Absolutely Uncompetitive

Bureaucrats should be proud of their accomplishment in destroying the oil and gas industry. Has anyone seen any of them leave the industry in shame with their heads bowed? They don’t care! As long as the money keeps coming in twice a month their lives are fine. Embarrassed? No, proud and feeling quite rejuvenated now that they’ve established that there is nothing that anyone can do about them. They’re permanent, there are no threats to their administration anywhere and at anytime. For the past thirteen years I have fought them and they’ve done nothing to mitigate the issues that are ever present. They knew what was going to happen. The fact that they did nothing about it, and continue to do nothing about it proves that they knew all along.

Commodity prices will only rise from this point forward. That is the only conclusion that the bureaucrats can be operating from. They feel giddy and are set to continue with their personal goals based on the steady uninterrupted cash flow from their jobs. I guess shale too has been eliminated from the scene as it was the precursor to the price declines. They may feel as if they have the upper hand at this time, however, nothing has been resolved and the same old issues are ever present.

We need to remember that these bureaucrats exist in the private business environment. They are not government bureaucrats who are established for life. They are subjected to the forces of the market. Although the bureaucrats may think they have the upper hand, that can only be maintained if they are the lowest cost producer. Which maybe they are? And if so they will remain established for as long as they feel the need and are comfortable. We should all aspire to be oil and gas bureaucrats. Do nothing and get paid well for it.

Creative destruction is going to wipe these people from their perches very quickly. At $200 / barrel in terms of the current producers cost of production. These values are obtained when we add in the cost of capital to produce with the cost of operations, royalties and overhead we come in at around $100 / barrel. Then we need to include, not so much a cost but a commitment to the past legacy of spending and ignoring that spending like it didn’t matter. These costs which are represented in the large balances of bank and bond debt obligations. And also in terms of the huge number of outstanding shares. Add up to make the producer firm very distasteful to any prospective banker or investor. Bureaucrats can’t hide their financial statements from prospective investors.

As we indicated yesterday our good friends the bureaucrats will try to live with a somewhat quasi informal administration by their banks. Bank’s will keep a tight reign on the producer ensuring that all surplus cash is put against any of their outstanding loans. The key though is that the payroll will be paid, and that is the only concern to the fat and happy bureaucrats. When your revenue is $50 and your costs are $200 you're not viable but that’s the bank's problem. Bureaucrats get paid first!

What’s that saying about the best laid plans of mice and men? The false narrative has been that the producers are profitable at $48 / barrel. We are closing out the second quarter with the financial reports due out in the next two months. We’ll see who can stick by those claims. Anyone heard of any financing lately? I wonder why the investors aren’t biting? Maybe it’s like I said all along. You can’t go on for decades kidding yourself that your investors investment is a sunk cost. And expect the investors and bankers not to notice. What generally happens, eventually, is that the investors and bankers see the bureaucrats as a sunk cost.

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. 

The Go It Alone Strategy

Making payroll is the key to the survivability of the North American oil and gas producer. These are the aspirations of the bureaucrats who are in charge and providing us with their strong leadership. If they stick their head in the sand, everything is ok. No bank, or should I say “the banks” won’t take over the industry if everyone is in such a mess. They’ll have to leave it to the current management to operate. Anything and everything that is surplus to payroll, based on the oil and gas price, will be taken by the banks and that is how the industry will operate. Sounds like a plan to me. Seems to be the one in place at the present time. Let's call this their “go it alone strategy.” No support from the investors or banks, but then no accountability either.

Eventually oil and gas prices will reflect the shortages created by the willful destruction of the asset base. And then consumers will be forced to pay the piper. The key to this strategy will be to ensure that the bureaucrats stock options are reinstated on the basis of any dilution that might occur. This will become the number one issue in oil and gas. This could also be an opportunity to establish a greater percentage of the producer that the bureaucrats will undoubtedly have earned as a result of turning around the company. “Rebalancing the markets” finest hour.

