Budgetary Changes

One of the things that I did during the time that I was off was I took a sharp pencil to the proposed organizational makeup of People, Ideas & Objects. To see if there was any way that we could make the organization perform better in the future to meet the needs of the user community and the oil and gas industry. What a difference. The question that I asked myself is if we were such big believers in cloud computing why were we not implementing these technologies within our own organization at every turn. To date we have implemented them and have benefited greatly from them. One look at our budget however and you can see that we took the mindset that was very typical of the 20th century bureaucrat. We had allocated $200 million to build our own cloud computing facility to host the People, Ideas & Objects application when it was complete. The question was, was this the appropriate direction?

This questioning also involved our software development environment. Many services are springing up that provide the horsepower necessary to host a software development environment that would meet the needs of a development environment that People, Ideas & Objects requires. What we would need is an excessive amount of computing power for those times in which we would build elements of the application. Oracle is now one of these firms offering these software development hosting services. This removes a significant amount of capital from our development budget but it also reduces our organizational overhead in many ways. We don't have to concern ourselves with the minutiae of keeping servers up and running and backing up everything as many times as possible. These services will be provided to us by using Oracle services. Providing us with lower costs, easier administration but most importantly the speed of our development team will be enhanced and our focus sharpened.

Offering our application in a cloud computing configuration to the dynamic, innovative and profitable oil and gas producer was always the consideration. Under the decentralized production model, when we move the administrative and accounting resources to the service providers, why would we leave the IT staff at the oil and gas producer? We wouldn’t. The point is instead of providing that service ourselves by buying Oracle hardware and running it ourselves, we will be purchasing Oracle cloud computing services to run our application on their servers and deliver our applications in that manner. The oil and gas producers won't know the difference. Other than the fact that Oracle will have sizably larger facilities and therefore much higher performance than what we would have been able to provide. We will save the $200 million in capital that we allocated to build the facility. Reduce our overhead and organizational complexity by the costs of maintaining that facility. And most importantly again pick up a factor of speed in which we are able to deliver our product to the marketplace, and sharpen our focus. We are not currently hardware experts. We were going to have to become hardware experts. Now we have Oracle, who are hardware experts, now we don't have to be hardware experts. Speed to deliver the application in terms of time of this type is an important point. We may have been able to deliver the world’s best application and failed to deliver it due to our inability to get the hardware right. This is a critical change in our makeup, our strategy, organization and time to deliver. It also reduces substantially our technical risk.

And look at that change in our budget. Some might think that reduces our budget by $400 million! And some would be wrong. I have reallocated these funds across the Oracle budget categories to enhance the work that they will be doing for us. This is in order to recognize the cost of the rental of the computer time for the cloud computing services of the development environment and application delivery. A $100 million boost to the Oracle Developers category to shore up the number of people we are able to access from the mother ship. And an overall loosening of the budget constraints of the other categories. What we are approaching in the oil and gas industry is unique and necessary. Our success is critical to the success of the profitable oil and gas producer. Our value proposition dictates that this money won't be missed. Therefore we are deploying it to the areas that will increase the probability of our success.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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 Product Owner in our Leadership Team Part III

We have been discussing the Product Owner position in detail this past week. This position is a key part of our leadership team that we are currently recruiting. If you have an interest in the Product Owner position for one of our modules or technologies please contact me below. In the last post we discussed the Leader and Team Player attributes of the position. Today we continue with several other attributes of the Product Owner. Quotations are from the book “Agile Product Management with Scrum: Creating Products that Customers Love” by Roman Pichler.

People, Ideas & Objects state that we are filling a “gap” between the oil and gas, and Information Technology industries. Creating a sub-industry where nothing exists today. This “gap” exists as the technologies have become too specialized and as a result technology firms are unable to fully understand the needs of its customers, the oil and gas firms. What we are doing in filling this “gap” is providing a means of communication between the oil and gas and Information Technology industries so that they operate more effectively. In the book Roman Pichler states that the Product Owner is an effective communicator and negotiator that operates to “communicate with and aligns different parties, including customers, users, development and engineering, marketing, sales, service, operations, and management. The Product Owner is the voice of the customer, communicating customer needs and requirements and bridging the gap between ‘the suits’ and ‘the techies.’” It is this role as communicator and negotiator that we are placing so much emphasis on the Product Owner role within our leadership team of the user community.

