An Operating System for the Industry

Maybe one of the best ways to describe the Preliminary Specification, the user community and service providers is that it is an operating system for the industry. One in which the producer, no matter their size, can manage their interests in any and all oil and gas properties. An operating system that provides the producer with the opportunity to implement whichever strategy they believe to be the most effective. Based on the most advanced earth science and engineering capabilities that are available from the partnership making up the Joint Operating Committee. How this will work is through the interactions, transactions and collaborations between the people and the electronic devices they use. Everyone knows that we can have these types of applications. Those that are readily available for consumers that use these devices. Why are they not available for the oil and gas industry? Its simple, we need to organize ourselves, our data and processes to enable these new types of devices and applications. We need to build the operating system for the industry in order for this vision to take hold.

Certainly everyone can access their files and work from anywhere there is an Internet connection today. We've all been able to do this for years. That is not where we need to go, nor is it what I want to discuss today. What we need to do is to begin to provide the oil and gas producers with the ability and capabilities to conduct their business securely, anytime, anywhere and on any device. A means in which producers would be able to work together, indirectly, to better manage their interests. Based on information and data that is accurate and reliable. And to have the capability to make the business decisions, at the Joint Operating Committee level, that need to be made.

It is this new way of operation brought about by the Preliminary Specification, the user community and service providers that the producers will be able to attain the most profitable means of oil and gas operations. Today everyone knows what the problem is. Overproduction. Everyone knows the solution. Shut-in the unprofitable properties. Yet none of the producers are able to do so due to the inability to know which properties are a financial drain, and they can not be the first in the marketplace to voluntarily reduce their production profile. If, with the Preliminary Specification, all the producers know that their production is profitable. And any that isn’t profitable has been shut-in. Then they know their profits will be the highest they can attain as a result. They will also know that all producers will operate in the same fashion as that is the most profitable means of oil and gas operations. There is no collusion over prices. There is only the self interest of the producers at the Joint Operating Committee making the decision to produce or not in their own best interests.

Making clear business decisions based on accurate and reliable information and data is not the method in which the oil and gas industry operates today! Overhead and capital are ignored as costs so they don't have to account for them. Bureaucrats let these costs accumulate on the balance sheet for eternity. That way they can justify producing everything they own no matter how much it might really cost. Its the modern version of the shell game.

With the Preliminary Specification our user community and service providers in place the industry would operate in a more rational manner. We use the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. In doing so we align the compliance and governance frameworks of the hierarchy with the legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks of the Joint Operating Committee. This alignment is the beginning of the Preliminary Specification. From there we are able to take the issues and opportunities of the industry and deal with them effectively. And not just in the administrative and accounting domains, but also in the operational domain.

Time will tell if the commodity prices are in the early stages of a recovery. I’m on the record stating this is not the case as the bureaucrats can’t change their means of operations. They will continue to overproduce. I am also on record as stating that the current accounting is bogus. That the ability and capability of these allegedly profitable producers to fund their negative margins and unprofitable operations is limited. Particularly in an environment where the investors are not investing, and now the bond holders are not investing. The only real place for a producer to get their hands on some cash is to produce! And around we go again. It is the definition of insanity.

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

Status Update

As difficult as our task appears to be, we are making progress in terms of spreading our message throughout the North American oil and gas industry. People can see the Preliminary Specification and understand its logic. Most importantly they can see how they will be able to fit into the revised oil and gas industry. What is difficult for many people to appreciate is the scope and scale of change that we have to exercise to enable the Preliminary Specification, the user community and service providers. It is my opinion that the bureaucracy is a method of organization that has ceased to build value in all industries. It is why we are no longer growing. Just as the former Soviet Union found that their system of organization could no longer function, the bureaucrats need to understand that their days are numbered in this the 21st century.

It is our focus on developing the user community for the next 18 months. At which time we should be able to shift into the development of the Preliminary Specification. This assumes that we are successful in convincing “someone” to fund our budget and proceed with these developments. It may appear that we are a significant distance from having our budget funded, however, watch and learn. The real priority right now is the development of the user community as this enables us to lose nothing in terms of time. If we had our budget now, we would be doing the same things, developing the user community. It is the critical qualitative difference in our software offering and will be the method in which the oil and gas industry solves its issues.

