Bureaucratic Persistence is Remarkable

Then there’s the scenario where I’m proven wrong and the industry doesn’t melt down. And oil and gas prices stay where they are. If oil and gas exploration and production were a drain on cash when oil prices were $74, is this as good as it’s ever going to get? Here in Calgary, which is an oil and gas town built on the 1870’s model of a one industry town / soon to be ghost town. Downtown office space is alleged to have a vacancy rate as high as 25 to 30%. Which has shifted the cities tax burden from those lucrative downtown office structures and tossed it on top of all the other businesses in the city. You can follow on with the decline in employment, wages and retail sales in the city on the basis of 30% of the jobs being axed. Times are not that healthy and yet no one’s expecting anything from the oil and gas industry in terms of opportunities or upturn. The bureaucrats have achieved a balance in terms of harmony in their daily lives where they’re never harassed by expectations or demands to perform.

The media have taken a different perspective on the world since the 2016 election. This perspective seems to have involved the oil and gas industry too as there is nothing so rosy and optimistic than what’s occurring today. Producers are not direct advertisers in their media businesses however they are a primary industry that generate activity in many sub industries. It’s probably not wise to criticise the producers in case they have the service and other industry advertisements put in jeopardy. The media wouldn’t want to end up like any blogger that we know.

Who’ll rescue the industry from this self inflicted malais. When oil prices collapsed in 1986 this type of depression era economic thinking continued well into 2004. This being our third year I guess we have fifteen more to go. The differences today are two fold. One is the natural gas prices have been completely destroyed by overproduction. Both sides of the business are now unable to carry the freight. Usually at least one had been doing well enough to get along fine. The second difference in today’s market is that the investors and bankers have discovered that they were the fool’s with the money that were being suckered into believing the financial statements of the producers. This enabled the producers to issue stock offerings annually that ensured the bureaucrats were handsomely compensated for the work they didn’t do.

What is surprising to almost everyone is the frantic level of activity coming out of the producers to address this malaise. Nothing, it’s the dead zone in terms of even addressing the issue. “Everything is just grand and we discovered another 8 tcf of gas last quarter.” As I stated yesterday, it’s probably necessary to have this crisis in the third quarter of 2018. Then we’ll be able to clear out the problem when the bureaucrats do slip out the back door. The question remains who will fund the development of the Preliminary Specification. Ours seems to be the only idea in the industry that addresses the specific oversupply and overproduction issue with any kind of resolution. Sure, it's expensive and it will take a while to develop. I don’t see too many people arguing about the time and cost that is being incurred by the bureaucrats doing nothing. At least we provide an upside with a value proposition of $25.7 to $45.7 trillion in incremental revenues for the North American producers in the next 25 years. We know that the bureaucrats have no plans, based on prior behavior, for the next fifteen years. What do you have to lose by building the Preliminary Specification?

We can continue on in the mode of the bureaucrats. Oil and gas does generate substantial cash flow due to it being a capital intensive industry. Those cash flows will always be rich enough to fuel the needs of the bureaucrats. And that is why this downturn is almost a decade since the collapse of natural gas prices. There is no sense of urgency, there is no issue evident to those in power, their fine. Their only concern is the transition between robust personal cash flow and the need to exit to get to greener pastures.

There really is no need for anyone to have any concern whatsoever for the millions of people who are directly and indirectly affected by the financial health of the oil and gas industry. These millions of people who include the employees of the producers who have been laid off, and those that have to fill the void at the producers today. They may have a job but for how long and working in fear is not what they went to university, have 2 kids and a mortgage in jeopardy for. The service industries are being bled to death through accounts payable hell. Not being paid for up to 18 months, and being employed only half the time is not what they spent their life savings on. Those that benefit from the royalties paid by producers don’t receive their fair share and “they” being mostly governments have to either scale back on other services or increase taxes. And the taxes that the producers, employees, service industry and others who are either not working, working part-time or having to settle for smaller royalty or business income and as a result not paying as much tax as if the oil and gas industry was a little more constructive. But we hear from them that their primary concern is for the health, welfare and of course the financial benefit of the bureaucrat who sit on the top of the food chain.

After all there have been 5 good years in oil and gas out of the last 32. What do people expect? That’s the way the business is operated. All the money that is ever spent sits in property, plant and equipment for decades at a time. Allowing the bureaucrats to pass on what little costs are incurred in terms of electricity for the pump jacks on to the oil and gas consumer. “Investors and banks always makeup the cash shortfall in the business and although they're not around today, they’ll see the wisdom of our drilling technologies.” This unfortunately is the culture of the oil and gas industry. It has slowly evolved into this over the past four decades. There is no sense of purpose but to drill wells. Financial people are there to pay the bills. It’s a culture that hasn’t grasped the issue that the industry is in, and after all that happened it is fair to conclude that we have not grasped how perfect the bureaucrats personal business model is. I honestly don’t know how this could continue. Cash is the same as the gasoline that you put in your car. The persistence in ignoring reality is quite remarkable.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 Great Migration Begins

The value of the reserves that have been discovered by the producer firms. The pristine nature of the assets that are unquestionably state of the art in terms of the applied science of engineering. These are the focus and attention of the bureaucrats today. They’re feigning not understanding the argument that People, Ideas & Objects are asserting. By drilling more wells, more reserves are being exposed to enhance the producers deliverability. Why doesn’t that blogger get that? Well I do and I’ve fought that logic since the late 1970’s. That and the logic it's all about cash flow. Spend money, find reserves, produce, generate cash flow. Rinse and repeat. That is the oil and gas business and anything outside of these activities are unnecessary and not of any interest. If a firm was filled with village idiots there financial statements would not be much different than the firm that was stocked full of the best oil men and women available. Big bloated balances of property, plant and equipment. And whatever revenue that was generated was pure profit. Genius’ all of them.

There used to be another step or process in the oil and gas business but that seems to have faded from memory as a result of disuse. That process was raise capital from the markets. No one is buying what these producers are selling anymore and the producers have had to live off of their “cash flow.” Hence the producers cash will run out by the end of this year. There are a number of mergers being undertaken at this time but those are all being done on the basis of stock, no cash. Just have to convince the shareholders that hanging on to that other drowning swimmer we’re merging with is a good long term strategy. Those fortunate producers who have mid-stream operations are trying to sell those businesses. There seems to be some takers enabling those producers to live off of that cash for a quarter or two. The only solution to the lack of cash. The only source of cash that is large enough to solve this problem on a long term, sustained basis, i.e. trillions of dollars, is to start charging the consumer for the cost of oil and gas exploration and production. The way to do that is to implement the Preliminary Specifications decentralized production models price maker strategy. There are not enough investors, bankers, governments or mythic creatures large enough and with enough cash to solve this problem.