The next two attributes that an effective Product Owner requires are to be empowered and committed. The ability to present new projects for development, and the ability to cancel poorly performing ones are necessary for the continuous improvement of the modules. The Product Owner also needs to have budgetary control of the module they are responsible for. These attributes impute a senior level of responsibility, especially considering the size of the user community budget for each module. Therefore an executive level of commitment is expected in return and as the book states “A successful Product Owner is confident, enthusiastic, energetic, and trustworthy.”

The physical location of the Product Owners matters. Our development team will be based in Houston. Therefore the Product Owners will be based in Houston. The need to have the Product Owners interact with the development team for their individual modules on a regular basis is a necessity. And this requirement would mean a minimum of two days per week. The offices of the Product Owners and user community resources will be located with the development team, therefore this will not be an issue.

Another key role in the development team is what is called the ScrumMaster. “The ScrumMaster supports the Product Owner and the development team, protects the team and the process, and intervenes appropriately when required to ensure that the pace of work is sustainable, that the team stays healthy and motivated, and that no technical debt is incurred.” And “The Product Owner is primarily responsible for the “what” -- creating the right product. The ScrumMaster is primarily responsible for the “how” -- using Scrum the right way. Only when the right product is created with the right process is enduring success achieved.”

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Not Your Normal Business Operation

The number of times that I've thought that this project should be funded and proceed is beyond my capacity to count. What we have in our value proposition is evidence that the bureaucracy will never act, ever. It is reasonable to assume at this stage that producers are paying capital derived in some form in order to produce oil and gas. That is to say the industry is generating negative cash flows. Their argument of course is that the commodity prices could be just as far on the beneficial side of industry. And of course their correct, when you sit and wait for events to happen to you there are good and bad things that can happen. That however doesn’t mitigate the losses that they are incurring currently. I think what they, the bureaucrats, have to look at is how seriously they have put their firms and the industry in North America in jeopardy of significant failure. And unnecessarily so.

What we propose in the Preliminary Specification, the user community and our service providers is a radically different way in which to operate the industry. One that has a value proposition that is approximately $350 billion greater than the bureaucrats for 2015. The cost of doing this is incidental in terms of the value that is generated. However the cost is still $4 billion and we are a start up. The chances of that happening on a sunny day are approximately one in one zillion years. The thing is its not very sunny in oil and gas and the way that the industry is headed seems to be one of those times when action needs to be taken.

Now I could say that I could do this for $5 and some of the bureaucrats would find that attractive because they would know that it would be impossible. And hence they get to stay in power a little longer and we would be destined to fail. Or I can choose to be open about what the costs are and expect that the situation be evaluated on the cold hard facts of the situation. I’m not the one who is bringing the problem to the investors, we are the ones that are bringing the solution.

We are most certainly thankful for the situation in the commodity marketplace today. It makes our job much easier. And this situation may come and go over the next few years as producers muddle along. The appearance of shale gas on the market is the guarantee that we will have pricing issues for the next 40 years if the bureaucrats are kept in place. The nature of the reserves bring a new dynamic and characteristic that the bureaucrats have proven themselves to be unable to deal with. Without the decentralized production model as provided by People, Ideas & Objects et al there is no alternative to the price maker strategy. And we are protected by copyright.

To make the decision to proceed with People, Ideas & Objects et al would be something unique, one of a kind decision and dependent on the situation. Its not subject to the normal business rules of what a business does and how it generates its business. We are adversaries of the people we want to replace, our current customers! However, if I were failing in such a wholesale manner as the bureaucracy is today, I would hope that there was someone holding me to account. And in that sense the market seems to be working. However, on a much larger scale than what we have seen in the last hundred years.

Information Technology is providing us with opportunities to conduct our business in different ways. The thing that is stopping us from making these changes is the way that we do things today. The problem is that its not only getting in the way its also dragging us down and we need to break away from it as quickly as we can. People, Ideas & Objects seems radical but its also what we need right now.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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 Product Owner in our Leadership Team Part II

Our second installment of the Product Owner positions series begins to look at the desirable characteristics of the individuals in these roles. I will be quoting heavily from the book “Agile Product Management with Scrum: Creating Products that Customers Love” by Roman Pichler. As Product Owners I want them to be the individuals that are responsible for the success of the module that they work with. That their user community is how they achieve that success and they hold our development team to be accountable to the needs of the user community. In order to achieve the oil and gas industry wide software development capability that I think is necessary. One that identifies and overcomes the industries issues and implements its opportunities on a real time basis. I think this is what will be required on a minimum basis.

