ASPO USA Conference

This week Houston is hosting the Association for the Study of Peak Oil & Gas - USA's (ASPO - USA) conference. Appropriately the conference is sub-titled "Energy, the First Challenge of the 21st Century". This conference may be the key turning point in the discussion of peak oil. Where talk turns to the actions needed to mitigate Peak Oil. Unfortunately I will not be there, but if I were, I would hope I could assert that one of the necessary actions would be to design and begin building the software for the industry operations.

The hierarchy is not an organizational structure that has been designed or built for the 21st Century. My question would be, what type of organization is necessary to address these problems? If we expect to approach this issue with any type of constructive speed or innovativeness we must first design that organization and build the software that supports it. The reality today is that software needs to be built first, or alternatively, choose manual systems. This organizational paradox is resolved when the software exists to support the transactions and processes of the innovative oil and gas producer.

Are we fully aware of the extent and level of dependence our actions are dictated by the IT we use? If I were to approach the "First Challenge of the 21 Century", I would start by designing the software. The organizational structure I recommend the industry use is the industry standard Joint Operating Committee (JOC). It is the legal, financial, cultural and operational decision making framework of the industry. All of the tacit knowledge of the industries operations is codified in that organizational construct. If we augment the Joint Operating Committee with today's Information Technologies, collaborative systems and a dedicated software development team, the JOC can align its frameworks with the Compliance & Governance frameworks of the environments we do business in. A system built to facilitate innovation and enable speed, everywhere and always in the earth sciences and engineering disciplines. Join me here and lets take action on our First Challenge of the 21st Century.

Technorati Tags: Genesys, Peak-Oil, Ideas, Innovation

Internet Scale Identity, Collaboration, and Higher Education

Click on the title of this entry to be taken to Google Video for this presentation. First off a stern warning, the topic is a difficult one to discuss and the presenters do not do a very good job at it.

Firstly Bob and Ken do not adequately describe who they are or where they are from. The Internet 2 association consists of the majority of the university and other organizations, like Google, dedicated to "Providing both leading edge network capabilities and unique partnership opportunities that together facilitate the development, deployment and use of revolutionary Internet Technologies." Bob and Ken work in the "Internet 2 mid-ware initiative". Their presentation is about identity and its importance in collaboration and determining the validity of the party you are dealing with. Extending this to the type of collaborative interactions that will eventually be held in this application, and currently being specified in the People, Ideas & Objects Security Module, how are you assured that what is represented online is factual? There needs to be a method in which people can verify their identity and carry that with them through the day to day interactions discussed here in this application. The Federated Identity is described as follows.

Federated Identity

• Enterprises exchanging assertions about users.
• Often identity based but can provide scale and preserve privacy through the use of attributes.
• Real time exchanges of standardized attribute / value pairs.
• Basis for trusting the exchanged assertions via common policies, legal agreements, contracts, laws, etc.
• Federations offer a flexible and largely scalable privacy preserving identity management infrastructure.

As a user of this system it will occasionally be necessary to find a welder in the area that you have production. How do you engage and ensure that the welder has the correct certification for operating in H2S environments. Conceivably the ticket that was issued to the welder for H2S operations would be available from the granting agency. The welder's "Federated Identity" would have the certificate issuer represented in the welder's Identity and the certified issuer would have the right to revoke it if for some reason the welder no longer qualified. This certification is assured at the point of initial contact with the welder. If the Federated Identity were for an individual, a company or a Joint Operating Committee (JOC) one could easily assure that the conduct of online interactions were assured to be valid. The inability to authenticate would preclude the user, company or JOC from conducting any further online transactions.

This style of interaction is currently being done in manual systems. Based primarily on past history, the user will call the welder up that finished the last job of his and not much more is done. And there is not much more that would happen in this virtual environment that I am talking about here. What is different is that a level of automation that eliminates much of the time wasting processing that is done in the manual style of systems. If the Federated Identity has enough terms and conditions that are necessary for the firm to hire that welder, they should be able to complete the majority of the contract prior to the issuance of the purchase order, which of course would also be the next step in this automated process.

