Draft Specification - Financial Marketplace Module

I am pleased to submit to the community the draft specification of the Financial Marketplace Module. This is the sixth of eleven modules, and last of the three marketplace modules in the specification.

What may not be obvious at first glance of this specification is the Marketplace makeup of the module. Financial resources are critical to the energy industry because of the intense capital nature of the business. This marketplace therefore provides a number of means for the innovative producer to manage the cash resources of the firm and apply the budget discipline at a finer level of focus, the Joint Operating Committee.

One thing that is very obvious about this module is the radical nature of how the nuance of committing capital amoungst the partnership is handled. Offering a multitude of options for the innovative oil and gas producer and eliminating many of the issues associated with raising money.

I have purposely provided a very light sketch of the Financial Marketplace Module. This is not my area of expertise, and many of the users in this community will better understand the open opportunity the module provides. I think the seventh module to be published will be the Compliance & Governance Module.

• Security & Access Control Module
• Petroleum Lease Marketplace Module
• Partnership Accounting Module
• Accounting Voucher Module
• Resource Marketplace Module
• Financial Marketplace Module

Technorati Tags: People's, Specification, Market, Change,

Unconstrained prices.

We have seen the price of energy increase by rather large amounts over the past 6 years. One would have to think that the upper limit of what is reasonable has to be near.

Oil and gas is unique in that it is the only resource that has a finite value. There are only so many volumes of oil and gas that ever existed. Like wood, wheat or rice it is not renewable, and like gold, silver and platinum not reusable. Once oil and gas is used its irretrievably lost. These attributes are what make them unique to other commodities.

The other aspect is that they are expensive, but more importantly difficult to find and develop. Conceptually the energy industry is the most difficult from a science and engineering point of view. As we have progressed through the cheap energy era, we now find ourselves in the era of difficult energy.

The pace at which the consuming public has learned the dynamics involved in the industry and its pricing has increased. The point that I want to make in this entry is that oil and gas prices are no longer constrained by the idea that there are easier to produce alternatives. The market has always generally believed that corn, wind and solar would replace the "dirty" oil used to power the SUV. That the future of the world's energy sources would now suddenly be clean, cheap and environmentally friendly.

The lesson that has been difficult to learn is that we can't use our food for fuel. Rice, wheat and corn are being disrupted and it is the food supplies of developing nations that suffer. Secondly the volumes of energy consumed in the alternative energy manufacturing process are higher then what is produced. And finally solar and wind, as they stand today, are prepared to take on less then 1% of the total supply of energy

So where may we see the price of energy go? If my suspicions are correct, we may ultimately see the price of oil reach $650.00. Within the next three months we may see $175.00 / bbl and we should consider that cheap. Cheap because it will only lead to temporary shortages.

Technorati Tags: People's, Peak-Oil, Energy, Market,

Draft Specification - Resource Marketplace Module

“For every serious challenge facing the world. There is someone with a big idea. That big idea needs to be nurtured. It needs to be explored and analyzed in order to bring it to life.

And design is at the core of that innovation. There isn’t a problem in the world that a great designer can’t solve.” Quotation from an Autodesk commercial.

The Resource Marketplace module is the second of three marketplace modules in the People, Ideas & Objects specification and the fifth of eleven. The key focus of this module is on providing a forum for electronic commerce. The Resource Marketplace works with the Accounting Voucher Module to optimize the contract, division of labor and mitigation of transaction costs.

A summary list of the published modules.

Draft Specification - Security & Access Control Module

Draft Specification - Petroleum Lease Marketplace Module

Draft Specification - Partnership Accounting Module

Draft Specification - Accounting Voucher Module

Draft Specification - Resource Marketplace Module.

Possibly the largest impact of this module is the management, with the Research & Capabilities Module, of People's Intellectual Property (IP). If we are to succeed in finding larger volumes of energy to meet the worlds demands we are going to need to solve a variety of difficult problems. Whether those problems are in engineering, science or business the individuals that will ultimately prevail need to be motivated to do this difficult work. The motivation is the ability to earn the rights to the expression of the idea, the patent or trademark.

