An Individual Plan

Cash starved producers are probably looking at the natural gas prices and the associated storage volumes and thinking that this summer is their chance to get some cash in hand. Although the prices are not that great, at well over $4 they provide the opportunity to pay the bills and have a little left over in the cash flow game. If they can spin that argument for six months, the time it will take to replace the storage volumes, maybe they'll be able to build some breathing room in the winter of 2014 / 2015. Lets face it, its been a brutal few years in the natural gas business. With these prices, it offers a slim opportunity to keep afloat.

If only there was a way in which the industry could allocate its natural gas production. So much pain and frustration would be eliminated. But it can't and most definitely it won’t. That would involve going hat-in-hand to People, Ideas & Objects and beginning with their developments. And we know that would require accepting that there are $705 billion in opportunity costs from what is being done today. And that just can’t happen. No one will ever admit to that.

There are just so many reasons that the bureaucracy will never proceed with our developments. We would be fools to think that we have an opportunity in working with them to make this initiative real. We are the ones that are going to have to make it real. Probably with the bureaucracy jumping on our back and standing in our way. I say bring it on and lets have some fun. So much of this is dependent upon the individual decisions that will be made by the people who work in the oil and gas industry. Decisions of when and where to join the user community. Decisions of how to drain the energy and life out of the bureaucracy as you keep that paycheck. I did mention this was a revolution didn’t I? A revolution where it shouldn't cost you anything.

It is the development of the user community that is our focus and our concern over the next five years. Keeping the day job during this time is of critical concern. What we need to be doing is providing an alternative means of organization to the oil and gas investor. Whatever an alternative means of organization actually means is something that we will have to define in the next five years. We have already set out the objective for the people who want to participate. And that objective is to provide the oil and gas producer with the most profitable means of oil and gas operations. We have talked about the leadership roles that need to be developed in the user community as well. The CEO, CFO, COO, and other roles within the user community itself. And other roles that are involved in the leadership with respect to our product. The twenty or so Product Owners that make up the modules, marketplaces and business models of the Preliminary Specification.

So we have much to do. We have a big adversary. We have more value to generate for the oil and gas industry than they’ll know what to do with. And we will have strong advocates, eventually. Ones who will be willing to bankroll our initiative. They're watching now and I think they like what they see. And if we add this user community to the vision of the Preliminary Specification, both of which will sit on top of the technological infrastructure of Oracle Fusion Middleware and Applications. They will believe that we do have an alternative to the current bureaucracy and will move to support us financially and provide us with the opportunities that we need. So this is what we need to do. Have a look around, if you like the way the industry is operated, we're probably not for you. But if you think there is a better way and the Preliminary Specification is a good start, then you'll know what to do.

The Preliminary Specification provides the oil and gas producer with the most 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. 

Engaging the Bureaucracy

Our appeal to the individuals who know there is a better way in the oil and gas industry continues. This includes the user community, our service providers and the investors who are all of like mind with respect to the Preliminary Specification. We have drawn distinct lines around the bureaucracy in the oil and gas industry and are at, no better way to describe it, war with them. They don’t like us and have chosen to not deal with us in every aspect of their organizations. We don't blame them, as the biggest side effect of the Preliminary Specification is that the bureaucracy is eliminated from the landscape. Kaput, Nada, out of here. So their response is more of a self preservation styled response of a self interested group. And we hurt them badly. Offering a solution that provides the oil and gas producer with the most profitable means of oil and gas operations makes the bureaucracy look really bad. Especially when they're kneeling at Church praying for successive cold winters as a solution to what ails the business.

But we are not alone in our difficulties with the bureaucracy. Other industries are in various stages of similar disintermediation. And some industries have seen the bureaucracy destroyed. So our friends know what’s in store for them. There is also the flack that they are getting from above in terms of the investment communities disappointment in the manner that the industry is run and the investors ability to influence how it is run. Lashing out at us is an understandable strategy for a groups of self interested bureaucrats who are being challenged in their franchise. The problem is its getting serious. I've been at this process of writing and developing these ideas around the Joint Operating Committee for over a decade now. And trust me I know how to be pesky, which I have. I have noted the times in which the bureaucracy have attempted to establish their own Intellectual Property that violates our copyright, and each time they have been knocked down. They are unwilling to accept that Intellectual Property means something much more substantial in the 21st century than it did in the 20th century.

