Our Plan, Part IX

One of the deliverables that we will have in place at the end of this initial year of developments, or on September 2018, will be our leadership team. We are now searching to fill positions in both People, Ideas & Objects and our user community. There are approximately thirty positions that we’ve identified at this time that need to be filled by September 2018. These people will provide leadership and support to these organizations through their proven skills and capabilities. If you find one of these positions of interest to you by all means contact me.

The first group of leaders that we are seeking are what are known as product owners. In the agile development methodology product owners hold a special role between the developers and users. People, Ideas & Objects will have as many as twenty product owners in our development, one for each module of the Preliminary Specification with additional product owners for other areas such as the user interface, data model, Oracle Applications etc.

This definition of product owner is provided by Scaled Agile Framework.

The Product Owners (PO) is the member of the Agile Team who serves as the Customer proxy and is responsible for working with Product Management and other stakeholders — including other Product Owners — to define and prioritize stories in the Team Backlog so that the Solution effectively addresses program priorities (Features/Enablers) while maintaining technical integrity. Ideally, the Product Owner is collocated with the rest of the team, where they typically share management, incentives and culture. But the Product Owner also attends most relevant Product Management meetings about planning and backlog/Vision refinement. 

Our user community will primarily be virtual in terms of the work that they do. Attendance with our team of developers will on occasion be necessary however that will be a very small percentage of the user community members time. The product owner is the proxy for the user community and the work that is done by them. When the user community member needs contact with the development team it will be through the specific modules product owner that this is enabled. The product owner role is a senior position with significant responsibilities in representing the needs of the user community. Recall too that once the Preliminary Specification is operational within the industry the user community member will be primarily involved in the management of their service provider organization managing a process on behalf of their clients, the oil and gas industry. This will involve delivering their services and the People, Ideas & Objects software that they’ve developed to manage that process. As time passes they may want or need to make changes to the software they use and will be able to so as members of the user community.

Additionally we will be filling out the principles and officer positions within People, Ideas & Objects and user community. The user community is a separate organization from People, Ideas & Objects with its own self supporting administration and organization. This provides for their independence and enables their focus on the issues and opportunities that exist in the oil and gas industry, producers and associated areas. The user community will be established based on the Revenue Model which denotes its revenue stream. The user community will be established to provide its services in the development of People, Ideas & Objects Preliminary Specification and will not be authorized to generate revenues outside of that. We will have a dedicated and committed user community that is wholly focused on the issues and opportunities of the oil and gas industry, producers and associated firms.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VIII

A couple of people have asked me why we have such crappy websites. And we most certainly do, don’t we. There are a variety of reasons for that but I think the primary one is as follows. Industry has never put any money into this initiative and have stood in my way at every opportunity. They never made my life easy. These websites are a reflection of that. The only thinking being done on the most critical business issue of our time, in oil and gas, is being distributed on a website made of duct tape and bandages. I hope the producers are adequately humiliated. Secondly this all has to come out of my pocket so review reason number 1.

Every plan has to have a budget. We have our own version of shock and awe and we’re proud to say that we’ve been able to see this issue clearly for years. The scope and scale of the solution is not going to be done on a wing and a prayer. This is a serious problem, with substantial upside for the producers, therefore the solution needs the full scope of our budget. However, we’re not talking about everything at this point. Just enough to start the developments and carry them for the first year. A preliminary budget that will keep the operation moving forward from September 2017 to September 2018. As we’ve made clear here in our last number of posts the emphasis on this spending will be on the user communities development and its support.

The question becomes how much could industry generate from now until September 4, 2017? A nice round number to me comes in at $100 million. This would provide, on the basis of the overall framework of our total budget, with what I feel would be an ambitious plan for our initial year. Understanding that one third of the funds raised would go to our costs we would be able to, based on our standard rate of $190 / hour for our user community members contributions, software developers and Oracle cost estimates, provide us with 108 man years of effort. Which feels appropriate for the task ahead and the ability for us to accomplish as much as humanly possible in our first year of operation.

Investing in more wells at this time will only cause the commodity prices to decline further. Producers need to begin to think about the business that they’re in. Scoring one reasonably profitable year out of each decade is not a business. The determination of that years profit being subject to highly questionable accounting. Owning the reserves of oil and gas is useless if they can’t be produced profitably and consistently. I don’t think anyone is being fooled by the actions of the producers anymore. All of the efforts to remedy the low oil and gas prices, the market rebalancing, the reductions in drilling haven’t worked and as evidenced by today’s low commodity prices, and the more than decade decline in oil prices in the 1980’s and 1990’s, will not work. Continuing to say they will is only being believed by those who have no answers.

What have producers got to lose. Based on their financial statements apparently not a lot. Or do they? By setting the start date of these developments we have set in motion a process that can’t be stopped and then restarted. For all intents and purposes this is it. The issue in the industry is such that the Preliminary Specification is necessary. The solution is now on its way to being developed. The lack of support by the producer, in the manner of not supporting our request for funds would be fatal to this initiative. If the money isn’t there nothing will come about. Alternatively if I’m screaming at the bureaucrats in a year from now I’ll be just as much at fault because I will not have done anything either. This is me ensuring that I’m developing software at this time next year.

What is the future of the industry in the next 25 years. More of what we’ve seen in the past five? Without any changes to the underlying business shale will ensure that our future is a continuation of what we’ve been experiencing. Society needs a prosperous, productive and profitable oil and gas industry. This destructive drain on society that we’re experiencing is a tragedy that is unnecessary and far more damaging to our future than what is realized. We have work to do to build the Preliminary Specification. Reorganize the industry and producer firms. Make the industry profitable. Deal with the resource constraints and the aging infrastructure. Then we can start to develop the capabilities that are necessary for energy independence in North America. Are we just ants running around a sand hill or do we have some control over what it is that we’re doing? I suggest the producers figure out which it is that they are and start acting in their own best interests. I am arguing for enhanced profitability. And why do these arguments cause so much distress in the marketplace?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VII

As I had mentioned before it is the people that work in oil and gas who will make the changes in the oil and gas producers and industry. We are seeing remarkable interest in the numbers of people who are assessing and evaluating our user community. People know that the industry is on a path that leads to their eventual demise, and these people are looking for ways to deal with it. People, Ideas & Objects are resonating with people and as a result they are proceeding with their application for user community membership. Now is the time for action. We have announced that we are beginning the development of our software on September 4, 2017. We won’t have the entire user community in place at that time. Only the beginnings. But it will be our first step in making the Preliminary Specification real and dealing with this chronic, systemic overproduction and oversupply. It is only our user community that can make this happen. No one else has the capabilities, and more specifically, the power to do it. The producers have proven time and again that they are incapable of identifying or dealing with these issues.

