Changes in Information Technology.

Around this time of year I like to review the state of the Information Technology marketplace from the perspective of the technologies we will be using. First off has to be the Java environment. Although I don't know how the Oracle acquisition will affect Java, we can assume the following. Oracle's purchase of Java makes their technologies stronger, much stronger. I would think this may help in resolving one of the bigger technological issues that exists today. That is the relational vs object relational design theories. Many assume that object relational is the way to go, yet, continue to run into the same problems. It will need the resources of Oracle and Java to resolve this problem and come up with a more complete solution. It is in my opinion the only technological issue that we face in People, Ideas & Objects.

The second assumption we can make about Oracle's acquisition of Java is the technically superior capabilities. I found that Sun was excellent in coming up with the big idea and could out think any firm in making the best technologies. However, I often wondered if these people ever took out the garbage. At times it seemed people were working on the big problems and no one was minding the store. I say Oracle's technological capabilities are superior from a commercial point of view. Oracle sells good products that are state of the art. A difference I see that is fundamentally different then Sun's.

Java as a technology has leaped onto center stage in the marketplace in the last couple of years. With no real competition from any other development technology Java dominates. From Google's almost exclusive use to each and every open source project, Java is technically capable and scalable. The Java Run-time Environment is robust when we include the many frameworks and the human resources that support them. Powerfully exploiting the re-use of Java code. Standing on the shoulders of giants never meant so much as it does when it comes to Java.

Lets not forget the underlying model of deployment of Java is to run it everywhere. And here it has done a good job from its early days. Now with the development of "Cloud" computing this deployment model fits with the users needs. Irrespective of how you access Java, it works extremely well. The Cloud as a platform is also receiving attention these days. For good reason. It works, but most importantly it works to release the users from the chains of the "office" environment and permits them to do their job as required, where ever and when ever. 

We are witnessing, I think, the maturation of the underlying technologies. The infrastructure is in place and less time and effort will be spent in these areas. Its time for developers such as those involved in People, Ideas & Objects to start putting these frameworks together and applying the unique and innovative attributes of these technologies in a package for users to do their jobs. What could have been done with 100 developers five years ago can be done with far less. Productivity is soaring at the infrastructure level and this is percolating upwards towards the end users. I have a tendency to agree with many that Information Technologies will be a source of innovation and value generation until well into the 2020's. Most of what we have been doing in IT in the past 40 - 50 years is building the infrastructure. The Information and Communication Technology revolution begins here and now.

For the oil and gas industry this is the time to consider these technologies as the point in which  their competitive advantage, innovative footing and exploitation of these resources should be a key focus of the producers. That is what People, Ideas & Objects is working to provide the global oil andg as producer. By facilitating the oil and gas user with the development technologies and resources to enable them to do their jobs. In turn the People, Ideas & Objects user community will provide the oil and gas producer with the most profitable means of oil and gas operations. With innovative modules like the Petroleum Lease Marketplace, Accounting Voucher and Partnership Accounting. Three of the eleven modules of the Draft Specification.

Of the many people that I follow and write about on this blog. Ray Kurzweil is one of the more interesting and he provides an interesting perspective on the changes that these Information & Communication Technologies provide. His key point is that people think in linear terms when seeing the future. Using the pace of change from their past experiences to extrapolate the impact these ICT will have on their future. Proving that the future is always exponential in terms of its impact is the point that he gets across. Here is Kurzweil's TED conference video.

Technorati Tags: People's User Software Energy Development

The situation today.

I've come across a number of interesting comments and arguments that are reflective of today's economic situation. The overall level of optimism is impressive, and with these comments and arguments, one would find the appropriate posture to succeed in these changing times.

This first article is from the Endless Innovation blog and the blog entry is entitled "Darwin's Finches and Corporate Innovation". Apparently there was a drought on the Galapagos islands that caused 6 out of 7 Finches to parish. What was obvious was the size of the surviving Finches beaks after the drought were different from those of the Finches before the drought.

