Critical Issues and Grand Challenges,...

Addressing the critical issue of the oil and gas producers performance is one of today's grand challenges. Prices of the commodities is a guessing game from one quarter to the next, however we know two things. The global demand is clearly accelerating through the Brazil, Russia, India and China (BRIC) countries. And the global supply has remained constant at around 86 million barrels per day since 2005. We also know the amount of earth science and engineering effort per barrel of oil is climbing and will continue to do so throughout the rest of time we use the commodities as energy. The retirement of the industry brain trust and other issues seem to conspire to make it even more difficult.

Hydraulically fracturing shale shows much promise for highly prolific wells with aerial extents as broad as the Appalachians. Crushing that much rock will take some effort. The remaining political, financial and technical risks are growing larger each day. How will the industry find the volumes of more people and ideas necessary to profitably serve the future demand.

This MIT video entitled Critical Issues and Grand Challenges shows the path we are on here at People, Ideas & Objects is the right one. The first two presenters on this video provide information and insight that only seasoned CEO's can provide. The first is John Reed, the former CEO of Citibank to discuss the September 2008 banking crisis. There is no doubt in his mind that the "banking industry needs to be completely rebuilt and reconfigured." Suggesting that "without the government interventions, the banking industry was bankrupt." Here he talks about the scope of the challenge as being global and one that needs new and effective regulations that do not stifle innovation and progress.

Reed talks about the "Too Big to Fail" issue that is pre-eminent in regulators minds. That systemic risks have to be identified and removed before they cause the system to break down as it did in 2008. He feels that in the 1980's there was a change towards satisfying shareholders almost exclusively. And at the same time the compensation of management was permitted to expand as long as the shareholders were being satisfied.

The securitization of assets became the key marketing tool of the major banks. Here Banks were able to, as Reed points out, interactively determine what was necessary to have a rating agency provide the AAA rating for the securitized assets. Which over time made the ratings process less and less objective.

Reed's conclusion is as follows:

The industry must be rethought and rebuilt. A systems view which includes behavioral considerations is essential.

In viewing this presentation it becomes clear that the ways and means of international banking systems had become skewed towards those on the inside. This caused the damage to the economy and is unacceptable that it continue in the manner that it had.

I believe the oil and gas industry has changed materially in the last decade. Moving from the easy energy era to today's technically difficult market. I also believe this is a transition that has been ignored by management. Most of the companies that were present in the easy era have been able to realize substantial market value gains. By trading on the higher prices for the commodities, the management are well taken care of with the higher cash flows from these price fluctuations, not the value the managements have provided.

Second to discuss their industry is Denise Cortese, the CEO of the Mayo Clinic. In the U.S. he notes, people believe the health care system is broken. And he argues the vision for Health care is missing. Asking the audience to develop the vision Cortese asks "who would want to spend tomorrow at the worlds best hospital". Of course no one wants to be in a hospital. Cortese then asks why is the solution to health care, a Hospital? And commenting that nothing can be done on a large scale, like reforming health care, without a vision.

Particularly pertinent is he states "you don't self organize without a vision". Citing the example of WWII Cortese suggests that without General Eisenhower's vision, the troops sent in on D-Day would have been unable to self organize. When the 101st Airborne division was dropped nowhere close to their drop zone, they were still able to self organize and move, although chaotically, toward fulfilling that vision.

Its at this point of the video's remaining hour and five minutes that provides no new value and I recommend skipping the rest. To me the important aspect of this video is the need for these industries to be remade. Just as Professor Carlota Perez suggested as early as 2005, industries will need to make necessary changes to the organization to accommodate the impact of Information and Communications Technologies. Both Reed and Cortese suggested how the motivation in these industries is distorted, leading to their difficulties.

The vision that the Draft Specification provides is the road map for people to follow. Chaos is mentioned many times in the video, and I think it reflects clearly that these changes are not as smooth as one would assume could be. Thankfully we are not in the health care business where people could get hurt, or the financial business with the collateral damage we've experienced in the last year. We are talking about oil and gas ERP systems and I am not aware of anyone being hurt by that. Please join me here.

