats. They only want to continue on in the same fashion as before, albeit with a smaller workload in terms of their capital expenditures. If they were to work on People, Ideas & Objects that would require significant effort on their behalf and only accelerate their retirement plans. All unnecessary and extreme in their opinion.

What we have seen in these last two blog posts is that shale brings a new dynamic to the industry. At the same time the search for shale is the real prize. Most producers who aggressively approach that side of the business can soon book 2 tcf of gas or more. The equivalent of the lottery. So although they may say they're reducing their capital expenditure programs, the search for larger reserve bases continues. That will never end and is a healthy market response. What is needed is a method of production allocation. The way the producers are organized, the high throughput production model, is incapable of dealing with anything other than production at capacity. What is required is a new model that enables production at any level of productive capacity based on the profitability of the production. Just as People, Ideas & Objects Preliminary Specifications decentralized production model does. Then and only then will the power of the shale reserves be of any value, and the industry can return to its “commercial” roots.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Record Production, Record Inventories

These attributes, record production and inventories, may not be fact at this time. Let there be no doubt in anyone’s mind that these are where we are heading in the North American marketplace. The destruction of the industry is unfortunately the net result of this abundance and there is nothing anyone can do to stop these bureaucracies from this destiny. If there was it would be reasonable to assume that it would have happened by this time. For five years the natural gas price has been depressed, collapsed or significantly below what anyone needs to make a profit. Yet the United States is now the largest natural gas producer. We have experienced seven months of depressed oil prices and the U.S. is the largest producer of oil. The fact that there are not record inventories is the result of plus or minus a week or two of production in storage of each commodity.

The nature of shale reserves brings a new dynamic to the oil and gas industry. One that demands a new business model is employed. One that allocates production amongst the producers based on reasonable and fair basis. A basis of production allocation that can be verified, and those producers that don't abide by the methodology can be disciplined by the marketplace. This production allocation methodology is contained within People, Ideas & Objects Preliminary Specification and we call it the decentralized production model. We will discuss that more later in this post. What I want to do is impress upon you the scope of the difficulties that are presented by the shale reserves and the need to allocate production.

The graph below is from the Energy Information Agency and is entitled the “Monthly dry shale gas production.” This is for the U.S. shale gas reservoirs and shows the history of the production from these reservoirs. We can see that in 2008 there was a little over 5 bcf per day of dry shale gas production in the U.S. And today there is almost 40 bcf per day of dry shale gas production. The U.S. produces around 72 bcf per day of natural gas. Shale therefore is making up approximately 55% of the U.S. supply in as little as six years.

In a decentralized industry where decisions are made based on the best interests of the producer. The ability to coordinate and allocate production between these producers does not exist, and will never exist in the current “high throughput production model” that the bureaucracy employs. No methodology will provide the means in which all producers will be satisfied with the decisions as to who is allowed to produce. Hence, what we end up with is every producer concerned with only their own production, and other producers are not their concern. This worked well when the resources were scarce. In an age of abundance like shale it leads to the destruction of the commodity market prices.

What People, Ideas & Objects Preliminary Specifications decentralized production model does is enable a methodology of production allocation based on the profitability of the oil or gas asset. If the property can be produced profitably based on the current commodity price, then it should be produced. If it can not produce a profit, it should be placed in the inventory of shut-in properties. Any producer that cheats, will be incurring losses and can be dealt with by the investment marketplace in a manner that is consistent with the losses that they are incurring. By removing the unprofitable production from the marketplace the commodity price will move towards its marginal cost. Then the industry will have a basis in which to make rational decisions in terms of its capital investments. The losses that would have been incurred in the current environment, which have to be added to the cost of the reserves, in order to calculate an adjusted cost base, will no longer have to be incurred in our proposed environment. The producer will either incur null operations on their shut-in properties or profits on their producing properties. With shut-in properties the producers will record higher levels of profits than with the unprofitable properties producing. And have higher revenues as a result of having higher overall commodity prices.

The decentralized production model does this by stripping down the prototypical producer to their C class executives, their earth science and engineering resources, some land, legal and support staff. The remainder of the administrative and support staff are reallocated to service providers who focus on one process and service the entire industry as their client base. Specialization and the division of labor will be the keys to the service providers profitability and competitive advantage. When a property is producing, the associated costs of administration and accounting will be billed by the service provider to the appropriate Joint Operating Committee. If the property is shut-in then the service providers charge isn't incurred as their is no activity at that property to create the administrative or accounting work. Therefore the property incurs a null operation, only the costs of capital are incurred during times when production is shut-in. It will be the service providers who will carry the administrative and accounting costs of the industry during any shut-in production activity. For the first time giving the producers real cost control over their administrative and accounting costs. On the other hand the service providers will know at any time that their annual revenues may be reduced by 10 - 15% and are able to budget for these possible revenue shortfalls in their annual budgets.

Looking at the graph above the first candidate to be shut-in would be the Marcellus properties. These are highly unprofitable and need to be stopped. Due to pipeline constraints in this area production receives sub $2.00 natural gas prices. If the 15 bcf / day Marcellus production were taken off the market, the natural gas price would be around $30.00 tomorrow. Something for the bureaucrats to think about. But don't expect it to happen, it makes too much sense and as hard as they try, they just aren't configured to do it. This decentralized production model works for both oil and gas and we'll look at the oil situation tomorrow. What we will also discuss is the extrapolation of these shale based properties productive capacity forward into the future. Anyone agree we need a new business model?

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Change Doesn't Happen That Way

To set out and deliberately construct the oil and gas industry in the vision of the Preliminary Specification is what is required to ensure its long term success. This type of change however, where we go about making wholesale changes to the structure of the industry, hasn't been done before. Usually changes are made gradually and organically as they’re required. I would argue that last point. Nothing really has changed in terms of the structured hierarchy since the 1920’s. As much as there have been reorganizations, the same general concepts are still in play. And we still rely on elements of that structure in some areas within the Preliminary Specification. However, the movement of the administrative and accounting functions from their development within each producer, building their own in house capabilities to a reliance on the industry wide capabilities of the service providers. And the recognition of the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer, are just two of the key changes in the Preliminary Specification. And they will need to be changed deliberately through the development of this software.

What we also do is recognize this new innovation called the Internet as a means to organize people. Dropping the bureaucracy from its role as the glue that holds organizations together is something that the Internet does much better. This type of change has taken place in many industries already. Steve Jobs of Apple did it with computers, music, telephones, entertainment and a few other industries. All of these changes were deliberate, with Information Technology, and many companies and people were displaced. To be replaced by new and innovative products and companies that grew to fill the void that those that could not understand the new dynamic.