I have always classified the world into two types of people. Thinkers and doers. I'm a thinker and thankfully there are few of us. The rest are doers. And the book by Roman Pichler says that the Product Owner needs to be a visionary and a doer. I don't think I've personally met anyone with those qualifications but we'll take his word. He defines the Product Owner as an “entrepreneur, the product owner facilitates creativity; encourages innovation; and is comfortable with change, ambiguity, debate, conflict, playfulness, experimentation, and informed risk taking.” All attributes that everyone would encourage.

The next attributes that are highlighted are “Leader and Team Player” and the author has highlighted a phenomenal quotation that I've quoted below.

The Entrepreneurial Team 

We sometimes focus on an individual as the amazing entrepreneur or the outstanding leader -- thinking of Bill Gates, Steve Jobs, and other celebrity leaders. In reality, very few innovations are a stroke of genius attained by one person. And even if the product owner is Mrs. or Mr. Innovation, the individual still needs a team to bring the product to life. No entrepreneurial genius can make all the right decisions. In fact, neuroscientific research reveals that even the best qualified person in the right job at the right place can make wrong decisions -- if that person decides alone. Finkelstein and his coauthors attribute this to the way human cognition works (2009). They recommend using at least one other person as a sounding board. A team provides plenty of sparring partners to test ideas and arrive at the right decision. Ed Catmull, president of Pixar (2008, 68), says this: 

… if you give a mediocre idea to a great team, they will either fix it or throw it away and come up with something that works. 

The wisdom of many is preferable to the brilliance of one.

Which says all there really needs to be said about what we are trying to achieve here at People, Ideas & Objects. The user community is the key to the success of the oil and gas industry in terms of its abilities and capabilities. Software defines and supports organizations. The user community defines the software. Therefore a great team positioned in the user community would be the objective that we should all be pursuing to ensure a successful oil and gas industry. And the Product Owner has an interesting view of these events.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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 Choice for the Oil and Gas Investor

Commodity prices are not behaving as the bureaucracy would want or expect them to. It would seem to me at this stage in the oil and gas industries development that we would have figured out that if we were going to produce oil and gas that it would at least be profitable. It seems rather wasteful to be taking the commodity that is irretrievably lost once its used and dispose of it with a handful of financial losses with it. The value that the oil and gas industry provides other industries and consumers doesn’t seem to earn the respect of the bureaucrats who just produce oil and gas no matter the consequences. I'm pretty sure we'll look back on this era as a time when we'll regret our waste and the havoc that has been caused in the financial markets. But please note the important criteria that none of the bureaucrats jobs have been lost in this effort, nor have any pension funds been un-vested with any of their pensions, if un-vested is a term. And if things do get bad for them they do have other choices in other industries.

Why should the industry be focused on profits? The simple answer is that we have a lot of work to do. We can't rely on the capital markets forever. This is a mature business, which would indicate that it provides for its investors and has some control over its day to day. Neither can be stated to be the case in oil and gas today. The investors are unhappy, and only the bureaucrats are happy that they have construction for the cabin’s expansion underway this winter. Oil and gas is sold at whatever price is available today. And don't ask them about the cost of what that property is. That only makes the bureaucrats blush. All this talk that it takes $50 oil for shale to make money is what the analysts are determining. Not the producers.

People, Ideas & Objects offers the oil and gas investors a fundamentally different business model that we call the decentralized production model. It is part of our Preliminary Specification. It provides the dynamic, innovative and profitable oil and gas producer with the capability to employ the “price maker” strategy for their oil and gas production. Simply if the property can be produced at a profit then it is placed on production. If not, it is shut-in and worked on by the geologists and engineers to determine how to make it produce profitably at the commodity prices in the marketplace. And when the Preliminary Specification determines the profits it will be the actual profits of the property. The revenue less royalties less operating costs less accounting and administration costs that are incurred by the property. The actual costs, not estimates or accruals, actual costs.