For more then 25 years the oil and gas industry has ceased to conduct any research. Making today's environment ripe for research and development opportunities and making it a use it or loose it proposition. Since they chose to do nothing they won't miss out on any opportunities. In this module specification I also suggest that companies have become too comfortable with using People's IP as if it was free like the oxygen that we breathe. The "Ideas" in People, Ideas & Objects is explained in fair detail in the specification. It is necessary to build a system where people can develop, secure, license, contract and manage their intellectual property. This application is the place where that will happen, have a look.

The next Module to be published will be the Financial Resource Marketplace.

Technorati Tags: People's, Specification, Development, IP, Modularity,

Google announces App Engine

We moved one step closer to the People, Ideas & Objects applications capabilities with the announcement of Google App Engine from Google. Information regarding what the App Engine is, is available here, here and here.

What this provides People, Ideas & Objects users is the ability to host applications on Google Application Hosting. As one can imagine, Google has a lot of hardware available that at times may be surplus to their needs. This service is being offered as part of the Google Apps for http://www.people-ideas-objects.com/ product. And therefore free to all the users and developers of the community.

Now they mention that the service will allow only the Python programming environment, but more will be added in the future. I have always considered using Sun Microsystems to run our main app, and that hasn't necessarily changed, but Google Apps Engine provides the users and others to build some of the applications that may be used by a user to provide a greater level of service to their oil and gas clients.

Technorati Tags: People's, Google, Capabilities, User,

Draft Specification - Accounting Voucher Module

I am pleased to present the fourth module of the People, Ideas & Objects module to the community. The Draft Accounting Voucher module specification is different then most other modules and applications. It brings an area of strong academic science that until now has been poorly published in other ERP applications. Have a look.

• Security & Access Control Module


• Petroleum Lease Marketplace Module


• Partnership Accounting Module


• Accounting Voucher Module.

The next two modules will be;

• The Resource Marketplace Module


• The Financial Marketplace Module
  

Technorati Tags: People's, Modularity, Specification, Organization,

Topics of discussion.

One point that most users will be able to identify with is the recent focus of the industry. For the past year the focus has been on reserves, its land base, its production forecast, how difficult and expensive it is to produce oil and gas, and occasionally the retirement of the brain trust in the next 5 - 10 years. Any topics outside of the realm of these points of discussion is never raised. What about the systems, administration and management of the industry? Are these disciplines no longer considered a part of oil and gas? Is it through the neglect of these areas that is the motivating factor of the need for the People, Ideas & Objects application? Or is this just the natural evolution of the industry to focus on its key value added areas?

When you think about it, the topics of discussion of the industry are the most serious that they've faced. And the most demanding in their 140 year history. The magnitude of the problems and the seriousness of the issues requires 100% of their focus. Is it any wonder that many areas of traditional concern are falling off the table? I don't think so, and I would suggest the responsibility for action will fall on a different group to provide the systems, management and administration. And as we move forward the Users will become the leaders of this new service industry.

It is clear to me that the Users must be the lead in the development of this application. They're the only ones that collectively know how the industry operates. To preclude them from development would render this software quality down to that of SAP's and Oracle's. But there's more then just that. In the future what will the role of these users be in the oil and gas? What I'm getting at here is that People, Ideas & Objects application is the beginnings of a new User-driven technical support industry. Where the Users build their own software, manage and administer the day to day in oil and gas, and provide these critical resources as part of their service offering.

The current focus is not likely to change, and the earth scientists and engineers are off busy with their reserves, land, and production problems. They will need this new service industry to rely on, and will willingly pay for it. The number of people employed is very small for an industry that is in the ballpark of $4.5 trillion in revenue. Over the lifetime of the oil and gas business, the General & Administrative costs have been around 5% of the total. Is it reasonable to assume that this new industry we are talking about is a $225 billion in revenue? I think so, join me here.

Technorati Tags: People's, User, Vision, Productivity,

Thomas Davenport declares a revolution.

Documenting the differences between the old "Knowledge Management" and the current Enterprise 2.0 (E2.0) type of applications. (Which of course People, Ideas & Objects would be considered E2.0) You can access the article from here.

Hard to imagine that Thomas Davenport would say such things, but this is a must read article. His most important point is the reaction that is reflected in this quotation.

Certainly any form of “2.0” movement would require a distribution of power. I have no objections to other groups coming into power, but if I held any power I would not be ready to hand it over because of some new software becoming available. I suspect many senior executives will feel the same way. Most would probably like to get the best ideas of their employees, but they like their own ideas even better.

