A User Perspective From the Service Provider

No matter the situation regarding the oil and gas industry. Whether our budget is funded earlier than our plan specifies in January 2017. The user community will have time to develop in the appropriate manner. Time is the option that we have at our disposal and we are using every minute of every day to further develop the user community. That is our priority and our focus and nothing will take that away. Whatever time is required will be what will be committed to the development of the user community. And not to contradict myself or apply any pressure to the community, it is also the user community development that holds up the remaining parts of this project. Therefore even if we were to secure the budget for the developments of the software, if the user community is not ready to begin developments we will sit on that money and wait for the appropriate time to start. Our commitment to quality and user community developed software is unquestionable.

What kind of oil and gas industry do you want to work in. One that the bureaucracy is in control and unaccountable. Then you can stop reading now you have what you want. Or is it a dynamic, innovative and profitable industry that is driven by the people and ideas that are employed within the industry. One where change is the constant and the systems that you are contributing to the design and development of are a critical part of that organizational dynamism. You see this in other industries that have changed as a result of Information Technology. Music is nothing like it used to be. You the user gets the music you want where you want when you want it. Too bad about the record executive though. Uber will get you from point a to point b without a word, or a need to grab your wallet. And now Apple Pay is the last great hope for the credit card companies existence. Why can't there be a solution along those lines for the oil and gas industry?

The only reason that hasn't happened in oil and gas is because you're not involved. It needs the user to be involved in the development of these software applications to make them effective for the work that is done by you the user. The Preliminary Specification dictates a business model of how the industry would operate if we adopted the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. It provides solutions to the big problems in the industry like the decentralized production models ability to make the producers price makers. And a solution to what is now being called the “Big Crew Change.” In terms of how it provides the support for your job. The desktop and mobile applications that you need to make what you do for the producer firm dynamic, innovative and profitable. That has to come from the user community and that is why we are so focused on the development of the user community at People, Ideas & Objects. It is the source of our quality in terms of our software.

Consider the revised structure of the industry under the Preliminary Specification. With the producers stripped down to the C class executives, the earth science and engineering resources, some land and legal, and some support staff. Where the administrative and accounting resources have been reallocated to service providers. Assuming you would be moved to an accounting service provider. What would it be like doing your job within a service provider where the entire industry is your client base. What applications would you need in order to do your current job there and process the mountain of data and information that you would be faced with. A completely different kettle of fish. One which the sciences of Information Technology on top of your industry knowledge and accounting education would be necessary to add real value for your producer clients. It is assumed that we'll approach this change with a division of labor where the computers will do the storage and processing. And the users will conduct the leadership, problem solving, creative, collaboration, research, idea generation, design and planning type of work. Then we begin to see the special role the user community takes in these software developments. And how the never ending developments of new and better ways of processing that data will constantly bring greater value to the producers. If it is this type of vision that interests you, and there is a bureaucrat lurking in your life, you'll know what to do.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Tactical Plan for the User Community

It is clear to People, Ideas & Objects that the prospective user community participant will not subscribe or participate in these developments until the funds are secured. This has always been understood to be the case. We do however expect that the leadership team will begin their participation at any time. It was on the basis of the leadership teams existence that we would be able to prove to the investor community that we were able to provide an alternative means of organization to them. And then raise our budget on that basis. That was before we were presented with this opportunity to raise our budget in 2015 based on the decline in oil prices. That is, with both the oil and the gas sides of the business performing poorly. Investors will be looking for alternatives to the bureaucracy and therefore the budget can be raised, our leadership team, user community and the Preliminary Specification developed in that order.

If we understand the scope and scale of the Preliminary Specification it involves the work that is done within the oil and gas industry, there is little that is conducted outside of the application. Once we adopt the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer there is little within the industry that is untouched as a result. Therefore we need to include these elements within the application to ensure that it operates in an integrated and functional manner. Therefore the user community will be drawn from the entire population of the oil and gas industry personnel. They will also bring to the application their needs and desires of “what” and “how” they do their jobs. This way we can build the applications, whether for the desktop or mobile, so that they are done efficiently and effectively.

If it takes at least six months to fully comprehend the role the user has within the producer organization. And this is based on the many years of industry experience that a user may have acquired. You can see the value that the user brings to the software development process. When we expect that the costs of user community developments will total $667 million. Total 2,000 man years of time and involve a population of approximately 3,000 individuals. We can see the scope of the undertaking that we are contemplating. And this is what is budgeted for in the initial commercial release. We expect that the user community will continue on in an ever changing and constantly improving manner for the entire time the application is operational in the oil and gas industry. Participation as a user community participant should be considered as a new career choice.

This is in stark contrast to the current model of hiring a number of consultants from the various accounting firms to conduct user development, installation and integration of ERP software. These somehow never have the resources required to complete the user development attributes. As is evident by our budget we're not going that way. We do however have a budget for Oracle consultants. These are primarily for our developers in terms of understanding the Oracle product line.

If you feel that this scope and scale is out of line with what is reasonable in the oil and gas industry I would point out that our value proposition is in the trillions of dollars. And those trillions of dollars are on top of the costs that have already been incurred by the industry. So our value proposition is valued in pre tax profits. We are providing the oil and gas investor with the most dynamic, innovative and profitable means of oil and gas production. That imputes everything involved in the industry to attain production. Therefore the investors investment in us will leverage off the many investments that have been made in the past one hundred years. That is the power of software today, however software is useless unless it is in the hands of an enabled and empowered user community.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Rememberance Day

There is no posting today in recognition of Remembrance Day.

What a Mess

There are no doubt a few bloody noses and some angry people as a result of my words Friday. I've made it pretty clear that I share the bureaucracies belief that they won't participate in this software development project, the user community or the service providers. They have ignored me up until now. That is the normal procedure you follow with respect to a pest. But when that pest becomes a danger, as we have now that the Saudi’s are dropping the price of oil and the bureaucrats are going to be losing money, and therefore won't have a leg to stand on, they will therefore be looking to exterminate that pest. So yesterday I made sure that they know I’m ready for the fight. Let us begin, and may the best business model win!

And this battle will be short lived and intense. I think the investors are going to be looking quickly for an alternative. Prospective members of the user community could help in sending our message out further and faster. That would help everyone. Other than that keep your head down and watch the show. I promise it will be enjoyable and there is no reason for anyone else to be involved in this fight. It’s just me vs. the bureaucrats. The Preliminary Specification vs. the status quo. And the referee will be the investors who have to call the fight to determine who the winner is. And the winner will be the one that operates the industry on a go forward basis.