Does the Preliminary Specification introduce a new dynamic to the oil and gas industry? According to our value proposition it does. When we can provide trillions of dollars in value to the industry then we are introducing a new dynamic. Our efforts have been to have this new dynamic, the decentralized production model, adopted in the industry since 2010. The time when natural gas prices collapsed. What is also clear is that this new dynamic is unable to be understood by the marketplace as the natural gas prices are almost at their lowest level of the past five years. And oil prices are now reflecting similar trajectories to the natural gas prices. Sometimes you can't teach an old dog new tricks.

Sometimes you have to put the old dog down. And its time we put this old bureaucracy down. If you have a yearning for its younger days when it performed well, like the 1960’s. Then there is nothing here for you. However if you are looking forward to 2040 and what we will do in the industry in the next 25 years. Shoot the hound and lets get on with the job at hand.

When that is out of the way we will finally be able to address the issues and opportunities that the oil and gas industry has in this next quarter century. The area of focus that I think we should be concerned about. To start, it would be wise to have an organizational structure that accurately replicates the culture of the industry and is consistent with the way in which it works. The Joint Operating Committee is the legal, financial, operational decision making, cultural, communication, innovation and strategic framework of the industry. If we take the compliance and governance of the hierarchy and align it to the Joint Operating Committee we will achieve a speed, innovativeness, accountability and profitability for the next quarter of a century.

We will also have an administrative, accounting and operational framework that is dynamic and capable of dealing with the issues and opportunities that arise in the industry. So that when “things” happen in the industry we can respond to them and leave this strategy of muddling along with the dead dog bureaucrats.

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

A Quick Review of Our Plan

I made the statement last week that I would not work with the bureaucracy in the development of this software, its user community or the service providers. Seeing how they had chosen to concern themselves only with their interests when they had the opportunity to work with us for the past decade. That we were providing them with the opportunity to expand the oil and gas industries output through specialization and the division of labor and provide higher profitability through the “price maker” strategy that we enable in the decentralized production model. Their choice was to take what we had developed and attempt to eliminate it without any compensation towards us. Now that they have caused the oil and gas producers to lose money at a remarkable rate we don't need them and we certainly don't want to emulate their way of doing business. So why exactly do we want to work with them?

Our budget. The producers are the source of the financial resources that are necessary to make this community operate. One thing I can assure you is that the feeling of not working together is mutually held by the bureaucrats. And if the bureaucracy was concerned about the loses that the producers were incurring, don’t you think they would have begun the search for solutions to solve the problem? Maybe even five years ago when the natural gas prices declined. The only reason that they have the ability to stay in power in terms of the administration of the oil and gas industry is that there is no alternative for the oil and gas investor to turn too. And that is point that we have to make in this next year. That the failure of the bureaucracy will continue until an alternative is put in place. And we are that alternative. All that is necessary for this community to begin the transition is for our budget to be funded.

In order to do that we need to be prepared to provide that solution to the marketplace. We have detailed a vision that is complete within the Preliminary Specification. A method of how the oil and gas producer and their assets will be managed through the user community and service providers. We began January 1, 2014 in the development of the user community. This is the hard, expensive and time consuming work that most ERP systems skip. We have defined a leadership team for the user community and began recruiting for the 30 or so positions that make up that team.

Our plan is simple. Present our leadership team, the Preliminary Specification and our method of management to the investors in the oil and gas industry and have them fund these. I don't expect the investors to fund us directly from their pockets. I expect them to direct the oil and gas producers to do so.

As unreasonable and difficult as this appears in terms of it occurring. It is the best hope that we have of ever being funded. The bureaucrats will never fund a competing solution to their franchise. It is the equivalent of suicide to them. They intend to stay in power as long as possible and will not concede anything to anyone. For five years they have allowed significant losses to occur in the natural gas business without a word of discussion about what to do about it. Do you hear any discussion today about what they will be doing to “fix” the solution in terms of the losses that oil and gas companies are incurring today? And you won’t, ever.

Offering an alternative to the status quo is the best that we can do at this time. It is also what is being done in most industries by Information Technology. Some industries are far ahead in terms of the changes that are realized through technology. Some are far behind. Oil and gas needs to change now because of the difficulties that the bureaucracy are proving incapable of and too self interested to deal with.

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

It's Time For Change

People, Ideas & Objects is looking forwards to a very active year in 2015. With the decline in the oil prices in the last quarter of 2014. And the further decline in natural gas prices in the month of December, our time has come. The Preliminary Specification decentralized production model deals specifically with the commodity prices and enables the producers to enact “price maker” strategies. Nothing could be more timely. But its not just the decentralized production model that we provide as solutions for the industry. By using the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. We are able to provide solutions to the current and future issues and opportunities of the producers administrative, accounting and operational domains. That is the real value of the Preliminary Specification, beyond how it resolves today’s problems.

However today’s problems are problematic for all producers. Year end has now begun for the majority of producers based on the oil and gas prices that were in play at the end of the year. Operational losses of material scope will be announced in the next few months. Additional write downs of assets to the commodity prices will also be carried out by the audit firms. This is perceived by many in the industry as being of a non cash item and therefore not of concern. Producers would be wise to remember that this was your investors money and is evidence that it is worth less than what it was when it was given to you. I expect to see a bloodbath.

Its not that there has been any real discussion of the issue of how the industry will deal with low commodity prices. Any strategic or tactical plans, or any discussion at all, appears to be missing from the discussion of lower oil and gas prices. CEO’s and CFO’s seem to have their heads firmly placed in the sand and are unavailable for comment. In consideration of their situation, its not that they can do anything about it. Their business model is completely inflexible in terms of its operating strategy and full production is the only methodology. Their only alternative was to talk to me and adopt the Preliminary Specification with its decentralized production model as an alternative operating model.

That was yesterday. Review of this blog’s calendar feature shows that we began writing this in late 2005. We published the proposal for the Preliminary Research Report which offered to research the idea of using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer in August of 2003. If you look at anyone of the entries in this blog it is regarding how we can build systems for oil and gas based on the Joint Operating Committee. At anytime during this eleven and half years you would have thought this research and discussion would have obtained an audience. I can tell you that it certainly has. And the bureaucracy has engaged me at every opportunity that they could. The highlights were on three occasions where they hired three other groups in attempts to steal the Intellectual Property that makes up either the Preliminary Specification or earlier work. This was, in my opinion, so that they could lay claim to it and shut it down, not to use it for its appropriate purpose of building something constructive.