What else could be going on. People, Ideas & Objects haven’t heard anything directly from any of the producers. Its as if the worst possible industry news has been distributed to everyone of concern and there’s no more bad news that could ever be issued. And the bureaucrats were never challenged! They cruised through! Not a peep about their efforts to turn the market around other than their narrative which they collectively stuck too. The worst case scenario of the industry's failure has occurred, they survived and are still in control.

No one will be able to touch the bureaucrats now. They are invincible! Who’s going to be able to do anything about the situation? “That blogger that doesn’t like bureaucrats? What’s he up to, all talk and no action.” This attitude would be counting the number of chickens one has, prior to the hatching of any eggs. Users need to stay tuned and committed for a while longer. It certainly seems to be the darkest hours for the development of the Preliminary Specification. And this strategy of the bureaucrats does seem to be successful in getting the upper hand. But with all things, time and ideas don’t necessarily operate in the best interest of the bureaucrats. And those are the two commodities that we have in abundance.

No one is going to aspire to the bureaucrats vision of the same. It’s future is limited and unproductive. We have a job to do in the industry and need to start working towards that today. What happens in the next 25 years is in the hands of the user community that is being organized here at People, Ideas & Objects. The bureaucrats have now proven that they will not being doing anything. It is therefore up to us to do it then. And that begins with you. Your participation in the user community is the beginning of our efforts to build the software that is needed in the industry. We’ll implement that software within the industry. Build the service providers that provide the administrative, accounting and software delivery to the oil and gas producers. And then operate the industry from an administrative and accounting point of view with these service providers. The replacement and elimination of these bureaucrats.

This bureaucratic malaise is the issue that the Preliminary Specification solves. The current oil and gas industries administration is the problem, and to I’m sure everyone’s surprise, they will not do anything to resolve it. They sat for almost two decades like this in the 1980’s and 1990’s. This is nirvana for the oil and gas bureaucrat. With $25.7 to $45.7 trillion in damages to the industry about to be occur in the next 25 years. These damages being in addition to what has already happened in the past few years. Our budget is the deal of the millennium. But more than that these bureaucrats can’t, won’t and will not ever do anything. Today you have more proof of that than you did last year. And next year you’ll have more proof if that is what is required. The future is in our hands. We need to take it, and make it ours. That is what we need to do. Otherwise we will waste away in this bureaucratic malaise that is only going to continue until we put it out of its misery.

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. 

"It's Just a Flesh Wound"

Was one of the Black Night’s arguments in Monty Python’s Holy Grail. This comes to mind as we listen to the narrative of the bureaucrats in oil and gas. Natural gas storage has crossed the 3 tcf level as of June 10, 2016. Something that doesn’t usually occur until late August or early September. Three months early! Last year we came very close to filling the natural gas storage facilities but did not cross that point. Natural gas prices reacted poorly to the situation nonetheless. We are 633 bcf ahead of last years storage levels at this point of the year. The probability that we do fill the storage is close to being a given. The natural gas prices will react poorly at that time. However, for some reason these prices have increased almost 50% from their lows of a few months ago. This is on the anticipation of a hot summer with high demand for electricity. This summer price increase has not been evident in any of the prior years, I question why it would be this year with the storage being so high.

Natural gas is in its sixth year of market rebalancing. The EIA reports that production is fairly constant at 72.9 bcf / day. This number is becoming a constant in the universe. Those that are buying the “market rebalancing” fairly tale should look to the natural gas market to see how truly effective it is. There is no production discipline in the bureaucrats. They may be deliberately letting their assets atrophy under the guise of “market rebalancing.” There are however just as many other producers who are finding new properties to put on the market to offset those assets that are atrophying. This is what passes for intelligence in oil and gas. Why not, as People, Ideas & Objects our user community and service providers suggest that producers only produce profitably? Then nothing is deliberately wasted and everything of a limited resource builds value.