What will we be doing when we start? The Preliminary Specification is a vision, a framework, a functioning business model. It’s defining characteristic is that it works. Many ideas run into difficulties when this or that is introduced which causes the model to break down. During the ten years of research I discovered those many areas that didn’t work and resolved them. The first thing we will be doing in development from September onward is expand on this business model and fill in the various processes and methods that the industry will actually operate. The details of how the industry works, based on the vision of the Preliminary Specification. This is why user community developments are such a critical aspect of usable software. If your area of expertise was in gas plant management and knew of the ways and means of how those operated from an accounting and administrative point of view then your skills would be needed in our user community in defining those elements in the software.

Our first deliverable will be an expansion of the Preliminary Specification in textual form. What our software development teams will be based upon is the “agile” software development methodology. Under which the key deliverable from the user community to the software developers is what is called the “user story” and is defined here. Initially these will be “epic” stories and need to be decomposed further down the road. Which of course we will do.

People, Ideas & Objects will begin assembling a software development team and capability on September 4, 2017. This will support the user community and enable them to collaborate and communicate in a preliminary manner. This will sort out some of the initial issues of setting up our environment. At the same time the user community will have access to an Oracle simulation that we will build that is a fully functioning cloud computing environment that consists of the Oracle Fusion Middleware and Applications that are the foundation of their applications. That way the user community will understand the environment they’re building their software within. And this environment will, over time, iteratively reflect the software developments that are the product of the user community and software developers efforts.

We will be talking about the role of product owners in the near future. The point I want to make now is that the user community will assemble somewhat around the Preliminary Specifications modules where their expertise exists. In addition, we will have other teams involved in other aspects of the development outside of oil and gas, and the Preliminary Specifications modules. Areas such as the data models that we will use and the user interface throughout the application. One of these areas that I would ask that we begin to gain some ground on quickly is in the area of just raw data. Consisting of the types of data that exist in the industry and bulk samples of that data so that we could run it through our Oracle simulation.

Note that I’ve not stated anything at this point about real estate. All of this work will initially be done virtually until such time as we have the opportunity to settle in our own location, based on People, Ideas & Objects and the user communities needs. The mindset of the user community will always be virtual. Never constrained by any physical or logistical issues. In the long run this will enable a capability in terms of speed that will be breathtaking.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VI

Imagine for a minute if these oil and gas producers were proactive. That they took the time to identify this systemic, chronic oversupply and overproduction issue and clearly acknowledged it. That they began to undertake steps to deal with the issue and correct the ongoing destruction in the industry. I know I almost fell off the chair when I thought of it too. Thoughts in the industry recently turned from a tacit admission of responsibility for the downturn in prices to the demand that OPEC extend its production sharing agreement beyond June. We are dealing with producer attention spans that are difficult to keep up with. News that Saudi Arabia’s reduction in production was to their Chinese customers. That Iran and Iraq made up the difference has the Saudi’s a little upset. Their old strategy was they would deliver to their customers no matter what the price. Having their customer satisfied was the key to a long term relationship and the customers demands for oil would never need to look elsewhere for their supply. In other words, as far as the Saudi’s are concerned, with this news and the fact that the shale based high cost producers have replaced their low cost production, I don’t think there will be an extension of the agreement.

I’m not seeing any support for the oil and gas producers out there. A lot of talk but no money is being advanced to provide the lifeline that these companies need. When I look at the financials of a producer they need wholesale changes and restructuring. Another billion or two in investment is only going to fill the cash drain for a few more quarters. Loaning or investing money into a firm for working capital is a sure sign that you're going to lose it. Production, specifically more of it and right now, is the only answer to the producer's cash shortfall dilemma. Therefore leading into the period from now to September 4, 2017 when we commence our software developments I expect the industry to have its day of reckoning. What we know is that the oil and gas prices are not keeping the producers afloat and I see significant downside, particularly in the price of oil.

People, Ideas & Objects and our user community therefore have the responsibility to undertake the steps necessary to begin to resolve these issues. Working on the mid to long term perspective we can alleviate the industry from these difficulties. This however depends on those people within the industry that our user community appeals to. I know it's not everyone’s cup of tea. We are looking for the future leadership of the oil and gas industry to take up their roles within the user community. It is through the user community vision that these leaders will be able to exercise the necessary power to effect the changes in the oil and gas industry. This is not your grandfather's user community. Review of the vision that makes up the community will provide you with an understanding of how it’s different and why it’s needed today.

The solution to the industries difficulties, based on my review of the financial statements for the fourth quarter, is a tripling of the revenues of the producers. This would not bring the commodities prices to record territory. However, if the accounting were to adopt a more aggressive and reasonable depletion of the property, plant and equipment it would need those revenues to eliminate those outsized balances of past production costs that producers carry, recognize the high costs of shale, pay the higher royalties and taxes on the higher revenues and generate a profit that will fund capital expenditures, pay down debt and pay dividends. Even with a tripling of revenues producers are going to have to sharpen their pencils to ensure that their shareholders are making a competitive return in the industry. Comparing this future environment to the current financial statements makes me wonder what it is that these producer firms are doing? We know that by storing their past production costs as property, plant and equipment they’re making their investors subsidize the energy consumers, but why? What is going on today is not a business in any sense of the term.

It will be the user community that will be able to implement the Preliminary Specifications price maker strategy within the industry and ensure that only profitable properties are produced. Remember when we accelerate the depletion of property, plant and equipment of a profitable producer that producer is generating substantial cash. The cash is being returned to be reinvested over and over again in a timely manner. Shareholders win by not being chronically diluted by successive share issuances. Oil and gas becomes commercial, not a place where cash goes to die for decades as property, plant and equipment. And this will be because the user community in their role as service providers, who are providing the accounting and administrative service and People, Ideas & Objects software to the industry will be doing so on a standard basis. So that when a property is reported to be profitable it is indeed profitable. Not subject to some accounting shenanigans that have been the flavor of the industry for the past four decades.

We now hear the howls of indignation and laughter from the producers once again. And if we listen to them we’ll see that they think they’re stilling running things. The fact is the bureaucrats are about to hightail it out of the industry before things get too bad and their name is somehow associated with the difficulties. That is why the user community has to begin the process of completing their application and prepare for the developments of the Preliminary Specification effective September 4, 2017. This is our responsibility now. We will be as much to blame if we are just screaming at the bureaucrats in a year's time. Now is the time for all of us to act.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part V

What are we doing? The first thing we’ll be doing is making sure the bureaucrats enjoy their retirement. We see in this past commodity price surge the propensity for these people to spend money that they don’t have. A capacity that is truly remarkable. And we were assured that this time was different, they were going to be disciplined. Critical review of the financial statements of these producers show that the industry is in desperate condition. I have rarely seen companies in a more desperate state financially. The industry as a whole is finished. Belief that things are not that bad is truly delusional. There is no cash in the industry, no working capital, no cash flow and no one supporting the industry from an investment or banking point of view. No money has ever been made in the industry over these past four decades as the costs of past production, as I have asserted here many times, remain stored on the pristine balance sheets of the producers as property, plant and equipment. These bureaucrats have been running a scam for so long they truly believe their own bull shit.

