The #User #Community #Vision Part II

Following on the brief introduction of a user community vision. We also need to discuss what types of work the users will be doing. We will be offloading a lot of the work that is currently being done in the industry to the computers. No one would dispute that fact. The time and effort in maintaining disparate databases of the same information, the reliance on paper and multiple layers of bureaucratic red tape will be gone. In addition using the Joint Operating Committee and aligning the compliance and governance frameworks with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks eliminates significant redundancies within the producer organization and their interactions between working interest partners. There will also be efficiencies of using the service providers who focus on their process on behalf of the industry, as their client base.

Therefore there will be significantly less paper used in the process. A lot of the jobs that were consumed in that task will be gone, as will many of the jobs that are involved in the inefficiencies today. So what will people be doing? The first thing they will be doing is providing the oil and gas producer with the most profitable means of oil and gas operations. The industry will understand that it is an investment in its people that provides them with the best return in terms of how their money is managed in the oil and gas industry. Secondly, in the short term, they will have an alternative means of organization for the oil and gas industry to rely on for when the bureaucracy either ultimately fails or just quits.

Focusing on the business of the oil and gas business will be what is the mindset of those that are operating in the user community. The Preliminary Specification is an oil and gas ERP system that is designed for its unique character, and particularly the Joint Operating Committee. This user community is being built upon the Preliminary Specification.

Therefore it will be the decisions, the ideas, the collaborations, researching, the creative, and solving of problems that people will be doing. All focused around the oil and gas business. Now those that are in the user community will be working with the developers of People, Ideas & Objects defining what it is they need and want in terms of software to do these things. That is their job. Developers know how to write code and make systems work and need the explicit direction from users in order to develop the appropriate software. When we look at the Preliminary Specification we need the user community to be large and robust in order to capture the needs of the industry. That is the scope and scale of the effort that we are doing here in the user communities development.

It is therefore reasonable to assume that this will be different software from what is available today. And the reason that it will be different is that it depends on the Preliminary Specification which is unique to the industry but more importantly, it will have the user community that will have been developed over the next few years. The user community participants will have had the time to fully understand and appreciate the opportunity that this is. And they will be able to define what the software is, how it is different and what they need and want. The user community will have at their disposal, not just during the initial development period, but always, the software development capabilities of People, Ideas & Objects for the changes and improvements that they want and need.

In terms of portraying a user community vision this helps to show how this important work will be undertaken. I will continue in further posts to try to portray more of how I see what I think the industry needs from this new form of organization.

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

A Vision of the Beginning of the User Community

Its difficult to lay out a vision of what the network, user community and service providers will look like when they are built. Its an entirely different way of working for pretty much everyone in the oil and gas industry. Instead of showing up one day at an office provided to you by someone else, with a desk provided to you by someone else with a computer provider by them as well. A brief introduction to those that are around you and the stack of papers that you will become more intimate with. You'll be faced with nothing but your toes at the end of the bed.

And that’s a good thing as Martha Stewart would say. You have those degrees, that experience, those skills you worked hard in building. You have the knowledge of the oil and gas industry and how it operates. Your own computer of which you're connected to the @piobiz network. This is sounding a bit better than a few minutes ago and then you'll realize its that specific thing that you have always wanted to do.

Its 2014 and what you need to do to enable yourself to do that thing that you want to do will require some time and effort and organization to put it together. Thankfully the People, Ideas & Objects developments are not scheduled until 2019 so you have some time, and you're going to need it. Thankfully you can drone on in the office we noted above for many more years while you configure this offering for the future. The question would be where do you start.

The first thing everyone needs to do is to read the Preliminary Specification and become familiar with the global scope of the application. And all of the other aspects of the projects. The more you understand the business model the better you will be able to fit within it and configure yourself with others. Then everyone will need to Think, Act and be Patient as first the network, and eventually the user community develops into what they need to be to provide the oil and gas industry with an alternative means of organization.