It has been throughout this past decade that there has been a theme in all of my writing. That is that all economic growth can be attributed to enhanced organization through specialization and the division of labor. Our society today requires software to define and support any enhanced version of specialization and division of labor. People, Ideas & Objects software and our software development capabilities are therefore critical capabilities of the oil and gas industries future growth. Some of these attributes were discovered in the Preliminary Research Report and published in May 2004. The bureaucracy have twisted this to their benefit by never acting to change their systems, therefore their franchise will never be challenged. Understanding that economic benefits were at stake their franchise was more important. This was in addition to the value that was available from the decentralized production model in the last five years from low natural gas prices. The bureaucracy therefore can not be trusted. They have refused to deal with me and therefore have proven unable and unwilling to use these tools to the betterment of society. Now with losses growing in a material way its time for change and I am unwilling to work with them.

Did Steve Jobs need the assistance of the record store managers in the development of iTunes? He offered a clear alternative without the legacy constraints of the past. I don't want to compromise with the bureaucracy on their legacy needs and losing ways. We offer a viable alternative with the Preliminary Specification, our software development capability, our user community and service providers. This is a remove and replace strategy based on the greater force of economic change, creative destruction. The bureaucracy have begun their role in this process, its time the investors find the will to step up and direct the payments be made to us to begin these developments and for us to begin our work.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Where we Stand Today

We're heading into the Christmas season and a new year will be upon us soon. Its time to look back on 2014 and see what it is that we have accomplished, where it is that we are headed and what our plans are for 2015. Final editing of the Preliminary Specification was completed on December 20, 2013 so it is timely to say happy first birthday to our completed product. We started first thing in January of 2014 to begin the development of our user community. Therefore it is reasonable to state that we have now completed the first year of our three year plan to put the user community in place for the development of the Preliminary Specification. People, Ideas & Objects are committed to user based software developments. This commitment should be starting to show.

With respect to the development of the user community we were able to specify and publish our development budget. Although the budget details a range of what our costs will be. It has been determined that we will only commence developments with the full budget of $4 billion in place. It terms of the character of the user community we were able to determine a variety of specific positions within our leadership team. These positions number upwards of thirty and we have been actively recruiting for these positions throughout the year. Stay tuned for more information on these. If you have an interest in any of these positions please contact me through any of the contact information below. We have also seen a number of people that are interested in participating in the user community begin to make their presence known. These people do not have the desire to be part of the leadership team, however are interested in the work that we are doing and / or are interested in the work of the service providers. Lastly we were able to publish a user community vision that identifies the reason that this user community is not what has typically been a software development user community. And we will continue to build on these developments throughout 2015.

These efforts have to be undertaken and would be our priority even if we had the development resources in place. Our approach is different and therefore we have to educate the market to this difference. Therefore we are already incurring time and energy in efforts that would need to be incurred during our development. And as a result we are not wasting anytime as long as we stay focused and committed to our primary objective of developing the user community. It is important to note that we are not constrained in the development of our software deliverables by physics or anything tangible. It is the development of the user community and the ideas that will be generated within that domain that are our primary constraint. The abilities and capabilities of the user community are the constraints that we must live within. And those constraints are limited in the physical world by the speed of electrons. Therefore the need to start this work now is critical to the success of our entire initiative. Since we are working on that, it is therefore reasonable to state that we are in development.

People, Ideas & Objects have become very lucky as our decentralized production model has driven our value proposition into the stratosphere. And that was before Opec stepped in. I’ll be recalculating our value proposition in the new year but its probably safe to just start saying that its valued in the trillions. The downside of this is its just one issue. We provide so much more value for the dynamic, innovative and profitable oil and gas producer beyond just enabling them to be price makers. On top of all that the Preliminary Specification does do. We enable them to become organizationally flexible to address the future issues that will need to be addressed in similar ways through organizational changes in either the industry, producer or Joint Operating Committee. Something that they will be able to address through participation in the user community and its vision.

As we have discussed we'll be looking in early 2015 to the possibility that we can get some attention in terms of our solution in the marketplace. Attention that could enable our budget to be funded by the investors in the oil and gas industry directing their producer firms to fund our budget. This is an opportunity as the short, medium and long term commodity prices look terrible in North America and the bureaucrats think they are in the catbird seat. We need to at least get the attention of these investors to let them know that there are alternatives to the bureaucrats and they don't necessarily have to take the continued losses that they provide. This opportunity might provide us with the ability to reduce our development time by one year. Therefore it is something that we will make a reasonable attempt at. Otherwise we are sticking with our plan of developing the user community up to January 2017. At which time expect that the user community leadership team will be able to prove to the investors that we offer a viable alternative to the existing bureaucracy and our budget can be funded at that time.

In an earlier posting I noted that I would be taking six weeks off returning January 12, 2015. 2014 was a very good year for us. I think 2015 will be even better, so we'll see you then.

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

A Foolish Consistency

“A foolish consistency is the hobgoblin of little minds.”

Ralph Waldo Emerson

That is what comes to mind when I read so many comments from oil and gas bureaucrats regarding how they perceive the decline in oil and gas commodity prices. Each of their responses are the same “that we are still making profits” and nothing has changed. My first argument concerning these comments is that the net proceeds from the field are not profits, they're margins. When you take the revenues less royalties, production and transportation costs that is the margin that the property is providing the producer. There are significant additional costs included in determining the profit of that property. Such as what it cost to drill the well which needs to be depreciated and the reserves depleted. Additional costs include an allocation of all of those thousands of people you employ in the head office. Then maybe you will begin to determine what “profit” really is.

As I have stated before it is detrimental to the industry to display that the bureaucrats have such a poor financial understanding. If they do not comprehend the business from a level in which they can articulate the situation to the financial community. In a way that is consistent with financial expectations then they should find someone who can or just be quiet. Right now all this talk of continuing to be profitable is setting up expectations that they are still profitable. And we all know that if the producers are operating on skinny margins in the oil sector, they are losing money after the deduction of the capital costs of current production and the associated overhead. Adding the losses on the oil side to the known losses on the natural gas side of the business and these bureaucrats will be reporting big losses in April and May of 2015 for the fiscal year of 2014. So why set yourself up for angry and disappointed investors that will believe you deceived them?

One producer was quoted in World Oil as stating...

“They're not shutting in because that’s all ‘sunk costs,’” he said of U.S. shale producers, “So you're not going to get a lot of producers stopping at 75 buck oil.”