So now we stand here with the Preliminary Specification gaining steam in the marketplace. Our primary focus is to build on the Oracle Fusion Middleware and Applications, and the vision of the Preliminary Specification by focusing on the development of the user community. And the bureaucracy has been exposed as having no clothes. What are the prospects of the bureaucracy to establish “something” to offset our momentum. Clearly this next year is the time in which they need to do something if they are going to succeed, scratch that, survive for the next decade. Survival is all that they need to achieve for survival assumes they continue to control the cash. They need to do something that is either brilliant in terms of how it solves the issues in the industry. Or is ruthless in terms of its attack on People, Ideas & Objects, its user community and service providers.

Brilliant solutions from the bureaucracy will be forthcoming from the committee that is being formed and will have its first meeting February 1, 2015. So that leaves us with an attack on us collectively. And we have been the focus of this in the past. But I think this can be classified as something more substantial. I am wise to their ways of keeping their enemies close. But I think that they will keep us at arms length and employ other more radical means to attempt to ruin us in the “mind share” game we have chosen to operate in. We would love the attention to say the least. So lets keep a look out for what our friends are up to this next year. I for one am looking for a good knock out brawl. I haven't been in the ring, so to speak, for a couple of decades. All this jabbing and prodding around the edges only gets you hungry to take your opponents on in the ring. The only thing that I demand is that they put some clothes on.

The Preliminary Specification provides the oil and gas producer with the most 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. 

Busted Again

We have evidence of the bureaucracy attempting to circumvent the Intellectual Property that makes up People, Ideas & Objects, the user community and the servicer providers, again. We went through this just in October 2013 with Ernst & Young and here we are again. This time its with The Oxford Institute for Energy Studies and the author of the paper is, not surprisingly I guess, a Senior Partner at Ernst & Young. So although Ernst & Young stated that they would not be publishing the document that they had, that does not necessarily apply to any of their staff. I have been in contact with the Oxford Institute and informed them of the copyright and I am awaiting their reply.

The important thing in these copyright claims is to frame the issue correctly. That although The Oxford Institute paper does not address the organizational construct necessary to undertake all of the changes. That can be introduced in a subsequent paper. What the industry is doing is reverse engineering our work by starting with the effects of the breakthrough of using the Joint Operating Committee, and then working their way back to that conclusion. It will be in that way, using their logic, that they will be able to use our ideas as theirs. The fact that I took ten hard years of research after the breakthrough of using the Joint Operating Committee isn't relevant to them. This is why the industries costs are so high. If after 10 years of hard work you risk having your customer steal your work, no wonder no one is willing to do the hard work of innovating.

And its not like industry is going to begin the process of herding cats or writing software code. That is the last thing that they want to happen. They just want to have a plan in which they go to the investment community and say “here, we have a plan.” They will never proceed with any aspect of the Preliminary Specification with People, Ideas & Objects, the user community or service providers and they certainly wouldn't do it if they had the idea themselves. Things are too comfortable for them to be bothered with work. What they need to do is give the appearance of working at the problems of the day and buy time. Time in which they earn their paychecks and shuffle the papers.

So it comes down to a communication issue for People, Ideas & Objects, the user community and the service providers. One to make sure that the industry does not have the right, or alleged right to claim to have any plan to deal with low natural gas prices or the performance of the industry. That our claim of providing the oil and gas producer with the most profitable means of oil and gas operations is the only competing vision to the existence of the bureaucracy. That they the bureaucracy can’t muddy the water with a vision that competes with ours, because it is ours, and turns people away from us with an attitude of “let's give the bureaucracy one more chance.”