That is for the foreseeable future. The next 20 to 30 years. A continuation of the bureaucrats and their losses, with no strategy, vision or prayers as to how to make money other than for themselves. Or a vision of how we provide the industry with the most dynamic, innovative and profitable means of oil and gas operations. One based on the Preliminary Specification which is defined and controlled by the user community. The choice is stark. The scope and scale of change is significant, approximately equivalent to the changes that are being experienced in the oil and gas industry itself. This is the choice that the investors are being asked to be make and what the fight will be about. There are trillions of dollars at stake, and maybe so much more.

There is the point of our user community. Which is our primary focus and will always be. User defined software developments are substantially different than other software developments in my opinion. The user community is our source of quality and success. They will be the reason that the industry achieves the dynamic, innovative and profitable means of oil and gas operations. Our cultivation of the community will continue until we have it developed to the level that it can begin developments of the software. And it will never stop developing for the 20 or 30 years that we are the means in which the industry is operated.

We started this week noting that we were taking on what we have now quantified and qualified as the “fight” against the bureaucracy. This is in order to raise our budget in what we describe as the “opportunity” that we find ourselves in.  An opportunity present now that the Saudi’s are “teaching” the shale producers the lesson of “production discipline.” I have set the context and the tone this week. This battle will continue on through the better part of 2015. And believe me you have the right candidate to provoke and antagonize the bureaucrats in your corner. There is nothing that I enjoy more than a fight and I am itching for this one. This however will not take our focus off the development of the user community. And starting Monday we will begin again with our discussion of the user community. The fight will play on in 2015 and there is not too much that will happen in 2014. And with that I should announce I will be taking six weeks off from December 1, 2014. Time which gives the bureaucrats a chance to clean the place up from the mess they made yesterday.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

"I Did It My Way"

Today I want to address the eight hundred pound gorilla in the room. And that is our budget. It’s controversial and contentious because no one has seen anything like it in the ERP marketplace of the oil and gas industry before. Lets also be clear we will be looking to raise the full $4 billion in funds in order to begin the developments of the Preliminary Specification. I am certain that our costs will be in the range defined in the outer limit of our budget. And for a number of reasons detailed later in this post we will be looking to raise the full amount. The issue and the controversial aspect of the budget is the payment of the Intellectual Property royalty to me, and the net profits. These two items total half of the budget and nothing of its kind has ever been proposed, or paid, in the industry before.

As detailed in earlier posts and elsewhere; the time that I have spent on this project is significant. I started it in 1992. If the industry can come up with a timely solution to its problems that competes with the Preliminary Specification they can begin the process that I started way back when. This blog reflects much of the ten years of applied research that was done in order to take the idea of using the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. An idea that I first published in August of 2003. And moving it to the situation we have today. Some people may consider that I am lucky that the oil and gas prices declined and the decentralized production model just happened to meet the needs of the industry. I don’t care. I'll have the royalty payments that prove that the industry needed the solution to solve the trillions in potential revenues that they were losing. I have always been able to generate significant value in the work that I do. It’s no coincidence that I also generate significant controversy. The money is how I keep score.

So we can continue on with the controversy and the losses in the producer firms. To me it only matters that the industry provides me with the up front payment of the budget first and foremost. The first reason of course is to pay myself the royalty. Secondly I will deliver the program in its first commercial release in a timely manner and as a result earn the profits that are identified in the budget. If I fail or have difficulties, then the profits that I realize will be diminished. The issue of the up front payment also has to do with the fact that the bureaucracy have chosen, in every instance, not to work with me. Even when faced with the difficulties in their business. Reasonable people faced with the difficulties in their business would have turned to those that have solutions. They will never do that. If I have to be accountable to the bureaucracy in any way it will surely be my demise. By moving the money under my stewardship as the first act of the industries participation in these developments. Ensures that I will be able to deal with the issues as they arise. And the bureaucrats can continue to manage the industry for the short time they have left.

It is our commitment to the user community and the service providers who are providing the removal and replacement to the bureaucracy that will be the keys to the transition. Technology is disintermediating industries all over the world. Just ask the record store manager, or his distributor. Yesterday I detailed how the industries investors were led down the primrose path to build the industry while prices were low. So that when prices did turn higher they would reap what they sowed. This was a farce and the investors were fleeced. The bureaucracy have played the ultimate ponzi scheme and I’m saying to the bureaucrats you're busted. We're offering an alternative. And in reality its a pretty inexpensive alternative compared to what the bureaucracy is currently charging the investors, and will be charging them in the future with no vision or strategy. And, no prayers. So maybe the people in industry think that our scope and scale is out of line with what is historical in the industry. That paying for Intellectual Property is inconsistent with the industries history. I think we've had enough history from the bureaucracy, and I'm declaring that they're toast.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

"Its Just a Flesh Wound"

Those were some of the last words of the “Black Knights” in the movie “Monty Python and the Holy Grail.” They're what immediately came to mind when I read the response of the oil and gas producers to the Saudis discounting of oil for import into the U.S.

What happened on Tuesday was the Saudis began discounting the oil that they sold into the U.S. marketplace. This was in contrast to price increases that were made in the rest of the world. Isolating the U.S. market, and I think specifically the shale producers. Making it unquestionably the shale producers that are the focus of the Saudis concerns regarding the global overproduction of oil. That if the shale producers in the U.S. want to produce at capacity, then the Saudis will produce at capacity, as will the whole of Opec. That is the message that was sent on Tuesday.

On Wednesday the producers responded in a consistent fashion. In a Bloomberg Businessweek article. Saying more or less that “Its just a flesh wound” is not far off from their actual comments. Here is a quote from the Businessweek article.

Executives at several large U.S. shale producers, including Chesapeake and EOG Resources Inc. (EOG:US), have vowed to maintain -- and even raise -- production as they reported earnings this week. They say their success in bringing down costs means they can make money even if prices slump further.

Its obvious to me that the Saudis are playing the long game and the shale producers are playing the short game. This is how I see the situation playing out in the next few quarters. First of all the oil prices are trading on rumor and innuendo. There is no stated policy at this time by anyone in the marketplace. Once there is a stated policy the market will move to reflect that policy. Opec is meeting on November 27, 2014. Which very interestingly happens to be three days after the Americans announce their negotiations with Iran regarding nuclear weapons. What we might see is no change in the announced production quotas and no concern by Opec for the markets pricing. We might also see no date for another Opec meeting set. This will throw the bottom of the market open for a freefall. Finding the low of the oil price market within the 2014 year end period of time. Just about the time that the accountants will retrospectively be looking to value the reserves of the producers for their annual reports. Creating even larger losses for the producers.