This logic is a holdover from the 17th century. In the 21st century the dynamic, innovative and profitable oil and gas producer will use People, Ideas & Objects Preliminary Specification. Which will enable them to use the decentralized production model and agree among the Joint Operating Committee to shut-in their unprofitable properties. And by doing so they will be able to remove the excess production from the marketplace, increasing the price of the commodity. Save their reserves for the day when they can be produced profitably. And reduce the unprofitable property from their inventory of producer properties, therefore increasing their firms overall current profits. Again this would be a more constructive posture than applying confusing messages to the investment community and applying 17th century thinking to the current situation. However, I am on record as being on the outside of the industry due to the bureaucracies dislike of my ideas. Therefore I am liberated in my application of criticism of their performance, or lack of it.

Does anyone believe that these bureaucrats would, could, wanted to, are capable of, or are willing to change? I think the investors are beginning to see the extent of the little minds that are at play in the bureaucracy of the oil and gas industry. I see the commodity price issues as being a severe challenge to many of the oil and gas producers. There however seems to be an ongoing orchestrated discussion regarding climate change, carbon capture, carbon tax, carbon exchanges and the like by the CEO’s of the major producers. Why, it should be asked, would they discuss the potential losses they're incurring? This situation is fascinating to me. It will soon be time for the investors to act and direct their producer firms to fund People, Ideas & Objects and begin a new way of operations in the oil and gas industry.

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

A User Perspective From the Service Provider

No matter the situation regarding the oil and gas industry. Whether our budget is funded earlier than our plan specifies in January 2017. The user community will have time to develop in the appropriate manner. Time is the option that we have at our disposal and we are using every minute of every day to further develop the user community. That is our priority and our focus and nothing will take that away. Whatever time is required will be what will be committed to the development of the user community. And not to contradict myself or apply any pressure to the community, it is also the user community development that holds up the remaining parts of this project. Therefore even if we were to secure the budget for the developments of the software, if the user community is not ready to begin developments we will sit on that money and wait for the appropriate time to start. Our commitment to quality and user community developed software is unquestionable.

What kind of oil and gas industry do you want to work in. One that the bureaucracy is in control and unaccountable. Then you can stop reading now you have what you want. Or is it a dynamic, innovative and profitable industry that is driven by the people and ideas that are employed within the industry. One where change is the constant and the systems that you are contributing to the design and development of are a critical part of that organizational dynamism. You see this in other industries that have changed as a result of Information Technology. Music is nothing like it used to be. You the user gets the music you want where you want when you want it. Too bad about the record executive though. Uber will get you from point a to point b without a word, or a need to grab your wallet. And now Apple Pay is the last great hope for the credit card companies existence. Why can't there be a solution along those lines for the oil and gas industry?

The only reason that hasn't happened in oil and gas is because you're not involved. It needs the user to be involved in the development of these software applications to make them effective for the work that is done by you the user. The Preliminary Specification dictates a business model of how the industry would operate if we adopted the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. It provides solutions to the big problems in the industry like the decentralized production models ability to make the producers price makers. And a solution to what is now being called the “Big Crew Change.” In terms of how it provides the support for your job. The desktop and mobile applications that you need to make what you do for the producer firm dynamic, innovative and profitable. That has to come from the user community and that is why we are so focused on the development of the user community at People, Ideas & Objects. It is the source of our quality in terms of our software.

Consider the revised structure of the industry under the Preliminary Specification. With the producers stripped down to the C class executives, the earth science and engineering resources, some land and legal, and some support staff. Where the administrative and accounting resources have been reallocated to service providers. Assuming you would be moved to an accounting service provider. What would it be like doing your job within a service provider where the entire industry is your client base. What applications would you need in order to do your current job there and process the mountain of data and information that you would be faced with. A completely different kettle of fish. One which the sciences of Information Technology on top of your industry knowledge and accounting education would be necessary to add real value for your producer clients. It is assumed that we'll approach this change with a division of labor where the computers will do the storage and processing. And the users will conduct the leadership, problem solving, creative, collaboration, research, idea generation, design and planning type of work. Then we begin to see the special role the user community takes in these software developments. And how the never ending developments of new and better ways of processing that data will constantly bring greater value to the producers. If it is this type of vision that interests you, and there is a bureaucrat lurking in your life, you'll know what to do.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Our Tactical Plan for the User Community

It is clear to People, Ideas & Objects that the prospective user community participant will not subscribe or participate in these developments until the funds are secured. This has always been understood to be the case. We do however expect that the leadership team will begin their participation at any time. It was on the basis of the leadership teams existence that we would be able to prove to the investor community that we were able to provide an alternative means of organization to them. And then raise our budget on that basis. That was before we were presented with this opportunity to raise our budget in 2015 based on the decline in oil prices. That is, with both the oil and the gas sides of the business performing poorly. Investors will be looking for alternatives to the bureaucracy and therefore the budget can be raised, our leadership team, user community and the Preliminary Specification developed in that order.

If we understand the scope and scale of the Preliminary Specification it involves the work that is done within the oil and gas industry, there is little that is conducted outside of the application. Once we adopt the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer there is little within the industry that is untouched as a result. Therefore we need to include these elements within the application to ensure that it operates in an integrated and functional manner. Therefore the user community will be drawn from the entire population of the oil and gas industry personnel. They will also bring to the application their needs and desires of “what” and “how” they do their jobs. This way we can build the applications, whether for the desktop or mobile, so that they are done efficiently and effectively.

If it takes at least six months to fully comprehend the role the user has within the producer organization. And this is based on the many years of industry experience that a user may have acquired. You can see the value that the user brings to the software development process. When we expect that the costs of user community developments will total $667 million. Total 2,000 man years of time and involve a population of approximately 3,000 individuals. We can see the scope of the undertaking that we are contemplating. And this is what is budgeted for in the initial commercial release. We expect that the user community will continue on in an ever changing and constantly improving manner for the entire time the application is operational in the oil and gas industry. Participation as a user community participant should be considered as a new career choice.

This is in stark contrast to the current model of hiring a number of consultants from the various accounting firms to conduct user development, installation and integration of ERP software. These somehow never have the resources required to complete the user development attributes. As is evident by our budget we're not going that way. We do however have a budget for Oracle consultants. These are primarily for our developers in terms of understanding the Oracle product line.