Oil and natural gas prices have shown some strength in the past month. The bureaucrats are thinking all is well and they dodged the bullet, so to speak. Others outside of the industry may be thinking the same thing. Why then would it be necessary to conduct such radical surgery as implementing the Preliminary Specification if everything is on the road to renewal. To me commodity prices are displaying characteristics of a classic dead cat bounce. Last week the EIA announced that natural gas storage levels are 65% higher than they were last year. One look at the production profile of the United States and it is clear that the storage capacity for natural gas will be reached this summer / fall injection period. Taking 100 to 110 bcf per week of demand out of the market, suddenly, will cause the natural gas prices to take a further step downward on a semi-permanent basis. And as for oil, there is no good news anywhere that can support $60.00 prices.

What needs to happen is a method in which producers can allocate production based on profitability. Only the Preliminary Specification provides our decentralized production model. The bureaucrats are conflicted against themselves by having to produce everything they can to offset their overheads. To determine which properties are profitable is impossible for each and every producer on each and every property. They use estimates of what the overhead at the property is and these are based on best guesses from the 1960’s. The actual overhead of the producer is capitalized into the ballooning asset base. Therefore to determine the actual cost of a property, forget it. The only number they can provide is the gross margin. And as long as the gross margin is positive then they will produce. However, don't be surprised if, in the future, the margins do turn negative.

Hope springs eternal. So the saying goes. The alternative is that the bureaucrats face the reality that they have failed and begin dealing with the consequences. Not something that anyone wants to see. So we assume that things will be alright when the commodity prices rise to these levels. We need to extract our emotions from the work that we have ahead of us. And focus on the job that we need to do. A very difficult and hard type of work in building the Preliminary Specification, the user community and service providers. Alternatively we will see the continued failure of the industry leading to the breakdown of its capabilities and capacities. Who knows, we might have to go there before anything happens with People, Ideas & Objects budget being funded. And we're prepared for that too.

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

Taking the day off in recognition of the Canadian Victoria Day Holiday.

No Posting Today

Making it an extra long weekend. 

Oil and Gas Pricing

With the Preliminary Specification, our user community and the service provider's operational in the oil and gas industry. Pricing of the commodities of oil and gas will be different than what is currently occurring in today’s marketplace. People, Ideas & Objects provide oil and gas producers with the most profitable means of oil and gas operations. On the issue of pricing we ensure this profitability through two key differences in the way we operate the industry. The first is we enable the producer to use the “price maker” strategy of our decentralized production model. Secondly we include all of the costs of production in the determination of the commodity prices. Capital, royalties, operating and overhead. Not just the royalties and operating costs to calculate the margins as is done today. It is these differences that enable us to make the claim that we provide over $45 trillion (thats correct with a T) in incremental value with our value proposition over the next 25 years. This post will detail how we earn that difference.

There are a number of fundamental changes that occur when the Preliminary Specification is implemented into the industry. The producer firm is organized to focus on their competitive advantages of their earth science and engineering capabilities, and their land and asset base. We do this by stripping out the administrative and accounting resources of the producer firm and establishing service providers who are focused on a single process and use the entire industry as their client base. The service providers are in turn able to focus on their competitive advantages of specialization, the division of labor, automation and making the computers work for us, as opposed to the other way around. This reorganization of the industry opens up many opportunities and enhancements to the way that the producer operates through the Preliminary Specification. The decentralized production model is one area where our value proposition is affected greatly.

With this industry configuration in place, it provides the ability for each property to determine the actual cost of operations. The costs will include the capital, royalty, operations and overhead that is incurred in that property. Overheads are incurred by the Joint Operating Committee, not the producer firm. The overhead is incurred by the service providers who will conduct their services when they receive an activity from the property that starts their work, and subsequently issues their billing. For example, when there is production, the revenue accounting service provider will conduct their process in accordance with the needs of the producer, and then issue their billing to the Joint Operating Committee for revenue accounting services for that property. If the property is shut-in, then none of the service providers are receiving any information from the “task and transfer” network and no work is conducted by any of the service providers. Creating a null operation; no operating costs, royalties or overhead are incurred during times when a property is shut-in. Only the cost of capital is uncovered. This increases the overall profit of the producer as it is assumed that the only reason the property was shut-in was that it was not producing a profit.