Playing the short game when they should be playing the long game, the producers are falling into the Saudis hands here by making the foolish comments that they are making. The investors who are concerned at the losses that the producers have been creating in the gas side of the business, are now beginning the process of losing money on the oil side of the business as well. Investors have already had enough of the fiscal irresponsibility created by these bureaucrats. They don't need to increase, and by a substantial margin, their losses by these fools losing money on both the oil and gas sides of the business. The investors will be forced to act and within a short period of time to deal with the problem within the oil and gas bureaucracy. And that’s where we, the Preliminary Specification, the user community and service providers come in.

The Saudis are playing the long game and can do so for a significant period of time. They have almost one trillion U.S. dollars in reserves. An effective weapon when you consider the enemy is screaming at you with no arms and no legs.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Herding Cats

It is the tradition in the oil and gas ERP software marketplace that the software provider will raise their capital from the investment community and banks. For a variety of reasons People, Ideas & Objects have chosen not to participate in those methods of raising capital. Those reasons are detailed in our Revenue Model and essentially state that the oil and gas community is too small of a market in which to leverage any investment. The producers themselves know this market is small and have frequently abused the fact that the software provider, who has invested all their investors money, has a limited market to sell to, and as such has very little if any bargaining power. The investment community is wise to this and that avenue is most certainly off limits to us when they see the scope and scale of our budget.

That leaves us with dealing with the producers themselves. Something we have chosen not to do ourselves, again. I have frequently referred to this job as herding cats. You have a handful of producers moving in the right direction, you try to get a few more, and then a shiny object attracts the attention of the others and they're gone again. I have stated in the past that I won't be doing this anymore and I stand by that claim. Working with the producers at this time would be nothing more than working with cats. The added difficulty to this process is that when the CEO was interested in what we were selling. He would naturally pass it down to the CFO and IT manager for further evaluation before any decision was made. The IT manager has no interest in eliminating his department and his job. And the CFO has no interest in having all of his staff moved to the service providers. Which are the results of implementing our software. It is the solemn oath of a bureaucrat that “thou shall not reduce ones staff unnecessarily.” Therefore the recommendation that the CEO will receive will be one of thumbs down. And no matter how much we appeal to the CEO he can’t make the move without the staff, it would create a mutiny in short order.

Therefore we need to create a situation that we can appeal to the investors who own the industry. Those that have significant influence in the operation of the industry as well. We have seen these people, they work quietly in the background and generally get what they want. What we have to do is to appeal to their sensibilities and provide them with a compelling value proposition that deals with the issues and opportunities that exists in the oil and gas industry. Some might argue that these people don't have the influence in the industry that they once had. I say you're listening to a bureaucrat who thinks that they have the upper hand in the relationship. That is because they have had the upper hand for a while now. What we are offering the oil and gas investor is an alternative means of organization based on the Preliminary Specification, defined by the user community and operated by the service providers. This alternative is offered as a removal and replacement of the bureaucracy and has a value proposition valued in the trillions of dollars. This value proposition is so high because the issues and opportunities are so grand as a result of the abuse that the bureaucracy has incurred through their belief that they have the upper hand.

So what are these issues and opportunities. Certainly the profitability under the Preliminary Specification is one of the opportunities. However, the investors were told that during the 1980’s and 1990’s that survival in the industry was the name of the game. And that the building out of the industry in the long term, so that when the time came and higher prices would arrive, they would be in position to realize the benefits of those higher prices. Those higher prices did arrive in the 21st century. And the bureaucracy realized the benefits through stock options and bonuses that were valued in the billions. However, the investors did not necessarily profit as a result of the higher prices. The costs of production in many cases exceeded the gains in the prices. Where was the benefit for the investors that was promised them as a result of building out the industry? It seemed to have been contributed mostly to the bureaucrats in higher bonuses and stock options. Now the prices are in steep decline and the bureaucrats pray for cold winters. That is the scope, scale and the depth of the bureaucrats capabilities. Prayers. I think this year they have seen how stupid they looked last year praying for a cold winter and now don’t even ask for that. So the investors stock valuation did not trade up on the increase in commodity prices because the bureaucrats were unable to increase the profits that were made. The investors would have been better off investing in the commodity exchange, not the stock exchange. Now the stocks of the companies are being significantly affected as a result of the declines in the commodities. And what do the bureaucrats say and do? I haven't received any calls. And I don't expect any from any of the bureaucrats. It’s paragraphs like this one that make them angry. Which is the only emotion they can express.

So when we say we are looking to fund our budget by the oil and gas investors we think we have a group of like minded people who are interested in what we have to offer. They can direct the individual producers to participate in these developments and fund our budget. After all we offer the industry the opportunity to implement a continental wide price maker strategy. One that is driven by the individual producers profits. What a concept. The thing I like about it best is that I don't have to herd cats.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Origins of two Different Perspectives

There is a clash of two different perspectives when we discuss the impact of the Preliminary Specifications decentralized production model. The shutting-in of properties to reduce the market supply of commodities is contrary to the current practice within the industry. For one thing it is not currently possible to shut-in properties due to the impact on the producer in terms of their overheads. They are using the high throughput production model which requires production to continue at capacity to deal with their fixed, high overheads and infrastructure. However, the bureaucrats also believe that the manner in which to deal with low oil or natural gas prices is to curtail capital expenditures until the market responds. In terms of the low natural gas prices, which have continued for many years now, someone should ask the bureaucrats how this strategy is working. And now that Opec is also producing oil at capacity, will that strategy of reducing capital expenditures work for oil?

The strategy of curtailing capital expenditures is an engineering inspired strategy. By reducing the number of wells that are drilled during subsequent years the surplus capacity in the marketplace will be absorbed and prices will rebound to the point where profits will return. This has worked in the past. However, it has taken many years before the changes in prices have been seen. Participation by the producers is not always equal either. Some producers feel it is an opportune time to expand their market share, and as such expand their capital expenditure programs. I have described this strategy as a blunt instrument due its inability to achieve the desired result within a reasonable period of time. In theory we have seen the natural gas producers operating under this scenario for the past six years. The time in which natural gas prices have collapsed from their traditional 6 to 1 pricing to the current 20 to 1 in comparison to oil. If the strategy was valid it would have worked by now.