If you feel that this scope and scale is out of line with what is reasonable in the oil and gas industry I would point out that our value proposition is in the trillions of dollars. And those trillions of dollars are on top of the costs that have already been incurred by the industry. So our value proposition is valued in pre tax profits. We are providing the oil and gas investor with the most dynamic, innovative and profitable means of oil and gas production. That imputes everything involved in the industry to attain production. Therefore the investors investment in us will leverage off the many investments that have been made in the past one hundred years. That is the power of software today, however software is useless unless it is in the hands of an enabled and empowered user community.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

What a Mess

There are no doubt a few bloody noses and some angry people as a result of my words Friday. I've made it pretty clear that I share the bureaucracies belief that they won't participate in this software development project, the user community or the service providers. They have ignored me up until now. That is the normal procedure you follow with respect to a pest. But when that pest becomes a danger, as we have now that the Saudi’s are dropping the price of oil and the bureaucrats are going to be losing money, and therefore won't have a leg to stand on, they will therefore be looking to exterminate that pest. So yesterday I made sure that they know I’m ready for the fight. Let us begin, and may the best business model win!

And this battle will be short lived and intense. I think the investors are going to be looking quickly for an alternative. Prospective members of the user community could help in sending our message out further and faster. That would help everyone. Other than that keep your head down and watch the show. I promise it will be enjoyable and there is no reason for anyone else to be involved in this fight. It’s just me vs. the bureaucrats. The Preliminary Specification vs. the status quo. And the referee will be the investors who have to call the fight to determine who the winner is. And the winner will be the one that operates the industry on a go forward basis.

That is for the foreseeable future. The next 20 to 30 years. A continuation of the bureaucrats and their losses, with no strategy, vision or prayers as to how to make money other than for themselves. Or a vision of how we provide the industry with the most dynamic, innovative and profitable means of oil and gas operations. One based on the Preliminary Specification which is defined and controlled by the user community. The choice is stark. The scope and scale of change is significant, approximately equivalent to the changes that are being experienced in the oil and gas industry itself. This is the choice that the investors are being asked to be make and what the fight will be about. There are trillions of dollars at stake, and maybe so much more.

There is the point of our user community. Which is our primary focus and will always be. User defined software developments are substantially different than other software developments in my opinion. The user community is our source of quality and success. They will be the reason that the industry achieves the dynamic, innovative and profitable means of oil and gas operations. Our cultivation of the community will continue until we have it developed to the level that it can begin developments of the software. And it will never stop developing for the 20 or 30 years that we are the means in which the industry is operated.

We started this week noting that we were taking on what we have now quantified and qualified as the “fight” against the bureaucracy. This is in order to raise our budget in what we describe as the “opportunity” that we find ourselves in.  An opportunity present now that the Saudi’s are “teaching” the shale producers the lesson of “production discipline.” I have set the context and the tone this week. This battle will continue on through the better part of 2015. And believe me you have the right candidate to provoke and antagonize the bureaucrats in your corner. There is nothing that I enjoy more than a fight and I am itching for this one. This however will not take our focus off the development of the user community. And starting Monday we will begin again with our discussion of the user community. The fight will play on in 2015 and there is not too much that will happen in 2014. And with that I should announce I will be taking six weeks off from December 1, 2014. Time which gives the bureaucrats a chance to clean the place up from the mess they made yesterday.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

"I Did It My Way"

Today I want to address the eight hundred pound gorilla in the room. And that is our budget. It’s controversial and contentious because no one has seen anything like it in the ERP marketplace of the oil and gas industry before. Lets also be clear we will be looking to raise the full $4 billion in funds in order to begin the developments of the Preliminary Specification. I am certain that our costs will be in the range defined in the outer limit of our budget. And for a number of reasons detailed later in this post we will be looking to raise the full amount. The issue and the controversial aspect of the budget is the payment of the Intellectual Property royalty to me, and the net profits. These two items total half of the budget and nothing of its kind has ever been proposed, or paid, in the industry before.

As detailed in earlier posts and elsewhere; the time that I have spent on this project is significant. I started it in 1992. If the industry can come up with a timely solution to its problems that competes with the Preliminary Specification they can begin the process that I started way back when. This blog reflects much of the ten years of applied research that was done in order to take the idea of using the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. An idea that I first published in August of 2003. And moving it to the situation we have today. Some people may consider that I am lucky that the oil and gas prices declined and the decentralized production model just happened to meet the needs of the industry. I don’t care. I'll have the royalty payments that prove that the industry needed the solution to solve the trillions in potential revenues that they were losing. I have always been able to generate significant value in the work that I do. It’s no coincidence that I also generate significant controversy. The money is how I keep score.

So we can continue on with the controversy and the losses in the producer firms. To me it only matters that the industry provides me with the up front payment of the budget first and foremost. The first reason of course is to pay myself the royalty. Secondly I will deliver the program in its first commercial release in a timely manner and as a result earn the profits that are identified in the budget. If I fail or have difficulties, then the profits that I realize will be diminished. The issue of the up front payment also has to do with the fact that the bureaucracy have chosen, in every instance, not to work with me. Even when faced with the difficulties in their business. Reasonable people faced with the difficulties in their business would have turned to those that have solutions. They will never do that. If I have to be accountable to the bureaucracy in any way it will surely be my demise. By moving the money under my stewardship as the first act of the industries participation in these developments. Ensures that I will be able to deal with the issues as they arise. And the bureaucrats can continue to manage the industry for the short time they have left.

It is our commitment to the user community and the service providers who are providing the removal and replacement to the bureaucracy that will be the keys to the transition. Technology is disintermediating industries all over the world. Just ask the record store manager, or his distributor. Yesterday I detailed how the industries investors were led down the primrose path to build the industry while prices were low. So that when prices did turn higher they would reap what they sowed. This was a farce and the investors were fleeced. The bureaucracy have played the ultimate ponzi scheme and I’m saying to the bureaucrats you're busted. We're offering an alternative. And in reality its a pretty inexpensive alternative compared to what the bureaucracy is currently charging the investors, and will be charging them in the future with no vision or strategy. And, no prayers. So maybe the people in industry think that our scope and scale is out of line with what is historical in the industry. That paying for Intellectual Property is inconsistent with the industries history. I think we've had enough history from the bureaucracy, and I'm declaring that they're toast.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

"Its Just a Flesh Wound"

Those were some of the last words of the “Black Knights” in the movie “Monty Python and the Holy Grail.” They're what immediately came to mind when I read the response of the oil and gas producers to the Saudis discounting of oil for import into the U.S.

What happened on Tuesday was the Saudis began discounting the oil that they sold into the U.S. marketplace. This was in contrast to price increases that were made in the rest of the world. Isolating the U.S. market, and I think specifically the shale producers. Making it unquestionably the shale producers that are the focus of the Saudis concerns regarding the global overproduction of oil. That if the shale producers in the U.S. want to produce at capacity, then the Saudis will produce at capacity, as will the whole of Opec. That is the message that was sent on Tuesday.