These types of systems are being developed now not only for Internet2 but also for participating firms such as Google in their Google Apps for Education. Since we use Google Apps for People, Ideas & Objects, this type of Federated Identity is being built in the Security Module Specification that I am working on. The interactions are also an element of People, Ideas & Objects Compliance & Governance Module specification noted here. With the effective pooling of the participating producers human resources, requiring the Military Command and Control Style of organizations, these identity based interactions will be able to take on a dynamic matching of skills and function. One other area in which the Federated Identity satisfies is on the need to know basis. Even though all participants are from different companies their is no unnecessary leakage of information that would not have been pre-authorized to any other participant, individual or JOC.

The authors noted an Apache open source software "Shib 2.0" is capable of these types of Federated Identity and Shib 2.0 has just moved into beta. Much of the Federated Identity's ability to do these is contained within the "Technical aspects of Federations".

• Federating Protocol
• Enterprise signing keys
• Meta-data Management
• IdP discovery service
• Enterprise Identity management practices.

Accreditation and certification are needed, and also difficult to achieve. The most difficult aspect is what is referred to as "Many to many user centric identity". The presenters were wise to point out the two methods, "multilateral" and "bilateral" means of achieving accreditation and certification. By using multilateral accreditation you achieve the Many to Many user centric identity without having to accredit every transaction, query or specification as bi-lateral, or one to one, certification requires. The presenters noting "Commonly manage which identities and which attributes can use the capabilities of the collaboration tools." And "Can offer delegation, privacy management, maybe even diagnostics."

To view some of the areas in which Federated Identity is currently operating see InCommon and the Internet 2 wiki.

Technorati Tags: Genesys, Security, Collaboration, Google

Jeffrey Immelt on MIT Video

Jeffrey Immelt is the current Chairman of General Electric. His video presentation is at the MIT Energy Conference. This is a very good video and I would encourage anyone to watch it for the unique perspective and insight that Immelt has. Click on the title for the url to the video.

Speaking about the difficulties in the energy field, Immelt noted that "market signals don't fit the time horizons", and I have to agree that is certainly the case. The three-months time frame that the capital markets operate within is not enough time for the energy industry to do anything. And the decades long lead times for satisfying the demand for energy are two areas where this disconnect happens. With such long lead times necessary to achieve anything in oil and gas, the markets always seem at odds.

He also spoke of the "notion that energy is free". This notion that he speaks of is, I think, is the same concept that makes people expect they have the right to energy. I hope that we can continue to experience these rights and entitlements; however, I think that our future holds occasional energy outages and increased costs.

Immelt noted from his personal experience in traveling to India that demand for energy from China and India would not stop growing. In satisfying the needs for energy he states, "This is the time that technology and innovation can have a value". He felt that coal, natural gas and oil were going to be as important as they ever have been. And noted his turbines where operating at 65% efficiency, and indicated that reducing consumption was an area where much innovation and savings would occur.

He finished his presentation with two of what he calls "Immelts".

If you want to do something, you have to do something.

and

You want it bad, you get it bad.

Technorati Tags: Genesys, MIT, Video, Energy, Environment

BP announces reorganization.

Things are not as rosy as the $80.00 oil prices would make it appear. The new CEO of BP Tony Hayward is on record as stating that a re-organization is required. He wants to reduce the number of reporting levels from 11 down to around 7, and intends to do so on the basis of the need to manage its "dreadful" performance. Staff cuts were not expressly stated however Hayward noted "There is massive duplication and lack of clarity of who does what".

Recall BP's recent operational concerns have included a fire at a Texas refinery and pipeline leaks in Alaska. Financial performance appears to be following the operational difficulties and BP's stock was affected today by the comments of its CEO. It would appear to me that the organizations has not only duplications as it's problem, but some areas where no one is watching. Cutting the bureaucracy will most probably prove to be the wrong direction in terms of the safety of its employees, contractors and public in general.

A change in the organization requires a change in the software. This is a fact of life that we live with today, but many of the largest corporations consider that software is just a cost of doing business. Its not, it is the life-blood of the organization, and rolling in another version of SAP is the safest approach to career security. Any organizational changes not directly mirrored by similar changes in the software will lead a company to continue on in the same futile vein as BP has.