The origins of the Preliminary Specifications decentralized production model are more from the business side. In that profits are what dictate production. And profits are what drive the investment in producers. If producers are not profitable, in theory, why would an investor continue to participate in the producer. Therefore the producer would cease to operate in the marketplace. Production discipline is therefore imputed through the market mechanism that only production that is profitable is produced. Producers that adhere to that principle will receive a welcome response from the investment capital markets.

Engineers and geologists have been the operational and executive members at the helm of the oil and gas industry for the better part of its history. The business is a science and that is the way that it should be operated. However, in terms of the production output of the industry it needs to be profitable. Its not a science experiment, its a business. And the business needs to generate economic value. Something that has been lost in the day to day mindset of the industry. This is evident in the activities of the current “must have” asset. Today its shale. Yesterday it was heavy oil. Before that it was SAGD. And before that it was… whatever. Today producers have to employ production discipline in order to bring this science experiment into the commercial realm.

The accounting I think has been at fault. I think People, Ideas & Objects developed out of the need to address the shortfall in the accounting and systems in the industry. My hypothesis is that in the 1960’s when computers were introduced, accountants asked themselves what they’d be used for. The accounting, tax, royalties and compliance requirements were the natural needs. This continued for a few decades and the isolation of working on those topics created a separation between the compliance and governance of the firm, which has become the exclusive domain of the current accounting function, and the business of the business. By reintroducing the Joint Operating Committee as we are in the Preliminary Specification. We are moving the compliance and governance frameworks of the hierarchy into alignment with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee. Once we complete this alignment then we achieve the speed, innovativeness, accountability and profitability that we desire in our organizations. This clarity in accounting will provide the engineering and geological resources with the ability to better understand the business that they operate. Allowing them to compete in the profitable oil and gas industry.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Budget Developments

It's now November 3, 2014 and we are two months away from recording our first of three years of user community development. It is at this time that I would assert that People, Ideas & Objects have established some credibility in terms that we are user community based software developments. It is our primary focus and will be until we have the community established to the point where we can rely on it to drive the developments of our Preliminary Specification. A difficult undertaking and one that I think is worthwhile in the history of the oil and gas industry. Establishment of the user community will enable us to build the kind of software that solves the current issues and opportunities in the industry. And take on the challenges in the future.

Today the user community has an opportunity within the oil and gas industry that needs to be resolved. It has been our plan that we would prepare, organize and present ourselves to the investors of this industry with an alternative means of organization of the oil and gas industry. That they could then choose to select either the current bureaucracy or, People, Ideas & Objects Preliminary Specification, the user community and service providers as the alternative that they wanted to run the industry. That this decision would be made in January of 2017 and if we were chosen, then fund our budget at that time. That was and is the plan. Our commitment to the development of the user community will continue in the same manner that I had planned for 2015 as was the case before.

However, this issue with Opec pushing the oil prices down has thrown the cat amongst the pigeons, as they would say. Oil is no longer able to carry the losses in the natural gas side of the business and the producers are going to be showing even poorer financial performance than in the past few years. Producers stock market capitalizations have reflected significant losses in market value. Our appeal to the investors may never be as promising as they might be in the next six months.

Therefore we will be active in terms of our attempts to raise our budget within this time frame as well as maintain our focus on developing the user community. If there is a point where we are overloaded in terms of commitments we will defer to the user community developments as our priority. We are only chasing this opportunity to raise our budget for its timeliness. The issue of the bureaucracies performance will be well within the mindset of the investor in January 2017 as much as it might be in the next six months, maybe more. Time in terms of raising our budget is on our side. We cannot afford to waste any time in terms of the development of the user community. The ultimate delivery of our product, the user community, the service providers and solving the problem for the industry relies on our diligence in terms of developing the user community. By taking this opportunity to chase our budget might provide us with the opportunity to knock a year off our timeline by starting our developments in January 2016, IF we can develop the user community within that short of period of time.

Once again I see within our logs that we are beginning to have the success in the development of the user community. People are beginning the early part of the process of joining the user community by reviewing this blog and the wiki. Learning what they can about the ideas on how to run the industry in a better way. And beginning to think how they too can participate and improve upon it. I think this could be some of the most exciting work that has been undertaken in the industry. Putting the bureaucrats in the unemployment lines. And building a new and better way to operate the oil and gas industry.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Recalculating Our Value Proposition

Members of the user community need to update their value proposition in terms of the changes that are occurring in the oil side of the business. If oil is being affected by the Saudi’s in the manner that we spoke of in yesterday’s post. Then the value proposition that is provided by People, Ideas & Objects, the user community and service providers is enhanced substantially. We haven't discussed how the calculations of our value proposition is prepared for a while so I thought now might be a good time to prepare an update.

Simply we should calculate the incremental value of the People, Ideas & Objects software that the user community develops, and the service providers implements and operates for the oil and gas industry. That calculation begins by determining what incremental value is generated above the current base case. What we can deem the base case consists of is the current bureaucracies “price taker” strategy in both the oil and the gas sides of the business. We also need to calculate the incremental value that is earned by the producer through the specialization and division of labor that are attained through the continuous development of the administrative and accounting capabilities within the domain of the industry.

Lets deal with this last point first, specialization and the division of labor. These are two of the many tools that the user community can apply as the resource that determines “what” and “how” the People, Ideas & Objects software will do. Using automation, process management, computers, and other tools to continuously refine the specialization and division of labor of the administration and accounting processes and capabilities of the oil and gas industry. These will eliminate the bureaucracy and achieve higher levels of output in terms of the oil and gas production from the same resource base.

The second element of our value proposition is our decentralized production model which enables the oil and gas producer to become a “price maker.” This is in direct contrast to the “price taker” strategy that the bureaucracy has accepted throughout its administration of the industry. With shale based reserves moving the oil and gas industry into an era of abundance it is necessary to move the industry mindset from its current belief that demand is insatiable. To one where production is easily obtained and that can overwhelm demand. And therefore the need to allocate production on the only reasonable and fair methodology, that being profitability of the producing property, is necessary.

Therefore to price this aspect of our value proposition it is assumed that we have the capacity to double the current natural gas prices and bring the natural gas reserves into a profitable situation for the producers. If we doubled the value of all the natural gas reserves, including the shale based reserves, we would easily obtain our claim that our value proposition is in the trillions of dollars. Based on yesterday’s post we are now able to make the similar claim in the oil side of the business and could add incremental value from that business. As a result, our claim that we provide trillions of dollars in value to the dynamic, innovative and profitable oil and gas producer is what every member of the user community could and will be saying to differentiate their services from those otherwise unprofitable bureaucrats.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Raging Against the Bureaucracy

To be able to join the user community and participate in the development of the software of People, Ideas & Objects you really need to have a deep felt rage toward the bureaucracy. I know I have it and many other people do too. Especially the investors that we will be appealing too to provide us with the financial resources to support the user community and build the software. Now I know its inappropropriate to rage against anyone in this politically correct world. However if we look at the oil and gas industry today we see a very disturbing trend. I think it started when the oil and gas prices took off in the early part of this century. The budgets of the various departments of the firms became a little soft and no one has been able to remember the type of size or configuration of what a profitable oil and gas producer looks like.