The fact of the matter is there is nothing that’ll stop these bureaucrats from destroying the industry. They don’t care. If they did this wouldn’t be happening. Where is the sense of urgency that something’s wrong? Who’s got an idea on how to fix this? Where do we go from here? Don’t ask a bureaucrat because just like the Black Night everything is fine. There has been a train wreck. A ship wreck. A natural disaster in their industries financial and operational performance. And these people have continued on as if nothing mattered or anything has affected them. It’s utterly amazing.

It’s evident to me now that the narrative of “market rebalancing.” And the myth that producers are profitable at $48 oil prices. Is designed to convince the bureaucrats themselves that all is well. They need to hear these comforting words. They were never meant for public distribution, they are intended to keep the people within the industry from being concerned about their situation. My interactions in downtown Calgary couldn’t be more relaxing and entertaining. It’s like an old folks home. No one hurrying to do anything. No one talking about business. It’s just a passive existence with a paycheck I guess. As long as the oil and gas prices are high enough to meet payroll there really is nothing to worry about.

We see a larger war waging in the western world at this time. The Brits are tired of the decree coming down from the European Union. They will probably vote to leave tomorrow. They are describing it in terms of their 1776. Donald Trump is representing the concern that people have with the size and uncontrolled nature of government today. Uber, an app that everyone loves, still battles the bureaucracy everywhere there are people. And I have been punished for 12 years for standing up to the bureaucracy in oil and gas. It’s the 21st century and Information Technology eliminates the bureaucracies through far more effective and efficient means of organization and processes. It’s only a matter of time until the bureaucrats are eliminated from the scene. But they will never accept that, not until everything is destroyed first.

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. 

I'm Impressed!

On two occasions this past week, I’ve watched on Bloomberg, and seen a report from Deloitte & Touche regarding the capital structures of the oil and gas industry. It would seem the narrative in the industry is changing from what a producer can produce oil for at this very minute. To one that considers all of the costs of the business in the context of the future. Very impressive. Deloitte even went so far as to state that the industry would have a $2 trillion cash shortfall over the next five years. I would like to point out that our value proposition of $25.7 to $45.7 trillion includes this value. It however includes all of the $4 trillion of capital Deloitte notes will need to be spent in the industry, and will hence be returned to the investors under our business model. Bloomberg and Deloittes calculations include the costs of the current operations, capital costs, the debt obligations and dividends that may be expected by the shareholders in determining any shortfall. Excellent work people, keep it up.

The history of the industry has to be taken into consideration. The producers had their hands in the investors pockets “building the business” over the past number of decades. Each and every year feeding at the trough for more capital from the investors. Never recognizing these costs of capital in any of their annual reports to the shareholders. Stating they were “sunk costs.” We still need to deal with this phoney baloney accounting methodology that capitalizes everything for ever. It’s ridiculous and has, as I have stated here many times, led to overproduction of oil and gas in North America. Many of these assets still sit on the balance sheet, however there is no capital structure supporting them. It's all been wiped out by losses and what’s left is all debt. Now “market rebalancing” has starved the production profile into a semi-permanent state of decline that will require massive capital expenditures to turn around, even more capital to achieve growth and so on. Where can I as an investor line up?

It will be a fool that invests in an entity that requires this rehabilitation. Defined by Deloitte as the $2 trillion cash shortage. Even Deloitte recognizes that the prices realized are not going to be over $55 per barrel in the next five years. Investors, according to the Bloomberg analyst, will be making critical choices as to who to invest in. I think the choice is academic. These carcases are toast. Run by bureaucrats who are unwilling to recognize the issues and deceitful about their operations only makes me want to double my bet that they will never turn these ships around. How? The more a rational person analyses the oil and gas industry the faster they run away. If you put your money in, you’ll at best get an extremely small percentage of the company's already deep and wide investor pool of issued stock. Any alleged earnings won’t be supported by cash that’ll be distributed. And even if there was, it would be diluted by those yuge balances of bank and bond debt. Makes the valuations in Silicon Valley look rational and exciting!