So we will continue to pick off any of these attempts to take our Intellectual Property and compromise it. This is how the industry, a three and one half trillion dollar industry chooses to compete. By theft. The real problem is they don't see it this way. And they don't see it this way because it has become so mainstream in the manner in which they operate. Ideas are intended to be stolen and too bad for the fool who came up with the idea. These are also the rules that govern recess in grade two. Unfortunately for the bureaucracy its the 21st century and Intellectual Property is the way in which most industries operate. The fact that they left their flank open to someone to come along and take it, is their problem. My problem is having to deal with these pesky little thieves.

The Preliminary Specification provides the oil and gas producer with the most 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. 

Value Provided by the Decentralized Production Model

In our discussion yesterday we noted the decentralized production model made the oil and gas industry a price maker, as opposed to its current role as a price taker. Its been a while since we reviewed the decentralized production model. And with over $705 billion in opportunity costs attributable to this model, we need to continue to highlight this important element of our competitive advantage. This value is contrasted to the current bureaucracies lack of a plan to deal with the industries issues. With this past cold winter now a distant memory, last years plan of hoping for a cold winter, leaves the industry without a plan, a hope or a prayer. I am pleased to therefore offer the Preliminary Specification complete with the decentralized production model on behalf of the user community, the service providers and People, Ideas & Objects to fill this void.

It is our competitive advantage that we provide the oil and gas producer with the most profitable means of oil and gas operations. An element of that is the decentralized production model. What this model does is take the prototypical producer organization and reorganize its resources in a manner that focuses the producer on its key competitive advantages of its earth science and engineering capabilities, and its land and asset base. It does this by stripping the producer down to the C Class executives, the earth science and engineering resources, the land, legal and some support staff. The remainder of the people, the administration and accounting resources are permanently reallocated into service providers who are focused on a process or subprocess and use the entire industry as their client base.

What the service providers will be doing is conducting the management of their process on behalf of the entire oil and gas industry. It is in this way they will have the volume of activity to apply the toolset of specialization and the division of labor to the process that they manage. Then they can achieve new levels of efficiency and effectiveness that are not available to the stand alone oil and gas producer. Not even ExxonMobil. It is the application of these tools along with process automation and computers that will provide the service providers with their competitive advantages.

Management of the process will include automation of the task and transfer network which is part of the Preliminary Specification. In the instance of a Production Accounting service provider the field data capture, reading of a chart, completion of regulatory reports all denote the completion of a task in the task and transfer network. It is at the end of the month that the service provider prepares their billings on the basis of the tasks and transfers that occurred during the month, and charges the pertinent Joint Operating Committee for the services that were incurred. And it is in this process of preparing the billing that if any property was shut-in for the month there would be no billing generated from the task and transfer network.

Billing directly to the Joint Operating Committee for the costs of administration and accounting, the general and administration costs of the producer, provides us with a new flexibility from the decentralized production model. If the property is shut-in none of the associated overhead is incurred by the producers of that Joint Operating Committee. The overhead doesn’t disappear. It is still the responsibility of the service providers. And they will need to manage their organizations with the understanding that at any time their revenues from operations may be reduced by shut-in oil and gas operations by as much 15%. It is they who can control these costs providing the oil and gas producer with the ability to control their G&A costs with the volume of their production.

The net result is that all producers can shut-in any production that is not profitable. Reducing their production profile however will also reduce their overhead burden as well as their operating costs. When they shut-in their production that isn't profitable they will become more profitable at the lower production volume. The reserves of the properties that have been shut-in will be saved for a time when they can be produced profitably, and the commodity marketplace will have the high cost production removed from the market, putting a floor on the commodity marketplace prices.

This is the manner in how the decentralized production model provides the industry with the ability to be a price maker. It is radical surgery. It is also a plan that has significant opportunity costs. The current bureaucracy doesn't have a plan, hope or prayer. What they will do to fill this gaping void is the interesting question. As hoping for another cold winter isn't going to fool anyone this time. I think that we are going to have an interesting year in terms of dealing with our good friends the bureaucracy.

The Preliminary Specification provides the oil and gas producer with the most 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. 