What has happened since the early part of this century is that the empire builders have begun to understand the game as it is played. And instead of building a company, the domain of budgets and the number of people are all that bureaucrats are concerned about. Simply the stuff that makes their blood flow. What we have now in my estimation, at least in Canada, is at least half of our organizations are bureaucratic waste. That’s correct I think if we lost half the people in the industry we would be far better off than we are today. Now if you're still reading this you belong in the user community as the people that have stopped reading have found it too painful to listen to, those being the bureaucrats.

One needs to ask themselves for what purpose does a bureaucrat exist today? Well there are the friends that keep the bureaucrats self confidence high. And there are the wife and kids, and the private school that they no doubt attend. These are the things that provide for the reasons for the existence of a bureaucrat. But my question was more oriented to the use and productivity within the organization and specifically from the point of view of a dynamic, innovative and profitable oil and gas producer. They are but a cost, and a healthy cost at that. And they incur costs, many of them in the manner of time and energy of others. But in terms of productivity within the producer firm it would be a tall tale for one to believe that bureaucrats provide any value to the producer firm.

Take the situation that we find ourselves in today. Technology provides a means in which to deal with the administration and accounting of an oil and gas producer. And the Preliminary Specification aligns the compliance and governance frameworks of the hierarchy with the seven frameworks of the Joint Operating Committee. Enabling greater speed, innovativeness, accountability and profitability. Why with the technology that can be developed today are we still constrained by bureaucracies? Are bureaucracies and technology not mutually exclusive? Doesn't one eliminate the other? Yes they do. And that is why I write to you from outside the industry. There is no bureaucrat operating in the oil and gas industry today with a vested interest in developing the technology to eliminate themselves. They have the game fixed in their favour and as far as they are concerned it will stay that way.

So it comes down to the question of... “do you hire the bureaucrats to run the oil and gas industry, or do you spend the time, energy and money to build the systems, user community and service providers to offer an alternative to that archaic, lethargic, unchanging, and losing proposition the bureaucrats? Guess which side I'm on. Your suspicions were correct that not everyone could be part of the user community or the service providers. We don't need any bureaucrats to run the industry. We can do it much better with fewer people. And some may say that’s a bad thing because we will be putting a lot of people out of work. And I say, in this case we should look at it as significant progress.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Some Thoughts on Our Future

Reading the content of this blog we can see that we all have much to do. How it will be done is through the individual actions of those that will make up the user community. They are the key to the success of the oil and gas industries future. If we want a dynamic, innovative and profitable oil and gas industry, we need the individuals within the user community to form and provide the knowledge and understanding of “what” and “how” they want their People, Ideas & Objects software applications to look like and operate. Software is the ingredient that defines and constrains what an industry can and can't do. Our user community will be able to define what the industry can do in the software that they build, and make the necessary changes through their actions.

People, Ideas & Objects appeal resonates with a broad audience in the oil and gas community. Frustration with the bureaucracy is an age old complaint that doesn't require too much argument for people to agree with. Our appeal is much broader than that. People, Ideas & Objects Preliminary Specification, user community, and service providers project a vision of the ways and means of the oil and gas industry that is compelling and complete. A vision that deals with the issues of today such as low natural gas prices and the high demand for earth science and engineers. But also provides the framework in which to deal with the issues and opportunities of tomorrow. This is where the user community and service providers come in. Their ability to institute change within the frameworks to deal with the current and prospective situations in the industry will provide the industry with much needed capabilities.

The oil and gas industry has changed. The shale based reserves have endowed the industry with the reserve base for the next few generations. However they are not profitable. And within today’s business model they are of no commercial value. The oil and gas industry, or the bureaucracy refuses to even discuss this issue. Choosing to muddle along hoping for a cold winter or something that will fix it. At the same time ignoring People, Ideas & Objects. Ignoring us because we preclude them from the future of the industry. Theirs is a self interested or selfish point of view that is inconsistent with the scope of the problem that is facing them.

From our lofty perch up here in Canada we can see the devastation of the great “hope and change” experiment that the United States has been involved in since 2008. We had a similar one in the 1960’s, 70’s and 80’s under our Prime Minister Pierre Trudeau. We are still paying for the cost of that experiment. From what we see up here we can’t believe that the U.S. has fallen so far, so fast. And in a related way the great experiment with alternative fuels and renewable energy is proving to be what it is. Therefore I hope that the U.S. can get back on track and remember that the progressives are really that dangerous. And that the damage from them isn't too costly. And that the natural gas business can become the fuel that powers the next great leap.

I’d like to think that that is the case. And with a new organizational configuration the shale gas reserves could become the engine that drives the U.S. and Canada forward. If so it will have to do so profitably. There is no way that the industry can continue to lose money on natural gas at the rate that it is for the past few years. What the industry is involved in now is not rational. And what is tragic is that the industry carries on without a single thought about the rationale about doing so.

I think we have come to a point in our organizational evolution where the big organizational behemoths have finally proven incapable of dealing with the speed and scope of the changes that we face. What is needed is a new method in which to organize ourselves to solve our issues and profit from our opportunities. I propose the Preliminary Specification, the user community and the service providers.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

As a User Community Participant, Where Will You Be?

The question is asked where the members of the user community will be physically located. I guess the best answer I can give at this time is they will be located virtually in the main centres of Houston, Dallas, Oklahoma City and Calgary. And there may be others such as Denver and Los Angeles or San Francisco. Or, wherever you are now. Members of the user community may have their own office space dedicated for the sole purpose of being a member of the user community. However, they will most likely be operating out of the office of the service provider that they have established as a result of being a member of the user community. There they are hands on with the issues and opportunities of the producer and can deal with the day to day of the producers, and also see the bigger picture issues of the overall industry.