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Oh those Russians.

We see in this Reuters article that Russia wants western based producers to develop their offshore energy resources. I think this shows that the demand for the type of skills that the Duverney's and BlackPearl's, the prototypical producer, is high amongst National Oil Companies (NOC's). 

I think this is indicative of the difficulties of finding and producing oil and gas. The demands of energy, in the non-easy era, are particularly hard from the engineering and earth science perspective. I think the International Oil Companies (IOC's) have learned that they can rely on the skills of the prototypical start-up to build their reserves. NOC's can take a lesson from Russia who appear to be actively searching for the skills to develop their reserves. And were only to happy to seize assets from Shell and BP a few short years ago. 

Adding political risk to technical, financial and all the other risks these teams face. Is just another day at the office. 

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The Prototypical Producer

"Build it like your going to operate it forever."

That is the expectation of the CEO of BlackPearl Resources Ltd. John Festival, who sold BlackRock Ventures Inc to Shell Canada in 2006 for $2.6 billion. As I mentioned in a recent post companies are being formed with the intent to sell them within a five to ten year window. These people are able to put together a firm and sell it for substantial gains.

Nonetheless the expectation is to "build it like your going to operate it forever". The oil and gas assets of the producer are the value that is being built. Why would anyone approach the building of those assets with anything but the long term perspective. The dichotomy is that you are building the company for a quick sale. A team can put together a valuable producer in a short 5 to 10 year period that can then be sold for multiples of the cost to build the firms.

I see in the BlackRock team the prototypical 21st Century oil and gas producer. The ability to find and develop the resources, build the assets and then sell them to start all over again. It is happening consistently on this grand of scale, it is also happening on a smaller scale where less "proven" teams are building their capabilities up with each successive start up and subsequent sale.

It is these teams that I have in mind as being the ideal candidates for both the People, Ideas & Objects Draft Specification and the associated Community of Independent Service Providers (CISP). My logic is as follows; why does a firm that is focused on developing a firm's assets, based on a team of capable leaders need to burden themselves with the overhead associated with systems, procedures or even the staff to manage the day to day. What if they could access the systems and people necessary to manage their assets development? What if they were to find their most profitable operations were best managed by the CISP and People, Ideas & Objects application modules.

From an outsourcing point of view people will have preconceived ideas of what works and what doesn't. To think of this as just outsourcing limits the opportunity for the producer and the industry as a whole. Adam Smith proved that the division of labor and specialization were the keys to organizational efficiency. Since these concepts were proven they have been the driving force behind all economic growth. Greater specialization and division of labor are what organizations have been able to do to improve their performance since the late 1700's. The Draft Specification considers this as a critical aspect of the systems means of providing the producer with increased speed, innovation and performance.

One of the key aspects of the Accounting Voucher Module is to provide the means to design transactions. A transaction for the purpose of this example is the drilling of a well. The work that will be undertaken by whom and when is defined in the Accounting Voucher as the value adding process. This process is not too much different today as it will be in the future. However, the number of people that would be involved in that transaction may total one thousand people when we consider the producers CEO all the partners staff and on up to the invoice clerk at the water hauling firm. Clearly the division of labor has already been used to good effect.

Now to enhance the capabilities of the producer and particularly the industry, will require a greater division of labor. Lets assume that this transaction in the future may involve triple the numbers of people to successfully complete the transaction. Already the Joint Operating Committee employs only a handful of these people. How many will need to be directly employed by the JOC in this future scenario? Will it be more or less? I think it will require sizable more individuals reporting directly to the Joint Operating Committee.

Many more individuals spending substantially less time then they do today, over a shorter period of time. How will this be handled by the JOC? The ability of having this larger number of people spending less time on a transaction will be one of the direct results and benefits of the Information & Communication Technologies. The ICT can handle this type of activity, and what I am suggesting here is that irrespective of the size of the producer, only the key team of CEO, COO and CFO would need to be in the office at all times. The thousands of people available when and where they are required, managed by the People, Ideas & Objects application modules and the Community of Independent Service Providers.