People will figure out the rest from this point. Collaborations will begin and the self organizing nature of the network should begin to start. That is how this works. No one will control it, no one will tell it what to do. It will exist to provide the oil and gas producer with the most profitable means of oil and gas operations. It will have the software development capability of People, Ideas & Objects to build the software it wants and needs to meet that objective.

Collaborations and participation in this user community will be how the oil and gas industry is operated. The bureaucracy doesn't want to hear such nonsense. But as I noted yesterday they won't be around much longer. They will either quit or continue to fail. Our appeal is to the investors who are of like mind and will need the solutions that we are developing here. Both to replace the bureaucracy and to ensure that they achieve the most profitable means of oil and gas operations.

We have time and as more people join, we will gain mindshare. This is the way things will be operated in the future. In other industries as well. Bureaucracies are finished. Networks are taking over. And this is how they get started. With like minded people Thinking, Acting and being Patient.

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

A Cold Hard Assessment

What we are faced with may seem like a long road where there is much risk and a lot of hard work. That is a fair assessment. What we are doing in the user community will be hard to accomplish. The question we need to ask ourselves is, will it be worth it? But before we answer that it probably make sense to take a step back and look at how the bureaucracy perceives us.

Although I have never crossed a mother grizzly bear and her cubs, I don’t think she would have anything on the bureaucracy when you cross their domain. They are a nasty bunch. And they are not a fan of People, Ideas & Objects or the work that we are doing. As we mentioned yesterday we are looking to throw them in the river. They have a nice setup now and do not see the need to upset the makeup of their empire. As I have mentioned in the past, even the CEO’s don’t venture into our territory for fear of a mutiny.

I look at those as the good old days when things were relatively calm in the oil and gas market space. Today, that is since the 2008 financial crisis, things are not necessarily as they appear. The bureaucracy has been losing much of its hold on power in all areas of its domain. It’s in retreat and having to pick its fights. The investors have risen and are asserting their dominance in the corporate domain. So the CEO’s have to pick. Harmony with the bureaucracy or profits with the shareholders. And it looks more and more like the shareholders are winning the war. It’s still too early to pick a winner, but what industry can continue on without making any profits.

And what is so great about profits. Its just that in reality the oil and gas industry hasn’t produced any. The accounting treatment of valuation of assets and hence income can make anyone an oilman. The fact that there are ceiling test write downs in an environment with $100 dollar oil and $5.00 gas should make you laugh uncontrollably. Anything and everything that is spent is capitalized. And little is expensed in the current year. In good years this balloons income and inflates assets of everyone to the level of a super achieving oilman. On an accounting basis you can’t tell if the CEO is an idiot or a genius. That is until they declare bankruptcy.

So earnings have been a bit of a shell game for the past three decades. All your mistakes and skeletons stay in the closet as long as you keep drilling and the commodity prices eventually rise. The investors are now wise to this game and they want to earn some real money now. They have invested faithfully in the industry and have expected returns from the business. During the past decade there has been significant increases in commodity prices and the bureaucracy have not performed. The results are the same as when the prices were $20 per barrel. The bureaucracy feels this should be adequate and the investors need to check their expectations.

I have heard a few CEO’s talk about value instead of volumes. As a matter of fact it was the CEO of Encana in their fourth quarter conference call that brought up that as their new strategy. Well that will be a surprise if they actually pull it off. They could always call us if the mood strikes them. As we have a solution that is somewhat consistent with that idea.

We’ll see how long this flavor of the month strategy lasts. If it’s a trend precipitated by the investors, which I think it is, the bureaucracy should purchase some luggage. Maybe even a canoe. The point being that the time for the user community and People, Ideas & Objects gets closer each day, the risks are less, and the rewards for us as a community are more than worthwhile.

The question was asked at the beginning if we developed the user community would it be worthwhile. If we assume for a moment that the bureaucracy is in decline. And their ability to battle is waning. Then providing the oil and gas industry with an alternative means of organization will not only be a good thing from a profitability point of view, it will be a necessity. What will happen is that when the situation gets to be too untenable for the bureaucracy, they’ll quit. That is their history. They’ll either run out of paper or find opportunities in other locations and leave their skeletons in their closets for someone else to wrestle with. They are not fighters or builders, they’re bureaucrats. We need to have a replacement for them when they abandon ship just as much as we need to replace them to enhance the profitability of the oil and gas industry. And that is why we need to do what we need to do, build the alternative.