Accommodations will be made in People, Ideas & Objects development environment for the members of the user community to participate in the developments. These however will not be the primary means in which to communicate between the developers and the user community. This is where the virtual elements of the relationship come into being. The user community is first of all designing what they want in their systems. The only constraints on their design is the budget and the Preliminary Specification. Users may virtually come together from all corners of the continent in order to make this design dynamic, innovative and profitable for the oil and gas producers. Secondly they will document what it is that is necessary for the development of those systems and interpret that for the developers and insure that it is implemented correctly in the software.

This doesn’t need to be conducted side by side with the developers. Developers will work from the documentation that is prepared by the user community. Developers and user community participants will both have access to the information prepared by the user community and the developers. That means that at times when you are discussing issues with a developer, or another user, on line, you may be reviewing some of the software code. It’s not necessary that you're able to write code, but at least be able to follow along in a reasonable manner. As a user, having read-only access to the software code will provide you with a better understanding that the system that you want is the system that you have.

So if you're based in San Francisco and are working mostly for Chevron, and our development environment is located in Houston. You will not be subject to any difficulties as a result of the virtual nature of the relationship with the development team. The development team is housed together in one location which I think is a necessity. However, in most open source development projects the developers are scattered across the globe and they develop excellent software. Having the users and developers separate in this day and age is a non issue with the technologies for web based meetings being readily available.

What is a critical issue is the interaction between the user community and the producers themselves. And we have that in the user community participants being members of the service providers. They are therefore the people on the ground that are dealing with the producers issues and opportunities and are the producers proxy in terms of what they need their systems to do. Here we are getting at the critical nature of the user community participant and the importance of them in the People, Ideas & Objects development. They are for all intents and purposes, the producer.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Some Rambling Thoughts

Liz Ann Sonders was on Bloomberg the other day and was asked to give her investment advice. Ms. Sonders is the Senior Vice President and Chief Investment Strategist at Charles Schwab & Co. Inc. I can remember her advice form the 1980’s when she was a guest on Louis Rukeyser's PBS show. She must have been 8 then based on how old she looks now. Anyway her advice was as good then as it seems to be appropriate today. She said that she sees the trend of returning money to shareholders through dividends and buybacks ending. And that this money would be invested instead. Her primary recommendation was for the technology sector which she stated was in the position to capture some of the capital investment from other industries. And secondly, energy was so cheap that it appeared to be a good buy. I just thought that it was good news for anyone who was contemplating being part of the People, Ideas & Objects user community to hear that technology and energy were good places to be in terms of career choice.

I've had an iPhone 6 Plus now for a little more than a month and have to say that I in the hands of the user community, backed by a software development capability like that of People, Ideas & Objects, is a lethal weapon. I was never a fan of phones before, they were good to make phone calls but for anything else I deferred to a computer or an iPad. The iPhone 5 that I had was too small to do anything on. And the battery didn't last if you tried to do anything on it. And there is just no way that I can manage my life through a four inch screen. Well it appears 5.5 inches is all that I need. Anything that I can do on my iPad I can now do on my phone and without concern for the battery drainage. This is an effective tool for the enterprise, as is the iPad as you might have guessed. What I see these being capable of doing in the Preliminary Specification are significant, and the user community really needs to consider these as effective and useful tools for the dynamic, innovative and profitable oil and gas producers.

Some people might be confused as to when to join the user community. The simple answer to that is January 2017 when we are funded. However, that is when the work will begin on a full time basis to begin the developments on the Preliminary Specification. There is much that can be done in the next few years in terms of your personal investment and planning in terms of your participation in the user community. Reading this blog will be the first priority. Reviewing the Preliminary Specification in its entirety and getting an understanding of how the industry will operate in the new revised organizational structure is critical for everyone to understand. Then review your area of expertise in the Preliminary Specification. Lastly picking up those three or four university level courses on Java, relational theory and databases so that you will be able to communicate effectively with our developers when the time comes. These are the things that you could be “investing” your time and energy in the next few years. Trust me, it will make you able to smile during those meetings when the bureaucrats are droning on. Knowing that you're secretly putting them out of business.

If however you want to join the leadership team then you should start the process of joining the user community now. We need to have the leadership team in place in order to secure the funding from the investors in January 2017. We need to have the ability to show the oil and gas investors that there is a group of like minded people available and committed to providing them with the most dynamic, innovative and profitable means of oil and gas operations as an alternative to the current static, bureaucratic and financially poorly performing organizations that exist today.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Marketing Strategy

Within People, Ideas & Objects we have a unique Revenue Model that sources our funds where the money and the need for our services exist, at the producers. We will raise the necessary funds to fuel the developers, the user community and the cloud computer infrastructure to run our application from assessments on the subscribing producers. This is a fundamentally different Revenue Model than what has been used in the software development business, and one that has been developed to deal with the issues we have with our business model. Each of our revenue issues is a deal killer on their own and collectively make the project a non-starter. However, with our Revenue Model as it stands today we are able to overcome these issues and proceed with the project with the anticipation that the project will be funded based on the value proposition that we offer to the dynamic, innovative and profitable oil and gas producer. Had I ever mentioned that the value proposition that People, Ideas & Objects, the user community and the service providers provide the producers is valued in the trillions of dollars?

The first thing any software developer wants to do is to go out and raise some venture capital to fund their ambitions and bring the next great iPhone app to the world. When we knock on the VC’s door this is the world that they operate in. They are looking for innovative products that fit on an iPhone and require substantially less than $2 million in funding and will be sold at $2 to 4 billion people. When we say that our costs are $4 billion and our audience is a few hundred producers they naturally back away quickly and completely. We in no way fit within the scope of a VC’s business model. They are designed for the mass market and are designed to bring innovative products to that market quickly. Neither of which apply to us.

So if the producers are the ones to fund both the developments and the user community how come we haven’t received any funding? Good question. One of the reasons that we are going to the producers for funding is as a result of the games that were played by the producers in the 1990’s when there were an abundance of ERP software providers on the street. There were significant numbers of vendors and it was difficult not to bump into all of them. And all were big players backed by big companies looking to earn market share in the new “ERP” market space. So the producers played the “show me what you got” and “so and so will give me his stuff for free with just a maintenance contract” type of games. Needless to say I don't think any producer ever paid for an ERP system in the 1990’s. Those days are over. The costs are too high and the oil and gas industry isn't that large of a prize that anyone is looking to sell ERP systems, other than us that is. What’s that saying you reap what you sow. Having an operational ERP system running ready to be sold into the oil and gas marketplace would be a non starter today or any day in the near future. The producers will know that the market is small and they will collude with each other to ensure that you earn single digit percentages of lifetime revenues on your capital investment. They will put you in the poor house and make sure that you eat slop for the rest of your life. So now they will have to deal with the likes of the Preliminary Specification as literally their only choice, and pay for it. No one else is so foolish as to even think to be in this business.