Once we’ve divorced ourselves from what exists today then we say goodbye to the business model that is in existence in the industry. Commonly known as the muddle along strategy it is technically known as the high throughput production model. Produce everything that you can so that you can cover off your high overhead costs. A business model that frankly was practical and reasonable during times of resource scarcity. Now with resource abundance it is the leading attribute to the financial decline of the industry. People, Ideas & Objects and our user community are not recreating what exists today. We are abandoning it and starting fresh from the beginning. Rebuilding the industry brick by brick and stick by stick under the overall vision of the Preliminary Specification. Only then can we break this cycle of destruction.

Are People, Ideas & Objects and the user community involved in a software development or an implementation of the Oracle Fusion Middleware and Applications based on the Preliminary Specification? You tell me. It’s a hybrid. It’s both. Think of it in the sense of a dynamic event. That’s how I see it. In systems development you have a choice between three priorities. Costs, time and specifications. Pick two at the expense of the third. We have chosen as our priorities time and specifications. Costs therefore are going to be high.

We are going to look at the industry from the point of view of “what” and “how” are the most efficient ways to manage its processes. Specialization and the division of labor are key tools that need to be adopted by the user community. They need to understand that all economic growth is a result of an expanded specialization and division of labor. To expand the throughput of the oil and gas industry we can do this through this tool kit alone. It must become one of the user communities competitive advantages in terms of how they do their work.

We are also going to apply a strict interpretation of specialization and division of labor when it comes to the work that humans do and the work that computers do. Today too much time is being spent doing the work that is best done by computers. The types of work that we need to focus on in this new environment are the leadership, unstructured problem solving, creativity, collaboration, research, generating ideas, design, planning, thinking, negotiating, compromising, innovating, and I’m sure that there are hundreds more. Computers can handle the storage and processing of information for us. Let's make this a principle in terms of who tells who what to do.

There will certainly be displacement of jobs, professions, etc initially in the administrative and accounting fields in oil and gas. The retirement of the bureaucrats will also be noticed. Productivity will begin to rule. Then we’ll need to expand the throughput of the industry. But before that, the oil and gas industries identification of this issue needs to be made. I think we are finally at the beginning of this realization. We’ll see.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part IV

The other day I asked a stranger if I could borrow $2 for a cup of coffee. It was a lie, I had had my fill of coffee at home. Needless to say this initiative still has never raised any money for the development of the Preliminary Specification and its user community. The scope and scale of the task ahead of us is matched by the scope and scale of our budget. It is as I say outsized. Either it’s blind ambition or insanity that leads me to believe that it’ll be done. The damage that has been done in oil and gas pales in comparison to the damage that I see if we don’t begin dealing with this overproduction and oversupply issue. It was present in the 1980’s and 1990’s for more than a decade. Nothing was done, just muddled along. Now with shale reservoirs the producers demand for cash can only be satisfied with more production. The amount of cash in the industry is probably less than what most people carry in their pockets. From my review, producers are consuming cash at remarkable rates with no support from investors or banks. This cash crisis will continue.

I am pleased with the audience that we have been able to generate through our blog and wiki. Our numbers are small for a website when we compare them to most sites, however, you have to consider we are talking about obscure oil and gas ERP systems. We’re also talking to a small subset of people who are the leaders within the industry. In that sense our numbers are very impressive. It is these people that we need to leverage in order to get our message out and begin the process of raising our budget.

My banishment from the industry over the past decade as a result of these ideas has lead me to lose direct contact with the industry. If I’m to cold call each of the producers we will have our first funds in about ten years from now. Which is not acceptable for anyone. What we need is the leadership of the user community to begin to assert themselves in the marketplace. Now is the time in which to spread the word amongst your peers and toss the Preliminary Specification, our budget and revenue model in front of the CEO’s and CFO’s of the producer firms you are currently engaged with. I can’t have people ask me how come my company hasn’t been asked to participate? Leverage of the potential members of the user community is the way that we’re going to be able to mitigate the time that it takes to deliver the software represented in the Preliminary Specification and the user community.

During these past 26 years I have attempted to herd cats on several occasions. So much so that I’ve sworn never do so again. And I am not asking the user community to undertake the herding of cats on my behalf. I am asking the user community to lead the oil and gas industry by bringing their own individual cat to the table. That will be more efficient and effective and provide us with a reduction of the time and frustration of one individual trying to do an impossible job under ridiculous time constraints.

Our user community is about leadership in the oil and gas industry. The administrative and accounting domains are the responsibility of the user community. As change occurs within the industry the user community will accommodate those changes on behalf of their clients the oil and gas producers. Both by leading the development of software changes at People, Ideas & Objects and as service providers in their services based organizations. It is my expectation that our user community will be able to anticipate the necessary changes in the industry and move the industry in the direction that future changes will occur.

I’m asking that the user community begin their role as leaders in the industry today. The scope and scale of this issue demands it. The time allotted to resolve this issue will be far less than what we would be comfortable with. Our expectations of our budget brings its own demands into the equation. We will have many difficulties in developing the Preliminary Specification that will challenge the user community and the industry to resolve. I am not underestimating the scope and scale of these tasks and that is represented in the publication on this blog of our budget in January and February 2014. I understood the issue then and I think that understanding is represented by the situation in the industry as it stands today.

Therefore the ball is now in the user community court. Those that want to participate in this fashion should complete their application and join the user community as soon as possible. Our goal here is to reduce the time required to deliver our solutions to the oil and gas marketplace. I believe the market expectation of when the software and services are required will be completely unreasonable, and justifiably so. We need to meet those expectations and that can only be done on the basis that we undertake the tasks ahead of us in the manner spelled out here.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part III

Now with the user community engaged it's time that we put the oil and gas industry and the producers on notice that we’re commencing developments effective September 4, 2017. Their options are limited, in our opinion, to supporting People, Ideas & Objects and its user community or closing their doors. There has been a lot of mud slinging these past few years but now is the time to get to work. People are beginning to see the problem that the Preliminary Specification is designed to solve. Some, unaware of the Preliminary Specification, even calling the issue unsolvable. It’s a difficult issue which is material to the health of the industry. Maybe producers will concern themselves with this opportunity, maybe they’ll chuckle. Either way they should consider the following.