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

#Specialization and the #DivisionOfLabor for Higher #Profit

I want to stress that we as a community are not looking to anyone or any group for approval of what we are doing. We are acting in the best interests of the oil and gas industry by providing the oil and gas producer with the most profitable means of oil and gas operations. When this community achieves a certain level of organizational capability the resources necessary to fund the development budget, and hence the user community and eventually the service providers will arrive. Its a bit of a leap of faith. Organizing ourselves does not cost anything of a material nature. Providing the industry with an alternative means of organization is what is necessary to set the revolution in place and throw the bureaucracy in the river.

As of today we stand on the vision that is contained within the Preliminary Specification. One that provides substantial value in terms of its enhanced profitability to the oil and gas producer. The bureaucracy will continue to produce shale gas at a loss, making it a wasted resource. People, Ideas & Objects have a better way. The second pillar of our offering is the Oracle Fusion Middleware and Oracle Fusion Applications as our technical base. These two pillars form the foundation of which we are building the user community upon. When we have the three pillars in place it will be hard for the investors to deny themselves the opportunity to earn greater profits by joining us.

Yesterday we discussed the toolset of specialization and the division of labor. And this is an important element of how we provide the most profitable means of oil and gas operations. Some may feel that the use of computers will be taking away jobs in the future. I sure hope so. They can take away all of the low end jobs that they can handle as far as I am concerned. And leave us with the thinking, deciding, innovating, creating, collaboration, research, problem solving and ideas that we can handle. Thats the future that I am building.

What the future of the oil and gas industry has in store for us is a little different as well. Even today the production costs on oil are in the $70 range. How many people are being employed in those cost figures as compared when oil prices were $20 and production costs were $12. The future sees a continued escalation in the costs of production. And the demand for production will increase as well. The volumes demanded by the world will grow. Therefore the level of work needed at all levels within the industry is going to need to expand significantly as production costs continue to rise, and production rises to meet demand.

Where will these people come from? And that is an age old question that economic principles have solved since the 1790’s. They have solved it through the toolset of specialization and the division of labor. As more is demanded from the workforce we will adapt by bringing more people into the industry. But that is limited. What we need to do is to continue to specialize and divide the labor so that the efficiency and productivity of each individual is increased. And it is in that way we will be able to approach this increasing workload.

The way that the bureaucracy has structured itself today provides no further upside in terms of specialization and the division of labor. Each silo’d corporation is constrained by its ability to specialize and divide the labor because it is not exposed to large enough of an area to really specialize in. Take yesterday’s example of the lease rental payment service provider or even Exxonmobil's ability to specialize in that process. The service provider, particularly with the People, Ideas & Objects software development capability, will win every time. So there is no opportunity for the bureaucracy to increase their throughput of more oil and gas production or deal with the rising costs. They only have the ability to hire more people to do more stuffing of reams of paper in the printers. And they have already shown the inability to make any money with that business model.

So when we talk about the toolset of specialization and the division of labor we are talking about the capability of increasing the throughput of the industry to meet its future demands. Demands of rising costs per barrel of oil equivalent, and higher production volumes. Without this toolset the industry might not be able to increase its productivity, or address the higher throughput, leading to further declines in its profitability. Specialization and the division of labor, in addition to the decentralized production model, are reasons that this community will provide the oil and gas producer with the most profitable means of oil and gas operations.

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

How the #ServiceProviders Will #Compete

We noted before that the glue that holds the user community and service providers together is the Intellectual Property (IP) that is derived from the Preliminary Specification. Users are licensed to access all of the IP that makes up the Preliminary Specification for the work that they do in the user community. It is a similar case for the service providers. They will be granted an exclusive license, and the software from People, Ideas & Objects to manage a process. For the purposes of this blog post lets assume that it is the lease rental payment process for the United States.