Endless Innovation goes on to note;

In the same way, the benefits of having the right innovation processes in place are often masked during good times. "Firms with both new and old technologies remain solidly profitable, happily hopping along... But when hard times hit, innovators survive. Most importantly, they flourish when the business cycle swings up again... But like Darwin's finches, the survivors are not just those who have more technology investments, but those who get the dimensions right." At the end of the day, downturns are not only good for innovation, they are necessary.  

The author reflecting on the fitness of the firm to weather the storm and survive. This thinking is also evident in McKinsey's February 2009 document entitled "The Crisis: Mobilizing Boards for Change". Although it speaks to the efforts that should be undertaken by boards, I think it is good advice for everyone. Starting off with the following questions ;

As companies grapple with uncertainty of a magnitude that few have experienced before, their boards should begin by questioning fundamental strategic assumptions: Is our view of the market realistic? Does our financing strategy take into account the new conditions? Should we reset the incentive scheme or abandon any approach based on share prices? Can we exploit the current glut of talent? How can we take advantage of the pain our competitors are experiencing?

Certainly times have become difficult in the oil and gas industry. By developing the People, Ideas & Objects application modules, producers would have the capacity to scale back production and even shut down the well or facility. What we have seen is the North American natural gas producer continue to produce as the prices decline to levels that can't support the costs of production. Why? And then, why did Chevron cease all natural gas drilling on the continent? Why didn't they cut production? Stopping the development of a companies reserves hurts the long term prospects, health and value of the firm. Selling current production at fire sale prices only further erodes the value of those reserves and shortens the firms reserve life index.

I think that oil and gas companies indulge in this type of suicidal behavior because its the only thing they can do. To shut-in or scale back production requires the Joint Operating Committee to make the majority decision based on a vote by the firms represented. A company like Chevron may have interests in thousands of fields. To think about the internal logistics of these decisions would scare even the most ambitious. However, if the People, Ideas & Objects Draft Specification was built. Producers would easily engage their partners within the Joint Operating Committee to make these types of decisions. And as I have said before, the system would provide the ability for producers to pre-determine the prices at which they would reduce production volumes. The alternative is the producer just continues to produce their reserves. An option that is proven to erode the natural gas marketplace.

One thing about this recession is the duration of not knowing. Not knowing which direction to turn. It is however times like these when most of the change comes into play. Like the Finches, natural selection allowed the species to survive, change will be the factor or ingredient that brings about the new. Just as this video shows the effects of these changes, we will look back on this time and see the importance of being fit and change oriented.



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Dr. Yergin guzzles the kool-aid.

I have frequently been critical of Dr. Daniel Yergin. For someone who has his background and influence in the oil and gas industry, he seems not to understand the business. In the past he has denied the peak oil theory and made unsubstantiated claims that we would be flooded with an additional 16 million barrels of oil per day. 

In this Foreign Policy article and in today's Wall Street Journal,  Yergin steps into it again. Instead of getting on board and pulling some weight, he raises the issues of climate change, industry regulation, alternatives and a number of lesser irrelevant issues. Clearly Yergin has drank the kool-aid, however its the grape flavor, of which the energy has no need or interest in. 

And maybe that's the point. Instead of contributing to the conversation about energy, he lays the groundwork for another book that will sell his vision of regulation, alternatives and climate change. Who knows maybe he'll start selling the hope and change mantra as well. 

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An interesting view on oil and gas.

The Times Online have raised some interesting points as to the state of the oil & gas industry. In an article entitled "Timid oil giants hand back their cash". They suggest the majors as represented by BP and Shell, but also Exxon, Chevron, Total and Conoco Phillips are failing. Having the inability to maintain their production and reserves in the face of record capital expenditures. The lack of growth leaves the stocks as stagnant dividend and share buy back opportunities as investments. The article notes one unidentified comment as;

The scale of the payouts led one analyst to accuse energy bosses of a “complete failure of ambition”.

I can't agree more. Another interesting point of view is raised. One that shows the difficulty of the business from a political point of view. In the recent Iraqi lease sales the majority of the leases were left with no bidders. The only winning bids were by Chinese firms and BP. The rest of the producers felt that the terms were too steep for the majors to make any money. This is a continuation of what has been happening for many years. 