It’s no longer just People, Ideas & Objects that are involved in this initiative. Our user community which is a fully independent organization, that is fully dedicated to resolving these issues, is also involved. People, Ideas & Objects have exhibited a persistence and commitment to resolving this issue over the past decades. We are stubborn and proud of it. I would hope that these characteristics are inherent in the user community. It may be unwise for the industry and producers to assume that it is. What if the user community, which is made up of professionals from the industry, doesn’t see the requisite support from industry. It’s too early to tell of course and we don’t want to be asking that question at any time in the future. It’s not within the user communities scope of risk to undertake.

This initiative is moving forward to rectify the issues in oil and gas. Should the industry support it? Why is this in question? People, Ideas & Objects and our user community have a value proposition that is in the trillions of dollars. These are incremental revenues to the costs that are already being incurred. These revenues would flow to the bottom line with only additional royalties and taxes being incurred. Again, why is this in question?

Abandoning the user community will leave the industry with no options. To disband would be like Humpty Dumpty, would industry be able to be put it back together again? The question would need to be asked, and what would happen to the Intellectual Property contained within the user community vision? It would still exist however only as a means in which the industry could not develop an alternate solution to People, Ideas & Objects and our user community. If industry refuses the user community and People, Ideas & Objects they are rejecting the Intellectual Property in the Preliminary Specification. We would also assert our Copyright of any other initiative that tried to use it in any way.

Then what? It took me ten years of research to come up with the Preliminary Specification. Maybe I’m slow. Does the industry have that kind of time to develop a new, workable and viable business model. This was ten years of research that was done after I determined the Joint Operating Committee is the key organizational construct of the industry. What organizational basis will the industry use to base an alternate specification upon. Or will the industry hold on to its policy of never paying royalties for Intellectual Property and litigate my claims for the next few years. It’s not so much the amount of time that industry has. Its how much money do they have. They have none and they’re running out of what they have very quickly. They need to start thinking more strategically and dump this muddle along strategy.

People, Ideas & Objects and our user community are currently constrained by the imagination of its members. Our capacity and ability to think, to resolve issues is the only impediment to us delivering software. We are on Internet time. We are implementing Oracle Fusion Middleware and Applications on an industry wide basis. That is our task. The only thing that could derail us now is the lack of, or constrained support from the industry and producer firms. This may be the key point for everyone to be thinking about. The issue is ripening and the solution in the form of the Preliminary Specification is in hand. Producers need to act decisively and quickly. I am not the enemy, I am presenting the solution to your problems.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part II

In yesterday’s blog post we commenced the developments of the Preliminary Specification. This began with a call to our user community to complete their applications and submit them to People, Ideas & Objects in order that we start building software on September 4, 2017. We have been involved in the development of our user community since the publication of the final copy of the Preliminary Specification in December 2013. Our commitment to user community based developments are unshakable. I will not involve this development in anything but user based developments and this is represented in the structure and configuration of People, Ideas & Objects user community vision. If you’ve been sitting on the sidelines waiting for the time to act and make your submission for the user community, now is that time. The oil and gas industry and producers have a systemic, chronic and unfixed issue that has resisted any identification or resolution to this point. I think I’ve documented here that the existing producers capacity to undertake the necessary changes to correct these problems is impossible. Therefore this issue is terminal to their health and welfare.

If you’ve ever wanted to involve yourself in user community developments. Now is that time to jump on board. Waiting at this time, thinking that People, Ideas & Objects are involved in a false start may prove to be difficult to overcome. Participation and commitment will be seen of those who desire to correct this issue in the industry and those who seek a better way. Now is the time to decide, what’s best for the industry, what’s best for society in general and what’s best for our future. Being a part of that is what is being offered through our user communities participation. Participation is about leadership. Leadership of the oil and gas industry through its darkest days. We will not be able to roll back the clock to this starting point for those that decide to wait it out.

Somebody needs to express to me a vision of how the industry can continue without the Preliminary Specification. I can’t see it. We have destitute oil and gas producers. I’ve never seen financial statements that reflect that these producer firms have been so destroyed, in my life. Throughout the industry. No cash, no working capital and no banking or investor support. Chronic and devastating losses. We go from optimism that commodity prices are going to rebound to the next commodity price decline, in as little as three months. Producers are stuck in a revolving door that has been locked and they’re just spinning around until they die of hunger. There is no leadership in the industry. It is their muddle along strategy’s ultimate manifestation of itself. Insanity.

We can sit and watch this act play out for a few more years. That could be eight more cycles of commodity price rebounds and declines. Sounds exciting to me. But at what point as a user community do we have to take responsibility for having this continue? Are we not becoming as responsible as the bureaucrats with their do nothing strategy. We as a user community are not doing anything either. We need to assert our leadership now and begin the process of forming and building the necessary user community to ensure that this nightmare ends. It is not up to us, yet, but it will be, and it will be because of us that this issue is resolved in a timely and effective way in the industry.

If you want user community involvement in the ERP systems you use in oil and gas then you’ll have to participate. If you want to have the power that is authorized to the user community through People, Ideas & Objects user community vision. Then you have to begin using it. It has been over three years that we’ve worked to plant the seed of the user community to drive the Preliminary Specifications development. It's now time for those users to make the changes in their life that they need to make to save the industry from itself. What we do know today is that no one is going to be doing so on their behalf. Those in responsible and authoritative positions would prefer to attack me than do anything constructive. There time to act came along time ago. It’s not that I started to do this a few weeks ago. They’ve known about this initiative for a long time and they’ve chosen not to do anything about it. Now we need to take the responsibility and authority away from them by establishing the user community, building the Preliminary Specification and fixing what is clearly wrong in the industry. Join me.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part I

A quick summation of People, Ideas & Objects blog postings over the past six months. Has us identify and recognize the opportunity to establish a startup oil and gas producer has never been better. Our first series entitled “Best Business Opportunity, Ever” documented how the legacy costs and other constraints present in the current producers make for an impossible to remediate financial situation. That investors need to move to newly established producers. Companies that hold none of the legacy debts and share structures of the current producers. It is these legacy constraints that preclude any value ever being accrued to the new investors in the future. With the investors capitalization of these start-ups, these new producers can prosper by buying the old producers crown jewels at fire sale prices. Our second, just completed blog series documented why industry needs to proceed with the development of the Preliminary Specification. Entitled “My Argument” it provides the rationale to make the now evident and necessary changes in the industry and producer firms. These changes are to address the issues in the industry and are becoming more obvious to people each and every day.