On Wednesday the producers responded in a consistent fashion. In a Bloomberg Businessweek article. Saying more or less that “Its just a flesh wound” is not far off from their actual comments. Here is a quote from the Businessweek article.

Executives at several large U.S. shale producers, including Chesapeake and EOG Resources Inc. (EOG:US), have vowed to maintain -- and even raise -- production as they reported earnings this week. They say their success in bringing down costs means they can make money even if prices slump further.

Its obvious to me that the Saudis are playing the long game and the shale producers are playing the short game. This is how I see the situation playing out in the next few quarters. First of all the oil prices are trading on rumor and innuendo. There is no stated policy at this time by anyone in the marketplace. Once there is a stated policy the market will move to reflect that policy. Opec is meeting on November 27, 2014. Which very interestingly happens to be three days after the Americans announce their negotiations with Iran regarding nuclear weapons. What we might see is no change in the announced production quotas and no concern by Opec for the markets pricing. We might also see no date for another Opec meeting set. This will throw the bottom of the market open for a freefall. Finding the low of the oil price market within the 2014 year end period of time. Just about the time that the accountants will retrospectively be looking to value the reserves of the producers for their annual reports. Creating even larger losses for the producers.

Playing the short game when they should be playing the long game, the producers are falling into the Saudis hands here by making the foolish comments that they are making. The investors who are concerned at the losses that the producers have been creating in the gas side of the business, are now beginning the process of losing money on the oil side of the business as well. Investors have already had enough of the fiscal irresponsibility created by these bureaucrats. They don't need to increase, and by a substantial margin, their losses by these fools losing money on both the oil and gas sides of the business. The investors will be forced to act and within a short period of time to deal with the problem within the oil and gas bureaucracy. And that’s where we, the Preliminary Specification, the user community and service providers come in.

The Saudis are playing the long game and can do so for a significant period of time. They have almost one trillion U.S. dollars in reserves. An effective weapon when you consider the enemy is screaming at you with no arms and no legs.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Not Your Grandfathers 1984

We recently noted that people who participate as early adopters in the user community would be in essence making a choice in how they want the oil and gas industry operated. To continue on with the current bureaucracy, with their legacy of losses and stagnation in place for the decades to come. Or, begin the restructuring of the industry around a dynamic, innovative and profitable framework based on the early adopters initial action of becoming a People, Ideas & Object user community participant. And in doing so set the path of the industry on one which the individual actions of people within the industry are what makes it dynamic, innovative and profitable. This is the choice that can be made. It certainly doesn't have to be made, but I can assure everyone if people don’t make this decision to act, there is no one else that will make the necessary changes to the industry. And the bureaucracy will remain in place.

What we do in terms of this decision will have significant consequences in terms of what happens next. If we do nothing, then of course nothing will happen as a result. However, if we choose to break away from the bureaucracy and begin the process of building an alternative organizational capability then the investment community will see that they have alternatives in which to manage their assets. And it will be in a few years time that they will be asked to fund the user community and People, Ideas & Objects to develop that alternative organization. This is how I see the situation becoming a reality in the next few years. No one is going to be able to sit and one day decide that this project is a go. No one holds that type of power in the industry. The bureaucracy won't enable us, as what we are doing contradicts their survival and best interests. Therefore the only opportunity we have is to provide the investment community with the choice of the bureaucracy, or a means to operate the industry in a dynamic, innovative and profitable manner by joining us.

In order to make that decision the investors have to see that there are people that are ready, willing and capable of making this new industry structure operate. A leadership team and a community of like minded people capable of managing their assets under an overall sound vision. And this is the user communities choice to provide this alternative. That they are as dissatisfied with the standards set by the bureaucracy as the investors are. That the user community believe that the industry should be reestablished under the vision of a dynamic, innovative and profitable means of operations and that they have that with the Preliminary Specification.

As I have mentioned this initial first step is the beginning of the user community. But also becomes the manner in which the industry is operated in that dynamic, innovative and profitable manner. It is with this first act of individual participation, either as a member of the leadership team or as an early adopter in the user community that the industry is transformed. It will be on the basis of these individual actions by members of the user community in the future that the industry achieves what it sets out to do today, tomorrow and in the future.

I can't see how change of this scale can take place in any other way. There is no one to ask permission of. If we want this done then the only way that it is going to get done is that if we do it. Our timetable is such that we will have two years remaining in which to develop the user community and then we will turn to the investor community to fund these developments. We won't be asking for their money specifically, we will be asking them to direct their producer firms to pay their share of the development costs. And then when we have the funds we can develop the application and the user community, create the service providers and begin the process of converting the producers over to the new method of managing their properties. I'll have more to discuss regarding that integration tomorrow.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Who Are the Industries Next Leaders

The bureaucracy are managing their time until they are forced out, or their retirements allow them to live like kings. Either way they will be gone and the investors will be left holding the bag, as they say. Who then are the oil and gas industries next leaders. Dedicated, committed and looking to build on a flexible framework provided by the People, Ideas & Objects user community. Leaders that we can rely upon. And how do we recruit them into the user communities leadership team? Last week we went through how the user community and service providers can benefit the industry, the oil and gas investor, but particularly you the individual that is interested in participating in the user community and as a service provider. Bureaucracies are leaderless and not change oriented. However they are established. Their choice as individuals are to continue on in an unprofitable enterprise where you push paper in a system that is as frustrating and boring as is humanly possible, or to begin that permanent vacation. Bureaucrats know there is a better way, they also know there is nothing they can do to change things.

If you think that People, Ideas & Objects offer the alternative that the industry needs. One in which the focus will be on the dynamic, innovative and profitable oil and gas producer. Where the individual, working through the user community and the service providers has the ability, the capability and the power to make the changes that are necessary to keep the oil and gas producer dynamic, innovative and profitable. Then maybe there is a role for you in the leadership team of the user community. After all leaders need an organization, and roles within those organizations in order to practice their skills.

We showed last week that the People, Ideas & Objects user community has significant power that they can exercise within the oil and gas industry. This power is approximately equivalent to what the bureaucracy currently holds today in the oil and gas industry. The difference is that the bureaucracy have chosen to line their pockets by abusing this power, and employ the muddle along strategy. In other words they do nothing but use this power for their own self interest. We have chosen to prioritize the oil and gas producers dynamic, innovative and profitable capabilities as the keys to our competitive advantage. It is this competitive advantage that will sustain the user communities power for the long term. As long as we remain focused on these priorities we will remain the chosen method of oil and gas administration and accounting, ways and means.