Other than for other geographic regions such as Canada, no other service provider will be granted a license or be given access to the software that manages the lease rental payment process in the United States. It is an exclusive engagement. Some might think that without the competitive elements driving the service provider, the lease rental payment process will become inefficient. And that would be the case. However I would ask what competitive elements are we looking for. The oil and gas industry consistently looks to establish multiple vendors in every category of offering. The innovator or inventor of a product or service is left to fend for themselves against half a dozen “me-to” competitors who provide low cost and low quality services to the industry. The original providers IP or advantage washed away by the oil and gas industries lack of respect for anyones IP. This has been the traditional manner of operations in oil and gas for many years. And these days are gone.

Now what will happen is the service provider will have the exclusive rights to manage the process. However they will also have the competitive forces from other service providers managing other processes driving their efficiency and effectiveness. It will be the toolset of specialization and the division of labor that they will be able to rely on to make their service offerings more valuable to their producer clients. This they will do without the risks associated of losing their market share to someone who thinks they can do it cheaper. The competition will be between the service providers in terms of how they use specialization and the division of labor to increase their efficiency.

The ability to concentrate on the process and its efficiency will be the success in the long term. The team of people that will be employed at this service provider will be able to use their advanced educations, their ideas, the software development capabilities of People, Ideas & Objects, the most recent and advanced sciences and make themselves profitable and efficient for their producer clients.

Being a licensed service provider will require demonstration of significant skills in the marketplace. The experience, skills, knowledge, and understanding of the industry will be what we are looking for in a service provider. Their participation in the user community will be a mandatory requirement, particularly in the process that they are looking to manage. And to get started with that it is necessary to join our network (@piobiz on Twitter). Granted this development will take time. And time is what we have. We are not currently scheduled to go into developments until 2019 so there is plenty of time for people to organize themselves for these opportunities.

Its important to recall the revenue streams and value proposition that we are working under here. The user community is budgeted to receive $333 to $667 million in direct payments from People, Ideas & Objects for their contributions during developments. And the service providers will have the tens of billions of dollars that the producer firms are incurring in G&A diverted to them as annual revenues for their service offerings. And that is in consideration that in 2012 and 2013 the opportunity costs of not having the Preliminary Specification operational with the decentralized production model cost the oil and gas industry $170 billion. Software has such an impact on what we do these days. Its important we get a handle on these things by joining our network (@piobiz on Twitter).

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

The Importance of the #User in #Systems #Development

Within the network that we are building here in People, Ideas & Objects. It is our long term objective to provide an alternative means of organization to the oil and gas industry. We are not looking for anyone’s approval to do so. We are not waiting for the bureaucracy to fund our initiative and provide it with the momentum that they will control. We are not waiting for someone’s decision to proceed with what we know is the right thing to do. We are the critical point of success or failure in terms of the how the industry operates in the future. We are focused on providing the oil and gas producer with the most profitable means of oil and gas operations.

The industry as it stands today has proven that it can not change. The bureaucracy is in control and will not cede its position. It is self serving and uninterested in the needs of any other stakeholder groups. Individuals and society have issues and opportunities that the bureaucracies refuse to consider. It is time to remove them from their comfortable seat and throw the bums out. Our appeal is to the oil and gas investors who are as equally frustrated with the profitability of the industry. They can direct the bureaucracy to fund People, Ideas & Objects, our user community and the service providers.

It is the people in the user community and service providers who will run the industry in the future that are being organized around our network (@piobiz on Twitter). This is the critical next step in our development. And the determination of whether we will be successful or not. Significant talk about the user and their role in the development of software is discussed in systems today. However, once the budget is fixed and the dollars start flowing, the realization that the user communities development is slow, hard and difficult work. Not something that fits into the gantt chart. Therefore user community development continues to be spoken of and very rarely implemented in terms of its potential. Everyone glosses over the fact that no one did any user community development and the system is deployed to widespread user disappointment.

This has been the traditional means of software development and implementation in the industry. This is unacceptable to me. User community involvement is the difference between success and failure in systems development, in my opinion. It takes at least six months for an individual to get a handle on their position in the organization. Multiply that by the hundreds of different positions in the industry and we understand the unique and difficult characteristics of how systems are to support these users. To not have the users involved in the development to portray this knowledge to the developers, then what exactly are the developers doing.