Investors interested in oil and gas are going to want to see a commitment to profits. Bureaucrats don’t understand the concept. People, Ideas & Objects, our user community and the service providers are configured to provide the oil and gas producer with the most profitable means of oil and gas operations. That is our competitive advantage. It’s what we’ve been talking about for 12 years now. A decade or so of having the bureaucrats laugh at us “that no one cares about profits, stupid.” We also provide the organization in which the investors can start a new dynamic, innovative, accountable and profitable oil and gas producer with 100% of the equity and no debt. One with the full scope of administrative and accounting capabilities available to them if they have a production profile of 1 bbl of oil per day or 3 million. This industry based administrative and accounting capability, when our service providers are built, will be available to them immediately and on demand.

Buying properties from existing producers that have been willfully damaged by “market rebalancing” will be the opportunity for these investors to poach from these carcases. The ones the investors are now considering their “sunk costs.” With the People, Ideas & Objects Preliminary Specification, our user community and the service providers we are able to implement the price maker strategy and remove the marginal production from the commodity market and have the oil and gas prices reach their marginal costs. For the bureaucrats “marginal costs” include the cost of capital, operating costs, royalties and overhead a.k.a. all of the costs. Oil and gas is a business, not a piggy bank you can raid at your leisure, too bad you never understood that.

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 Task and Transfer Network

Within the Preliminary Specification we have what we’re calling our Task & Transfer Network. Although there is not a lot of detail contained in the Preliminary Specification it is a simple concept to understand and implement. As producers conduct commercial activities this information is captured in the Task & Transfer Network. Production data is captured, aggregated with all the other production data in the industry and distributed to the appropriate production accounting, revenue accounting and royalty accounting service providers etc. This enables the specialization and division of labor between the service providers. For example, possibly there will be a service provider who reviews just the drilling day work for payment. Ensuring that it is consistent with tour reports etc, and other methods of verification. Then that service provider will generate their invoice for their services based on the information that they receive from the Task & Transfer Network.

I can see the bureaucrats squirming and wincing in their seats. Their concern is the security of the information that they have and the proprietary nature of that data. They are in no way going to allow their data to be processed in this fashion. Have I ever mentioned our $25.7 to $45.7 trillion value proposition? I think I must have at some point along the way. Continue on with the way these bureaucrats are doing things and we will all be out of business. We also have the Security & Access Control module of the Preliminary Specification. If that is incapable of meeting your needs then you’re not getting the point of having user community based software developments. Use the user community to ensure that the security of the Task & Transfer Network is at the level that ensures compliance to all the regulations and ensures that no unauthorized access is enabled.

What a service provider is going to be faced with is a constant flow of data from the Task & Transfer Network. It will be the service providers work that will be able to take that data and process it in the most effective way for the oil and gas industry. Specializing on one process may sound like a redundant and boring approach to accounting and administration. However, if you put your mind to the task you can become quite creative in developing the tools to make the process cost effective, innovative and high quality for the industry. And that is just in the first iteration of the Preliminary Specification. Over the life of the system the process management would evolve in ways that we can’t imagine at this point. The science of data, statistics and information would come into play in a serious way and become part of the value proposition of the service provider, and would also begin to form the basis of competition between service providers.

If there was no production from a property, then no information is delivered through the Task & Transfer Network, no processing conducted and no service providers invoices sent. The decentralized production model is implemented and the producers have the price maker strategy operational on the North American continent. This is how all of the producers costs become variable based on production. Taking the data down to its simplest form, aggregating like data and processing it on a specialized basis by those who have the people and the software development capabilities in hand to deal with the issues and opportunities they see their producer clients having. That is how we reorganize the industry and ensure that we provide the oil and gas producer with the most profitable means of oil and gas operations.

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. 

Third Friday Off

No posting today.

How Our Users Make the Difference

It is our user community members and their service provider organizations that provide the key differences in enabling the producers to achieve the most profitable means of oil and gas operations. They’re the critical infrastructure necessary to enable change in the oil and gas marketplace. They’re the source of quality in the producer firm and the industry. And they enable the dynamic implementation of business models such as the decentralized production model. When a change is needed in the industry today, who do you turn to? In the future there will be no question as to who you will turn too. The user community member that is responsible for that area and has the capabilities to implement the changes on behalf of the producer and industry. They’ll have the power and control over the Intellectual Property that is the operational understanding of the industry. The derivative of the Preliminary Specification. It is theirs to do with as they believe is in the best interests of the producer and industry. The People, Ideas & Objects software developers will only ever look to the user community for what software it is that they will develop.