The advantages of doing this are simple however significant. Based on the decentralized production model we have calculated our value proposition in the trillions of dollars. When a property is shut-in it keeps the reserves that would otherwise incur a financial loss and be wasted. And saves them for a time when they can be produced profitably. The producer will increase their profits during the financial period as a result of shutting-in unprofitable production. Even though their production profile will be lower their profits will be higher as they will not be carrying any unprofitable properties. And the best part is that the commodity markets have less oil or gas in the marketplace placing upward pressure on the commodities prices. Moving the commodity markets to the marginal costs. The key to our value propositions creation of value. As evidence by today’s market prices, and actions by the bureaucracy which shows they can’t, won’t, don’t, will not do this, ever. Bureaucracies do not change, ever. People, Ideas & Objects is offering a choice as the only alternative to this insanity in the marketplace.

If this seems logical and simple to you go ask a bureaucrat why they don't implement it. Watch them explode. The net effect of implementing the Preliminary Specification is that the bureaucrats are put out to pasture permanently. They're not needed and will be rendered useless in no short order. Much like the record store manager was by Apple iTunes. This is why the bureaucrats are being careful what they say. Making sure they don't get caught in a trap they can’t get themselves out of. Like saying they can cut back on production. Which of course they can't because they're just not built that way.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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 Product Owner in our Leadership Team Part I

Something people have to keep in mind about People, Ideas & Objects is that we are currently in development. By focusing on developing the user community, this is a key part of the software development and the software development capability that we will be providing to the industry. It may seem to the casual reader that things are static at this point, however, as this year develops we will see that this development in the user community will bring about many of the desired outcomes that we anticipate. Stay tuned, I promise this will be an interesting year.

One of the things that we are experiencing is that with the Internet and cloud computing our progress is able to move at the speed at which change is happening. We are not being constrained by the traditional resources of a software developer. Everything is virtual at this point and as a result is able to accommodate the needs of the people we are appealing to and the oil and gas industry. We have a lightweight footprint that is unconstrained by the physical world.

One of our objectives is to recruit the user communities leadership team and have them represent the user community to the oil and gas investors. This was to secure the funding necessary to develop the Preliminary Specification and have the user community and service providers developed. I recently changed my mind on this point. We will continue to recruit these positions, however, we are not going to expose any of these individuals to the antics of the bureaucracies vindictive ways. There is no reason that these people need to take on any career risk by being named here. Therefore from the point of view of what will be expressed to the investors, what you currently see, is what you get.

I am therefore going to begin to detail the specific positions that we are looking to fill in the leadership team and what those positions will be doing. The first position I want to discuss is the Product Owner positions of the user community. We expect that there may be upwards of 20 out of the total of 30 leadership team positions being Product Owners. Starting today I want to begin a discussion of that role and what they provide to the user community, the development team and to the software quality.

The quotations that I will be making are from the book, “Agile Product Management with Scrum: Creating Products that Customers Love” by Roman Pichler. What he suggests as the reason that the Product Owner role exists is to solve the issue of having too many cooks spoiling the soup. Having a single individual leading the development of the product from beginning to end provides this solution. Making one person responsible for ensuring its success and ensuring that everyone involved has a shared vision of the product is the Product Owner role in the development. In the broad scope and scale of the Preliminary Specification I am more or less its Product Owner. But each Product Owner in the leadership team will be either responsible for one module of the Preliminary Specification or some element of the technology. For example the data model, the user interface etc. So for example we will have a very senior individual who will be the Product Owner for the Partnership Accounting Module, and they will have the authority and responsibility for that module.

In the book the Product Owner role is defined as,

The Product Owner is the one and only person responsible for the managing the Product Backlog and ensuring the value of the work the team performs. This person maintains the Product Backlog and ensures that it is visible to everyone. 

If we think for a minute we may have 250 to 300 users in the Partnership Accounting module. This being a simple mathematical representation of the total of 3,000 people in the user population. There may be a need for far more people, especially considering the Material Balance Report which is a critical part of the module. The scope of the module is very broad, however it is consistent in terms of the type of work that is being done and therefore can be handled by one leader or Product Owner. Ensuring that the user community has considered the differences present in the People, Ideas & Objects Preliminary Specification. Having adopted those differences in their input and their analysis of what is required in their systems. It is then the responsibility of the Product Owner to ensure that the development team delivers that product to the user community.