Our new series, “The Plan” will document what we plan to do about all of this. 2017 is going to be the year in which we begin developments. The acceleration in People, Ideas & Objects momentum is breathtaking. I have been at this for almost 26 years and struggled for years at a time to move this initiative forward by an inch. Now we’re travelling at Internet speed and the next five years are going to be a blur. The issue in the oil and gas industry is ripe and soon to be over ripe. Choices for producers to resolve these issues are limited to People, Ideas & Objects Preliminary Specification and closing the doors. Our very good friends the bureaucrats won’t make the decision. They’ll just part ways with the company when things become untenable. Or in other words very soon. Their story about cold winters, or market rebalancing or that they’re now disciplined was believed over and over again these past few years. Faith that they understood what was necessary was placed in them, and yet here we are heading into another commodity price decline with all the associated pain being distributed everywhere. Will anyone be listening to what they have to say this time?

So here’s our plan. We begin developments of the Preliminary Specification effective September 4, 2017. People who are interested in participating in this development through our user community should begin the application process now. It will take time to both read the Preliminary Specification and develop your submission. It is imperative that everyone thoroughly read and even study the Preliminary Specification in its entirety to understand how the industry and the producer will operate in the future. Focusing on your area of concern and specialization will come through the process of development. Your focus now needs to be in gaining the overall understanding of the Preliminary Specification in order to comprehend the implications of the new business model and its impact. That way when we engage with one another within the community we will be well versed in the objectives and tasks that are necessary. Additional consideration will need to be given by yourself to the development of a service provider organization that you as a user community member will be called upon to provide to the industry. Begin to think of how it is that you will organize and establish that service. Determination of which processes will be distributed to which user community member will be based on the efforts and contributions made during the development process. Once developments are done we will be able to determine who has earned what opportunities.

User community participation is a part-time position. It will continue throughout the developments. People, Ideas & Objects are providing a software development capability to the oil and gas industry to provide the flexibility they need to meet the changes in their business. Therefore the user community will be in existence always. User community members primary source of revenues are the service providers they will be establishing to service the oil and gas producer and industry once our software is operational. Their secondary source will be the continued revenues earned as a user community member. Recall the decentralized production model reorganizes the producers administrative and accounting resources into the individual service providers. Focused on a single process and applying their services across the industry as their client base. The service provider organization which they own will be the primary source of revenue for the user community member.

No one is going to tell us to get moving. We are probably late in materially helping the industry in the short term. Things could get much worse and we should work towards resolving this systemic, chronic and otherwise unsolvable problem. It is up to us to do this. And it will be up to us to keep the industry dynamic, innovative, accountable and profitable.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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.

My Argument, Part XXXVIII

It wasn’t long ago that the bureaucrats at the oil and gas producers were talking of energy independence on the continent. How quickly these ambitions have evaporated in the reality of their chronic oversupply of oil and gas. The light has now been turned onto the real issue and everyone can see as clear as day who the real culprits are. No one is hiding behind aspirations of energy independence in North America anymore. People know that the oil and gas producers will not be given another chance to make this right by “market rebalancing” or other wishful thinking. Comments such as these are being found everywhere as the reality of the size of this issue sinks in. From World Oil.

“People are worried about the future,” says Janet Weiss, president of BP’s Alaska division. “It’s a lower-for-longer world, and we’ve got to find a way to adapt to that.”

People, Ideas & Objects have the way in which we can adapt to the current situation, we call it the Preliminary Specification. Which if we did adopt it we would be able to put energy independence back on the table. The objective of the Preliminary Specification is firstly to turn all of the North American production profitable. Then when that is achieved, we can look at the ways and means that we can expand the industries throughput through the further development of the Preliminary Specification. Answering the question of how we’ll expand the resource base of engineers and geologists for the mid to long term. How we can repair and replace the aging oil and gas infrastructure. Then we can apply ourselves to expanding the throughput of the industries oil and gas production profile so that we are reliant only on ourselves. We know the reserves are there but there is so much more that needs to be in place. That’s how you would conduct yourself if you were serious about an ambitious plan such as energy independence.

What oil and gas producers and the brokers are selling today I don’t understand. It’s all sunshine and rainbows as far as they can tell. It’s as if the producers financial statements are irrelevant and only provide their accountants with something to do. Financially 2016 was a disaster for all producers. Far worse than 2015 in almost 100% of the cases. The worst year on record. There is no cash anywhere in the industry. No working capital with producers owing every service industry provider many year's worth of past work. Revenues are down and no one is generating any cash flow. So producers are looking for any source of cash that they can find. Stock prices of the producers are all highly overvalued so now would be a good time to be issuing stock. Yet there is little activity there and not one bank is participating in the industry that I can see. The only source of cash is the diminishing revenues of the producer. Diminishing due to the price declines from chronic overproduction and the producer's own decline curve.

If you tell the lie enough times people will begin to believe it. That is the new strategy of the bureaucrats. As an oil and gas investor looking at the producers they see the desperate need for funds and the legacy of the past four decades of accounting deception. Bloated balance sheets stick out in outsized fashion today in comparison to revenues that are single digits of the capital investment. In other words the opportunity for returns will be slim to none in the next ten years. You also have to stand behind the thousand and millions of existing shareholders who are also waiting in line for something out of these companies. That assumes of course that the producer has either serviced their debts where interest payments are in some cases one third of revenues, or paid the debts down by selling the crown jewels. As an investor which fire do I throw my money onto?

I know one group that has determined that they’ve had enough. Our user community. Activity there is at an all time high. It appears to me that people are turning their back on the oil and gas producers and saying enough is enough. People don’t expect to see the days when they work directly for an oil and gas company again. And if they’re committed to the industry they’re looking for ways in which to stay employed in the industry. People, Ideas & Objects user community is seeing 775% increases over 2016 in our numbers of people inquiring about our community. The light certainly has turned on for the people who work in the industry. There is no question about that.

And that is why we hold energy independence as the objective that is possible through our technologies. It's the first step. Then profitability has to become the religion of the industry. The investors response to this current downswing in the price of oil and gas is unknown at this time. If they’ve determined that they’ve had enough it will be a long time before they come back. And when they do it will only be on the basis that the industry is proven to be profitable from stem to stern.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXVII

Maximum pain will now be distributed throughout the North American oil and gas industry. You may have thought that the situation was turning around. We were told as much by the producers. The need to make changes prescribed by People, Ideas & Objects Preliminary Specification were laughed at and ridiculed again in December 2016. Producers had it under control. Oil prices were higher, natural gas prices were higher. And they don’t need no stinken software. They assured everyone that they wouldn’t be making the same mistake again, this time they had discipline. Yet here we are again with prices of both commodities in freefall. How could this have happened?