If investors gave up years ago. And if as I mentioned yesterday, John Q Public doesn’t listen to bureaucrats anymore because they don’t believe them now, just like they didn’t believe them last year, etc. This warm summer of peaceful bliss maybe about to end, violently for our very good friends the bureaucrats. The only attention producers may be able to garner is the spectacle of a big bad crash of faith in their industry. It seems September and October are the times in which crashes, 1987 and 2008, happen. Look at that, if we add the .com meltdown of 2000 it seems an industry crashes every decade. 1987 was Wall Street, 2000 IT, 2008 Real Estate and Auto, 2018… I can’t think of another industry who fits this timeframe that is in such desperate financial condition. Retail is certainly bad now but when they fail they go out of business. They don’t issue financial statements that keep investors investing for several more decades so that they can keep paying the bureaucrats. They just go out of business. Usually you can get some good deals then too. Maybe what retail should do is learn from the oil and gas bureaucrats and just start capitalizing all of the merchandise that flows through the store. Think of the profitability!

The Trump economy is booming like no other. And in my opinion this is only the start. Which is a very good thing for our friends the bureaucrats. When the fan does get clogged they’ll quietly slip out the back door with all the other bureaucrats. That way no one will notice and no one will remember their names. On to new frontiers in new industries in the new Trump economy. Finally some fresh excitement they’ll think. And I would agree with them on the point about the excitement, that is until they get back into control and power and stifle any initiative there too. What is that saying you can’t teach old dogs new tricks. It applies to oil and gas today as well. These bureaucrats are hopeless. They’ve never considered anything other than themselves in this entire process. I don’t receive the treatment with the baseball bats out back by the dumpster anymore. They don’t laugh or spit at me either. In fact we seem to be at a complete stand still. Not that it was a dynamic relationship at any point along this journey. Not one producer has ever called me to ask about the Preliminary Specification and what they could do. It’s not that they don’t know what’s been going on, they know what’s going on and just wanted to protect their franchise for as long as possible.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

That's What You Said Two Years Ago

I’m finding that people’s memories have been etched with the chronic behaviors of the producers. The endless cycle of better times by this time next year, only to be replaced by the same promise the following year. Has created a cynical attitude in the public towards the producers. Most people understand, somewhat intuitively, that if you stopped overproducing then higher commodity prices would provide for a healthier industry. This apparently seems difficult to comprehend when drilling wells is the full scope of the business. Maybe the bureaucrats have it right and we’re being the fools as no one is expecting anything from them. They can just carry on in obscurity with no one the wiser or caring much what happens. The question that people should ask is why are we short changing our future by producing unprofitable oil and gas today? Producers expand their reserves, because that’s where the value is, except they’re never able to produce them profitably. So although they discover a resource that has monetary value it does not provide for a commercial operation. Given an abundance of investment and banker dollars any fool will stumble across something of value, eventually. Making it a profitable venture is a fundamentally different exercise that requires effort and skill. This has not been the case for four decades, rehabilitation can only come about through implementation of the Preliminary Specification.

I’m seeing discussion regarding the phenomenal cost control being exercised in the industry. The overall innovation throughout the industry and specific application of Artificial Intelligence that’s leading the industry forward onto a new frontier! I didn’t believe it either. In addition to the chronic unprofitability that has plagued the industry for four decades. That until recently was backfilled by an investor and banker who now realize they were duped through highly questionable accounting. That situation triggering the investor and banker strike that has been ongoing for three years. Which has created the cash crisis that now exists in the industry. What you have now, as represented by our sample of 23 producers, are bloated balance sheets totalling $489 billion in property, plant and equipment and working capital consisting of $7 billion. It seems like one of those numbers is disproportionate to the other. But I checked they’re correct. Maybe the theory that a business needs cash is not valid anymore in the 21st century. When a company ran out of cash it was usually a disaster, but that won’t happen to the oil and gas producers, they’re special.

In terms of oil prices hope springs eternal. But the fly in the ointment has to be the Saudi’s again. Having rehabilitated the market as constructively as they did in the past few years. The purposes of which were twofold, to prepare for the IPO of Saudi Aramco which demanded higher prices and to educate North American producers regarding the economic principles of price makers. As we see with the critical low balance of working capital, obtained in an environment of $74 oil I might add. There is no educating these producers. Just check how long this blog has been consistently publishing. The key point here is that the Saudis have now somewhat permanently pulled the IPO of Saudi Aramco. What is it that they’ll do next? If you think that they will continue to support the price, you haven’t been paying attention, they’ve already cancelled their production sharing agreement and there are two ways to educate the North American producers. By increasing oil prices and decreasing oil prices. Maybe North American producers will learn their lessons through the bankruptcy process.

This not so rosy situation is in contrast to the potential good news in the natural gas side of the business. It's been a decade since the collapse of those prices. The opportunity is showing itself through the inability to refill the storage volumes. They have now broken through the five year average and are expected to be around 3.2 tcf as opposed to almost 4.0 tcf last year. Might I suggest that the natural gas inventories are now moot. When gas deliverability was constrained by conventional reserves, high levels of inventory were necessary to meet winter demand. The same situation exists today however the natural gas deliverability is constrained by pipelines that don’t currently exist. Not the reserves necessary to provide the market. A different and temporary situation. One I don’t think is going to make any difference in the natural gas market. Particularly when the natural gas producers were saying in late 2016 that shale gas was reaching its maximum deliverability at approximately 43 bcf / day. And indeed did decline over the next few months to as low as 41.5 bcf / day. Heralding a new market for natural gas prices. Except for the chronic drilling and overproduction that we all know and love from these bureaucrats who have now attained daily production of shale gas of just over 55 bcf.

The one fact that we can be certain of in natural gas is that none of the conventional or shale gas is produced profitably. And that’s based on the specious accounting that the bureaucrats have used for the past four decades to scam the investors. Using a constructive accounting methodology we also know that none of the oil that’s been produced has been profitable either. The fact is all oil and gas production in North America is consuming cash. I don’t see how that would qualify as profitable, but the bureaucrats have reported that our sample of 23 producers were profitable to the tune of $9.2 billion for the first half of 2018. I guess the good news for 2018 was those $9.2 billion in profits only consumed $11.5 billion in cash and $11.9 billion in working capital. With $7 billion in working capital as of June 30, 2018 how much time do you have?

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 https://twitter.com/piobiz anyone can contact me at 403-200-2302 or email here.