What we have learned is that software, and ERP software particularly, defines and supports an organization. In order to implement any change it is therefore necessary to make the change in the software first, otherwise the people will regress back to the old ways which are defined and supported by the old software. Bureaucrats have interpreted our breakthrough in this area as; securing their position in the organization by never changing the software. The user community member who is also the principle in the service provider sits in the new sub-industry that we are building. Working with the industries producers to ensure they are the most profitable they can be. Understanding their issues and opportunities. And, having the People, Ideas & Objects software development capability on hand to make the changes that they see necessary to fulfil their requirements of keeping their clients the most profitable that they can be.

Quality is a difficult aspect of an offering to define. Speed has to be an element of quality. Having things done right the first time as well. Affordability also has to be part of a quality offering. Recall that the configuration of the service providers are what provide our price maker strategy possible in the industry. Achieving the lowest cost possible but missing out on opportunities such as the price maker strategy would be foolhardy. The value that we provide the industry is so much more than just an efficient and effective cost. We are able to leverage the value that the oil and gas industry generates by making changes in the business models that we have the power to control. It is here where we become affordable. The service providers are a cost of doing business that is already incurred in the oil and gas industry. The $45 to $65 billion in G&A costs will be transferred and become the revenue streams of the service providers. When you compare the annual cost of the service providers over their value proposition of $25.7 to $45.7 trillion over the next 25 years, it’s a profitable value proposition for the producers.

Now we come to the decentralized production model of the Preliminary Specification. It is the reason that we have configured the service providers in the manner that we have. By restructuring them on this basis we will have done two fundamentally important things. First we will have moved the administrative and accounting capabilities from each individual producer, where they are replicated, redundant and unshareable; to an industry based administrative and accounting capability. Secondly we will have made all of the producers administrative and accounting costs variable, based on production. If a property is shut-in then all of the costs of the producer, except for capital, will not be incurred. The burden for the administrative and accounting cost control has shifted, if there ever was any cost control, to the service providers. Who at anytime might experience a drop of 10% in their revenue. The 10% being the amount of production that might have to be shut-in to maintain oil and gas prices. A budget-able contingency that can easily be handled by the service providers.

It is this kind of flexibility and capability that the dynamic, innovative, accountable and profitable oil and gas producer needs. They have enough to focus on with their competitive advantages of their earth science and engineering capabilities, and land and asset base. Constructing an administrative and accounting organization, which is exactly like each of their neighbors is destroying their profitability. If they had any, that is.

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. 

It's a Business Opportunity

More than anything the People, Ideas & Objects user community is a business opportunity for those that work in the administrative and accounting fields of the oil and gas industry. We are developing and creating a new sub-industry that includes People, Ideas & Objects software developers, our user community and their service providers. It is these people who are working to provide the oil and gas producers with the most profitable means of oil and gas operations. That is their purpose and their focus. Turning the industry around from a bureaucratic slog to a dynamic, innovative, accountable and profitable industry.

The business opportunity comes from the fact that the members of the user community will be independent business people with their own going concerns and two distinct revenue streams. The first will be the fees that are earned when they are resident or are working on the software with the People, Ideas & Objects developers. Working to make the software that they want and need. These user community fees are paid by People, Ideas & Objects and are detailed in our budget. Our budget only deals with the initial phase of the Preliminary Specification. What it will take to implement the software in its first commercial release. The user community member should assume that this revenue stream would continue far off into the future.

We are expecting that we will need to have 3,000 members of the user community in order to acquire the full understanding of the manner in which the oil and gas industry operates. We also expect that at any time 600 of these users will be working directly with our developers. So although this is a cornerstone of the business opportunity for the user community member, these revenues are only for their part-time efforts.