Implementing the Preliminary Specification in a normal environment has been understood by me to be a non-starter. You could never muster the energy necessary to make the changes within the producer and industry, and as a result the initiative would have eventually failed. We have always premised the implementation of the Preliminary Specification as a remedial rebuilding of the industry after its complete destruction had been done by the bureaucrats. This being the creative destruction that is the lifeblood of our advanced capitalist systems method of renewal.

I started this project 26 years ago this coming May. Based on what I saw as the difficulties being experienced in the 1980’s and 1990’s with low oil prices in the marketplace. All the producers needed to do was to shut-in some production, prices would rise and the industry would be out of a multi-decade downturn. Simple. However, once you started looking at the reasons why the producers can’t, won’t and will not ever shut-in production, you can see how complex the problem is. That’s why it took until 2013 to publish the Preliminary Specification. Based on the August 2003 realization that the use of the Joint Operating Committee was the solution to all of these problems. The ten years in between those dates was pure research into what and how the solution had to be, and all of that can be read here on this blog.

Now is the time for the Preliminary Specification to commence its developments. If you believe that the industry will last much longer in the hands of the bureaucrats then you’ve made your choice. If, however, on the other hand you believe that they’ve fundamentally destroyed the industry and its only the phase where maximum pain has to be extracted from all of those people, companies and investors in the industry. Then you should be reviewing our project to determine where you fit in. There can be no doubt in anyone's mind that the success of People, Ideas & Objects Preliminary Specification in the marketplace is necessary in order for the eventual success of the oil and gas industry. We can’t go back to the old ways of doing things due to the scope and scale of the failure that is about to be realized.

The way that the oil and gas industry has been run is rotten to the core. What producers say doesn’t relate back to their financial statements. They can’t be trusted to run a profitable operation. They don’t know what profit means. They’ve stored decades of past production costs as property, plant and equipment on the balance sheet and continue to expect investors to believe this means their worth something. They destroy value and have done so for decades. They are completely out of control and exercise no discipline whatsoever. The full realization of all of this is just about to hit those that have the most to lose in terms of monetary value. The investors.

Who is going to stick around and suffer through the rebuilding? We know the bureaucrats will cut and run at the first whisper of real trouble so we don’t need to concern ourselves with them. The opportunity to give the bureaucrats one more chance has clearly evaporated. Article after article in the business papers are now showing that the light is finally shining on this issue. Natural gas is projected to fall below $2 and oil is projected by some to fall into the $20s. And why wouldn’t they? There is nothing stopping these producers from completely overwhelming the markets in such fundamental ways that it’ll take years of disciplined profitable production through the Preliminary Specifications decentralized production model in order to rehabilitate the commodity markets. If maximum pain is what is required to make the changes in the process of creative destruction. Maximum pain is what the producers have created for everyone, and what we are all going to experience.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXVI

With evaluations of ERP systems being done on behalf of some producers. The question becomes what are the markets offerings. Only People, Ideas & Objects have a detailed specification of a system that deals with the issues that are ever present in the industry. A specification that requires the software to be developed. Others are offering functioning software code. Presenting to the industry, and the producer firms, the inherent issues that software presents to organizations. This post will argue the reasons why producers are better off choosing the developments of People, Ideas & Objects and moving to the Preliminary Specifications development.

Two of the key constraints in the use of ERP software are simply code and customers. As the software developer matures their code base continues to expand. Creating an overall conflict of interest due to code maintenance, which conversely doesn't generate any revenues. Customers also provide a conflict. As the customer base expands, support costs expand as well. Although these costs may be supported by the sale contract. The ability to make changes to the code become progressively more difficult with the increase in the volume of customers. As we’ve discussed here at People, Ideas & Objects software defines, supports and constrains organizations.

What's so different about People, Ideas & Objects Preliminary Specification? We are change oriented software developers. We generate revenues based on the changes that are present in the producer firms, industry and service providers. Our Revenue Model specifies how this monkey gets paid. Driven by the user community and dependent on the changes in the underlying business. If we should happen to need to replace entire modules then that is what will be done. People, Ideas & Objects compete based on the software development capabilities that we bring to the oil and gas producers and industry.

Another key component of our competitive strategy is the development of our Intellectual Property. With the Preliminary Specification we have developed substantial IP based on the 10 years of research that was conducted prior to its development. In order for the necessary changes to take place in the industry. Changes such as the adoption of the decentralized production model and price maker strategy. It is inevitable that the industry and producers will need to develop the Preliminary Specification. Use of the Preliminary Specifications underlying Intellectual Property outside of People, Ideas & Objects and our user community is not possible. Our Intellectual Property is the key to our user communities capabilities and will not be available for use outside of the user community vision.

As a key to our competitive advantage and development of the quality of user community we take our Intellectual Property seriously. Most people think this becomes a legal issue due to the rights inherent in copyright and other forms of Intellectual Property. In a small market such as oil and gas. With only a few hundred producers in the industry. We have put the producers CEO’s on notice, elsewhere and through this posting, that we will not accept any unauthorized use of our Intellectual Property. We know that these producers are good corporate citizens as are all the other participants in the industry, and our competitors. Therefore they wouldn’t spend the time or the substantial amounts of money that would be necessary to duplicate the Preliminary Specification for their own benefit. Their CEO’s would know that they would never be able to use the software from that venture if they did develop something on that basis.

Therefore there will only be one Preliminary Specification and user community. The user community itself will always be independent of the industry and that is its nature. There is however an implicit contract between industry and People, Ideas & Objects regarding the corporate structure and its ownership. The industry has me to build the Preliminary Specification, and then they can purchase that from me when it's complete for their own purposes. It is in that way, eventually, they can satisfy their need to own their ERP software.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXV

What do you know, pigs do fly. I thought that we were moving into a position where the focus of the issue of low commodity prices from overproduction might land where the culprits lay. Until now the Saudi’s and OPEC have taken the heat for low oil prices. I believed OPEC’s production sharing agreement was designed to change the focus away from them as the culprits and onto the North American producers, and most specifically the shale producers. My thinking being that if the oil prices did decline again, even after the production sharing agreement was in place, it wouldn’t be as a result of OPEC and we would then search for the real culprits. Last Thursday we had that admission from none other than Harold Hamm of Continental Resources. He stated the following in World Oil.

HOUSTON (Bloomberg) -- Harold Hamm, the billionaire shale oilman, said the U.S. industry could "kill" the oil market if it embarks into another spending binge, a rare warning in a business focused on fast growth to compete with OPEC. 