A New Approach

Throughout our discussion of the user communities development there has been an overriding theme of compressing the time necessary from the start of our developments to commercial release. Now that we’ve achieved what we can and defined the process of how we’ll proceed, it’s time for me to admit that I have a serious problem. One that I’ve been working on since the publication of the Preliminary Specification, that I’ve not discussed here or with anyone. People, Ideas & Objects have always claimed to provide a software development capability to the dynamic, innovative, accountable and profitable oil and gas producers. This capability has been defined within our budget as approximately six hundred software developers. That is a lot of people to assemble in a short period of time. Then we’ll need to get them all signing from the same hymn sheets and lastly turn them into the high performing team that they always could be. The high performing team state of the art that they will have to be in order to accomplish the scope and scale of the Preliminary Specification. We don’t have a decade or more in terms of time to do that. If the issue is speed. And at $66 / barrel there doesn’t appear to be much of a sense of urgency today. However when we test the low $30 / barrel range once again, and we will, this issue we see with the North American oil and gas producers guarantees it. Speed will become the issue on everyone’s mind and no one will accept the time for People, Ideas & Objects require to ramp up their software development capabilities. If we could have started building these capabilities when the Preliminary Specification was first published we may have been able to get it done, but too much time has passed and too much damage has been incurred by the oil and gas industry.

Therefore we are configuring People, Ideas & Objects from a research and software development firm. Which is how we described ourselves up until today. To now be a user community and Intellectual Property firm. Specialization and the Division of Labor at its finest. This will allow us to focus on the detailed work necessary to ensure that oil and gas producers achieve the most profitable means of oil and gas operations everywhere and always. Ownership of the software code will be derivative from the work that we do. The only software or code operations that we will be conducting will be compiling and running our application off of GitLabs. The leadership team that had been defined for People, Ideas & Objects, and the leadership team that was defined for the user community will be consolidated. Other than that, and only that, nothing and I repeat nothing has or will change to the configuration of the user community in any way as a result of the new approach we’re taking. If anything we are and will be able to focus our energies on this our primary concern, our user community.

What we will be doing in terms of generating the software needed for this project is issuing contracts. All of the contracts that we will be issuing will be to Oracle Corporation to access their developers. Oracle has 7,000 developers who are in their consulting division conducting spec development of software. They have many more in the area of Oracle Fusion Middleware, Oracle Fusion Applications, Java and Database. There isn’t an issue from a technical point of view that we could throw at them that they would not be able to solve, quickly. They have the team functioning now and in a manner that is state of the art. By doing this we can hit the ground running and have the software development capabilities that are necessary to deliver our software, but on a more timely basis than our previous approach. The speed of our developments are potentially hundreds of billions of dollars per year to the oil and gas producers at this time. We must and will do this. From Oracle’s point of view I think they should see this as an opportunity to showcase their technologies, their people and their capabilities. Oracle doesn’t have an oil and gas solution on Oracle ERP Cloud. As a result of this approach they will be a big part of the delivery of the solution that delivers real value to the oil and gas producers.

Our budget is blown, maybe. Shifting the development dollars that were committed internally to now being committed to Oracle may push us over our budget. At this time I’m willing to let People, Ideas & Objects absorb the overrun from our profitability. I see no reason to review our budget unless producers would like me to do so. And I am advising the producers right now they never want me to revise the budget. In terms of the costs paid to Oracle I will not be looking for any discount or special deals from them at any time. I want them to understand from the first day that there will be no excuse for failure. We are paying the full freight for guaranteed success. Oracle will be on the hook for the success of delivering the software that our user community defines.

The reason that I am willing to indemnify the producers on any cost overruns on the change to Oracle based software developments is that there have been some efficiencies and developments in IT, and in the software development methodologies since we first published our budget. We are willing to proceed with this process with the belief that the higher costs associated with using Oracle will be offset by these efficiencies. I am satisfied that given the industries financial resources the Preliminary Specification will provide industry with the upside as defined in our value proposition. That being $25.7 to $45.7 trillion over the next 25 years. And therefore that is the basis and determination of my compensation. I’m not working for an hourly fee.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

Unquestionably, The Largest Issue Ever

I am at a loss to think of a time when the oil and gas industry faced a larger issue than what it faces today. The energy crisis of the early 1970’s comes to most people’s minds however I would suggest that it was a consumer related issue that was brought about by political means. Looking just at the business issues that the industry has faced I believe there has never been a time in which the business issues have been greater. My perspective is that industry has carried on with specious accounting for over four decades. An accounting prescribed by the SEC that inflates assets and profits magnificently. Outside of the issues of reporting profitability that never existed, which created overinvestment and overproduction. The value that is held in the industry today is worthless as it demands significant capital investments just to maintain operations. It is a drain on the economy and society in general. Without a willing and naive investor and banker group maintaining a long term annual infusion of cash the industry is unsustainable. This becomes more evident each day as the investors and bankers, realizing that they’re the mark, have ceased participation in the industry. The aggravating aspect of this issue is that it is systemic throughout North America and is unrecognized and unappreciated. It is the culture of the industry to spend other people’s money as the means to (bureaucratic) wealth generation. This culture knows of no other method in which to manage the industry and refuses to accept any other input.

As much as bureaucrats believe that $74 oil for a couple of months is all that is required. People, Ideas & Objects know different. The only thing $74 oil for a couple of months will provide is the return of a more robust skimming of cash flow by said bureaucrats. What we believe is necessary are prices in the region of $150 for oil and equivalent for gas for at least three years to deal with the damage that has been done through this issue. Nothing short of this will be able to provide the scope and scale of cash necessary to remediate the industry. It will need to be the consumer who pays for this as they are the benefactors of this current issue. The values held in property, plant and equipment can be seen as an accurate accounting of the amount of the discount provided to the energy consumer. These values being the amount of unrecognized capital costs of past production.

It was early this century when I began pounding the pavement regarding the lack of profitability in the oil and gas industry. I was told then that it was about cash flow, profits didn’t matter. I was laughed at repeatedly as a result of the position that I had taken on the profitability of the industry. It’s only in the last decade have producers begun to see the light in terms of profitability. Profitability of the producers is such a foreign concept that none of the producers know with any certainty or accuracy which of their properties are earning or losing money. The overhead necessary to operate those properties is mostly capitalized to property, plant and equipment of the producer firm. Therefore the cost to operate a specific property, for this and many other reasons, is unknown and unknowable. Therefore everything is thrown in the pot to see if it’s a functioning organization at the end of the quarter. That is the state of the quality and effectiveness of the accounting information that exists in the producer firms of the oil and gas industry. The objective is to produce everything always and don’t ask questions that can’t be answered. The CEO needs to strut down the street with the largest balance of property, plant and equipment that is conceivable. That is the measure of value and of performance in oil and gas today.

We need to fully understand the implications and reasons why we would ever produce oil and gas unprofitably. Is doing so reasonable or necessary? I believe this only robs future generations of their use of oil and gas. We owe it to ourselves to use oil and gas responsibly. That implies that we don’t waste it which means we should produce it profitability. Profitable on the basis of a reasonable and accurate accounting. Today we have producers and an industry that are effectively worthless. An abundance of producers have extinguished all of the capital that was ever provided to them. Yet still carry large balances of property, plant and equipment. People, Ideas & Objects believe that all of the producers balances of property, plant and equipment are overstated and 60 - 70% as a minimum of these balances should be depleted in the current period in order to capture a pro-forma understanding of the management's performance. This takes the bureaucrats perspective of accounting as a reflection of value, which it is never meant to be, and places the proper perspective on accounting, one of performance. These pro-forma financial statement will then accurately capture the situation that I feel exists in the industry today. A financial armageddon.