There is another important point that I want to highlight here, and that is the role of the user in making sure that the software is what is required. What does SAP know and understand about pipelines and miscible floods? I think the BP situation, with all the failures and problems, is symptomatic of too many organizational changes that were not planned, developed and implemented from a software point of view. The "duplication and lack of clarity" and "operational failures" are the two extremes of the same problem; the software is not functioning, as it should. And the software is not functioning because the user was never asked, involved, consulted or expected to define the requirements of the systems they need and want to do their job.

The hierarchies' life expired in the 20th century. Approaching this problem with the same tools of the 1970's and 1980's appears wrong to me, and certainly not the solution to the BP problem. Have we exceeded the collective imagination of the CEO's and managers of our allegedly greatest companies? What does Hayward and those involved with BP think will occur as a result of the compression of 4 management levels?

If the firm is unable to deal with the operation today, what does that spell for the future? The industry will need to perform at a higher level very soon, and in the near future it will only become more difficult. Contrast today's headlines with what we should be learning from these organizations. We don't hear the news that the industry is moving forward with greater technical achievements and major discoveries, only news that reflects they are stuck in a time and place where nothing positive ever seems to occur.

Technorati Tags: Gensys, User, Software, Failure

Modularity, Transactions, and the Boundaries of Firms: A Synthesis

Professor Carliss Y. Baldwin of Harvard University has published a new working paper. The title "Modularity, Transactions, and the Boundaries of Firms: A Synthesis" (available here) provides an excellent opportunity for me to review these topics. I intend to use Professor Baldwin's synthesis as a summary of the work that we have done in reviewing Professor Langlois working papers. I had also reviewed a prior working paper of Professor Baldwins, located here.

In the past I have been able to specify a modular specification, defined roles of both the Joint Operating Committee, the corporation and a method of how compliance and governance (Military Command & Control Structure) is achieved. I trust that reviewing the article by Professor Baldwin will enable me to build upon and re-publish these specifications with the changes learned through the review.

This first table designates the area of primary and secondary responsibility. The boundaries of the firm and market can be discerned through this table, the "Market" is for all intents and purposes the Joint Operating Committee (JOC).

Construct	Market	Firm
Joint Operating Committee	P	s
Military Styled Command and Control (Governance)	s	P
Transaction Costs	s	P
Production Costs	P	s
Innovation	P	s
Routine, compliance and accountability	s	P
Research	s	P
Development (the D in R&D)	P	s
Financial Framework	P	s
Legal Framework	P	s
Cultural Framework	P	s
Operational Decision Making Framework	P	s

P = Primary
s = secondary


A summary of our current module specification.

• Access Control and Collaboration
• Security specification
• Google Apps for People, Ideas & Objects
• Partnership Accounting Module
• Petroleum Lease Marketplace
• Resource Marketplace
• Financial Resource Marketplace
• Compliance & Governance Module
• Research and Capabilities Module
• Knowledge and Learning Module

A module summary with some detail can be found here.

Technorati Tags: Genesys, Baldwin, Langlois, Modularity

A user vision.

This next week I want to continue to discuss what a successful software application needs in terms of its user involvement. Without extensive user involvement you end up with applications like SAP. This next week, I hope to explain a lot of what, where, why, who, when and how a user will work in the development of this software application. I also want to appeal to the people that want to do something about the current slow pace of recognition of this looming Peak Oil crisis. Those people that know we have to change, but also know that change has to be planned, and software built before we make any changes to the organization. If we ignore the fact that software defines the organization, any changes not supported in the software will render us to use manual systems.

I will start this week with a summary of the overall user vision of this application that will be built here at People, Ideas & Objects. With that in mind lets begin by stating some of the ways that I see that work may soon be carried out in the oil and gas industry.

...Mandatory attendance at the office for working hours has quietly faded into the background with not much management friction, or heavy pushing from those that have benefited from the elimination of long commutes. Anytime there is a meeting, they appear to be sporadic events that just seem to happen, and most of them being virtual. Face to face meetings almost never happen at the office but at a restaurant or Starbucks. The times where an office is required is usually for large groups using conference and meeting rooms. The downside of this is that work may happen at any time of the day, but most of it easily schedule-able within your calendar.On-line use of the systems developed by People Ideas & Objects helps to collaborate with all of the people that are gainfully employed in the industry and have access through the system. The management, administration and commercial areas of the industry are managed through the applications interface. Years ago you may have been doing production accounting related work which required you to report the production from one facility. Now most of that work has been automated and your job has evolved to where your specialization requires that you interact with any and all producers / owners with production from the sandstone formations of the early Cretaceous period, your teams specialty. Your last "job" was in production accounting doing administrative work and your current role has 20% of those elements but on a much larger scale and volume of data. The engineering and systems related elements of your work make it unique and diverse, depending heavily on your background, education and training. Oddly enough the math and statistics courses you took are the skills that are most heavily relied upon during the day.