In this future scenario BlackPearl Resources needs to coordinate and manage the efforts of thousands of individuals who have a significant influence on their success or failure. Some of the key attributes of this is that the "transaction" must be flexible enough to have the influence of the decision makers involved intimately with the aspects of the transactions that they can influence the success of the transactions outcome. For the industry to increase the overall productivity of the people imputes the speed of these transactions will turn over much quicker. If the performance criteria is to drill X wells today, then tomorrow may require X³ wells drilled. Or it may be stated better by saying the engineering, geological and overall work required for each barrel of oil triples.

This is the only method I can see of how the fixed number of people working in the industry can become three times as productive. The market for energy is rewarding these firms with the pricing of the commodity which values all aspects of the producers operation. China, India and the rest of the world is joining the "Western World" and the demand for energy will only increase.

They key to the worlds energy demands being satisfied lies with these teams of people, as represented here by BlackPearl. The ability to do what they do is an intangible that lies in the minds of oilmen. This talent is very rare and very difficult. I don't think that without the motivation of the potential of a billion dollar payday, these teams would form. Which brings me to the point that I mentioned here a few weeks ago. Clearly International Oil Companies are buying most of these producers. National Oil Companies are yet to realize their value in developing their countries resources. What if Pemex were to use these teams to help maintain their production volumes? As I mentioned in that post the idea that these producers are closed behind some communist or dictatorial mindset has receded over the past few decades. The only thing that needs to be done is the IOC's, NOC's and teams fund the development of this software to make this real. And as a key component of the Community of Independent Service Providers, all you need to do is join me here.

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A call to action.

John Hagel and John Seely Brown are two authors who's work I reviewed in the Preliminary Research Report. They have consistently shown the direction that business should be moving towards. Their message has been somewhat controversial due to the focus on technologies impact. With the luxury of time we can see they are in tune with the needs of business and have added value to those that listen.

Finding those that will listen may be the difficult part. I see their message being broadcast over the heads of management to the people who are in the know, that things are not working quite right anymore. In a blog post, John Hagel has itemized a call to action for those people to deal with the situation they are in. I think they are on message and add some value to those that will listen.

It's important to remember that this situation is unique in terms of it's point in history. We have reviewed Professor Carlota Perez work that says the economy today is the result of a long term trend that has shown a consistency in each of the five previous events over the past 300 years. The old is being replaced by the new. The new is being facilitated by the Information and Communication Technologies (ICT) which enable new ways of organizing.

Professor Perez has documented the changes that have happened in the prior 300 years. In addition to the industrial revolution we saw affordable and abundant steel impacting the strength and capacity of ships. How the canal system in Europe provided an increase in trade. All disrupting technologies that brought prosperity to the world.

This blog post of Hagel & Brown intimates the future is ready, waiting and looking for the people who are needed to take it too the next level. I recommend you review this post closely, and if your involved in the oil and gas industry, please join us here.

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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.

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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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McKinsey Interaction Costs Part I

McKinsey are re-publishing two very pertinent documents "A Revolution in Interaction" which I'll cover in this post, and "The Next Revolution in Interactions" which I will cover in my next post. I highly recommend downloading and reading both documents from here and here. I also reviewed "The Next Revolution in Interactions" back in December 2005 on this blog.

As I recall 1997, the boom in technology related companies had begun. Pets.com and other ridiculous businesses were popping up with multi-billion dollar valuations. It seemed as if the collective intelligence of the markets had taken a vacation. McKinsey on the other hand were publishing "A Revolution in Interaction" that even today, provides a solid road map for any firm. 

Much of People, Ideas & Objects research has been around the work of Professor Richard N. Langlois' work at the University of Connecticut. His research, which has earned him the Schumpeter Prize, is on Transaction Cost Economics (TCE). As the 1997 McKinsey article says;

The structure of firms and industries at any given time is designed to minimize the total costs of transformation and interaction.