When the situation was manageable it was neglected, and now that it is thoroughly out of hand, we apply too late the remedies which then might have affected a cure. There is nothing new in the story. It is as old as the Sibylline books. It falls into that long dismal catalogue of the fruitlessness of experience and the confirmed unteachability of mankind. Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes it's jarring gong -- these are the features which constitute the endless repetition of history.”

That is a quote from May 2, 1935 from Winston Churchill regarding the buildup of military power in Germany. I’ve been arguing for a while now that the loss of cash in the industry was the issue that would bring about the necessary changes in the industry. I guess as long as the bureaucrats were able to continue to skim off the top whatever cash flow there was then there would be no critical issue to motivate them to action. “They were fine, thank you.” I do however believe that I now see the triggering mechanism, or jarring gong, that will precipitate the downfall of the industry. What's worse than the cash evaporating out of the industry? The entrance of the lawyers and the lawsuits against these bureaucrats for their poor performance. That is the one thing that they will all seek to avoid by escaping out the back door in mass.

We’ve seen a number of revised business strategies being published by producers these past few days. Establishing committees within the board of directors to evaluate options, selling themselves off bit by bit or cutting staff. These are not strategies, business models or what anyone signed on for. They are not productive and do not address the issue. Producers need to evaluate and implement the Preliminary Specification in order to adopt a plan and strategy that will provide for the profitability of oil and gas exploration and production everywhere and always. Other than the capitulations that are defined earlier in this paragraph, ours is the only plan and strategy that is available. The adoption and implementation of the Preliminary Specification may possibly enable their investors and bankers to reevaluate the outlook of the industry and producer based on a profitable future. And who knows maybe even forward some investment dollars to help producers bide their time.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

Commodity Price Dynamics

The bigger the commodities price differential, the more valuable the producer firm! That’s correct isn’t it? Well it seems to be the logic that the Canadian producers have adopted. Therefore it must be correct, the objective of the bureaucrat at the Canadian producers is to achieve the highest price differential possible! For what other purpose would you be in business for? My friends the bureaucrats have therefore attained significant value within their organizations. Here’s why, although natural gas prices remain positive, there is still the possibility that they will once again pay the consumer to take the gas from them. The differential on Aeco Spot natural gas is now $2.86 CDN. Leaving the natural gas price at $0.99 CDN. The real achievement though is in the oil price. Western Canada Select prices are $53.58 CDN making the differential $35.49 CDN. Which is a pretty healthy differential, more than double the previous record, yet still provides much incentive for the bureaucrats to move the differential much higher. Clearly my education in oil and gas remains incomplete.

What these differentials should reflect to each and every producer everywhere is the same lesson that the Saudi’s have been attempting to teach the producers over the past few years. This is also the manner in which the Preliminary Specification handles the oil and gas commodities. They are subject to the economic principles of price makers. If the market is overwhelmed with production then the price of a product that is subject to price maker characteristics will reflect that overproduction in price declines. Or in this case higher differentials due to Canada being somewhat of a constrained and unique market onto itself. (Maybe Canadians should think about building some pipelines!) The Preliminary Specification deals with the overproduction that is chronic in the industry through our decentralized production models price maker strategy. If the property based on the actual accounting did not attain a profit, as a result of high differentials in this case, then it would be shut-in to remove that marginal production from the commodity markets. Achieving a financial null operation, no profit but also no loss. Enabling the markets to find the marginal price within the industry. The properties reserves would be held for the time in which they would be produced profitably, and those reserves would not have to carry the incremental cost of each months loss as an additional cost to be recovered from those reserves. Lastly the producers would be more profitable as a result of removing their unprofitable production from their production profile which would no longer dilute their profitable production.

Once again my education gets in the way when the bureaucrats consider that the act of using reasonable and accurate accounting information from the Preliminary Specification in order to independently decide that a property is unprofitable and should therefore be shut-in, is clearly collusion as the bureaucrats consistently tell me. And I’ve now written these two oil and gas business attributes on my office wall in big letters. “Differentials are good, the bigger the better.” And “Making sound business decisions based on actual facts is collusion.” I’ll continue to work on these and one day I’m sure I’ll begin to see the light of how the industry operates.

It was about this time last year that I suggested that oil prices might begin to mimic what occurred in the natural gas marketplace. What happened there is that shale so completely overwhelmed the market that the commodity price collapsed. But then it continued in a significant way and since it was a continental based price overproduction further eroded the price until such time as it fundamentally broke down. Prices for gas in Japan and Europe remained robust which brought about the Liquified Natural Gas mini-boom of a few years ago. That mini-boom has now flooded the global market for natural gas and prices everywhere are depressed. It will take many years of deliberate rehabilitation of the natural gas market before anyone can profitably produce natural gas again. My suggestion was that a fundamental collapse of oil was not a given, but if it did happen it would be different due to the global nature of the commodity. We’ve now heard as of late last week that five year oil futures prices are beginning to be affected by the volume of producers selling, mostly shale, into that market. Might this be the beginning of the fundamental breakdown that we saw in natural gas prices? I suggest we keep overproducing and find out. Which is proof that I am trying as hard as I can to educate myself in the logic of the oil and gas industry.

It is believed that share prices are evaluated based on the three year outcome of the firm. If the five year oil price is breaking down, then that would also be good for the oil and gas industry? Bureaucrats may need to help educate me here on this one. I would see this as detrimental as the stock price of the producers having held up fairly well throughout the decline in oil prices. These share prices haven’t been stellar performers but they also haven’t been subject to the massive annual dilution that they were going through each and every year for the past few decades. I’m sure all of the bureaucrats would render a non opinion on this point. It maybe hits too close to home if they agree their performance may be lacking and also found to be dumping more of those options they’ve accumulated over the decades. It’s not that they’re conflicted, that requires emotion, it’s just that they want to keep their exits from the scene quiet for now. Bureaucrats may not like my discussion of their performance. What else is there that I could provide them that would reflect the job that they’ve done. I ran out of participation ribbons many decades ago.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

Investment in the Future Oil and Gas Industry

There are two fundamental changes made in the Preliminary Specification that create an interesting dynamic in terms of investing in oil and gas. The first is that we shift to fully recognize and support the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer. We shift the compliance and governance frameworks from the corporate model into alignment with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks. The alignment of these nine frameworks provide oil and gas producers with a speed, innovativeness and profitability that we seek in the oil and gas industry. The second change that we make is the creation of the service providers who are reallocating the accounting and administrative resources of the producers. The service providers will then provide the administrative and accounting process management on behalf of the Joint Operating Committees that are producing during any specific production month. If the property is profitable it will produce and the service providers will render an invoice for their services to each Joint Operating Committee within the industry that produced that month.