The national oil companies, backed by governments with the goal of grabbing as much of a dwindling resource as they can, are ratcheting up the pressure. In many cases they are willing to pay far more than publicly quoted rivals that have to explain the merits of such deals to their investors. Paul Wheeler, an oil banker at Jefferies Broadview, said: “National oil companies and the oil giants have the same objective, which is to secure new reserves, but they labour under very different conditions.”

This article also documents the major producing firms decline in known reserves from 85% in the 1970's to today's 15%. This decline in reserves has been despite the phenomenal increase in technical capabilities.

For investors such as pension funds, the only reason to hold the shares is the generous dividend payments. Without the dividend they are an unappealing proposition: low-growth companies that have no control over the price of their only product.

Ouch that hurts. I have held similar criticisms on this blog. Why would someone buy an oil and gas producer if the stock is only going to follow the commodity price. Why risk the investment on the management of the company, and just buy the commodity on an exchange?

I have considered the difficulty that a producer has in shutting in marginal production. The mechanism to shut-in production lies with the participating producers of the Joint Operating Committee (JOC). In most JOC instances the producers meet for too infrequently to make these decisions in a timely fashion. And this is one of the many reasons that the industry has to begin using the JOC as the key organizational construct of the industry. The operational decision making authority and framework resides with the JOC on a global basis. The conflict resides with the operators internal policies that employ compromise strategies and ignore the best interests of each individual property. I have included within the Draft Specification ways and means for the producers and JOC's to operate in a fashion that is consistent with the unique strategy and operational focus of each property.

There's a much larger opportunity that is being missed in this article. Since the 1970's the industry has had substantial declines in the sphere of influence of its business. We have also seen the decline of communism and the upswing in what we used to call the developing world. We seem to be globalized to a large extent, globalized except for the mindset of the management of the producers discussed in this article. 

The revenue model of this software development project considers this new reality. Both the producers and the energy producing provinces, states and nations have an interest in ensuring their investments are appropriately managed. With producers and nations financially supporting this community in an arms length, open and transparent manner. Please join us in building the systems the world needs to provide for a strong oil and gas industry.

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MIT Video - Energy Secretary Steven Chu

I have expressed my disappointment about MIT's focus on energy in this blog before. Accusing MIT of having the right goals and objectives, but taking too many wild bunny trails down the path of alternative energy. When MIT suggests our energy issues requires an equivalent effort as to what was required to win WWII. That objective resonates with me, we have much work to do. Alternatives have proven more costly, more destructive of the landscape and of limited scale to replace the heavy lifting of the oil and gas industry.  

This MIT video of the U.S. Energy Secretary Steven Chu shows the destructive ways of the U.S. towards the oil and gas industry. A Nobel Prize winner, Chu is an academic. He has the budget and power to have a dramatic effect on the energy landscape and has indeed drank the alternatives kool-aid. Thankfully Chu is having difficulty getting many of his initiatives funded. 

This video is disconcerting as the "leadership" of Secretary Chu is heralded by MIT president Susan Hockfield. What appears to me as a rambling and incoherent discussion of his life and work, which was rewarded with the Nobel Prize. I don't see anything of value to be gained by reviewing this video. But there is much to learn of how off-base the current U.S. administration has become on the energy topic. As I have said before it is not a coincidence that the U.S. is the largest consumer of oil & gas and the largest economy. If we take an excursion down the alternative energy bunny trails I hope MIT and Secretary Chu understand that the great power the U.S. is, and will be, put in serious jeopardy. 

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China's energy consumption

Rebecca Wilder has one of the most interesting blogs on the Internet. Her passion for economics, writing and prolific chart production provide unique insight and perspectives on the economy. She recently published this graph that I think identifies one of the most difficult issues we will face in the next few years.

The problem of course is the future demand for energy. China's consumption is already amongst the highest in the world. This is evidence demand will continue on a rather aggressive trajectory for the next few decades.