Working mostly in the U.S. and Western Canada, your contacts are mostly virtual and you frequently collaborate with your clients, the partners / investor in the energy assets, and the members of your team. Your primary responsibility is the validity of the systems algorithms used within the People, Ideas & Objects systems for the facilities in your specialty. Ensuring they are consistent with the agreements requirements for production, revenue and cost allocation. You are joined by many of your teammates who work with you to ensure the processes you are responsible for are operating correctly. Your team consists of yourself, an engineer, and a software developer, and you have reviewed a proposed methodology of production allocation based on the co-mingling of production from the Cardium zone. A proposal from another investor group that needs to process their production through a facility your investors own. This has been contentious with the work attempting to strike an agreement for the methodology of the production distribution.Your work largely consists of a number of processes that validate much of the automated processes of reporting for the facilities. Data and information that you work with mostly consists of a variety of graphs, charts and statistics that summarize and highlight the areas of concern and / or opportunity. Your toolbox also consists of many forms of rich media where audio and video presentations and documentations are used to discern the desire of the clients, and enable your team to learn about the new and innovative ways that the facilities are changing. Your report to your clients regarding the new production from the outside group will consist of a summary of the historical production history and net income. And, what could be expected from the facility on a go forward basis if there were no changes. These pro-forma reports are compared against a number of scenarios that the new investor group has expressed interest in, and deemed acceptable. These different scenarios have been used to calculate the differences from the most recent reserves information. It is your recommendation to the ownership group that hired you that the economic externalities have predominately fallen in their favor and they should proceed with alternate B. Adoption of the teams' proposal is made and the new production begins to be processed. You and your team work to have the system amended to reflect the new changes, and your processes updated to reflect the new agreement. You then move on to your next assignment where your team has been asked to evaluate the effectiveness of a CO2 capture and injection scheme for another ownership group.

The key points I wanted to highlight is the lack of fixed office locations, the hyper-specialization of a team's work, and the time of day in which the work was done. How the rich media would be used to communicate concepts quicker and more effectively then with text, and the statistical and graphical representation of data was necessary to eliminate the overwhelming volumes of data. Also how the team was comprised of cross-functional teammates with their own specific skill set. And lastly how they moved from different ownership groups based on their specialization of certain categories of hydrocarbon bearing zones.

I will try to add more to this vision in this next week, but I think that most people would generally agree that it is plausible that these types of activities would take the industry to the next level of performance. Those of us that know the bureaucracies are "sleep walking" through this looming crisis can see the value in developing this software. This next week I will take the opportunity to consolidate the discussion of modules, transactions and boundaries of the firm, and specify exactly what I foresee a user will define what will be done in this development. Lastly, I want this week to be the beginning of an appeal to the community of like-minded thinkers at the Oil Drum, Association for the Study of Peak Oil and the Energy Bulletin.

Technorati Tags: Gensey, User, Vision

Where is the user?

SAP has announced a new product direction today. Offering SaaS (Software as a Service) functionality to small and mid-sized businesses of all industries. See here and here. The ability to service most industries with the same solution would be a tough sell for me. I am surprised that they would have tried such a strategy. The other problem is that SAP has been in development of this product for the past 3 years, what users were used to determine the functionality and requirements? I am not aware of any in the energy industry. And dare I ask what vision was used to unify the users behind one strategy. The answer to that question may be in the title of SAP's offering "Business ByDesign", which indicates to me they have designed this solution in their research labs!

The software service is targeted against other services such as NetSuite, and SalesForce.com. Each of which is offering a smaller component of the functionality pie then SAP. SAP provides the CRM and ERP functionality, as does Netsuite, but Netsuite has been available for 7 years and in the mind of Larry Ellison for the past 10 years. Reviewing NetSuite's targeted offering, it's audience appears to be currently using Quicken and Simply Accounting. SAP is expecting that some of their installed base of R/3 users will move to the "Business ByDesign" offering. Reflecting to me that they are positioning the product more in the mid to high end of their target audience.