We have established reasonable timelines for people to participate within the user community. We need to have the leadership team in place and operational prior to the January 2017 deadline that we established for industry, and the investors to support this initiative. It will be on the strength of the leadership team and our commitment to providing the oil and gas producers with the most dynamic, innovative and profitable means of oil and gas operations, and of course the Preliminary Specification that they will fund us. This does not preclude people from joining the user community prior to January 2017. After all we have much work to do.

Our leadership team consists of the traditional board of directors. We have set the total number to six, I have appointed myself as chairman and hold two votes. There are also the C class executives of the user community that need to be filled. That is the CEO, CFO and COO. Lastly there are many product owner positions that we have defined in the user community. Each product owner will be responsible for one of the modules of the Preliminary Specification, or one element of the development. For example the data model, or the user interface, etc. As a result the total number of people we are looking for to fill out this leadership team will be upwards of thirty people. If you have an interest in these positions or know of someone who might be a good candidate then pass this data on to them. After all it looks like we might just change the world after all.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Providing For a Dynamic, Innovative and Profitable Oil and Gas Industry

One thing that will be a defining characteristic of the future oil and gas industry will be that it operates on the individual initiatives of the people that work within the industry. People such as yourself who, as in yesterday’s discussion, plan and prepare to participate in the user community and service provider organizations. Not seeking the approval of anyone in order to make the transition. And not seeking the approval of anyone in order to make the transitions necessary for the industry to move from one business model to the next, say in 2025. Providing the industry with the kind of dynamic, innovative and profitable make up that we are seeking for the most profitable means of oil and gas operations. As that is our priority and our concern, to make the industry as profitable as it can be.

This dynamic is held up as the alternative to the bureaucracy with their tried and true muddle along strategy. We are asking the investors and the progressive producers to make a decision and as a result fund the developments of the Preliminary Specification and the user community. This decision and funding is due in January 2017. Those people that take the advice from yesterday’s post and plan and prepare to participate in the user community and service providers within this timeframe will be offering the industry an indispensable opportunity and future. One that provides the dynamic, innovative and profitable elements that are necessary for the 21st century. It is this offering that we collectively will be providing to enable an alternative means of organization for the investors and progressive producers to use.

Change at this level can not be conducted within the traditional organizational context. We have seen how the bureaucracy has responded to the ideas put forward in the Preliminary Specification. Their plan was to hope for a cold winter. When that happened and it did not materially affect the natural gas prices. They gave up on any planning for the future. We on the other hand provide the producer with the price maker strategy through the decentralized production model. A starker contrast can not be made. The fact that the bureaucracy will not entertain or consider the Preliminary Specification is due to the fact that our system eliminates their existence. It’s suicide for them to consider us. So we need to find other ways in which to have the Preliminary Specification operational in the oil and gas industry. The only other way is to provide an alternative in which the industry can choose which way they want to have their assets managed.

Therefore there is a need for people to begin the development of these communities. And prepare and plan for their participation in the user community and service provider organizations to enable the industry to have an alternative means of organization. And this is a far more exciting path to be on. One where the needs of the producers profitability drive what the user community and service providers enable. It is the users who control the Intellectual Property that comprise the Preliminary Specification and all that comes after it. It is they who have the sole focus of the People, Ideas & Objects software development capabilities. And as a result are able to make the changes they need to keep the producers moving forward as they should. It is the user community and service providers who have the power in terms of the “what” and “how” of the oil and gas industry, and the ways and means of the oil and gas accounting and administrative domain.

But its not just in the accounting and administrative areas that they hold the power. It is also within the operational areas that the user community and service providers hold significant influence. It is the business models of the dynamic, innovative and profitable oil and gas producers that fall within the scope of what these communities control. Business models like the Joint Operating Committee, the decentralized production model and the effect they have on the operations in the Preliminary Specification. And if they were to discover a breakthrough in terms of a new business model then they would have the ability to implement that business model if it had an effect on the producers profitability. This is after all, not your grandfathers user community. As you can see.

The Preliminary Specification and user community 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. 

What Are Your Plans?

If we position ourselves as the alternative means of organization for the investors and progressive producers in the oil and gas industry. What does that mean for you as an individual that is interested in participating in this community? If you're asking yourself that question then it assumes that you have some entrepreneurial skills or desires that need some exercise. If that is the case, it would be incumbent upon you to spend some time reviewing the Preliminary Specification in detail. Understanding its differences and how it impacts the areas that you want to spend your time in oil and gas.

The next thing you might want to look at is our time lines and the prospects of change being implemented within the industry during that time period. Will these changes happen? Will they happen in that time frame? What would be needed in order for you to leave where you are working in 2018 or later and move to your own firm operating as a user community participant and service provider? What level of organization and preparations on your behalf would be necessary in order to make that change. Are the next four years adequate?

Not everyone will be able to make the transition from the bureaucratic systems that are operational today to the future that we are discussing. Look at any business magazine and they frequently discuss the effect that Information Technology is having on business. An effect very similar to the one here at People, Ideas & Objects. Like so many transitions in the past some people just can’t make the transition. Having time to prepare certainly makes the change easier from most people’s point of view, I think. Having control of the changes is maybe the most effective way in dealing with these changes. Therefore taking the initiative now to plan and prepare for the possible changes in the industry in January 2017 and 2019 might be a wise and prudent investment of your time and energy. After all what is the bureaucracy offering you as an alternative.

There are no guarantees in life. And I am certainly not in a position to provide anyone with anything. There is no prospect of People, Ideas & Objects proceeding within the industry at this point. What we need to do however is to offer the investor community with the proven capability to operate the industry if they should choose to decide to make the transition to People, Ideas & Objects Preliminary Specification. There is nothing I can do to prepare for that possibility. Other than to plan and prepare for the Preliminary Specification, the user communities leadership and general communities development, the service providers and the app marketplace. And that requires people such as yourself to make the conscious decision to leave what they are doing now, down the road in 2017 or later, and plan and prepare themselves in their own interest as members of the user community or as service providers and app marketplace providers.

Its a chicken or egg type of thing. The individual acts of people, doing this for their own self interest in developing a sound service based business in oil and gas. And for the purpose of developing a solution on providing the innovative and profitable oil and gas producer with the most profitable means of oil and gas operations. The fact that time is on our side is the real value in considering this opportunity today.