Now technology is clearly able to bring value to the oil and gas producers. Did I mention our value proposition? In my discussions with industry they still want to play games like “call me when you have something.” Clearly understanding that when we have something it will be specifically designed not to fit in their organization. These are user community based software developments. If you don't participate directly in the development of the software, then the software will not fit within your organization when the time comes to operate it. If you want to make money in the 21st century you have to think differently as to how you will make that money. The first thing you have to do is understand that your organization is run on software and you had better be able to operate the software from the development team and user community on up in order to operate your company. That will be how the dynamic, innovative and profitable oil and gas producer will make money in the 21st century.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Let's be Unreasonable

The last few days we have discussed the completely unreasonable and irrational idea that we could reorganize the oil and gas industry. That the prototypical producer would also be reorganized in a radical fashion. Ideas that were put forward here on this website. The methods put forward in the Preliminary Specification require significant change be implemented within the industry and not one thing, that is person, place or producer would be untouched by the changes put forward in that specification. This certainly makes the Preliminary Specification unique in its scope and scale of change. Its a bold statement to make and one that requires frequent checks on ones sanity. I am however, reminded by the saying from George Bernard Shaw

The reasonable man adapts himself to the conditions that surround him... The unreasonable man adapts surrounding conditions to himself... All progress depends on the unreasonable man.

I am certainly an unreasonable man, and I have many people that are willing to attest to that fact. I have also always focused on the value that we are able to provide within our organizations. I have been able to consistently differentiate my work on the basis of the value that is generated through my activities. It is why I went into business for myself back in 1986 so that I could begin to capture some of that value for myself. You have to understand too that you can not build anything of substantial value within a quarter or two. You need to begin with a plan, remain focused and dedicated to stomach the difficulties that will inevitably come your way.

Keeping focused on the plan during the positive and negative distractions that occur are what will keep you on the right track. For example if for some reason we were able to raise our budget tomorrow, a positive distraction, it would not deter us from our focus of developing the user community and then the service providers. The user community is critical to the quality of the software that we will develop. Without them we would only provide another version of what has already been produced. The clear and distinct difference between what we are doing and what has been done in the past is that we are user community ERP based software developments.

Some may think why in the world is that important. What concern does the user have in the world of ERP software. Consider the understanding and knowledge that is contained within what will be the user community. In terms of the work that they do and how they do their job. If it takes on average six months to fully comprehend an individual's role within an organization. And the number of different roles within the industry. Capturing that knowledge and understanding by the developers is a necessity in order to support the user. I think a user community based ERP system should support and provide the tools to the user for the work that is done in the industry. What SAP and other “ERP” systems do is handle the compliance and accounting requirements. And that’s it. Particularly from an oil and gas point of view they do a very poor job. Review the Preliminary Specification to see what I think the users will do and how they need to be supported in an ERP environment. We believe in a strong division of labor between computers and people. Computers should be used to store and process things. People should focus on the leadership, problem solving, decisions, creativity, collaboration, research, idea generation, design and planning amongst other things.

In terms of value we can be responsible for providing trillions of dollars in incremental value from the current base case. Is that justification for making these changes? I think it is. As we will be positioned to be able to provide for additional value as issues and opportunities occur within the industry. People interested in joining People, Ideas & Objects user community should look to build value for themselves and the industry for the long term. We don't plan to begin work until January 2017 and there are many things you can do to prepare before then. If the oil and gas industry is for you, and are disheartened by the bureaucracy what are you going to do about it. I have an idea and it needs you to make it work. Its a little unreasonable but then that is how progress is made.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Age of Abundance Part II

People, Ideas & Objects, our user community and the associated service providers who provide the dynamic, innovative and profitable oil and gas producers with the decentralized production model. Have a value proposition that is valued in the trillions of dollars. If you take the manner in which the industry is being operated today, with its price taker strategy. And compare that over the long term with the decentralized production models price maker strategy. You will generate trillions of dollars in incremental value for the North American oil and gas producers. If you were a member of the user community or service providers you too could tell people that you provide oil and gas producers with the most profitable means of oil and gas operations. And as you can see you would really mean it.

With the decentralized production model the producer firm could potentially be sitting with a large inventory of properties that are shut-in due to their inability to be produced profitably. That’s where the Preliminary Specification comes in handy once again. It has been designed to instill within the producer firm the innovativeness necessary to compete in the 21st century. Innovation is a replicable process and those have been included within the Preliminary Specification. So when a property is shut-in due to financial losses. The ability to begin the processes of innovating to increase the properties reserves base, bring its costs down or production up can begin. This will bring the property back into a profitable situation and therefore can be returned to production. Any properties that do fall into an unprofitable situation can be addressed through the various processes of innovation that the producer firm will be structured to approach as a result of using the Preliminary Specification.

The decentralized production model has also reorganized the producer firm to a much smaller footprint to enable a greater focus on the earth science and engineering capabilities, and land and asset base of the firm. These are the competitive advantages of the producer firm and should be their primary focus. How quickly the producer responds to a Sarbane’s Oxley situation is mostly irrelevant to the performance of the producer. Therefore as we mentioned yesterday the industry has been structured to provide the administrative and accounting capabilities through service providers who are focused on the process and use the industry as their client base. It is in fact the service providers competitive advantage of how they respond to Sarbane’s Oxley. This therefore sees the producer firm stripped down to the C class executives, the earth science and engineering resources, some land and legal, and support staff. The service providers bill for their administrative and accounting services directly to the Joint Operating Committee on a monthly basis and only if there is production.

This methodology would currently remove all of the production from the market as none of today’s natural gas production is making any money. The gas prices would certainly respond quickly, violently, and without hesitation to this change. Gas could then return to the market as it surely would qualify as profitable, and an equilibrium would then be achieved. What the producers have to understand is that it is profitability at the property level that is the factor for determining if the property will produce. Not at the producer level. By taking each property and assessing its profitability the prices will be much higher and there won't be the averaging that will occur if the assessment is made to determine if the producer is profitable. If it is assessed at the producer level, producers will attempt to average their properties profits and losses to show a net average profit. This would be an advanced form of cheating to achieve a higher production profile. Not the production discipline the market requires or is desired. Cheater’s however have always existed in the marketplace. The industry will have to establish the means to control those that do cheat. Maybe they will be able to do that through the Joint Operating Committee which is the operational decision making framework of the industry. And since the Preliminary Specification uses the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer it will have the means in which to deal with these cheaters. Another problem solved.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Age of Abundance

To review the natural gas reserves of the producers these days is quite a change from the past. In the past you would see how the producer would struggle to increase their oil and natural gas reserves year over year. Doing everything within their power to expand the reserves base of the firm was a challenge that took many of the best minds in the business. Now producers have so much gas that they have difficulty comprehending the implications of the change. And the business has changed from one of difficulty and scarcity to one of abundance. Where not only do you have several tcf of gas, but all your neighbours do as well. Rushing to get that gas to market is the current strategy for each of these producers. And thankfully for People, Ideas & Objects we have a solution for this situation and the investors who are very disheartened by the producers financial performance.