Each of the user community member will be focused on one area within the Preliminary Specification. And will focus and specialize on one process within that area of understanding. The competitive advantage of the user community member is their division of labor, specialization, automation of business process, quality and innovation. This process that they manage will be theirs where the license granted by People, Ideas & Objects gives them exclusive rights to that process. Competition between service providers and users is not on the basis of cost where one steps on another's functional or process domain. It is through their ownership and control of the service provider organization that they will manage the process on behalf of the oil and gas industry. Competing on the basis of specialization and the division of labor, etc. It is in the service provider organization that the second revenue stream of the user community member will be derived. They will have the salary, bonus, dividends and capital gains they earn from their ownership of their own service provider firm.

How big a service provider would need to be in order to manage a process on behalf of the industry is the question that no one can answer at this time. They would be of a moderate size considering they would be replacing the $45 to $65 billion in administrative and accounting costs that are being incurred in the industry today. It would be reasonable therefore to estimate that the service provider's revenues may be in the range of $10 to $30 million per year. This should therefore be considered a substantial business opportunity.

If we are undertaking the replacement of the accounting and administration of the industry. These numbers come into focus. Who knows maybe the bureaucracy will change into the dynamic, innovative, accountable and profitable organizations that we seek! With the costs and prior bank and investor commitments in excess of $200 / barrel, however, with organizations that are stale and choking on paper, there may not be too many investors that are interested in supporting that old model of organization.

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. 

It's Not a Price War!

I did not catch the name of the individual that I saw the other day on Bloomberg. He had an energy consulting company, had at least 40 years experience and a PhD from Stanford. Certainly well qualified, but I fundamentally disagree with his position that we are in a price war with the Saudi’s and Opec. He said that when you’re in a price war you have to produce at your marginal costs. The marginal costs of some of the shale reservoirs, he stated, was as low as $10 and the Middle East was even lower. Noting that he thought oil prices might bottom around there. This is yesterday’s thinking. What the bureaucrats use for their excuse to do nothing. And how we find ourselves in a devastated industry where investors are used as ammunition to fuel an unnecessary war.

Oil and gas commodities fit the textbook description of what qualifies for “Price Maker.” This entire oil and natural gas depression has been brought about as a result of a small percentage of over production. Maybe 1 to 2%. Which has led to price decreases from their long term highs that are in the region of 70% on oil and 90% on gas. My math is pretty good, and I can tell that this is a losing proposition. All that would be needed would be to curtail a small amount of production in order to reclaim all of that lost pricing. This is also one of the key characteristics of a price maker. Where does the thinking come from that has producers continuing to produce oil and gas at a financial loss, yet they think that those actions don't impact prices? Bureaucratic sloth I would suggest.

The strategy that the Saudi’s have adopted is fair and reasonable. It has however changed from their position as the swing producer role which they occupied until recently. They feel that it is the North American producers who need to fill the swing producer role. The swing producer role involves removing production from the marketplace to ensure that it remains balanced. The Saudi’s changed their position as it was apparent the North American shale based producers, who are also the higher cost producers, were forcing them to curtail too much production to balance the market. Saudi Arabia was having to give up its customers in order to do so. Eventually, under the Saudi swing producer scenario they would have had no customers and no production. Therefore they changed their strategy to a fix production level and committed to their customers that they will provide their needs reliably. It is a sound business strategy. It is not a declaration of war.

We should note too that bureaucratic sloth is evident in the natural gas marketplace where the Saudi’s and Opec don’t exist. Natural gas has displayed these overproduction characteristics for the past six years. Who is responsible for that markets overproduction? I would suggest it’s the same people. The issue the bureaucrats will not deal with is shale based reservoirs. Recently the Energy Information Agency noted the Mancos shale formation in Colorado has been defined as 4,000 ft of pay. They have adjusted their 2003 evaluation of 1.6 tcf of gas to its current evaluation of 66 tcf of gas. What the bureaucrats will now do will be to ensure that the necessary steps are taken to get this natural gas onto the commodities marketplace so that it too can be fairly priced along with the other 2,500 tcf of gas that is sloshing around the continent. Producing everything that exists, irrespective of the financial implications is madness. Especially when the Preliminary Specifications decentralized production model employs the price maker strategy that would make all production profitable.