And what we are doing in People, Ideas & Objects in terms of user community development is not your fathers user community developments. We are creating a permanent user community for these developments, a dynamic revolutionary movement away from the bureaucracy, and a sub-industry of service providers that is derivative of the user community. If we had the money necessary to complete our developments we would sit on it until the user community was fully developed to the point where we could begin developments with them in place. This is something that we can do without the financial resources. And what we choose to do now. Develop the user community, the long, hard and difficult work of finding the people who are like minded in their desire to provide the oil and gas producer with the most profitable means of oil and gas operations.

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

A New #BusinessModel For #Shale #Gas Production

We have seen in the last few weeks a number of spikes in the natural gas price due to the cold weather we have been having. It is winter and this is to be expected. We should thank all of those who prayed for a cold winter this past summer. Their efforts have certainly been successful. With the higher natural gas prices this eliminates the need for industry to adopt the Preliminary Specification. Or so the bureaucracy would like to think. However, it would be typical of the bureaucracy to manage the industry on the basis of the current conditions. It makes me wonder what happens to these people when it gets dark at night.

What we really need to focus on is the two hundred year supply of global natural gas that is available as a result of shale gas. And ask ourselves how are we going to produce it. Continually at a loss, or can we organize ourselves in a manner that would provide the industry with the opportunity to actually earn a profit? I can assure you what these price spikes in natural gas have done is dusted off some old drilling locations that will be spud here in the next quarter. By summer we should be back to $3.00 or less for the gas price. If shale gas is anything, its prolific.

Its comedic, predictable and destructive. The industry is operated on the two human emotions of fear and greed. Nothing in between. Its also inherent in the bureaucracies current business model. One in which requires them to always produce at capacity. This is in order that they can pay for the large overhead costs associated with managing the production, operation, administration and accounting organization. The organization is fixed in size, capabilities and capacity. It is custom built to support producer “A” at production levels of 100%. Not 80% or even 90%. To scale back production would trigger the demand to scale back the organization. And that can't be done. It is a unique one of a kind organization that has no redundancies. Everything is needed at 100% as it is at 80%. And if you make any cuts to the organization you'll damage your capabilities in the long run and hurt yourself in the long term. Its a catch 22 that no one in the industry wants to or will play. And rightfully so.

What is needed is a different way in which to organize the industry, a different business model and that is the Preliminary Specification. Contained within it is the decentralized production model that addresses the ability of the producer to shut-in production that does not meet the marginal costs. Therefore the only production that would be produced would be that which is profitable.

The decentralized production model does this by taking the prototypical producer and reducing their footprint to the C class executive, earth science and engineering resources, some land and legal, and some support staff. All the other resources that were traditionally employed by an oil and gas producer are reorganized into service providers who are focused on the process and have the entire industry as their client base. Then for example the service provider who manages a process to calculate royalties for the purposes of the Texas Railroad Commission will process their work for the client and bill the associated Joint Operating Committee for that work. And this will be the same for all of the processes that are managed by all of the service providers. What we are doing is moving the producers reliance on the firms administrative and accounting capabilities to the Joint Operating Committees reliance on the industries administrative and accounting capabilities. And in turn making the Joint Operating Committees administrative and accounting costs variable.

So when it comes time for the producer to shut-in the property because it is not producing a profit. All of the service providers will therefore not receive any work units associated with that Joint Operating Committee for that month. And as a result will not be processing any billing for any of the administrative or accounting work that is traditionally done for that Joint Operating Committee during the time that it is shut-in. And it will be understood that during times of commodity price volatility the service providers will have declines in their revenue streams as a result of some of the properties being shut-in.

What this does for the producers that own the property is substantial. It first of all keeps the reserves in the ground until the time in which they can be produced for a profit. Secondly they eliminate the loss on operations from the companies performance. The company will only have profitable producing properties and shut-in or “null” operations that don't produce a profit or a loss. And lastly the commodity marketplace will have less of the commodity in the market setting a floor on its pricing and keeping the steep declines we have seen in the past, in the past.