Producers are jumping ahead of each other offering their gas at lower prices in order to be able to make the sale. This has caused the price to collapse from 6 to 1 when priced to oil to 20 to 1. And some producers seem determined to drop the price even further. This has caused the price of natural gas to fall below the margin for the past number of years. The only remedial action that has been taken by the producers is to reduce their overhead costs. As it is deemed that the costs of carrying the overhead for their production profile is the issue that the investors are concerned about. Not that there is significant overproduction of natural gas in the marketplace. The investors real concern is that the shale gas reserves are unproven as a commercially viable venture.

What is needed is a new business model in which to operate the business based on the changes that are reflected in the business. If there is an abundance of natural gas, and potentially oil as well, then the industry needs to have a business model that deals with that situation. A business model that would allocate production based on profitability would be the most reasonable approach. It would also be the most fair basis in which a producer could approach their business. An easy to enforce business model from the perspective of the investors. With unprofitable producers not being funded, or participated in, by the investment community.

People, Ideas & Objects Preliminary Specification business model is called the decentralized production model and addresses specifically the issues that are raised as a result of the abundance from shale based reserves. It enables a producer to shut-in any production that is not profitable without any financial penalty. It sets out a revised organizational structure of the producer and the industry in which the overhead costs of the producer become variable with their production profile. Therefore as the natural gas price declines in the marketplace, producers can shut-in their unprofitable production, reducing their losses on individual operations and actually increasing their firms profits. This will also save those shut-in reserves for a time when they can be produced profitably. And reduce the amount of production in the commodity markets placing a floor in the pricing structure.

When a producer shuts in production the overhead for that property is not incurred in the decentralized production model. What the Preliminary Specifications decentralized production model does is reconfigure the industry to change from a producer based administrative and accounting capability to an industry based administrative and accounting capability. The fact that each and every producer has to develop the capabilities to be compliant with all of the administrative and accounting regulations are what are causing the producer to lose money. These capabilities are not shareable at the producer level. By establishing industry wide capabilities through the People, Ideas & Objects software, user community and service providers we can specialize on each of the individual processes and bill the individual Joint Operating Committees the overhead costs for each process. If the property is shut-in there will be no charges incurred by the service providers and no billing to the Joint Operating Committee during periods when a property is non-producing.

This is the manner in which the industry needs to operate in the era of abundance from the shale based reserves. Production allocation based on profitability is the only equitable manner in which to proceed in the industry. A method to deal with the fact that everyone has trillions of cubic feet of natural gas in reserves means that some of it will have to be kept off of the market some of the time. The current methodology isn’t working and there is no solution to the situation other than the decentralized production model of the Preliminary Specification.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Attributes of People, Ideas & Objects System Integration

We need to address the integration of the People, Ideas & Objects applications, and the services of the service providers into the producer firms when the user community has completed the development of the People, Ideas & Objects applications. First I would like to address the issue of funding for the integration, and the larger issue of where the funds for the service providers are derived from. And that is to say not me. Whereas the user communities funds are derived 100% from People, Ideas & Objects we provide no funds to the service providers, ever. They are licensed by People, Ideas & Objects to manage an exclusive domain or process of the application. And therefore access the applications. They are also owned and operated by members of the People, Ideas & Objects user community. It is therefore on that basis that the service providers are deemed to be self funding in terms of their needs. And that would include any investments that were required to initiate the establishment of their services. We feel that with the license and their expertise, the ability to leverage these assets and skills in the financial community would be possible to help establish the service provider in terms of any initial investment requirements. Recall that we see the service providers are undertaking the responsibilities for the administration and accounting capabilities of the oil and gas industry. And as such would earn as their revenue stream the $40 to $60 billion in annual G&A expenses currently incurred by the producers.

Integration, or implementation of the software therefore clearly falls under the jurisdiction of the service providers. They will charge the producers for the costs of the integration of the process that they manage. These will be the first costs that the producer face outside of their initial development costs which they paid for when the project was commenced. The relationship with the service provider will be under a service level agreement and be based on the activity, or non activity of the producer. If there is no activity, shut-in production, there will be no service fees billed by the service provider. This will be a mandatory requirement and is included in all of the People, Ideas & Objects licenses. The Preliminary Specifications decentralized production model requires this feature to be present throughout the service providers.

With regard to integrations I have never been a fan of the big bang ERP integration. There are too many elements that are being managed poorly and too much information being lost in the process to make them practical. However, what we do have is an interesting and unique situation. A cloud computing based offering that is fully funded. Our hardware and software, development and user community is fully paid for as a result of the way we are being funded. Read our Revenue Model for further information. With so many disparate components of the Preliminary Specification being integrated into one unified system, the dependencies are very large and not initially well known by the producers. Therefore the tendency, and probably the necessity, due to these dependencies, is to move to the big bang style of integration.

Each service provider is responsible for their own exclusive domain. They will need their source data and will be able to find what they need to prepare that. They will also be the ones that are managing the process on a going concern basis. It is a domain therefore that is more manageable than what a traditional big bang integration is due to the ability of the service provider to parse their domain down to their scope of process operation. The main difference is the domain of data is much larger than what would have been the case in the past. What also may be the case is the state of affairs in the industry. PennWests recent reduction of 50% of their administrative and accounting people led to the capitalization of royalties. The quality of the accounting by the time we get to the industry integration may be tragic, and the number of people left in the industry may be minimal. That’s also considering the transition in terms of the number of resources that have moved from the producers to the user community and service providers before the integrations begin.

What I therefore see is a massive game of musical chairs where the producers layoff their administrative and accounting people and the service providers rehire them. These people then reengineer the data into the new processes within the service providers that they are re-employed by. In a world where companies are currently cutting half their staff and capitalizing royalties. I don't think this game of musical chairs sound as off the wall as it might have a few years ago.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.