The energy industry is ill prepared to meet this challenge. That is what this software development project is about. Preparing, by first organizing, the producers to address this challenge. Organizing around the Joint Operating Committee, the legal, financial, cultural, communicative, and operational decision making framework of the global oil and gas industry. Building the software to define, align and support the People, Ideas & Objects of an innovative energy industry.  

If we leave the problem in the hands of the bureaucracy we will continue to fail. Please join us here. 

Technorati Tags: People's Energy Economics Innovation

Jeroen van der Veer

We stand at the early dawn of a new energy future.

Comments such as this coming from the retiring CEO of Royal Dutch Shell are welcome and refreshing news to this community. We have a job to do and as van der Veer mentions a difficult one. Approaching these types of problems based on the way we do business today is going to leave us disappointed. Energy is reputed to be the second most complex industry to the space industry. As we increase the level of complexity and risk it is reasonable to assume the organizational methods should change. Particularly when we have Information Technologies as advanced and as mature as they are today. 

Indeed, fossil fuels, coal, oil and natural gas, will continue to provide more than half the world’s energy in 2050. 

This fact alone will require a tremendous volume of capital to discover, develop and produce these oil and gas resources. I don't think capital of this magnitude can be sourced from the traditional capital or debt markets. The resources necessary to fuel the industry will have to come from the prices these resources command in the marketplace. Price will therefore be the mechanism for rewarding innovative oil and gas producers.

Therefore we are challenged in transforming the oil and gas infrastructure and operations to a new competitive footing. One in which innovation is the key method of developing value. From the bureaucracies that have served us well in the past century, I can not foresee this challenge being met. I would argue that today's prices are reflecting that we are falling behind as a result of the organizational performance of the bureaucracy.

To help make this transition, interested people are invited to join this community. People who are working within the industry that know there is a better way in which to do their jobs. Taking the Draft Specification and adding to it the detail that is necessary for the global oil and gas industry to operate on the People, Ideas & Objects system. The community that forms here will be the beginnings of how the software gets built. And more importantly the Community of Independent Service Providers will provide the innovative oil and gas producer with the most profitable means to manage their operations.

Nonetheless, whatever the reality of our industry will look like. More energy will be needed to fuel the future. Energy is critical to our economic survival. And van der Veer reflects on the challenge ahead.

A growing population and higher standards of living for billions of people in the developing world will mean that we need all available sources of energy to keep the world’s economies humming. So, while the world races to build up alternative fuels, it must also find new sources of fossil fuels, including unconventional ones, such as oil sands.

Please join us here.

Technorati Tags: People's Economic Change Organization Energy

May you live in interesting times.

Based on those charts of the Council of Foreign Relations the economy is in very bad shape, but if the economy can't source its energy needs, it will be far worse. A key aspect of this project has always included a strong element of industry renewal. The bureaucracy expired in its effectiveness and was the basis of my research into alternative organizational methods. In May 2004 I wrote the Preliminary Research Report which suggested the bureaucracy be replaced with the industry standard Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. 

We see a number of producers cutting back on their production, particularly a number of North American gas producers. Cutting back on production is a serious action that I have not seen before in my lifetime, but a welcome development. Pricing of energy has become a critical part of a producers tactical approach to the business. As the referenced article suggests, the oversupply of natural gas is leading to a collapse of natural gas pricing. Having a system such as People, Ideas & Objects considers this scenario in the Draft Specification. 

Reducing production is an operational decision that has to meet the majority voting requirements of the Joint Operating Committee. What I have suggested is that there be a predetermined point where prices would invoke a percentage decline in production. This being done in an automated fashion based on the Technical Vision of this software development project. A reduction in production that is pre-approved by the JOC to ensure that the costs do not exceed the revenues of the property. A strategy that optimizes the reserves of the property for maximum return over the life of the field. Yes, game theory being incorporated in these decisions. 

  

Today we also have the alternative sources of energy that were to have replaced "dirty" oil and gas, fading into their appropriate and irrelevant posture. Time is of the essence and we have little slack time in which to deal with the decline in reserves, production and development of our long term sources of oil and gas. Action is necessary or we jeopardize our quality of life by leaving it in the hands of these bureaucracies. Please join us here. 

Technorati Tags: People's Energy Economics Change Development

Vicente Fox on leadership.