We will be knee deep in technology in 2017, that is one thing that will be a certainty. Therefore it would be a good time to take some technology courses to help in this transition. I can certainly recommend that people take courses in relational databases and Java. Those technologies, and a general understanding of those technologies throughout the user community, service providers, and of course the app marketplace might, dare I say, be a mandatory requirement by the time we get there. In order to fully understand and appreciate the opportunities and what you can do in the application requires a full understanding of what you can do in the technology. The technological concepts are opening up new conceptual ways in which the People, Ideas & Object applications will be able to function. Service providers who are on the front lines of providing the producers with their needs could really provide a much higher level of service by fully understanding the relational model and Java, as well as their accounting or administrative oil and gas industry knowledge.

The Preliminary Specification and user community 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. 

Profits vs. Cash Flow?

There are many people such as myself. Particularly those that read this blog that agree that the manner in which the oil and gas producers are operated by the bureaucracies has to change. That profitability, in what can only be described as a mature industry, is the only responsible manner and priority to proceed from this point forward. I understand the desire to trade on multiples of cash flow. It happens in most industries when the businesses need to be built and the industry is young and is at the beginning of a long and hopefully prosperous future. The need to invest in the business fuels the demand for capital and the metric that is used to determine a healthy business is a multiple of cash flow. To be using that today in the oil and gas industry I think is as a result of the bureaucracy having the luxury of sitting on its hands, unchallenged, for so long that they think they can get away with it.

It used to be that I was the only one that thought that profits should be of concern. When I raised the point I was usually derided as not understanding the way in which the industry operated. I assured them that I knew how the industry operated. Knowing what we know today, and the fact that the decentralized production model provides the oil and gas producer with the ability to become a price maker. Who can argue that profits should not be the deciding factor in determining what should be produced? Today the bureaucrats don't have a leg to stand on in terms of arguing the point about profits, if they ever had.

I have to say that we have come a long way in making the arguments of having the Preliminary Specification implemented in the oil and gas industry. What was a chance in a million in 2004, albeit a significant threat, is now something that is under reasonable consideration by many like minded people. What was just an idea is now a defined business model for the innovative and profitable producer, the user community, the service providers, the app marketplace and lets not forget the effect it will have on the service industry as well. What we have is a budget and a plan as to when this will be put in place and how it will be funded. What we are going to do is offer the investors and the progressive producers the opportunity to fund this environment and build this alternative means of organization for them to manage their assets. An alternative means or organization to manage their assets based on the profits they can make in the mature oil and gas industry.

To suggest that the oil and gas industry needs to be “built-up” by investors in order to realize the value that exists in the shale reserves is a story that I don't think anyone is going to buy. I think the investors have been told many times that they were needed to move the industry just a little bit further and a little bit further too many times in the past. The story isn't selling. The bureaucracy needs the investors money in order to pad their pensions and add to their summer cabins. What the investors may have already realized is that the game was fixed from the beginning and they were mark. What they should quickly realize now is that, since they realized that they were the dupe, is that those dishonest players are going to take their cards and move to another scam. That is the bureaucrats are going to realize that their ability to play the investor for the fool is over and move on to another industry.

Therefore, the investor is going to need someone to manage their assets as the bureaucrats are going to be high tailing it out of here faster than you can say “where is a cop when you need one?” And that has to be this community, consisting of the Preliminary Specification, user community, service providers, app marketplace and all that we have discussed here. Its been 10 years since we started this and many things have happened to take this from one chance in a million to who knows what our odds are today. But if we keep at it and keep building like we have, we just might be the ones that the investors find that they can rely on. I’m certainly betting on it.

The Preliminary Specification and user community 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. 

Decisions, Decisions, Decisions

We have not clearly discussed the role that the producers would have in the development of the People, Ideas & Objects software. Up until now I have isolated them from having to be involved in these developments. The bureaucracy, which operates the producer firms today, will have nothing to do with People, Ideas & Objects. And that I think is why we see such systemic losses, except of course for where the producer capitalizes their royalties. The user community, the service providers and app marketplace are driven by self interested individuals that will take People, Ideas & Objects to the point where we will build the best software possible. There is however a role for the producer in this task, and it is one that requires they undertake a different footing and posture in terms of how they approach their business from this point forward.

I am of course speaking of the muddle along strategy that has been in place throughout the industry for the past number of decades. Sitting around waiting for events to turn favorable really looks inappropriate when you consider the full scope of the value of the shale reserves potential. Are we to muddle along until these reserves are produced unprofitably in their entirety? Is that the strategy of the industry? The ability to let things play out will no longer favourably benefit any producer. That assumes that this strategy ever favoured any producer in the past. And it will be the same with the next issue or opportunity that the industry faces. The time to be proactive and deal with the issues and opportunities that the industry faces is how the industry needs to be managed in the 21st century.

That is “what” the industry needs to do. “How” they do that is through adopting the toolset that People, Ideas & Objects is offering. The software that we develop. The software development capability to deal with the opportunities that occur, and to eliminate the constraints that the software might impose. Our user community and service providers to deal with the changes within the industry, and provide the services that are necessary for a proactive, dynamic and profitable industry. Software’s role in society is much more involved than what the oil and gas industry considers it is today. It is not just a cost of doing business today. Anyone who reads the Preliminary Specification should see that the ability and capability to manage the producer organization strategically and tactically are the capabilities that are being provided. Managing the organization and its development within the industry itself are what the Preliminary Specification provides the innovative and profitable producer firm to undertake.

It appears to me that the majority of people believe that software had its heyday in the build up to the dotcom crash. Pets.com, WebVan and the ridiculous business models that were valued in the billions of dollars one day, and evaporated overnight, were the rightful course of action for the Information Technology want-to-be’s in business. I agree with the assertion regarding the ridiculous nature of the business model’s that were proposed in that era. However, I think that since that time there is an important lesson that needs to be learned. With the Internet, everyone could see the capabilities that it would provide to change everything. The important thing to remember about change is that it is always overestimated in the short term, and underestimated in the long term. The fact that we can provide a value proposition in the trillions of dollars over the life of shale based reserves should be evidence that we are now in the long term perspective of the impact of the changes from the Internet.

A producer therefore cannot just sit idly by and have this activity go on around them. If they do they will be flushed out with the bureaucracy. This change will be comprehensive, quick and unforgiving. Those producers that are progressive and that are with us will have obtained significant competitive advantages. Those that choose to sit and side with the bureaucrats will see their unprofitable assets sold at a discount in the marketplace. If you can't make a profit in a dynamic industry then what other purpose will you serve? Therefore it is incumbent upon those producers to determine if they are in, or are they out of the People, Ideas & Objects software development and user community environment? There is time to consider your decision, but I wouldn't take too much time.

The Preliminary Specification and user community 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.