If each producer produced only profitable properties in this manner then they would only have properties that were profitable. ;) Their shut-in inventory would provide them with ample opportunities to innovate in an attempt to bring those properties back into production. On an industry wide basis the marginal cost of production would be determined. And the commodities prices would find their equilibrium. In the case of natural gas this would be at least double and maybe triple the price of natural gas in North America. On oil it would have a significant impact as well. This would not only make the producer profitable in the current environment, it would reduce their capital costs of the property by reducing the amount of losses that have to be recovered tomorrow on properties that are losing money today. We have valued this price making capability from our decentralized production model at $5.7 trillion over the next 25 years in our value proposition.

The other critical aspect of our Preliminary Specification that provides the dynamic, innovative and profitable oil and gas producer with our significant value proposition is the manner in which we calculate the costs of the property. It is our assertion that the producers are being misguided by the SEC and accounting firms in their use of full cost and successful efforts. They are essentially bloating the balance sheets of all producers by implementing these accounting policies. Even with these poor prices the producers are able to report profits on operations because they include none of the costs of capital in their calculations. In determining prices we will use a more appropriate means to recognize the cost of capital in the pricing mechanisms used by producers. Then they will be able to capture these values in their price making strategies and recover their costs of capital for their investors.

Just because the industry is reporting accounting profits and stock traders are claiming to have made money, does not mean that oil and gas is a healthy industry. There is a difference between the two of these domains. The business of making money in oil and gas has been fundamentally flawed since the accountants implemented their accounting voodoo many years ago. Never recognizing the full cost of capital in a business is foolish and the investors in the business itself have been made to pay as a result. Until we include a capital allocation, on a reasonable basis, in determining the commodities pricing, this business will not be able to provide an investor with a return on their investment. It is stated that the industry requires $40 trillion in investment in the next 20 years. Where is this money coming from when all you have are accounting profits. With producers sitting on big, fat, bloated balance sheets holding onto capital costs that never see the income statement. Sure I’ll volunteer my capital, let me put my money down, where do I sign up. With the Preliminary Specifications decentralized production model. The capital costs are considered and included in determining the commodity prices. Therefore the capital is being returned to the investors in the long term. The other $40 trillion in our value proposition. Today the bureaucrats say the investments are a sunk cost, and they don't consider sunk costs in their decisions. I suggest we don't consider bureaucrats in ours.

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

Our Solution Part XVI

“Plurality should not be assumed without necessity.” Occam's Razor which simply states that the simple solution is the right one. Those reading the Preliminary Specification may find the 175,000 words anything but a simple solution. However those with a sizable amount of oil and gas experience know that using the Joint Operating Committee in the manner that we are provides a very simple and elegant solution. It is the way that the industry is structured. Around partnerships that mitigate risk and enable the pooling of assets. The Joint Operating Committee is the organization that the industry operates under. Yet none of the ERP systems that exist today recognize this. They define what we call the corporate model. How does the corporation manage their compliance and governance requirements. SAP doesn't even know that partners exist! They work around this “anomaly” in their software. What is needed is an industry specific development of the software to meet the unique needs of the oil and gas producer, the Joint Operating Committee and the industry.

The need to have the software developed for these needs is only the beginning. The changes that occur within the business. The developments of concepts that will occur in a dynamic, innovative and profitable oil and gas producer need to be accommodated as well. That is why the People, Ideas & Objects software development capability is a permanent addition to the toolkit of the industry. Included within that toolkit is a user community and a number of service providers that not only define the software, but also run the industry administrative and accounting operations. It is under this basis that we are able to bring the Joint Operating Committee, the natural form of organization to the industry, and our business models to the producer. These businesses enable the dynamic, innovative and profitable producer to reap the benefits of our significant multi-trillion dollar value proposition. One that provides the producer with price maker strategies. That define the full cost of the exploration and production process in determining what those prices should be.

The next 25 years is going to be different for the industry. Investors may not be around to continue to “build” the industry. As a mature industry they may expect that they finally begin to see a return on their investment. The chronic overproduction and bloated balance sheets that the bureaucracy are providing today don’t impress anyone in the investment community. Debt or equity investors. They can see the performance of the industry over the past fifteen years and know they would have been better off investing in just the commodity. The bureaucracy provides no value increase beyond the increase in the commodity prices. And I would argue that they have destroyed significant capital in the past fifteen years. A business model that provides no upside over the commodity price increase is not a business. Its a failure that is complete in every sense of the word.