When Innovation is Implemented

One thing that we have not mentioned for a while is that the Preliminary Specification is designed to identify and support innovative processes for the innovative and profitable oil and gas producer. It is within the Preliminary Specifications DNA that innovation becomes the focus and drive of the producer. Innovation is at its greatest value when and where it is needed. And in the People, Ideas & Objects system innovation is needed where shut-in production exists. The ability to return the property back on to production will require some innovation that either materially expands the reserves and reduces the capital cost of each unit of production, increases the throughput of production to reduce the operational cost per unit of production or reduces the operational costs per unit in a material way. It is in this way that the Preliminary Specification is structured to provide the oil and gas producer with the capabilities to operate in this manner.

With the decentralized production model, which reduces the producer to the C class executives, the earth science and engineering resources, the land and legal with some support staff. The producers remaining resources are reallocated permanently to service providers who are focused on the process or subprocess and use the industry as their client base. These service providers are then able to charge for their services directly to the Joint Operating Committee for the administrative and overhead costs of the various services they provide. Then if the property is shut-in these service providers will have no work associated with that specific Joint Operating Committee and as a result no billing for their services will be presented for that month the property is shut-in. Allowing the producer to incur a null operation on the property, no profit or loss, saving the reserves for a time when they can be produced profitably and reducing the amount of the commodity on the marketplace, therefore placing a floor on the commodities pricing. This is how the industry becomes a price maker as opposed to a price taker. No production, other than profitable production is produced. A reasonable and fair means of allocating production discipline.

Once the property has been inventoried as a non-producing property. That is when the engineers and earth science resources of the firm, and associated working interest partners are able to engage in any number of initiatives that any of these producer firms have developed the specialized capabilities for. Conducting a complete review on the property, its opportunities and issues and determining what the best course of action is to either lower the cost of production, increase the reserves or deliverability, or just keep the property in inventory. These actions are taken in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. It is there that these people can see what the capabilities are that are contained within the many firms that make up the Joint Operating Committee. Selecting the most promising and innovative plans and programs and applying them to the inventoried property with the anticipation of returning it to profitable production.

It will be this overall process of applying innovation to the inventoried properties that identifies and develops the key innovations in the oil and gas and service industry. This overall process will have the net effect of reducing the overall costs of the industry. Both in terms of capital and operating. The incentive to move production onto the marketplace is one of the strongest that the company faces. Holding capital assets or capacity offline is costly. Moving the firm to produce at 100% of capacity is the pressure that each firm will experience. However, there will be market discipline to ensure that any unprofitable properties remain off the market. The punishment will be in the form of the investment community looking elsewhere for their investments.

The Preliminary Specification provides the oil and gas producer with the most 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.

Defining Who Our "Investors" Are

It would seem that it would be worthwhile during our discussion of leadership to take a step back and clarify and qualify who it is that we see are the “investors” that will be the ones that we turn too to support People, Ideas & Objects, the user community and the service providers. Our biggest issue in dealing with the oil and gas producers is that they are currently operated by the bureaucracy. The bureaucracy have made it clear in all of their actions that they will have nothing to do with People, Ideas & Objects. We are their worst nightmare and they know that to deal with us will be the ultimate end of their franchise. We don't do this on purpose, its purely as a result of implementing the technologies that we are that the bureaucracy is the odd man out. They are being disintermediated like they have been in so many other industries, and will be in all the others. It is with that understanding that we know not to cross one anothers path.

When you talk to a CEO or a CFO about the Preliminary Specification they quickly move to a supportive stance. It is there that they can see how they can operate their firm in a much easier and faster manner. When pressed for an expression of their support it becomes obvious of the power of the bureaucracy as the CEO or CFO back down in terms of their support for fear of a mutiny by the bureaucracy itself. The CEO and CFO have a ship to run, they can't run it without the bureaucrats who are operating it today. And so it is they back down and take the opposing side of the argument to ours.

It is however the CEO and CFO that I would count on as a key element of our “investor” class. These people will be the first to turn when the tide has changed and they will be the ones with the resources to make the commitments to People, Ideas & Objects, the user community and the service providers. It is also they who are the ones with the issues that are first and foremost in the industry. Whether that is natural gas prices or the resource restrictions in terms of the number of engineers and earth scientists. It is they who are the ones that are dealing with those issues and it is they who are the ones that will select the solution to the problem when the time has come.