The background of the Product Owners for People, Ideas & Objects purposes is from the business domain. Although a key member of the development team, their understanding of the business domain is what is required. Particularly with respect to the manner in which their understanding of these critical oil and gas processes are handled. It can take years, and sometimes decades before people are fully aware of the total scope of the processes under management in modules such as the Partnership Accounting module. A technological focus is not what we need to ensure product quality or to represent the user community. There will be significant developer and user collaborations and interactions throughout the course of product design and development. And the developers will have time to understand the nuances of the particular parts of the module from individual users, however there is the bigger picture that needs to be captured as well. And from a business perspective, that needs to be provided from the Product Owner.

We'll be discussing the Product Owner position in more detail in the next few days. If you have an interest in these positions, or any of our leadership teams positions please contact me.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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 Quick Review of Our Plan

I made the statement last week that I would not work with the bureaucracy in the development of this software, its user community or the service providers. Seeing how they had chosen to concern themselves only with their interests when they had the opportunity to work with us for the past decade. That we were providing them with the opportunity to expand the oil and gas industries output through specialization and the division of labor and provide higher profitability through the “price maker” strategy that we enable in the decentralized production model. Their choice was to take what we had developed and attempt to eliminate it without any compensation towards us. Now that they have caused the oil and gas producers to lose money at a remarkable rate we don't need them and we certainly don't want to emulate their way of doing business. So why exactly do we want to work with them?

Our budget. The producers are the source of the financial resources that are necessary to make this community operate. One thing I can assure you is that the feeling of not working together is mutually held by the bureaucrats. And if the bureaucracy was concerned about the loses that the producers were incurring, don’t you think they would have begun the search for solutions to solve the problem? Maybe even five years ago when the natural gas prices declined. The only reason that they have the ability to stay in power in terms of the administration of the oil and gas industry is that there is no alternative for the oil and gas investor to turn too. And that is point that we have to make in this next year. That the failure of the bureaucracy will continue until an alternative is put in place. And we are that alternative. All that is necessary for this community to begin the transition is for our budget to be funded.

In order to do that we need to be prepared to provide that solution to the marketplace. We have detailed a vision that is complete within the Preliminary Specification. A method of how the oil and gas producer and their assets will be managed through the user community and service providers. We began January 1, 2014 in the development of the user community. This is the hard, expensive and time consuming work that most ERP systems skip. We have defined a leadership team for the user community and began recruiting for the 30 or so positions that make up that team.

Our plan is simple. Present our leadership team, the Preliminary Specification and our method of management to the investors in the oil and gas industry and have them fund these. I don't expect the investors to fund us directly from their pockets. I expect them to direct the oil and gas producers to do so.

As unreasonable and difficult as this appears in terms of it occurring. It is the best hope that we have of ever being funded. The bureaucrats will never fund a competing solution to their franchise. It is the equivalent of suicide to them. They intend to stay in power as long as possible and will not concede anything to anyone. For five years they have allowed significant losses to occur in the natural gas business without a word of discussion about what to do about it. Do you hear any discussion today about what they will be doing to “fix” the solution in terms of the losses that oil and gas companies are incurring today? And you won’t, ever.

Offering an alternative to the status quo is the best that we can do at this time. It is also what is being done in most industries by Information Technology. Some industries are far ahead in terms of the changes that are realized through technology. Some are far behind. Oil and gas needs to change now because of the difficulties that the bureaucracy are proving incapable of and too self interested to deal with.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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.

No Posting Today

In recognition of the U.S. Martin Luther King Jr. day.

A Brand New Sandbox

Anyone who reads the Preliminary Specification can see that it is fundamentally different from anything that is available in the marketplace today. This difference can be attributable to many things which include use of the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. When we make this change there is nothing within the oil and gas producer or the oil and gas industry that doesn't change from the point of view of what exists today. It is a mindset change where we stop working against the culture of the industry, the Joint Operating Committee, and adopt the natural flows of its legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. In order to complete this mindset change we need to make some changes to the way that both producers and the industry are structured. We discussed some of these point here on Monday and Wednesday of this week when we commenced the second year of development of our user community.

Now if we take the discussion that we have had in those days regarding the changes of the user community participant and their roles in the user community and as a service provider. (This discussion included the user community participant as the service provider founder. The size of the both the user community and service providers in terms of people and revenues.) Both of these roles are unique to the industry and to what a prototypical producer employs today. If we build systems for today’s bureaucrats we will just be endorsing their ways of losing money. Don't we want to break the industry of that habit? Producers today have thousands of people supported by systems and procedures that can’t be changed by anyone. They're on autopilot and the plane is in a steep dive. Nothing can be done. Why would we want to model systems to emulate that situation? We need to come to the table with a new vision of how the world will work. A new business model for the 21st century. One that is profitable and provides for societies needs. The Preliminary Specification.