And there is nothing being discussed from the bureaucrats in regards to the size and scope of the problems that they are dealing with. Absolutely nothing. The only issue they are concerned with is getting through the annual report and annual general meeting season so that they can resume their personal plans of planning their retirement. They know they sit on top of a failed state and will do nothing to fix it. Their plan is to escape when the troubles become too obvious and too difficult to hide. Leaving the industry in even worse condition than what they are currently managing it to be in. This is not their concern because no one will be able to state specifically that it is their fault. They were just bureaucrats.

Some might ask if shale reservoirs are financially viable? Not in the current business model, managed by the bureaucrats. And bureaucracies don’t change. We offer a business model and form of management that deals with the nuances of shale and makes it viable. Shale is a necessity. With 55% of the natural gas production now coming from shale. And a large percentage of oil coming from shale. There is no turning back now. That however doesn't mean that we have to produce shale at a loss.

The number of times that I have been told that what we are doing can't be done is probably historic at this point. Our current “impossible-to-do” is harnessing enough disgruntled oil and gas investors to start with the funding of our budget. It might work, or we might figure out a better way to raise our budget. One way or the other we'll get our budget funded. What I do know is there is a problem that exists in the industry and I think the Preliminary Specification and decentralized production model is the solution.

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

Our Solution Part XV

Yesterday we stated that there had to be more consideration given towards the service industry in terms of the work that is done for the oil and gas producers. During the good times the bureaucrats are frequently expressing their dissatisfaction about the costs and availability of the service industry resources. During the downturn in the industry these same bureaucrats think of none of the consequences of slashing their budgets and ceasing all field operations. The flow of people into and out of the fields can cause severe traffic jams in the most remote areas. Bureaucrats need to begin to think a little more clearly at the real cost of turning the taps on and off in this manner. Calling out the service industry as leeches on their revenue streams doesn’t help to endear the service industry to the key role they provide.

After all if not for Packers Plus and coil tubing, to name a few, there would be no innovation in the oil and gas industry. Many of the bureaucrats are claiming that they are innovating at a tremendous rate at this point in time. The fact of the matter is that they are only conducting operations at lower day rates than they were when the rigs were fully contracted. The real innovations came years ago by these service industry providers who begged and pleaded for the bureaucrats to try their ideas, for free, to get an understanding of what could be done with coiled tubing, or what Packers Plus was providing. The ideas that started in the field were ignored and laughed at by the bureaucrats for many years, possibly a decade, before they were finally accepted by that rarified being, the oil and gas bureaucrat. You can also be certain that most of these people were funding their ideas themselves and found that most of their ideas eventually ended up in their competitor's shop as a result of a “technology transfer” that was hosted by these oil and gas industry bureaucats.

So why would someone fight these bureaucrats for decades to have their technology eventually adopted in the industry. Only to have their technology copied by their customer when it is accepted. And to generally be treated like a virus for the rest of the time? I can only speak for myself, and that is, we have a job to do. Without oil and gas, as a society, we are in a real mess. So we do the job that we are able to do, irrespective of the bureaucrats. The fact of the matter is it’s a very hostile environment. On the service industry side it's become work to rule. Collect your check and that’s it. I don't see anything positive being developed out of the service industry in the next decade. And the same would go for the bureaucrats. This is not how the industry should operate, particularly at a critical time such as now.

What is needed is the Resource Marketplace module of the Preliminary Specification. Within this and the Research & Capabilities module are a variety of interfaces in which the oil and gas producers and service industry representative can collaborate on future needs and desires of the producers. Respect for the Intellectual Property that is generated from the ideas that are raised is also provided in the module. No more will the bureaucrats be able to wash the ideas and innovations of individuals and service providers in the great ether of industry based knowledge. There has to be respect for the ideas that are developed in order for people to want to invest in them. If they continually see their customer poaching their ideas and handing them to their competitors. We will continue to see a hostile and unproductive relationship. Now we all know this is done in the field and in head offices of the oil and gas producers. And it has to stop. The victims of this “theft” is the producers themselves in that they are denied the prosperous and abundant marketplace of service industry innovations.

Review of the Resource Marketplace module of the Preliminary Specification provides the means in which to develop this prosperous and abundant marketplace. It is also where I place the blame for the breakdown in this relationship solely on the bureaucrats. Its what they do, blame others and cut costs in the short term. And as I said it has to stop if we are going to solve the problems that we will have to in the next 25 years in dealing with society's demands for energy.