It’s odd that during these times I have been screaming myself hoarse that these commodities are price makers. And that the Preliminary Specification deals specifically with that issue in the industry. The issue that I generate in the process of bringing my solution to the marketplace is that I, like so many Information Technology based solutions in the marketplace today, disintermediate the bureaucracy. Bureaucrats are toast once the Preliminary Specification is in place. And they know that. So for them to consider the thought that they would eliminate themselves from the marketplace is comical to them. Why else would they ignore our $25.7 to $45.7 trillion value proposition over the next 25 years. We need the investors who have been used and abused by these bureaucrats to turn the tables and oust these bureaucrats by supporting the Preliminary Specification.

The bureaucrats can hire all the consulting firms and all the PhD’s in North America to go on Bloomberg and be the talking heads for them. Engage in nuclear warfare on their behalf and ensure that the issues and opportunities of the industry are obscured and unaddressed for another decade. This may be a test for how collectively stupid the western world has become. If “this” is acceptable and allowed to continue.

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. 

The Next Ten Years in Software

We are all beginning to understand the Information Technology environment that is now developing around us. Two years ago people had a disinterest in Information Technology that had been consistent since the 2000 dot com meltdown. Now we are beginning to see the potential that exists in the marketplace with all these devices. I for one am quite optimistic about the future. There is much that we can gain in terms of the quality of our life from Information Technology. We are only beginning to realize its potential.

It’s only in the last few years that it has been possible from a technical point of view to build the Preliminary Specification. It’s big and complex, and the demands that we are asking of the technology, those issues that were beyond the technologies capabilities, would have had to have been compromised in order to bring our product to market. There will be no technical compromise involved in bringing the Preliminary Specification to market now.

Choosing Oracle Corporation as our systems vendor provides us with the integrated technologies that we need to deal with the demands of the Preliminary Specification. We will not have to chase a disparate group of vendors who choose to pass the buck instead of take responsibility for the issues that we face. It will be Oracle that will be able to solve the problems. In the hardware, software and services end of the Information Technology infrastructure. We are fortunate to have them as our provider.

I think people will be surprised at what the People, Ideas & Objects software development team will be able to achieve. In these next ten years there will be very little that we cannot accomplish. Our first objective is the most important of all. The continued development of our user community and the establishment of their role in the industry. It will be the user community who are able to determine what is possible. It is here where the ideas will be coming from. They will have the power and control to make the changes to the software and implement them through their service provider organizations. Doing so at will. It is the user community that will make the oil and gas industry dynamic.

The first iteration of the Preliminary Specifications deployment will take what exists today and implement that in the software. We will have the industry operate based on that definition. The user community will not be innovating on this first iteration of the Preliminary Specification. They will be bringing the processes and their management to the framework of the Preliminary Specification and making it operational on the basis of the Joint Operating Committee being the key organization construct. And it will be in this work that they can be as innovative as they would like to be. Therefore to clarify, in terms of how they implement the Material Balance Report in the Preliminary Specification they can be as creative and innovative as they feel necessary. What I am stating here is that they should not innovate on the business model, the framework or the manner in which the Preliminary Specification is put together until the second iteration of our software’s development.

Once the user community has implemented the Preliminary Specification and it is operational in the marketplace they will have free reign over any and all aspects of the software. It will be then that they have the foundation necessary to make the innovations valid and functional. Introducing major business model or framework innovations too soon in the development will only cause confusion and disorder. Best to write down any innovative thought that you might have during the first iterations development and bring it up later during the second iteration. We are headed to an unconstrained world where we can change our environment to suit our needs. Those members of the user community will hold a special role in the oil and gas industry. If I wasn’t otherwise occupied, I’d be jumping all over that opportunity.

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.