It is this business model that, may not be needed today, that might be needed tomorrow, that will provide a profitable return on all of the shale gas reserves, all of the time. Something that the bureaucracy should give some thought to, and how their mindless, self serving ways are currently destroying the industry. But then I am biased.

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

Killing Two Birds With One Stone

Yesterday we noted that we would be making contact with the investor community when the network for the user community was available to offer the investors with an alternative means of organization. Well that is sort of the case. I don't expect to be knocking on any doors or making any phone calls. The chance that you'll get through isn't worth the effort, second of all they probably won’t listen to you. The investors listen to what is going on down on the street. And that is how we will contact and communicate with them. By making this network available to them, it will also get their attention. And that is about the only way that we can motivate them to act in the manner that we want them to. And that is to tell their producer firms to issue the check for our developments.

If I was an oil and gas investor, frustrated with the situation in oil and gas. Poor earnings, the bureaucracy entrenched and not listening. Unable to assert any change even though I have cut them off from any future funding. That I as an investor have not realized any increase in the value of my investments as a result of the commodity price increases. Would keep my ear to the ground for anything and everything of interest in the domain of how to run an oil and gas firm better, faster, smarter or more profitably.

If I then found a community of like minded people committed to a vision of providing the oil and gas producer with the most profitable means of oil and gas operations. And a technical capability to do so. I would be more than interested in hearing more and seeing what they had.

This is the solution that we have to provide the marketplace. And in a way by developing the network and the user community we are killing two birds with one stone. We are building the capability to provide the industry with an alternative means of organization. And we are creating an awareness with the investor community of our presence and the value proposition that we provide. And that is how this community will be funded and proceed with its developments. From the ground up. Brick by brick, and stick by stick.

The investor is not being asked to front their own investment capital. We are asking them to direct the producer firms that they own and control to forward the money to us. And this is not taking money from the bureaucracy. We will know this money is being directed from the investors and the bureaucracy are not interested in making these payments. So when they try to put conditions and caveats on the money, we can tell them good luck with that. We don't have to listen to them, take the check and cash it. The revolution will be financed with money from the old world bureaucrats who will be powerless to effect any change in our progress or direction.

The investors joining us are what happens when you put networks of like minded people together. There are a lot of other things that happen as well. The point is that if you are committed to providing the oil and gas producer with the most profitable means of oil and gas operations. If you find the opportunities here at People, Ideas & Objects interesting. And think that these changes need to take place in the oil and gas industry. You need to join the network (@piobiz on Twitter) and watch what happens over the next few years. Granted these changes will take some time, but participation early is worthwhile as things will begin happening soon.

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

Who Are We Looking For

We have noted before that not everyone will become members of the user community. And certainly not everyone in the user community will become a service provider. However most of the user community will be employed at a service provider, or in the rare case a producer firm. What we are looking for in a user community participant is someone who can take the Preliminary Specification and build upon it the software and services they need to provide the oil and gas producers with the most profitable means of oil and gas operations. People, Ideas & Objects will provide the software development capabilities and together we can move the oil and gas industry forward into the 21st century.

Who are we looking for in terms of the people who should join our network (@piobiz on Twitter). Simple, those who work in the oil and gas, service or other related industries that see People, Ideas & Objects as an opportunity to further advance their careers. I’d like to think that the thing that we are providing the most is an opportunity. One that is in a new frontier of the oil and gas, service and related industries. Many people will shy away from the scale of the changes that we are making. Some will run toward them. In many ways this is a community of like minded people who are oriented to change and are interested in the opportunities that will be available as a result. And that is who we are looking for.