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

Career Risk for the User

Members of our user community have exposure to significant career risk as a result of being associated with People, Ideas & Objects. The bureaucrats have identified this project as being counter to their best interests. That is because we are working diligently to remove the bureaucrats from the landscape in the oil and gas industry. Therefore anyone who would be clearly identified as being associated with this project would be subject to the same warm and fuzzy feeling that I get each day from our good friends. Therefore the people who are associated with this project are kept confidential and are not exposed for any reason. Their career risk is significant and not something that can be mitigated. The bureaucrats, like elephants, have long memories.

This is also the key reason that our budget needs to be funded in its entirety. No one is going to commit to the level of career risk necessary to make this project viable without a viable going concern in which to move to. Since the only way that People, Ideas & Objects can be a viable going concern is to have the software developed, the user community developed and the service providers organized. The budget to bring those resources into being is necessary before we will be able to solicit the numbers and quality of user community participation to make this project a viable going concern. Classic issue in a modern manifestation.

To expect that people would volunteer for a project such as this is something that the bureaucrats would expect. They sit on a primary industry where the revenues are generated from oil and gas. And look down their nose at everyone of the tertiary industries that depend on the oil and gas industry for their revenues. What the producers need to begin to realize is that the ability for them to generate the oil and gas revenues depends on the members of the tertiary industries. Their behavior of turning on and off the tertiary industries revenue stream when oil and gas prices are up or down is a detriment to their own best interests. When prices were high they complained bitterly that the service industry was lazy and too expensive. Now with the prices being low they can't cut the flow of funds to the service industry fast enough. What will be the bureaucrats complaint next time oil and gas prices are high and people don’t want to work in the cyclical oil and gas industry? You really do reap what you sow.

The bureaucrats also have the attention span of the current quarter’s financial performance. Our project unfortunately spans a few of those quarters and therefore will be subject to the wandering minds of the bureaucrats. If we proceed on a pay as you go basis, once we are in full software development mode, the bureaucrats attention will no doubt turn to other “more pressing issues” and cut the funding to this development. Our ability to recover from a funding cut and resume developments would never exist. Its different when you have a physical asset like a drilling rig as the asset that you can idle for a few months. Our asset is our user community and software developers. Their Intellectual Property. Once this is stalled, it can not be restarted in my opinion. Therefore we must have the entire budget funded before their is any development work done.

The point about the boom / bust cycle and its impact on the service industry is something that we address in the Resource Marketplace module of the Preliminary Specification. There has to be a means in which the service industry can rely on the oil and gas industry to fund them. This method of turning off and on the taps is causing too many difficulties in terms of the service industries ability and capabilities that the oil and gas producers need. A dynamic, profitable and innovative producer needs to have the service industry innovating at the speed at which they are innovating. It doesn’t help to come up with the next great earth science innovation when all the rigs are idled, or, when all the rigs are contracted and you can't find a qualified crew. Tomorrow we will discuss the Resource Marketplace module in more detail in our “Our Solution” series.

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

Change is in the Air

We see that there is an aptitude and an appetite for change in people’s acceptance of the status quo. The Progressive Conservative party in Alberta is no more. With the former Premier, Jim Prentice quitting the cabinet, quitting the leadership of the party and quitting his just elected seat in the legislature. No one will ever vote for a Progressive Conservative candidate again. Thankfully we have the Wild Rose Party which is the upstart that will probably form the next government. People had to vote for the socialist New Democrats as they were the only other choice they could vote for, and get rid of the bureaucracy. I find the change dynamic parallels to what we are doing here in People, Ideas & Objects with our Preliminary Specification to be very strong. People are looking for better ways in which to be governed, better ways in which to be organized in their businesses and their careers. We might just be timely in our approach to the market!

We've also seen the devastation that low oil and natural gas prices have done to the income statements of the producers. Many are reporting losses, however, everyone is definitely feeling the effect. If producers only provide the upside from the increases in the commodity prices, why take the risks of investing in them at all. Why not just buy the commodities on the commodity exchanges and trade those instead. If you think the bureaucracy is there to build value beyond the increase in the commodity prices. You have the past fifteen years to convince you otherwise. Our suggestion is, that the book value of the producers are significantly bloated for no other purpose than to support high debt levels. This bloating of the asset value of the producers also allows them to report higher earnings than what would otherwise be possible.