The key attributes of these changes are that the producer is relieved of the difficulties of administering and accounting for their properties, but most particularly ensuring that they are building the appropriate capabilities and capacities necessary to function as a dynamic, innovative, accountable and profitable oil and gas producer. I am not aware of any producer that makes the claim that administration and accounting are any part of their competitive advantages, and I’m not aware of what benefit there would be for any producer to claim to have administrative and accounting competitive advantages. However with our current friends the bureaucrats I’m not counting out anything. What we’ve designed with the user community and service providers is a capability and capacity that enables all producers to focus on their key competitive advantages of their earth science and engineering capabilities, and their land and asset base. The accounting and administrative conducted by the service providers is prepared in an objective manner that ensures that compliance today and compliance for tomorrow will be achieved and ensured. This is the advantage that is obtained by the configuration of these resources. The focus of each service providers specialization on the one process they manage enables them to be aware of all of the requirements that are demanded of that process. And it will be the service providers through their user community participation that will have the power and tools necessary to make the effective changes to their process to maintain the producers compliance.

Our service provider sub-industry will be made available to the oil and gas producer / investor for the cost of a monthly fee. The fee for the processes management may be pennies for the service provider to provide, however they service the entire industry and are able to as they say “make it up on volume.” What this does therefore is open the investment in oil and gas to far more than just the common stockholdings of the existing producers. Investors would be able to participate directly within a Joint Operating Committee and even if they only owned an interest in one small property they would not need to carry the multi-million dollar annual overhead burden to manage that investment. They would be able to own and operate their interest through the People, Ideas & Objects software and the service providers would prepare their accounting and administration for them. The overhead incurred for that small oil and gas property investment would be commensurate with the size of the revenues and properties configuration. The service providers being “cloud” based services requiring only the payment of a monthly fee to each service provider. I’m sure that there are bureaucrats who believe this might be a career opportunity for them as a result of each producer / investor writing checks to the service providers for each one of the properties that they own. However this is 2018 and the payment processing to the approximate 3,000 service providers each month will not be a burden to anyone other than the computers. As far as bureaucrats are concerned People, Ideas & Objects et al glow radioactive making us incompatible for any future working relationship. Therefore we consistently turn to computers to replace the bureaucrats.

People, Ideas & Objects, our user community and service providers therefore open oil and gas to a broader set of funding alternatives to raise the required capital. We also opens up a number of opportunities for the investor to participate in the industry. Opportunities like securitization could be pursued where the oil and gas asset is actively traded. Probably a good role for the oil sands projects where the ownership interest could be converted into a securitized investments that is actively traded.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

What the Plan, Where's the Strategy?

It’s one thing to be critical of the oil and gas producers, a skill and talent that I apply faithfully. To do so without offering an alternative would be futile and counter productive. My argument is only against the bureaucrats who are everybody’s favorite people and the group of individuals who are particularly responsible for the demise of the oil and gas industry. They’re also the ones that are moving rapidly towards extinction as a result of Information Technology, and are the odd man out in businesses everywhere. Maybe they’ll find some use in their next life. The ability for bureaucrats to self identify and take responsibility for their actions would be to much to ask. They’re always attempting to hide in plain sight and have defined characteristics that are obvious to those that are familiar with their breed and are able to identify them quickly. Their days are limited no matter what happens with People, Ideas & Objects, our user community and service providers. They were placed on the endangered species list many decades ago. And don’t get me wrong, I am not in any way attempting to solicit support or sympathy for them. They deserve everything they’re about to experience.

There was an article from World Oil the other day that caught my attention. “Large Investment Groups Throw Weight Behind Oil Rally.” Makes me think I might be wrong about the difficulties in the industry and the investors withholding their investment dollars. However reading through the article provides some clarity.

Duquesne also added shares in companies including Marathon Petroleum and Devon Energy last quarter.

The stake in the VanEck exchange-traded fund was valued at $44.1 million, while the Marathon Petroleum shares, its fourth-largest addition, were worth $34.8 million, according to the filing. The biggest acquisition last quarter for the family office was Facebook and Gilead Sciences.

Soros Fund Management’s biggest addition in the energy sector is Devon Energy, valued at $30.8 million. The hedge fund also bought stakes in Andeavor, RSP Permian Inc. and Kinder Morgan.

Based on these and contrary to what I’ve been saying all along about the industry heading for a very difficult time. It is relatively easy to suggest at this point that we’ve arrived. The media are putting a spin on this disaster, for whatever reason, but the facts are facts and they point to a comatose patient with no heartbeat.

So how is it that the industry can come up with a plan to deal with the situation. A plan and not an excuse to defer any and all action to some quarter in 2022. They don’t have until the end of 2018. The first thing the industry needs to do is to buy time. That requires either bank or investor money. Which demands a plan and strategy to deal with the issues and future. There’s no time to start to think about this. It should have been started many years ago, or maybe even a decade ago. It took me a long time, 10 full years of research, in order to prepare the Preliminary Specification. Producers can’t throw more people at this either. These usually have to come from one mind. Which is part of the reason that it takes a decade or more. Does anyone know of anyone who would have been fool enough to prepare a plan and strategy that deals with the issues and opportunities in oil and gas and can be implemented today? Anyone?

My sarcasm is ripe today. The producers could collectively adopt the Preliminary Specification and proceed with that plan and strategy simply by funding our budget. Always a catch 22. That way the investors and bankers would be able to see the future of the industry and how it would be returned to a profitable industry. By implementing the decentralized production models price maker strategy the days of flooding the market everytime the oil or natural gas price rallies for two consecutive days would be at an end. That any of the investors or bankers money they did put into the industry would be returned with both the capital and earnings being competitive against other industries performance. And that performance would be based on a reasonable accounting that they could understand and trust.

I am aware that People, Ideas & Objects Preliminary Specification is not the only plan and strategy that is available in the oil and gas marketplace. There are others. Take for instance the publication of Crescent Points revised strategy yesterday. Their newly installed CEO will be cutting staff by 17% and selling assets. Which is a business model that exists in certain industries. Think of pawn brokers or scrap metal recyclers. There’s also Strategic Oil and Gas who recently published their second quarter report that looked towards a future where investor and banker support was critical to their strategic interests. Only to declare a few weeks later that a special committee of the board of directors was formed to evaluate strategic alternatives. Or in other words, they’ve all but given up. My point is that there are many plans and strategies, ours seems to be the only productive and profitable one.