The next cornerstone of our investor classification is the oil and gas investor. This individual, investment house, hedge fund or raider is of a size that they have established a material relationship with the oil and gas producers that they invest in. They are the ones that our competitive advantage of providing the oil and gas producer with the most profitable means of oil and gas operations will appeal to the most. That is their focus and that is their drive. Their concern is that the industry is not listening to the investor class and are occupied with stakeholders, that although should be of concern, are not material to the focus of the organization. These investors resonate with the Preliminary Specification and are not swayed by the concerns of the bureaucracy or its needs. It will be these people who assert the demands on the CEO and CFO to proceed with the developments of the Preliminary Specification when the time has come.

The last cornerstone of our investor classification is the people who work within the oil and gas producers themselves. And these may be people who are current members of the bureaucracy. As we stated yesterday, organizations don't change but people do, so we can only assume that bureaucrats can also change. Here we have people who are interested in a better way. Who see an opportunity to be a part of that better way by joining the user community and service providers. It is they as part of the investor classification who can invest their time and energy into that better way and develop a new means of earning a living from the oil and gas industry. All without ever having to leave it. The people are spending the time and energy on making the Preliminary Specification the system that it has the potential to be and in turn are draining the energy of the bureaucracy. No one really knows who they are or what their doing, other than in the long term, providing the oil and gas producer with the most profitable means of oil and gas operations.

So it is these three groups that make up our investor classification. Clearly we expect the money that supports the software developments and the user community to come from oil and gas production. Investment from the classic sources of investment funds is not what we are after. These are producer related issues, and producers incur the costs of ERP systems as a normal course of their business. Therefore the costs of these developments, the software and the user community, will need to be paid for out of the producers own revenue streams. Primarily at the direction and discretion of what we call our “investors.”

The Preliminary Specification provides the oil and gas producer with the most 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. 

Leadership in the User Community

Our discussion has focused on the development of the user community and why that is needed to replace the bureaucracy in the oil and gas industry. What I wanted to talk about today is the first real ingredient of the user community in terms of its needs. And that is leadership. For all intents and purposes the user community is a separate organization that is driven by its own vision, purpose, community and stakeholders. Therefore the leadership is an aspect that needs to be developed from those who commit to the overall vision of the Preliminary Specification and desire to provide the oil and gas producer with the most profitable means of oil and gas operations.

And there will be two types of leadership that make up the user community leadership group. There is the organizational focused leadership group that will be focused on what the needs of the user community are. Secondly there will be the leadership group that provides the continuous leadership in terms of the business model for the oil and gas industry. This will include the twenty or so Product Owners who are responsible for either a specific module of the Preliminary Specification or an element of its development. I think now we begin to see why we have allocated the next five years towards user community developments.

This is the hard work of developing an organization that meets the needs of the software, the industry, the service providers and most importantly the people in the industry. To build an application on Oracle Fusion Middleware and Oracle Fusion Applications can be done by anyone with the money to do so. To add a vision as compelling as the Preliminary Specification to the mix adds a lot of value to the process. However, building a user community to define and support the Oracle and People, Ideas & Objects software will ensure that this environment becomes successful for all concerned. And that is the only manner in which I will continue with this software development project. It would be nice to have the financial resources to spend our way to building the user community. And maybe one day that will happen. But with the bureaucracies attitude towards us that is a non starter. We therefore should look forward to a process of building this user community brick by brick and stick by stick. Based on our capability of providing the oil and gas producer with the most profitable means of oil and gas operations. One day the resources will be there and we can begin these software developments. However we are not in control of that timing at this point so we must do what we can do, and that is organize ourselves for the eventuality of developing the software.

McKinsey Consulting have a good article on the topic of leadership entitled “Change Leader, Change Thyself.” And within it they have an exhibit that I can't reproduce. You can download the article and view the Exhibit for yourself. Its the one that details the roles and responsibilities of the CEO, CFO, COO and Human Resource Officer. Their focus of attention, their source of power and their sweet spot. It is those roles that need to be filled in the user community as an organization in the next five years before we begin development.