With the Preliminary Specifications decentralized production model we are able to calculate the appropriate costs of capital in determining the total costs of each property. As we have documented here before the bureaucrats are calculating the margins on their properties and leaving out the overhead costs and the cost of capital in determining their properties overall costs. This miscalculates the prices needed to produce the commodities. Leaving the producers reporting some profits, however with large asset balances on the balance sheet with little or no cash or working capital being generated. With the Preliminary Specification adding the costs of overhead and capital into the properties costs, and pricing mechanism the producer will be able to earn the cash flow required to return the investors their investments and an element of profit as well. This is how we are able to provide the industry and oil and gas producers with the most profitable means of oil and gas operations.

Oil prices rallied this week for some unknown reason. I think it was on the basis of hope that the U.S. shale producers were soon to see their production decline. As I have stated before, the natural gas side of the business will show us the way in terms of what we can expect the oil deliverability from shale will be. And that is continued production increases and overproduction. The bureaucrats are using the high throughput production model. Which requires full production at all times to offset the high overhead costs of their operations. There is nothing but full throttle production as the means of operations. And for the bureaucrats to discern what is profitable and what is not has never been necessary or possible in the industry before. This current method of industry organization needs to change to the decentralized production model. Where every property is subject to the determination of the full costs of operations and if those costs can be covered profitably by the current commodity price it will continue production. If the prices don't cover the costs then the property can be shut-in until the prices rise to the point where they do cover all of the costs and provide for a profit. And if the producer has an inventory of shut-in properties they will be more profitable than they would be under the current high throughput production model.

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

Our Solution Part XIV

With the Research & Capabilities module developing the capabilities for later deployment within the various Joint Operating Committees that the producer has an interest in. We need a module, the Knowledge & Learning module, that is used within the Joint Operating Committee that has a view of those capabilities and will enable the deployment of them. The significant point of the Knowledge & Learning module is that it will have a view of each of the producer participants capabilities within that Joint Operating Committee. Therefore enabling the selection of the best capabilities for the needs of the Joint Operating Committee. This is done with the understanding that each producer will be focused on developing their own specific earth science and engineering capabilities on a specialization and division of labor basis.

There are limited numbers of earth science and engineering resources available at any time in the industry. With the demands of more science and engineering effort per barrel of oil, these demands will not subside anytime soon. It is therefore necessary to resolve this mid to long term shortfall with the tools of specialization and the division of labor. That way more throughput can be achieved from the same resource. There are also demands for these resources from the way in which the producers are structured. Each producer firm is attempting to build the capabilities necessary to fulfill their commitments at any and all times. This requires them to cover off the entire scope and scale of earth science and engineering needs within the organization. With any further specialization and division of labor within the sciences and engineering professions themselves. The scope and scale of the demands on the producer to obtain and maintain their capabilities in the manner that they do today may exceed what is commercially obtainable. The size of their teams will exceed their budget capabilities. Therefore specialization within the producer firm itself is not an option.

However specialization and the division of labor when applied across the industry is able to solve this issue. What the issue is is that each producer has unused surplus capabilities resident within their organizations. These are used for just in time instances where a specific properties demands for resources may peak. Taken across the industry these unused surplus capabilities incur substantial unused and unusable resources. Therefore in addition to specialization and the division of labor being applied within the professions. It is also necessary to apply these principles to the producer firms themselves. Where one producer will specialize in one area and another producer covers off another area. Where the needs of the property can be obtained through a pooling of the capabilities from the members of the Joint Operating Committee. And if there are further shortfalls, other producers who have those capabilities can be hired to fill out those requirements.

This pooling requires that each producer is able to charge their resources to the various joint accounts. And that the producer firm has two distinct sources of revenues. Oil and gas revenues, and revenues from the development and deployment of their capabilities. It will be in this way that the industry can meet the shortfall in these critical professional resources. Specialization and the division of labor are the only proven methods to resolving resource shortfalls. Hoarding these resources within each of the producer firm only leads to further shortfalls on an industry wide basis. As the retirements of the brain trust occurs in these professions. An answer to the way in which the industry will deal with them has to be answered by the ERP system that the industry selects. By designating operatorship to one firm producers have been reliant on other producers capabilities from the beginning of the industry. Few companies will have the budget to fund the scope and scale of an operation that will support the full science and engineering capabilities that will be demanded in the future. The Research & Capabilities and Knowledge & Learning modules are the solutions provided by the Preliminary Specification.

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