In somewhat related news, the probability that we’ll be able to launch a successful ICO diminishes each month. We’re still working towards one for September 2019 however it becomes progressively more difficult as the market remains relatively immature. The ICO method of funding will be with us for the rest of the century. And it will be a significant method to fund IT related projects. The diminishing capacity that I see is that to have our funding capability from that market in September 2019 may be premature. It may be as much as five years from now before the capability and capacities will be available, which would bring our ICO into the category of a less than highly probable event. The question the producers need to ask is, does this alternative appeal in terms of timing? Even with that delay though, that’s still twice as quick as the producers coming up with their own workable plans and strategy over the next decade.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

User Community Developments, Part XXX

Since the publication of the Preliminary Specification we have worked on the development of the user community as our first priority. This continues today and I’m happy to say that it will always be our first priority. High quality software begins with the user and that is where we are, the beginning. Building something today with the scope and scale of People, Ideas & Objects Preliminary Specification without an empowered user community would be futile and wasteful. The issues and opportunities in the oil and gas marketplace at this time are too critical to be wasting time on approaches that we know will never work. It is the user community that will provide the speed of development and quality of software that are necessary at this time to deliver the software product and services the producers and industry require.

During this series discussion we have taken the time to highlight the competitive advantages that the user community and their associated service provider organizations will be providing the oil and gas producer and industry. They are significant and substantial. To simply list them is the most effective way to capture their level of competitiveness in the industry. These advantages include;

• The quality of the software and services they build. Cost is not a competitive differentiator when producers are losing so much and are facing an existential crisis.
• Specialization and the Division of Labor being applied consistently in the areas of administration and accounting. All economic value has been, and will always be generated by these two tools.
• Automation of business process. The capabilities and capacities of the user community and service providers to effect the change required within the industry. To expand oil and gas profitability and reduce costs through automation is a competitive advantage.
• Innovation based on the users accounting and administrative expertise. The Preliminary Specification lays the foundation for an innovative oil and gas industry, they will have an innovative accounting and administrative capability as well.
• Application of the new technologies as they become commercial and are proven to generate value or reduce costs. New technologies such as;
• The application of Artificial Intelligence.
• 5/G or the Internet of Things.
• Focusing the efforts on what computers do well. Storage and processing. Leaving the things to the user community that humans do well. Such as leadership, issue resolution, decision making, creativity, collaboration, research, ideas, design, planning, thinking, negotiating, compromising, innovating, sensing emotions and financing. To name a few.
• Integration of our software and services within the oil and gas, and support industries. 
• Leadership. More on this below. 

Members of the user community will hold an active and dynamic position within oil and gas and will be driven to ensure that producers achieve the most profitable means of oil and gas operations everywhere and always. Only they have control of the decentralized production models price maker strategies Intellectual Property through their user community license. Only they can solve what ails the industry today.

We see the user community is configured differently with competitive advantages and tools like the Intellectual Property that make it capable of undertaking the tasks ahead. As I’ve described, the work that will be done on behalf of the oil and gas industry will be different than anything else the user community member may have approached before. It will be a dynamic and exciting role in a very difficult period for the industry. The key attribute of the user community member will be their leadership capabilities. Dispatching 3,000 leaders to solve the many areas at issue is the only way this will be done. Leadership has been defined as simply as the readiness, willingness and ability. Joseph Schumpeter said of leadership “Fixers and troubleshooters rather than production man.” Four specific behaviours are responsible for 89% of the effectiveness of leaders. These four are 1) being supportive, 2) operating with a strong results orientation, 3) seek different perspectives, 4) solve problems effectively. If you find this work as I’ve described in this series interesting the industry needs you. The issues don’t seem to be going away on their own do they.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

User Community Developments, Part XIX

As a user community member you may already know and understand that People, Ideas & Objects will be using Oracle Fusion Middleware and Oracle Fusion Applications as the base of the ERP system we will be providing to the oil and gas producers. These Oracle products have now been conveniently repackaged within a new offering called Oracle ERP Cloud. It will be this base of functionality that Oracle provides in which we will build the Preliminary Specification modules off of. Everyone being clearly aware of these applications and are good at seeing what the Preliminary Specification vision is as it is expressed today will be able to imagine in their own minds what it is they’re building. I’m being facetious of course. Nothing of the sort is expected, it would be a fundamental failure from the word go. What the user community must have from the first day of their development is a useable demonstration of the People, Ideas & Objects software in its initial development stage of being only the Oracle ERP Cloud. And each and every iteration of the development of the software. Then they can see the areas that they can use to bring about their ideas and weave their needs into the Oracle ERP Cloud and Preliminary Specification through our software developers. A constant, iterative approach.

As I mentioned this demonstration facility will be provided on the first day of development and be available to all of the users within the user community 7/24. Users will be able to generate generic data that can be used and reused to test the features that are being developed while the user is working to get the software right. As mentioned earlier, the use of an Integrated Development Environment (IDE) will allow user interaction with the software developer, review of the code, the ability to implement changes and run the code. Choosing an IDE is more of a personal preference. Google “Integrated Development Environment” and you’ll be provided with a wealth of information, videos and offerings. As an enterprise builder we would be somewhat limited to the Netbeans, Eclipse, IntelliJ and Oracle JDeveloper offerings.

Software development has changed from what most people understand. There will be times when a user community member may experience changes to the software their working with on a daily basis or even more frequently. Software is no longer released once a year based on a long list of changes that are opaque to the users. Small changes done incrementally over time is the superior method of building software today. When the user is driving those changes and is able to check the results of those changes against a working demo of the application there are few bugs that see the light of day in a commercial release of software. When we are discussing the development of the Preliminary Specifications on top of Oracle ERP Cloud we are discussing a well defined application scope and scale with an overall vision that is understood by each and every user member. There is no reason for People, Ideas & Objects to be releasing a buggy, poorly defined and slapped together hodge podge of an oil and gas application. We will have the resources, tools and methods to overcome the niggling details that the devil puts in our way.

Since People, Ideas & Objects will be a cloud provider of its software. And Oracle is providing their software on the cloud today. Members of our user community during our initial software developments will be able to access the work they’re doing and have done on most devices. Therefore demonstrating the work that they’ve done will be able to be presented to the producers as soon as the first week of our developments. The producers would then be able to participate through the user community member and have their specific needs and desires met in that way. Although it would be logistically difficult to have 3,000 user community members participating in this way, with 200 or so producers, more efficient ways of doing the same will be able to be discovered.

I’ve mentioned this next point a few times before and it’s just as valid today as it was then. I can’t necessarily peg the work that we’re doing here at People, Ideas & Objects as exclusively software development. That is our role and that is what we are focusing on. My point is that the cross between a software development / custom Integration will be hard to discern at times. Particularly for the user community member who will be undertaking the integration of the software through their service provider offering at some point in time. This is a result of the high levels of participation of the user community, possibly the producers tagging along too, and the developers all working to solve the issues the oil and gas industry is facing. To say that one day we will move from a decidedly software development phase to an integration phase in my mind will never happen. Integration should be one of the key issues that the user community member should be considering at all times and asking themselves, how can I speed up the implementation / integration of this feature within industry? Which raises the question when is it that the user community member begins the development of their service provider offering? Even without an assigned service provider process is there work that can and should be done by the producers in anticipation of the integration.