I recently wrote about the business model of the traditional software company. And how the ability to deal with the constraints of code and customers eventually becomes such a problem that few enhancements are ever done to the code base. I therefore applaud SAP for at least attempting to break away from those constraints. It is a difficult prospect to restart your business from scratch in such a fashion. The redevelopment of SAP's SaaS solution is recognition of that flawed and outdated traditional model of software development.

Although I think that SAP did a smart thing in making the change to "Business ByDesign", not including the users could be fatal to the offering. It is the lack of users that tells me that SAP may have prepared the competitive offering with the wrong focus. Selling the same code base to thousands of customers as SAP has done in the past, makes it clear what the competitive offering is, the software code itself. Now SAP have shifted to a service and appear to me to be still looking to the software as the key competitive offering. I would therefore suggest they have misread the reasons for moving to SaaS. The competitive offering should be on the basis of the hosting of the application for the user base, and most importantly adding to the offering through enhancements demanded and driven by the users. Supporting hardware and software were not their forte but now needs to be. How will they host this environment within the corporation. Do they realize the business model has changed so fundamentally? The lack of user involvement would reflect to me that they have lost sight of the service offering. Secondly the software development capability becomes one of, and possibly the most important competitive offering. You can have the best developers in the world but they may not understand the user community and the ability to communicate may become a critical component that is missing in the "Business ByDesign" offering. Once the software is built there is no opportunity to build a user community.

People, Ideas and Objects is building its user community the hard way. Brick by brick and stick by stick the most important element of this development will be the user's knowledge and ability to communicate their desires and needs to the software development team. It is also inherent in the understanding of this project that the continuous development and enhancements are what the users need to do their work. In a manner very similar to how Google continues to develop applications that meet certain needs, with the overall vision of organizing the worlds information. What Larry Page and Sergey Brin have been able to build at Google has many parallels to what I foresee the user community wanting in this development.

If you share my vision of building great software, focused on the Joint Operating Committee, and built for the user, please email me and lets get started.

Technorati Tags: Genesys, Software, Strategy, User, Capabilities

Peak Oil's turning point?

A variety of news and information that makes the Peak Oil issue somewhat more real then yesterday. First up is Shell's former Chairman Lord Oxburgh declares the following points. Lord Oxburgh says the industry "has it's head in the sand" and warned:

We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware.

and

And once you see oil prices in excess of $100 or $150 a barrel the alternatives simply become more attractive on price grounds if on no others.

The Association for the Study of Peak Oil published some comprehensive analysis on the US oil import data. Of the many countries that export oil to the US, what will be sustainable for the long term? This analysis answers that question and the following two graphs reflect this analysis.














and

















Our friends at the Energy Bulletin have noted such luminaries as Lee Raymond, formerly of Exxon Mobil and the National Petroleum Council and former Energy Secretary James R. Schlesinger quietly reflecting on probabilities and possibilities of Peak Oil. Another excellent resource highlighted by Energy Bulletin is the report from the Department of Energy report "Peaking of World Oil Production: Recent Forecasts."

Technorati Tags: Genesys, Peak-Oil, Data, Energy

Security Module.

I last wrote about the Security Module in October 2006. Now that we have established the general framework, or the infrastructure of the system, and indeed I have begun building the parts into a usable system, I now want to formally start the software development. As I noted in the October 2006 posting the security module would be the first item of development, therefore, I can now declare on Tuesday September 18, 2007 that we are indeed in development.

A few of the bits that we will be using as our infrastructure are Google Apps for People, Ideas and Objects, and Java Web Start and Java Swing. So lets start with that and build from there.

Google Apps for People, Ideas & Objects.

www.people-ideas-objects.com is the domain (and company name) that has been selected for this project. This is now operational on Google Apps and I am very pleased with the fit and finish. Key to their offering is the ability to integrate a Single Sign On (SSO) for the entire domain. Once the user is logged in through Google apps they will have access to the collaborative environment and application specific functionality. Recently Google announced the closing of their acquisition, Postini. Google will now offer a level of security that is in my opinion second to none.

With Postini Solutions, you can secure all of your electronic communications - email, instant messaging and the web – and manage your company's communication policies from one central location. Postini Solutions can also make it easy to meet your archiving and encryption needs.