Based on the increased production profile of the United States, and the proposed capital budgets of the U.S. producers they’ve already killed the price of oil. Evidence of this is the fact that oil is trading as low as $48.79 down 11% from $54.45 in late February. Don't believe me, just wait and we'll see a further, precipitous drop in the price of oil. Now I think the issue that People, Ideas & Objects Preliminary Specification identified and resolved many years ago, that being systemic overproduction as a result of the industry standard “muddle along” strategy and business model, could become the consensus understanding in the industry. Then I would suggest the decentralized production model’s price maker strategy would be seen as the common sense solution. If you disagree then now might be good time to read our Preamble.

On a related note, we are finding documentary evidence that ERP systems are under consideration in oil and gas. For example, according to KPMG's Calgary job site people are being recruited to fill positions to meet the increased ERP systems demand from producers. These recruits are being asked to evaluate ERP market offerings on behalf of producers. What are these recruits going to be faced with in terms of offerings? I would suggest their first step would be to read our Revenue Model. Understand the history of how the producers have used and abused the ERP vendors over the last few decades to the point where only People, Ideas & Objects are offering anything new. As a result you’ll be hard pressed to see anything happen in this ERP market space before we see the color of the producers cash. I think the saying is four times bitten, fifth time shy.

Hence with no investment being made on behalf of the producers into ERP systems vendors, no investment has been made on behalf of the ERP systems providers. Pretty simple really. Therefore no vision, no plan, no understanding of the issues or how to solve them. Will any of these ERP systems providers adopt a user community based development and invest the years that People, Ideas & Objects have already dedicated to our communities development? What will their revenue model be and how will they overcome the issues we’ve identified. Hiring KPMG who are hiring people off the street, a.k.a. box tickers of existing software, will certainly answer these questions.

The key to this situation is to understand that OPEC achieved what they set out to do with the production sharing agreement. Shifting the focus of the issue onto the real culprit, the North American shale producer. One can see they've already changed their position in the following quote.

Al-Falih, in a clear message to the U.S. industry, said it would be "wishful thinking" to expect that Saudi Arabia and OPEC "will underwrite the investments of others at our own expense" through production cuts.

Evaluating ERP systems is rearranging deck chairs on the Titanic. What we really need to do is for someone, I would suggest the oil and gas investors, take the keys away from these bureaucrats. They don't deserve the right to continue. And they only have Santa Claus left to blame for their overproduction and oversupply. This is an issue I identified in the late 1980’s and early 1990’s and continues today, and there should be no doubt in anyone's mind, that without the Preliminary Specification, it will continue well into the future. Otherwise, the only thing bureaucrats will prove after their inevitable ERP system failure. A failure that no doubt will be due to the inability to address the overproduction issues. Then bureaucrats will be able to say that they’ve tried ERP, it failed and is not the solution. Establishing themselves in positions of authority and responsibility for another generation.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXIV

I think we’ve seen this movie before haven’t we? Natural gas prices are down to just below $3 from their recent high’s of almost $4. Oil is looking shaky, dropping as much as 6% on Wednesday due to inventories at record levels and the recent production surge from shale producers. This in the beginning of the third month of the OPEC production sharing agreement. Most tragic of all is the financial statements of the North American producers reflect the damage that overproduction and oversupply has done and that none of them, anywhere, are making any money. Why are producers so hesitant to deal on price? Why do they always look to make up any revenue shortfall with volume? Why are producers so hesitant to accept their business model has failed? And why are producers so hesitant to accept People, Ideas & Objects Preliminary Specification, with our decentralized production model and its price maker strategy?

The U.S. Energy Information Administration (EIA) projected U.S. oil production would rise to an average of 9.2 million bpd in 2017 and 9.7 million bpd in 2018, which, if correct, would top the current record high of 9.6 million bpd set in 1970.

The inability of the oil and gas industry to consider any alternative to this scenario is what people should be most concerned about. It is a closed mind, incapable of considering the facts regarding the disaster that they’ve created and are suffering through. The cost to society in the various forms that we’ve detailed here is tragic. Yet, what we do hear is a confident producer preaching to OPEC and other non-OPEC members that they better get in line. From World Oil.

The Permian basin of West Texas and New Mexico, which emerged as the hottest region for drilling during the 2 1/2 year downturn, would see a major curtailment of rigs at $40/bbl, while other shale plays in the U.S. would become uneconomic, he said. If all goes well, though, production at the field will surge to a range of 8 to 10 MMbpd over the next decade, from 2.3 million now, he said.

Vicki Hollub, CEO of Occidental Petroleum Corp., said later in the day that she sees output from the Permian eventually growing to about 4 to 5 MMbpd.

Sheffield said he hadn’t expected supply and demand in the global oil market to rebalance until next year. Only full compliance on production cuts from OPEC and non-OPEC members might speed that up to the middle of this year, he said. That hasn’t happened yet: Although 90% of OPEC’s 1.2 MMbpd of agreed-upon cuts have been accomplished, another 600,000 bpd of reductions promised from non-OPEC producers are at 50 percent compliance, he said. "The rest of the non-OPEC countries have to get onboard, especially Russia."

OPEC and non-OPEC member compliance to the production sharing agreement has been significant. This has enabled the North American producers to fill the void with U.S. shale production. It is obvious based on that previous comment that the basic assumption that these North American producers are operating under is that the rest of the world should stay clear of the U.S. and do as they’re told. From Fox News.

Kuwait Oil Minister Essam Al-Marzouq said on Wednesday that OPEC's compliance with an oil output cut stood at 140 percent in February, while non-OPEC members compliance was 50-60 percent.

If we go back a month or so to what was said by BP’s Chief Economist regarding double the reserve supply for the next 33 years. That this over abundance may lead the low cost producers in OPEC to reconsider their strategy of keeping their product in the ground. And just produce at whatever price they can get. A global free-for-all. North American producers are in financial difficulty and are heading into terminal financial conditions at this time. If OPEC adopts the strategy of production at whatever price there will never be an opportunity to produce profitably in North America again. The sum total of all that has ever happened in North American oil and gas up to this point would be subsequently destroyed and wasted. In light of this we hear at the CERA conference, from the Oil and Gas Journal.

During a meeting on the sidelines of the conference with chief executives of major US shale producers, Barkindo said he “congratulated them for pioneering this new frontier” of shale, praising their combination of technology and operational skills, managerial ingenuity, and a financial system that supports creativity.

“We only wish that it was done in an orderly fashion without creating this severe cycle that we are still battling to come out of,” Barkindo added. 