It’s within this post that we see the dynamic and critical role that is undertaken by the user community member. Without them nothing is going to happen, and nothing will happen unless its an idea or thought of the users first. Such is the interesting nature of this work and this time we find ourselves in. It should be clear that this is not your grandfather's user community.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

Labor Day

Third Friday

User Community Developments, Part XXVIII

When we understand the power of Intellectual Property (IP) and the means in which to deploy it competitively we begin to see new opportunities in the marketplace. Publishing the Preliminary Specification has been an effective competitive weapon for People, Ideas & Objects. It has helped to recruit and establish the user community, and through our user community vision, secure their foundation with the power and control to make the needed changes in the oil and gas industry. These competitive advantages will soon be in the hands of the user community. IP is the only means of competitive value that I feel is worth having in the 21st century. You either own IP, you have a license to IP or you will work for a firm that has access to IP. These will be the only manner in which people will be able to work in the future. Software, which is one of the strongest forms of IP is in my opinion the only business that will exist in 2050. No other industry will still be around. Such as it’s not enough to own the oil and gas asset any longer, it's also necessary to have access to the software that makes the oil and gas asset profitable. Therefore as a potential user community participant with a license to this IP you have a choice to invest in the user community or you could buy a producing oil well. Where’s the value? It’s your choice to determine how you’ll operate in this century. Our user community will need to learn and understand how to effectively use this new tool they will soon have.

We have three general methods in which to organize the user community. The work will initially be highly collaborative between other users within the community. Then in addition to collaborating within the community it will also be collaborative with our software developers. Users will at times need to be physically in front of our developers to ensure that their needs are met. They will need to be speaking to producers to relate what they’re doing and what the producers needs are. And they will be collaborating amongst themselves all over the continent. Therefore do we establish office space in Houston and designate private offices for each user community participant? Or we could do the open area concept and crowd everyone into a third of the space. The final method that we could use is to have the user community participant do this critical work in distributed teams. In any one of these three methods the use of video conferencing and one to one video communications would be more than adequate for the majority of the work that needs to be done.

I read an interesting article the other day in TechCrunch regarding the use of distributed teams. The key finding was that in order to make up for the lack of face-to-face communications the demand falls to each participant having to use their writing skills to overcome the distance. Therefore reading and writing become the primary means and mode of communication. Alleviating the office politics and increasing the documentary value of the users contributions. What we need to do, as I stated earlier, is capture the ideas that have already formed in people's subconscious, verify it, codify it, collaborate with others to validate its authenticity and merge with the other ideas from other users. Doing this in text is more precise and thoughtful, is easily searched and reviewed. Capturing ideas and who specifically contributed the ideas within conversations in an open office area becomes much less efficient in contrast. To house people in individual offices in order to write these submissions seems contrary to efficiency and redundant when the Internet is at least 24 years of age. Therefore distributed teams is the method that we will be employing throughout the user community on a permanent basis.

In terms of how People, Ideas & Objects will determine the allocation of specific service provider licenses to which member of the user community. The contributions that are made during the development process will be the determining factor. No one is going to go through all the submissions and be able to allocate the appropriate license to the right individual. That would be a superhuman exercise and not possible. It is however well within the scope of what Artificial Intelligence is able to determine. The AI algorithm would review the Final Specification and determine the key attributes of the system. This may involve some help from us humanoids. It would then be able to go back and determine the first mention of these key ideas and the individual who originated it. It would then review the sum of all of the users contributions, compare those with the other users and their areas of specific idea generation. Then apply the known processes under management within the Final Specification and award the licenses for the management of those processes to the highest contributor of each individual process in terms of the ideas and contributions that were made. It sounds easy when I put it like this, however, we will have a budget set aside for the development of this algorithm the moment we are funded. That way by the time we have to apply the AI to the situation it will be tested and the bugs worked out. These AI recommendations would also be subject to the final approval of the user community.

We are capturing the user communities contributions in Google Docs and a Wiki based on Google Sites. We are using Google GSuite for our collaborative environment. It is by far the best in terms of determining who generated what idea when. All that users will have to do to secure their thoughts is to prepare their initial submission in a Google Doc (Word) document and then copy and paste that to the Wiki. The AI algorithm will be able to see the Google Doc was where the original thought came from, who wrote it and at what time. If we used Microsoft Office Word and Excel these applications are still unable to consolidate the contributions of many contributors to a document into one file. Usually someone has to babysit the consolidation to ensure everything is captured and hence losing the originators time stamp and contributions. In this sense Google is light years ahead of Microsoft. People, Ideas & Objects software code itself will be stored in GitLabs and be available for the user community member to review through an Integrated Development Environment (IDE). This will be read only access and will probably remain that way for the foreseeable future. Review of the code is something that will be expected of the user community member as a final verification that what they are expecting is what in fact being conducted.

Establishing the development environment in this manner provides significant value to the dynamic, innovative, accountable and profitable oil and gas producer. The desire to get things down quickly will be the motivation of the user community member initially. Providing a base for discussion and collaboration within the community in a short period of time. It will also provide somewhat of a competitive spirit between user community participants that will keep the pace of contributions high. Competitive, yet each user community members license guarantees each user community member will be provided with a service provider organization, after all that is the grand prize in this process. Therefore collaborative, competitive and civil all at the same time. With AI providing the recommendations of which user community member to be assigned to which process the user community member knows that the work that they do, the area that they know the best will lead to their recognition in terms of the allocation of service providers. Enabling them to specialize on a process and work hard to earn it. The last point to make is that user community members may have an interest in one service provider or in many service providers. Their total interest in many service providers not exceeding, or falling below 100%. (For example if the user had an interest in three service providers they may have 40%, 40% and 20% interests.)

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

User Community Developments, Part XXVII

We touched on some of the detailed work that needed to be done by the user community during our software developments. This of course could only occur once the user community had fully formed. Which would be difficult when we don’t have any office space in which to house them. Bringing up the issue of our budget, which needs to be fully in place before the user community participants are going to fully commit to this project. They can’t risk their careers by having the bureaucrats cut the funding half way through leaving those individuals without the opportunity of user community participation and establishing a service provider. Restarting the project after a budget cut and pause would be impossible. Which is why we need the full funding in place. Otherwise the bureaucrats will only create a failure to prove the Preliminary Specification is unworkable and establish themselves as the only solution for oil and gas management. Casting the user community participant to the catacombs as punishment for participation.