In terms of skills, experience, education and capabilities we will need people from all areas and all levels. It really comes down to the orientation towards change and opportunity. And in that sense I can point out that the user community in our current budget is allocated $333 to 667 million in user community fees for 1,000 to 2,000 man years of effort. These are budgeted at our standard rate of $185.00 U.S. per hour. There is also the service providers who will be derivative of the user community. Their revenue stream will be a reallocation of the G&A expenses of the producers. With the decentralized production model the G&A resources of the producers are moved to the service providers in the form of revenues. Therefore the service providers would be provided with a share of the $40 - 60 billion in current producer G&A expenses as revenues for their firms. The share would be determined on the percentage of the amount of the G&A that is offloaded from the producers to the service providers. I would estimate that share to be in the range of 75 to 85%.

So in terms of opportunities the user community can look to significant revenue streams as a result of their participation with People, Ideas & Objects. This is a business venture where there are significant upside opportunities for those that participate. We are not asking anything of the user community in terms of a volunteer basis. We are only asking that we organize ourselves within a network. A network of like minded people who are ready, willing and capable of forming the requisite user community and service providers necessary to provide the oil and gas industry with an alternative form of organization. One that uses the Preliminary Specification as its vision and Oracle Fusion Applications as its technological base. Then when we have these three components we can turn to the investor community and show them that they have alternatives, that we provide real value and only require their financial resources necessary to proceed. That is what is being asked by People, Ideas & Objects.

Development of the user community is the critical next step in our process. We can do this without the assistance of the bureaucracy. Indeed we need to do it without the assistance of the bureaucracy. They will contaminate our initiative if we accept their money or influence. This has to be a revolutionary type of change. One built from the ground up, based on the users needs and wants. And that is how it is going to be built.

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

One Implication of the Decentralized Production Model

We saw last week Canadian Natural Resources Ltd purchase the conventional assets of Devon Energy Ltd for $2.6 billion. I wonder if CNRL knows something about conventional gas assets that Devon doesn’t. Like what the implications are for implementing the decentralized production model in the oil and gas industry. By doing so, conventional assets become much more valuable as a result. Making this transaction favor CNRL in the long run.

What the decentralized production model does is turn the oil and gas industry into a price maker. This leaves their history as a price taker far behind. And it does it in a way that doesn't require them to collude or break the law in any way. All they have to do is focus on profitable production. If a property doesn’t produce a profit, shut it in and try to innovate ways to bring it back on production profitably.

People, Ideas & Objects decentralized production model works by stripping the innovative producer down to the C class executives, the earth science and engineering resources, land and legal and some support staff. Reallocating the remainder of the firms resources to service providers who are focused on a process or subprocess and are using the entire industry as their client base. The service providers are then able to provide their services based on a heightened level of specialization and division of labor. Providing their services, such as lease rental payments, production, revenue or royalty accounting etc. directly to the Joint Operating Committee that incurs the service. The fee for the administration and accounting services goes directly to the Joint Operating Committee that incurs the service.

As a result when the property is shut-in there are no activities that invoke the various processes for administrative or accounting service providers to incur any of their services. And hence none of their services are charged to the Joint Operating Committee. Therefore during times of shut-in production only the costs of capital are uncovered. There will be no operation, administration or accounting charges to the Joint Operating Committee. And the property will report a null operation. No profits but also no losses. The reserves will be held for a time when they can be produced profitably and the natural gas marketplace has a floor placed on the gas price.

The net result is that the pricing model of the industry is changed to higher values to enable the profitable production. The dynamic that exists in the marketplace today is that there is enough shale gas making up the production profile that it will be more than just the swing production. It will define what the level of profitable production will be, based on shale gas costs.

Therefore the conventional gas costs, which are substantially lower, will not factor in to what the pricing model requires. They will be profitable, highly profitable at all times. This assumes that the conventional gas properties can maintain reasonable production profiles and keep their operational costs low.

The decentralized production model is a business model for the innovative oil and gas producer. It is also a new economic model for the natural gas business. One that is based on the highest cost production. As it is only that high cost production that will come on to the market when a profitable price is received. And since shale is already approximately 40% of the North American production profile. Its costs will be the determining factor to its arrival on the marketplace.

Therefore CNRL’s acquisition of conventional assets at this time may be timely if the decentralized production model becomes the business model that operates within the industry. Maybe they know something that Devon and I don't know, a guy can always dream.

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