Best of all, it's all 100% hosted, so there's no hardware or software to install or maintain. Whether you're looking to transition from or enhance your existing messaging infrastructure for better control, Postini enables you to provide employees the tools they need to be productive while reducing the cost and complexity of managing those tools.

I can now say unequivocally People, Ideas & Objects has the most secure communications of all ERP systems. ;-) To my way of thinking, lets up the standard to a higher level.

As I noted in the security module definition last October, Sun's new Solaris Z File System (ZFS) and elliptical encryption would be used for all of the data and information on the server side of the system. ZFS provides a level of journal-ling that will add real value to the users of this system. Apple have integrated Sun's ZFS in their next operating system (Leopard) release. Sold as the "time machine" feature, it enables a user to look at the various iterations of the file from the beginning to the most current version. The user will then have tools that will enable them to select the best version of the file. Secondly ZFS is 128 bit, just as IPv6, allowing for an unlimited addressing capability.

These points will be the first elements that will be developed. Google Apps for People, Ideas & Objects will be upgraded with the Postini functionality, and the Solaris based server side will implement ZFS and Sun's elliptical encryption as base for all operations from the Operating Systems, Java, Network, Database and File.

Java Web Start and Java Swing

Integration of Single Sign On (SSO) between Google Apps and the server side will provide the secure collaboration environment and the secure "Cloud" based operations. This will all be wrapped in a package that the user will be able to access anywhere and anytime with any capable computer. For the initial downloading, Java Web Start, Swing and other components of the People, Ideas & Objects application will be a minor issue with the bandwidth that is available today. The "environment" this creates is one that meets the highest level of security for any and all programming environments. Java was selected for its adherence to strong typing and inherent security model. No other programming environment comes with this standard of security. Even Microsoft's .net environment cautions the user about the inherently weak security model.

Java DB

Embedded within Java Web Start and Java Swing client environment is Java DB, a relational database with a small footprint. Originally developed by IBM it was open sourced and made the default client side database for use in Java environments. This database will hold the environment and other variables of each user, and much of the client specific data the user has used, cached, collaborated or searched from their user account. Recall that we have selected the Ingress Database for the "Clouds" database. All the data from the Java DB will be replicated with the Ingress database. Additional search facilities of the server side or "cloud" environment have not been resolved at this time. Recall I was looking into the use of Enterprise Search and security firms to assist in this area.

This area is complex and daunting, however, the need for bullet proof systems in terms of reliability and security are necessary for the enterprise. Particularly in the manner and method that they are being used here. Much of this architecture has not been implemented in any industry. Lastly I would point out that if a user were to access their system on a public terminal or a machine in which they have only temporary use of, the application and data would be inaccessible to any prying eyes after the user had left. With encryption and Java, the systems variables would be persistent only in encrypted form.

IPv6

Recall we have instituted the IPv6 protocol as part of the Technical Vision for all Internet communications for People, Ideas & Objects. IPv6 is available to us through our ability to secure a Tier 1 vendor of bandwidth. Almost all computers are capable of handling the protocol. The security model of IPv6 adds elements of security at the protocol level and includes these technologies.

Specification

These specifications will be encapsulated into one Web Service where the user, upon authorization and integration into the system, will have seamless access to their information. The reason this is the first module being built is that everything will need to be built upon it. To retrofit this level of security to a current application would be more problematic and costly then it would be worth. I am pleased that I can specify this level of security at relatively little cost. (A reflection of how systems have developed in the past few years.)

The primary issue of what needs to be resolved is the restrictions on use of high-level encryption systems in countries that are unable to access and use the high level encryption algorithms. The work around may involve limiting the users to the countries that are authorized to use these types of systems. Our focus being Calgary, Texas and Aberdeen Scotland, limited issues with the systems use outside of these three countries will limit the risk of using these algorithms.

Thankfully much of today's technological development environment closely replicates Leggo, define it, get the parts and build it. Where we go after the security specification will be to adopt the data model from the Public Petroleum Data Model (PPDM), tune it and test it, and from there we can start building the Petroleum Lease Marketplace functionality.

Technorati Tags: Genesys, Security, Development, Java

The same, but different.

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

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

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

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

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

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

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

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