Nonetheless the time travelled in the first paragraph of this post is seemingly years and we still haven’t hired one developer. It appears that the time that we deliver commercial software to the marketplace will be at least a decade from here. This post will dispel this timeline with the facts of how we we’ll be approaching these developments within a far more reasonable time frame and deliver software on a much more timely basis. What delays our commercial release date at this point is the formation of the user community. We have been undertaking this task for five years and are continuing with that work. Therefore, in my opinion, our date for commercial release has been fixed in time for these past five years and will remain fixed as we continue to work on developing the user community. One of the primary reasons that user community developments in oil and gas ERP systems have never been successful is that the budget and time commitment to them are inadequate for the users to consider them. User community commitment is not something that people will review and in the following week commit too. They’d like to see the details of the plan. How will it work, what’s their role and how do they fit in. These are detailed in the user community vision. A vision that endows them with the power and control to effectively deal with the changes that need to be made. Users also need to see the budget and commitment of the producers, in this case, in order that they can rely on more than just empty promises. Right now they don’t see the commitment from industry only the need for action. These take substantial amounts of time for people to consider. They have to consider the opportunity and what it will cost them if they make the change and what will it cost if they don’t make the change.

Three thousand individuals, the size of the user community we believe we need for the Preliminary Specification, which is a substantial amount of people. Identifying the scope and scale of the community helps people to realize their role is probable and possible to be contributing to a successful venture. If we’re looking for a hundred people to undertake the scope and scale of the Preliminary Specification people would know intuitively that that’s not enough people to do the job and failure would be the outcome. I believe generally in my discussions with potential members of the user community that we’ve struck the right balance in terms of scope and scale of the tasks ahead of us. As the issue of oil and gas profitability becomes more evident to more people each day there is a greater realization of the need. Overall a large number of people within oil and gas have read the Preliminary Specification in its entirety. I know, I’ve been told a million times only put your ideas down in a half dozen points on a presentation because no one reads anything. What I’ve found since my first publication in 1996 is that people read.

People, Ideas & Objects competitive strategy at this point in time is the cognitive dissonance created in the potential user community participant who has read the Preliminary Specification. They know of a different and, I’ll state for marketing purposes, a better way. They can see the logic and integrated nature of how the Preliminary Specification functions. And they also need to function in the day-to-day of the existing environment that is not functioning profitably, which is being gracious, and are forced to use systems that are inadequate. This cognitive dissonance is the motivation that the user community participant will likely use to act when the budget is secured. The motivation being their own sanity. To continue without the hope of the change is too difficult for them to even contemplate. Therefore they may have already made the conscious decision with their families and are making tactical changes to their situation to accommodate the pending change. This is how you develop a user community.

So in terms of time I don’t see a decade passing before the user community is formed and we release commercial software. We’ll discuss tomorrow the “how” aspect of the user communities method of operation. Then we’ll be able to know the time necessary to do this work that has already passed. That is, the work has already been done in the subconscious minds of the people who are the potential user community participants. Now we only have to capture it in textual form.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.

User Community Developments, Part XXVI

Since we’re on the topic of the user community and service providers we should discuss their role during our software developments. Understanding the reorganization of the industry and producers conducted by the implementation of the Preliminary Specifications decentralized production model. When it comes time for the user community to prepare the processes that are under management by the service providers we are presented with a complete blank slate. The only thing that is settled is that there will be many service providers conducting the accounting and administrative tasks for the industry as a cloud based service. The how, what and why is more detailed than that and is gained as a result of reading the entire Preliminary Specification. The objective here is to prepare the most efficient way to organize the industry and producer in order to obtain the full scope and scale of the opportunities that these configurations provide. Understanding too that this blank slate is the reason that we’re unable to commit to any prescribed, specific process that will be managed by any specific user in a service provider organization at this time. That will be the last task we conduct in terms of who is assigned what process to manage. The criteria we will use to make those determinations will be based on the significance of the contributions made by each user community participant during the software development process.

So let’s look at a task that will be conducted within the industry nonetheless. I want to set out in the beginning of this post that this is only a discussion to stimulate some thought and will not be incumbent upon the user community for them to follow along with these as directions. The Preliminary Specification is a requirement, however it is the larger picture reorganization and reconfiguration of the industry, producers, departments, service industry and other organizations. With major processes defined and how they’ll operate. These are implemented as defined in the Preliminary Specification. The following is just a discussion in this one post around one individuals thoughts.

Let’s assume that the task the user community are developing are the processes needed to be established in order to pay vendors? What we also know is that there will be an approval process that will continue to be required by the producer. There is also a Purchase Order system within the Preliminary Specification. This process is complicated by the removal of the operator designation approving costs on behalf of the Joint Operating Committee. In the future, do the working interest owners approval of the AFE’s budget include the specific program with the vendors named and their winning bids as part of the AFE that is approved by the members of the Joint Operating Committee? Is this how the costs are then subsequently approved for payment for capital projects when submitted by the vendor? And what about operations, how are these costs approved, or are they analyzed for reasonableness and consistency from prior periods? With the mass of data how can Artificial Intelligence, a competitive advantage of the user community, be applied here? Where any exceptions that are identified are highlighted for subsequent review by a specific service provider(s).

How do we organize the process of paying the vendors? What are the needs, expectations and ideas that the service industry representatives have in this process? Will there be service providers who are dedicated to the service industry representatives processes? And as we state in the Preliminary Specification “who are we building systems for?” if not for everyone in society that is affected by the oil and gas industry. Only then can we begin to define the real efficiencies and effectiveness of what we’re doing.

Paying the vendors is not going to be handled by only one service provider. A further specialization within this area is going to be required. Maybe we have many service providers that are involved in the process of coding accounts and paying bills. Are these processes organized based on the specific producers that the service provider will support. Or will the service provider support the vendor with the A named vendors assigned here, the B’s assigned there etc. Or will there be the need for service providers on both sides of the transaction? And what about automation. You can buy an App that scans the receipt of your recent purchase and code it into the accounting system that you use personally. How much automation can be implemented in terms of these entire process and where do the service providers fit in terms of how and what they do to ensure the oil and gas producers achieve the most profitable means of oil and gas operations?

This work by the user community needs to be defined in order to commence software developments. They are therefore our current primary impediment to our release date and hence the reason that People, Ideas & Objects have focused on the development of our user community as our priority over the past five years. They are our customers as they are the ones who do the most critical work in terms of ensuring that producers are producing profitably and the users service provider organizations are constantly iterating and improving the software and service that they provide the industry. There won’t be any software developed prior to the formation of the user community and the development of the necessary level of detail for the developers to begin developments. I am not imputing that our software developers will only begin developing after the user community puts a bright red bow on their work. Developers will have their own initial work loads to do before they interact with the user community and they will have many phases where their output will need to be, let's be kind, amended by the user community. One of the competitive advantages of the user community is quality, they will need to learn how to attain that from our developers.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.