The title of that article is “CERAweek: OPEC done bearing ‘burden of free riders.’” With all due respect, North American producers have not bought into the religion of profitable operations. Producers need to do more than ride the commodity prices up and down. They need to build value all the time. I have been screaming about this for over a decade, providing our solution, the Preliminary Specification, and they only refute that profits are irrelevant and resume their baseball bat beatings of me. “Remember, never propose a new idea in oil and gas” they always say as they pound away. North American producers threats to OPEC are being taken seriously and in turn OPEC say they want to work with North American producers. The threats from OPEC, however, are not being heard. This is dangerous, particularly in an industry that has the financial position that oil and gas is in. Producers have left little bargaining room for themselves and they chose to threaten suicide as the tactic to get what they want. I would suggest that they adopt Opec’s suggestion of “an orderly fashion” and begin developments of the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXIII

The power of shale reserves to overwhelm the commodity markets is impressive. We’ve experienced this phenomenon many times in natural gas and a few times in oil. We will continue to see this until such time as the industry and most specifically the producers adopt some form of production discipline. The only discipline that can save the industry at this point is the production allocation methodology People, Ideas & Objects Preliminary Specifications decentralized production model and price maker strategy provide. Without that we will continue in this free-for-all, everyone loses scenario that has been the case throughout this first phase of shales existence. The commercialization of shale is the question. Can it be done? The technology now exists and is prolific, its power grows with each iteration of the boom and bust. Production discipline based on our production allocation methodology is necessary, but how is it implemented within the industry?

We use two simple tools in which to ensure that the industry implements production discipline through adoption of the Preliminary Specification. The first is greed and the second one is greed. People, Ideas & Objects provide oil and gas producers with the most profitable means of oil and gas operations. Maybe you’ve heard of our value proposition. If a producer is faced with full production at 100,000 barrels which generates a loss of $2 per barrel, or producing 80,000 barrels which produces a profit of $5 per barrel, what is in their best interest? With the decentralized production model the producer is able to scale up and down their production profile based on the price of the commodities and the cost of each individual property. If the property can’t make a profit at the current price it is shut-in until such time it can be reworked and put back into profitable production. The costs of the producer at 100,000 boe / day are different than what the costs are at 80,000 barrels per day. What the Preliminary Specifications decentralized production model has done is turned all of the producers costs into variable costs. Including actual overhead.

If the price of the commodity should drop precipitously to the point where only 10,000 boe / day is profitable then the producer changes their production profile on that basis. Yet they remain profitable due to the fact that their royalties, operations and overhead costs have all dropped to zero on the shut-in production and only incur those costs on 10,000 boe / day.

The second simple tool that we use in motivating the producer to shut-in their unprofitable production and obtain the production discipline that is necessary in the North American marketplace is as follows. Earnings are what drive the value of the shares of the producers. The better the earnings, the better the stock’s performance and the happier the investors. Happy investors means they would issue new capital and raise the money to expand their profitable operations. If a producer today were to begin offering profitable operations to their shareholders. In a marketplace riddled with financial carcasses from overproduction and oversupply do you think they would have a future?

There certainly will be violators of the production discipline of only producing profitable production. The motivation to cheat is well documented through the difficulties that OPEC experienced in the 1980’s and 1990’s. However, those producers may have higher revenue streams as a result of cheating, their actual profits will be lower than if they shut-in their unprofitable production. There profitable properties are being diluted by their unprofitable properties. As producers operations are today. Leading them to perform poorly in front of their shareholders and the market in general. These types of producers will be clearly evident in the marketplace. Their financial statements will be inconsistent with those of the rest of the industry. Whereas an industry that has attained production discipline will have each and every producer producing profitable production. The difficulty or the challenge in the industry, as it is today, is to increase your production profile over last year. In the future it will be necessary to increase it profitably. That won’t be a feature of spending money like a drunken sailor, and as a result, the pretenders will be weeded out by the contenders.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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. 

My Argument, Part XXXII

If we were to start to build the software defined as the Preliminary Specification today. What would be our priority and why would we develop our software in that manner. People, Ideas & Objects priority in developing software today, and always, is that it be user community driven. Throughout the history of the oil and gas industry users have been subjected to technical and accounting driven solutions that are top down approaches in terms of their design. It would not be difficult to develop a consensus that these solutions are inadequate for the 21st century, have failed the users needs and do not serve the business interests of the producer. I would also assert that the software defines and supports the organizations that we work within. Our producer organizations are failing financially and operationally. This is what I call a 21st century software bug.

I think we have a good foundation of understanding of the oil and gas industry captured in the Preliminary Specification. Building on that through the user community would bring about untold value to the producer firms, the oil and gas industry, the service industry and society in general. The key to realizing this value and quality of life issue will therefore come about due to the quality and capabilities of the user community that develops the Preliminary Specification. Understanding that we are currently in a software driven, organizationally constrained 21st century software bug, demands that we maintain this software development capability as a distinct attribute of the oil and gas industry for the rest of its existence. Locking ourselves into the strict definition of the Preliminary Specification for the long term will only lead to similar business issues whose scope and scale might be as significant as what we are experiencing today. Therefore the evolution of the business must be continually and directly mapped into the software by the user community.

Contrast this role for the People, Ideas & Objects user community with the historical use of user communities in oil and gas ERP developments. Most of the user communities that I’ve seen usually have their budget cut entirely by the time they’ve had their first meeting. It has been a tragedy in terms of implementing the software. Here’s a manual, learn the software overnight, we’re going live in the morning, this being known as user buy-in. User community budgets clearly interfere with the drilling of more wells.

Why is People, Ideas & Objects different when it comes to user community involvement? The fact of the matter is user based software is usable. It’s that simple. We see that today in other industries and other software types as the user community based software developments are the only serious approach to software development. I don’t believe the oil and gas industry has been well served in the ERP marketplace which is why I went into this business. Our budget dedicates ⅓ of our costs to user community participation and development. Throwing money around has also been a great exercise in failure in many serious software development projects. To leave the situation with only these guidelines for the users at this point, would therefore lead to our demise with only a number of wealthy former user community participants. There needs to be an organization where the members of the user community can affect the necessary type of change in the oil and gas industry. With the Preliminary Specification, change is the remedy to what ails the industry today. Without the user community having the power necessary to drive that change it will fail.

I have stated many times that organizations are defined and supported by the software that they use. If we accept that thinking and take it to its ultimate application in oil and gas we come to the following conclusion. It’s not enough to own the oil and gas asset, it's also necessary to have access to the software that makes the oil and gas asset profitable. Not a statement that bureaucrats like to hear. Conversely if you want a bureaucratic state hire bureaucrats for your user community. Nonetheless our user communities role in ensuring that oil and gas assets are profitable is the critical point. And through our user community vision they are endowed with the necessary power to generate the software that will define and support profitable oil and gas operations.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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.