Using the Joint Operating Committee (JOC) as the key organizational construct of the oil and gas industry would not be possible without the analysis of TCE and today's Information Technologies. The Draft Specification has incorporated these elements and applied these principles to the energy industry. 

So what are Transaction costs or as McKinsey calls them, Interaction costs. And why is that important to oil and gas.

If interaction costs were negligible, an organization could in theory be atomized into a collection of individuals, geographically dispersed but connected by a communications network. In reality, however, substantial interaction costs and the human aspects of effective interaction limit the range of realistic configurations.

With the developments in Information Technology the oil and gas industry has the opportunity to reduce their transaction costs towards the negligible level. The basis of the industry is partnerships, as represented by the Joint Operating Committee. The interactions and transactions between the partnerships can be supported and facilitated in the manner described in the Draft Specification. McKinsey notes;

If providers anticipated this, wouldn't they communicate and develop and distribute products in a very different manner? What if their costs of interacting with customers [partners] also declined? Many of these circumstances may soon come to pass. When they do, falling interaction costs will trigger dramatic changes in the relationship between companies and their customers [partners]. 

Based on my experience and understanding in the energy industry. I can see how the Draft Specification could provide substantial value to the energy industry. Both from an innovation point of view, and, to define and support the movement towards the science and engineering based strategy. Critical to the success of this strategy will be the administrative cost reductions and efficiency brought about by the People, Ideas & Objects Community of Independent Service Providers (CIPS). McKinsey suggested back in 1997 the U.S. would benefit from interaction cost analysis.

For the US economy, the increase in interactive capability could translate into productivity gains worth a third of GDP.

In addition to TCE being applied to the energy industry. The knowledge that Adam Smith's concepts of division of labor and specialization provide the majority of value accretion in an economy. For the energy industry to increase its productivity will require new and more effective means of organizing itself. 

The types of trade-off described above are not made explicitly and transparently. Rather, they have become hardwired with time into the assumptions made in designing organizations and setting strategies - assumptions about customer behavior, distribution economics, manufacturing scale, in-sourcing versus outsourcing, and a range of other variables. In each case, relative interaction cost is a key component of the assumption. This variable is about to undergo radical change. We believe that the interactive capacity of modern economies will at least double, and could increase as much as five-fold, over the next five to ten years.

Clearly these concepts strike at the heart of the strategy of the oil and gas producer. I see producers quickly adopting new strategies based on these concepts. People, Ideas & Objects believes the energy producer is best focused on it's land lease & facilities, and the internal capabilities associated with engineering and earth sciences. With this light weight and nimble structure, small teams of people are able to form, explore, develop and sell for hundreds of millions and even billions of dollars in as little as five years. Only to turn around and do it again and again. These types of producers have no need for the systems and procedures, staff or compliance requirements of the industry in decades prior. These administrative and compliance requirements provide no value to the producer, and are impediments to speed and innovativeness. Using the People, Ideas & Objects application with the CIPS adds these necessary requirements on an as needed basis.

The impact of the new economics on forms of organization will be equally profound. Organizations will adopt a variety of structures that would not have been possible to manage when interaction costs were significant. Our research shows that half or more of a company's spending on labor may be devoted to basic interaction activities, many of them internal to the organization. As the costs of search, coordination, and monitoring fall, we can expect a radical shift in the way corporations are organized. The flatter organizations of the 1990s, for example, are an early reflection of the growing ability to manage distant front-line activity through interaction technologies.

Finally in McKinsey's closing paragraph we see what possibilities await the innovative oil and gas producer.

As in all major economic shifts, the successful innovators will be those that develop the best understanding of the underlying change and act upon it. Success in the next five to ten years will require a deep understanding of the power of interactive capacity in both your own industry and the economy at large.

Recall this was written in 1997. Has the industry made these changes? To a certain extent the new producers that are being developed by teams are showing the way. And these will be the producers that would benefit from the use of the People, Ideas & Objects and the Community of Independent Service Providers that support the innovative oil and gas producer. Please, join us here.

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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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