Former Mexican President Vicente Fox was in Calgary to make a speech about the demands of the energy industry. In the process of identifying the issue, he make the perfect recommendation for the formation of this community. 

Former Mexican president Vicente Fox called for an energy "super-body" that goes beyond politics, ideologies and business interests to help create a unified global approach to the industry.

This can't involve just one person. It has to be a broad and diverse group of people that are able to take the necessary actions and make the necessary decisions. A community of people who are concerned about the future of our global economy. An economy that is dependent on a stable and secure supply of energy. Fox notes;

"(There are) too many interests, too many diverse positions, too many sources of information, What I would love to see is a leader . . . somebody should bring in some order into the conducting of the issue of energy in the future," he said in an interview before his speech. "I don't see that happening in energy."

According to Fox, assembling the talent of leaders, researchers, think-tanks and universities would help create a common purpose: "Getting energy to its optimum in the future so that energy fuels economies of the world, and so that economies of the world, being successful, fuel jobs and fuel opportunities for people."

Please join us here.

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Exxon's Annual Meeting.

On MasterResource, "a free market energy blog", the author Robert Bradley has a summary of the ExxonMobil Annual Meeting. First of all it is satisfying to see an energy company that doesn't indulge in the politics of climate change or the folly of alternative forms of energy. Those within the industry that are in the know, know that the exploration and development business has entered a more scientific level of complexity.

The metrics of success and failure in the oil and gas industry have therefore changed. Metrics that will determine the winners and losers on a far different basis then the metrics that brought the industry leaders to their lofty heights. ExxonMobil's, BP's, Shell's and Chevrons. The Draft Specification is based on the understanding that I gained from over 30 years of oil and gas experience, the research into innovation and organizations that has been published on this blog, and a passion for Information Technologies.

If we approach the energy problems that we have today with yesterdays organizations and approach. Then it is reasonable that we will fail in this "new" business. If however, we understand that software defines and supports the organizations, then we need to build a software application that will enable the oil and gas producer to achieve the speed and innovativeness necessary to continue to succeed in this business.

I find ExxonMobil's CEO Rex Tillerson's comments in the Annual General Meeting refreshing. Comments that reflect his concern, focus and understanding of the energy business is consistent with the Draft Specification.

Comments such as;

Petroleum as a primary energy source is the future, not only the recent past. (Comment: renewable energies once had a 100% market share, corresponding to mankind’s energy poverty era.)

Although renewables and alternatives are growing, their overall piece of the energy mix will remain small until they reach the massive scale at which fossil fuels are used. And Exxon won’t invest beyond research until renewables are profitable without subsidies, Tillerson said.

The situation before all of us is very difficult. The solution starts with action, action by individuals who join this user group, and producers such as those mentioned in this article, working together to solve these problems. On a related note I am reminded of Ray Kurzweil's comments of how we solve large problems through exponential developments. Please join us here.

Technorati Tags: People's Energy Management Organization Innovation

Sources and costs of energy.

Reason Magazine have published a summary of the various costs, advantages and disadvantages of the various forms of energy. This summary is very educational and shows in stark terms the energy problems we face. It makes it clear where we should putting our capital and our efforts. It also shows that when man attempts to best mother nature, it usually turns out bad. Have a look here.

Technorati Tags: People's Engineering Energy Environment

Welcoming Jeff Rubin to the club.

Today's Calgary Herald has an article on Jeff Rubin former Chief Economist and Strategist at CIBC World Markets. He has been prescient in his predictions of oil prices over the last two years. Accurately predicting both the rise and recent fall in the prices. The statement that he makes is as follows:

Everything we have taken for granted is about to change. Our cars, our homes, our whole world has been getting bigger in the cheap-oil era. Now it is about to get smaller - and, greener. Much greener.

Rubin's problems, and his joining the "club", is as a result of the recent publication of his book.

Why Your World is About to Get a Whole Lot Smaller: Oil and the end of globalization. 

Seems his employer didn't want to have anything to do with the book!