Our user community participants need to therefore determine what it is that they need in this new world where we will provide oil and gas producers with the most profitable means of oil and gas operations. Who else is going to be able to make the changes necessary to the business models of the industry when the time comes. As we see with the bureaucrats, no one has control of the plane. We're all just passengers on a mindless adventure. That is until it ends tragically. In the future, the user community participant needs to be mindful of the dangers ahead and implement the solutions needed for the industry and the producers to avoid any pitfalls that might occur in our business models. We are providing the industry, and the producers, with the software, the software development capability, the user community and the service providers in order to ensure that they have the overall capability to avoid the death of their industry. The future may hold much more in terms of difficulties than we think. To lock ourselves into one software configuration is the lesson that we should be learning from the bureaucracies inability to change from the current status quo.

The other thing we need to be learning is this is a fresh approach. Don't bring your legacy thinking to this project and have it weigh down our approach. This is a brand new sandbox delivered last night while we were sleeping. It’s big, its wide and its deep. Plenty of room for everyone and their toys. So join me and lets have some fun.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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. 

Losses are Completely Unncessary

Those unnecessary losses of course being those that have been incurred in the past five years in the natural gas side of the business. And the losses that we anticipate will be incurred on a go forward basis on both the oil and gas sides of the business. What everyone knows inherently about the oil and gas business is that the commodities are highly inelastic in terms of the supply and demand curve. I know we all learned this economic principle in university so I won't go into too much detail. But the long and short of it is. Removing a small portion of the current oil or gas production from the marketplace, in an inelastic supply and demand situation, leads to large impacts in the prices of oil and gas. The reverse, or what we are experiencing today, where a small volume of excess production hits the market has significant downward pressure on the prices. Its good to see we all agree on these fundamental economic principles. Excuse my condescending tone, however there is a purpose.

As we indicated the other day, the bureaucrats who have been educated in the economic principles of specialization and the division of labor, have refused to deal with the issues of low natural gas prices for the past five years. This is with knowledge of the Preliminary Specification and decentralized production models availability in the marketplace. We know they know about our product because of their antics regarding our Intellectual Property. We also know that they know the principles of inelasticity. So why has nothing been done? I'm at a loss to understand how the custodians of an industry could have brought it to the brink of total destruction knowing what we know they knew.

What is currently being discussed in the industry regarding low oil and gas prices? I don't hear anything. Why is that? The bureaucrats have nothing to lose therefore what is there specifically to discuss? If everything fell apart tomorrow they would be faced with the fact that the cottages gardening could be expanded substantially to take up most of their time and energy. What exactly is the issue? Certainly there will be difficulty keeping occupied in the winter but that is why they moved the cottage to Costa Rica! If there is a need to keep working there are other industries outside of oil and gas. Clearly the perception of an issue being at hand is that which is held by a small group of concerned, self interested loonies.

And I have been called worse by our friends the bureaucrats for many years. There strategy of waiting this out and having the oil and gas prices eventually recover is valid. The trouble is that with natural gas reserves being as they are today, they will never recover without the ability to implement some form of production discipline in the marketplace. This is because of the new element of shale reserves in the marketplace. Show me a producer who doesn't have a trillion cubic feet of gas and I'll show you a start up. And as obvious as that is on the natural gas side of the business, it is the complete opposite on the oil side. Natural gas reserves from shale could last 50 to 60 years. On oil they may last 10 at current production volumes. And at the rate they are developing them they could have them exhausted far earlier. Under either scenario, its the prolific nature of the flush production that dictates the price destroying characteristics in the marketplace. Its not that these producers are playing with matches, they’re playing with dynamite. And they need a method of production discipline to ensure that they don't destroy the marketplace every time they drill a well. The decentralized production model provides production discipline and the “price maker” strategy in the Preliminary Specification but that requires the bureaucrats will need to first work to build the software and then be forced into retirement by the software’s existence.

I’d rather be a loon than someone who consistently detonates their business interests. And so unnecessarily. I’d like to think there is some intelligence in the oil and gas business. An expectation that provides proof once again that I am a loonie.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and 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.