The powers that be in oil and gas, I can assure you, are reading from this script.

Technorati Tags: People's, Harvard, Call-to-Action, Software,

Draft - Partnership Accounting Module Specification

I am pleased to present the Draft – Partnership Accounting Module specification to the community. This is the third of eleven modules that will be published over the next few months. They can be downloaded from here.

• Draft Security & Access Control Module Specification
• Draft Petroleum Lease Marketplace Module Specification
• Draft Partnership Accounting Module Specification.

The next module to be published will be the Accounting Voucher.

Partnership Accounting brings together many of the issues that will be faced by using the Joint Operating Committee (JOC) as the key organizational construct. The module’s key assumption is that producer’s will contribute disproportionately to what their commitment requires. Whether the contribution is in capital, land, intellectual property or technical assets, these contributions need to be valued for the purposes of determining the equalized contribution of each producer.

We need to do this in order to eliminate the wasteful and redundant technical and management capabilities being built into each and every silo’d company. The oil and gas industry is based on partnerships, represented by the Joint Operating Committee. It is therefore necessary to recognize the shortfall in human resources due to the dual issues of:

• The planned retirements of the brain trust in the next 5 – 10 years.
• The ever-increasing demands of earth science and engineering for each barrel of oil.

This module pools the resources of the producers represented in the JOC. This is to ensure that the required capabilities are sourced from the appropriate resource.

There is a large amount of this module that consists of extensive algorithms that will make this application difficult to get right. However, I think this module is also an area where the greatest creativity and innovation in how these requirements are implemented. This module is also where the largest numbers of users will have their influence. And will also be one of the major modules that provide the users with the ability to develop their commercial virtual worlds in which they will work from in the decades to come.

Technorati Tags: People's, Modularity, Specification, Organization,

Tanks half full.

I have written about Matthew Simmons before. He is the most vocal of all the peak oil theorists and the one that makes the most sense. He recently made a presentation talking about the future of the industry, and like me he sees a very rosy picture for those that work in the industry. (Rosy = lots of work to do.)

Stating "Winners Win Big!" p.23

• Implementation of massive "efficiency plans"
• The oil service and equipment industry
• The world's engineering and construction companies
• Companies that can adapt to high energy costs fast
• All consumer goods who win market share in building prosperity among oil producing world

I have to agree with all these points. Imagine what someone who is actively employed in the oil and gas industry will be doing. Think of the software tools they will need to make this future a reality. A software application that meets their needs because they were one of the fundamental elements of the development, the user. Join me here.

Technorati Tags: People's, Simmons, Peak-Oil, Organization,

Change is everywhere.

Bear Stearns is gone. Doesn't it seem like the financial markets never seem to regain their footings. It appears that unfortunately Bear Stearns had scheduled their first quarter news conference for Monday March 17, 2008. That being today in which they would report large losses, the management chose instead to take $2.00 per share (Down $27 since Friday's close) instead and be taken over by JPMorgan. With over $380 billion in Bear Stearns liabilities, lets hope JPMorgan stays afloat!

Shell will be announcing their reserves tomorrow, and I suspect just as Chevron's were bad news we'll see the same problems form Shell. Last week Chevron announced that their reserves are now below the level they were before they purchased Union oil's assets. Recall that was a few years ago and was a moderately sized acquisition. As fast as these energy companies try to move they are constrained by the ability of the organization to change to the greater demands of the higher levels of science and engineering per barrel of oil. The bureaucracy can't keep up.

Professor Carlota Perez is someone that I have written about on this blog before. Perez is a long range economic theorist of the Schumpeter style of creative destruction. She has been stating the Information & Communication Technologies are going through the "turning" phase in which they will finally take the lead position in creating product value. She also states the financial structure of the economy has become irrelevant and is unable to provide the sustained value generation that is necessary for the future. Check out the 7 other blog posts I have written on Perez here.

The entire purpose of this blog is to provide a software development vehicle for the User to participate, design and develop the software they need. The software that establishes their role in the new organization of the energy industry, the Joint Operating Committee. As I suspect with Bear Stearns, the current bureaucracies will not have the organizational speed and innovativeness to stay ahead of the difficulties of this new market and its cold brutal realities. Join me here in what Professor Perez calls the future.

Technorati Tags: People's, Perez, Failure, Energy,