Rubin, who spent 20 years at the Canadian Imperial Bank of Commerce unit, said he quit to publish his book after the Bay Street firm didn't want to be associated with it. 

I went through the same process in May 2004 when I published the Preliminary Research Report. The report that is the basis of this software development project; and is where it was proven the Joint Operating Committee is the natural form of organization for the innovative oil and gas producer. As a result of the publication of this report, I have not worked in the oil and gas industry for five years. I know what it's like to be ostracized for your ideas. It's not the most enjoyable process, it is however, very liberating. 

As more voices start down the difficult road that I, and now Jeff Rubin have taken. It's important that the people who join this development are not subjected to this archaic and destructive process at the hands of the vested interests. I have set up the system here in such a way that the only way your employer can know you are participating in this development, is that they are here too. So please follow this process and join us here. 

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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

Project P.U.M.A.

"Personal Urban Mobility & Accessibility" from GM and Segway. What have they done to my Segway? I have frequently pointed to the need to stop hurling 4,000 pounds down the highway at 60 miles per hour. As one solution to the many energy demand issues. We can't afford to be spending so much energy so inefficiently. If you believe in global warming, then you should also get behind this type of transportation. Using it to replace the car in your daily commute. And relegating the car to one or two days per week.

There is a large amount of talk in the blogs about PUMA. Segway have a blog that I subscribe too and they had three announcements today. You can read these here, here and here. Another one of the better sources of information is Fast Company. During the announcement Larry Burns, GM's VP of R & D says it well.

It'll be one-quarter the cost per mile, he told journalists. This is a vehicle that runs on electricity made from a wide range of sources, and because it's so small, it's efficient--it's approaching 150- or 200-gallon [tank] efficiency.

Note he doesn't call it a car. Those that have issue with the looks, I suggest it looks like any of GM's products. Me I'll buy a Segway as soon as all the insane city councils make it legal for them to be driven on streets and sidewalks. Also the TED Conference highlighted archive video's of Dean Kamen, who invented the Segway, and Larry Burns talking about his ideas in the car business. 

Technorati Tags: People's Energy Summary

Professor James Hamilton on energy.

Professor James Hamilton writes the popular and often cited weblog www.econombrowser.com. (Click on the title to download this paper.) I have highlighted many of his writing in the left hand column of this blog, his writing is clear, comprehensive and based on fact. Through the Brookings Institute he has published a paper entitled "Causes and Consequences of the Oil Shock 2007 - 2008". The abstract to this paper reads;

This paper explores similarities and differences between the run-up of oil prices in 2007-08 and earlier oil price shocks, looking at what caused the price increase and what effects it had on the economy. Whereas historical oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. In the absence of those declines, it is unlikely that we would have characterized the period 2007:Q4 to 2008:Q3 as one of economic recession for the U.S. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.

I recommend people download and review the comprehensive nature of this paper. This is an individual who, with tenure at the University of San Diego, and an impressive global following has nothing to gain or lose by saying what is said. This is the first paper that I have seen that confirms the concern that all should have with respect to our energy demands.

We see the political leadership continue down the road to energy alternatives. I would expect these moves will be short lived as the reality of their stupidity begins to show. If they are truly concerned about the CO2 that oil and gas production and consumption produce. What will their move to electric cars with lead acid or lithium batteries recharged by electricity generated by coal do. A little rational thinking from alarmist politicians would show them the demise of the landfill and the far more polluting coal. 

The solution to these problems does not involve a car. To move away from internal combustion engines to electrical can never happen. The costs would be formidable. Transportation should have a priority on the oil and gas resources. People, should begin skipping the 9 to 5 commute, and keep short trips to the Segway. People, Ideas & Objects are a big part of how these problems can be approached.

A key finding of Professor Hamilton's includes:

The most important principle for understanding short-run changes in the price of oil is the fact that income rather than price is the key determinant of the quantity demanded. p. 1

In a related item Bloomburg is reporting that many of the difficulties the major producers are having in increasing their production profiles. It sounds to me they need a new more innovative organizational construct supported by a capability based software developer. Please join me here.

Technorati Tags: People's Hamilton Energy Research Economics

Nouriel says the "D" word.

This week we have been able to focus on the community that needs to form here. A community that needs to build the People, Ideas & Objects ERP styled software systems that are desperately needed for the oil and gas industry. Today we have a fairly strong dose of negative economic news, and I submit these latest articles to provide the support for the changes that are needed. If we don't act, we will be in a much more dire situation then we currently find ourselves.

First is Professor Nouriel Roubini states the "D" word. He also states that the five top U.S. Banks are insolvent. Nouriel may be the most famous economist due to his precise calling of this economic decline. Noriel has provided very sound quantitative and qualitative analysis of what is happening economically. Prescribing some of the remedies that are necessary to offset this decline. When he starts using the "D" word, I think it is very serious point. His most recent interview was on Wednesday with Bloomberg News "On the Economy" with Tom Keene at the Davos, Switzerland World Economic Forum. I highly recommend listening.

Next is the earnings of the oil and gas producers. Conoco Phillips fired the first shock in the season by reporting a loss of $31.8 billion for the fiscal 2008 year. Wow, must be a problem there.

Lastly the news comes from Forbes, Occidental Petroleum's Chairman finds that the current pricing structure is inadequate to cover the cost structure.

"The current oil and gas industry cost structure is higher than what the current product prices can support," said Dr. Ray Irani, the company's chairman, who said the company would lower its 2009 capital spending budget to $3.5 billion to protect its returns.

Hm must be a problem there. Just a note, I don't think I will be reporting on any more oil and gas company earnings outside of the Pigs. (CNRL, Nexen, Petro Canada and Encana.) Conoco is a well run firm, however, that is in the context of last centuries performance. The Pigs are deserving to get stuffed and I'll continue on as they release their losses.

The need for this community is evident, and is on display in almost every business article written today. The economic decline is going to get much worse, the oil and gas companies are being questioned with their own survival, and the need for this community to form and get on with the job of building the next generation systems AND organizations is now, please join me here in doing these critical tasks.

Technorati Tags: People's Community Economics Failure Energy

Innovation Engines and more.

Booz, Allen, Hamilton and the Aspen Institute hold an annual conference to discuss many issues. The 2008 event is summarized in a document entitled "Harnessing the Power of Ideas" which include two very interesting and pertinent articles to the work we are doing here. These papers deal with energy, innovation and the community based approach.

Innovation Engines: Where Will the Next R & D Breakthroughs Come From?

The article asks the very pertinent question:

Rather as evidenced in the 2007 Strategy + Business study The Customer Connection: The Global Innovation 1000, increased return on investment is directly associated with a market driven, customer focused R & D strategy. Moreover, consumers are participating more directly in innovation and technology development, signaling the innovation landscape may be moving from the top down, Manhattan Project style model to a networked, continuously adapting and evolving "Google Style" approach. Are these developments temporary, or will "innovation engines" continue to change? Are traditional top down models still effective? p. 3

These and other questions are asked in the document but are not answered. More a call for answers. Here I can state unequivocally that the Manhattan Project style would never work in bringing an innovative software development project on-line. Score one for the Google Styled approach.

Megacommunities: Addressing Global Challenges Through Collaborative Networks

This article is right on topic with what is being done here. Defining the People, Ideas & Objects user and developer community as a megacommunity resonates with me. In their "why this matters" section it is stated:

Our increasingly globalized and interconnected world is creating issues too large for one authority to solve alone. The issues we face - environment risks, energy security, climate change, food and drug safety, global health - are so complex and involve such a diverse set of stakeholders that traditional methods of problem solving are ineffectual. In response, we see new types of collaboration emerging. p. 14

More particularly this quote gives me goose bumps.

A megacommunity approach helps create the conditions for translating complex issues into clear solutions. More than a large community of people, megacommunities are collections of organizations whose leaders and members have deliberately come together across national, organizational, and sector boundaries to reach the goals they cannot achieve alone. This tri-sector engagement of similarly concerned organizations focuses on a clearly defined  issue where the vital interests of those organizations converge. A megacommunity focuses an issue so that it is clearly defined but not oversimplified. The issue is scaled, but it maintains its complexity. p. 15

Download the .pdf and use it as a guide to increase your involvement in this megacommunity.

Web 2.0 and Beyond: What Does the Cyber Future Hold?

Discussion of the cloud and its impact is beginning to generate interest and discussion. This article presents some of the issues of web 2.0 technologies from the point of view of speed. I appreciate this discussion and ask, although the pace may be too fast for most of us, what does a bureaucracy do in the face of this viable and developing alternative. From their "Why this matters" section:

Web 2.0, the latest technology trend in computing and communications, is popular slang for a series of dynamic, interactive applications producing new forms of technological and social interaction. The lightening pace of web 2.0 technological innovation and evolution challenges our ability - as individual users, communities (real and virtual), and cultures - to grapple with its immediate and enduring implications. As these technologies increase connectivity, decentralize power, and facilitate mass collaboration, cyberspace presents a formidable dilemma for policy makers: What does the future of cyberspace hold, and how might policymakers shape it? p. 29

Interesting question. What I would suggest the oil and gas investor, the government agencies and particularly the progressive minded producers do, is to get on board and start pulling their weight. There is no control or "shaping" if your not here, no one can hear you.

Fueling the Future: Sustainable Choices for a New Transportation Landscape. and Food, Fuel, and Famine: Will Biofuels Starve Us or Save Us?

And lastly these two articles ask the right types of questions in my mind as to what the future holds in terms of energy production. Those in the oil and gas industry know that the endowment of oil and gas can not be replaced by man made synthetics. This is a very dangerous discussion. One that can cause significant issues in our very near future. We need to realize the most effective way to fuel the future is through a combination of aggressive exploration of the earth sciences and engineering disciplines, and their application in the oil and gas industry. We also need to reduce the amount of energy we consume by more effectively using what we have. Driving to work in the morning is becoming more and more ridiculous by the day. Join me here and lets build systems that will reduce the daily commute to simply logging in to People, Ideas & Objects .

Technorati Tags: People's Innovation Energy Organization Strategy

The end of the paper economy.

I have commented many times about the state of the current global economy. Why do I continue to discuss these economic difficulties? This is a necessary part of the development of this software. The ways and means of the global economy are being transformed to new and more effective ways of organization. Whether that is your belief or not is not something that I am challenging. I am trying to build support for the fact that these economic and organizational changes need to be accepted by every individual that works in the oil and gas industry. Milton Friedman has best captured the point in the following comment.

Now, you never have real changes unless you have a time of crisis. And when you have a time of crisis what happens depends on what ideas are floating around, and what ideas have been developed, and thought through, and are made effective. 

I'd like to think the ideas that I have formulated in the research and writing represented in this blog are some of those ideas that are just lying around. I perceive this time as the point of greatest opportunity for individuals. Our lives will be transformed, if we take this opportunity and run with it, we could achieve more then has been possible in many generations. 

There is going to be a sizable amount of pain as the "old" dies away and the new is formed by trial and error, but mostly frustration. But it will be worth it. What was conceived of as being of value in the past, - paper assets, stocks, bonds, pensions, real estate and retirements - are falling in value and will be not be adequate for our long term needs. What is of value and what can anyone in the oil and gas industry do to participate in this new economy and rebuild their lives?

I think the new economy is going to be based on "rights". Where access too, or ownership of, rights is the basis of how an individual earns a living. At least that is my theory and I'm sticking to it. The right to use the People, Ideas & Objects software is subject to license in which the rights to the ideas of using the Joint Operating Committee are available to everyone who chooses to make a living in oil and gas. These rights and the associated software are provided for free to those who provide services to the oil and gas producer, in their own service based offering. People, Ideas & Objects revenues are sourced by those that benefit from the sales of oil and gas. Oil and gas producers and governments which have the need for the people to manage and organize their assets and provide the most profitable means of oil and gas production. Creating an environment of dependency and mutual support between those that work in oil and gas, the producer companies and government agencies that collect royalties, and the software development process and application itself.

Please, join me here in this necessary and worthwhile cause.

Technorati Tags: People's Economics Change Energy Software

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