Other roles that will need to be filled are the 20 or so product owner roles we mentioned earlier. These are fascinating roles that take a premier seat in the software development team. They are the ultimate representative of the user community for the scope of the teams development authority. So if the team was developing the Partnership Accounting module the Partnership Accounting Product Owner would ensure that the user communities needs were understood and implemented in the software by the People, Ideas & Objects software development team. Having expert knowledge in the area, in this case partnership accounting, the Product Owner is able to interpret the user communities needs and desires and increase the effective communication between the user community and the development team. Ensuring that no misunderstandings or confusion between the groups cause delays or faulty software.

These are just some of the obvious leadership roles that are necessary in the user community. As we proceed in the next five years we will begin to put more elements of what is required and how we expect things to develop. However if you have any comments or concerns don't hesitate to contact me or use the comment feature on this blog.

The Preliminary Specification provides the oil and gas producer with the most 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. 

Organizations Don't Change, But People Do

In yesterday’s discussion we noted that the bureaucracy was up to its typical actions of trying to put a plan together to deal with the issues in the oil and gas industry. The fact that this plan would violate our copyright was morally and ethically a non-issue to the bureaucrats and that they didn't really have any “plans” to implement the ideas, they just need to have a “plan.” Which are really our plans. Today I want to talk about the fact that bureaucracies and organizations don't change. However, people do. And that is why we are focused on the development of the user community as the alternative organizational means for the oil and gas industry. One in which the individual investors can choose to have their oil and gas assets managed by, as opposed to the current bureaucracy. In essence people, in the user community, being chosen by people, the investors, to manage their assets. Change that is real and leaves the baggage with the bureaucracy.

This is how industries are disintermediated. It used to be the record studio that had all the power in the relationship. Dictating to the artists to produce ten hit songs a year, and the consumer to purchase 10 hit songs a year. Now the artist and the consumer can produce and purchase whatever songs they like. The bureaucracy tells the oil and gas investor that they are the only means in which to have their oil and gas assets managed. And they are correct in that assertion. And therefore have the administrative power to dictate just how that will be done. And if its not profitable, well there never was any guarantee was there.

Now is the time in which we, People, Ideas & Objects, the user community and the service providers. Or as we refer to them here as the user community. Provides the investors with the alternative in how to administer their oil and gas asset. One with the explicit guarantee that we provide the oil and gas producer with the most profitable means of oil and gas operations. Where the investor can dump the bureaucracy and proceed with us as the administrator of their oil and gas assets.

There is no way in which the level of change that is implemented in the Preliminary Specification can be “managed” within an organization. The resistance to such changes would be so strong that we would all die of stress related illnesses. An unpleasant thought, a more unpleasant reality. Particularly unnecessary when creating the environment for the Preliminary Specification, the user community and the service providers would be seen as an opportunity by most of the people that would want to work there. If we built the Preliminary Specification and user community in an environment where we did not have to constrain ourselves with the bureaucracy, it would truly be an enjoyable task. And one whose success would be most assured.

Its the people who can make the transition to this kind of environment quickly and efficiently. Given the opportunity to work for either one of the organizations, the user community or the bureaucracy, I would think most people would take the user community. And that would be the same for the investors. If they understood the impact of the Preliminary Specifications decentralized production model there would be no question as to which method of administration they would take.

Disintermediation of the oil and gas industry is simply a matter of choice then. And since there only exists one choice at the present time. Our first priority must be to organize the alternative for the investors to know and understand, and that is the user community.

The Preliminary Specification provides the oil and gas producer with the most 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 Priority, the User Communities Development

It is our current number one priority at People, Ideas & Objects to be developing the user community. The user community is the third pillar of our offering to the innovative and profitable oil and gas producer. As we develop the user communities capabilities to provide the oil and gas industry with an alternative means of organization. We can then challenge the bureaucracy and its hold in the administration of the industry. We do this on the basis that there are significant issues unaddressed. Primarily the financial performance of the industry. Capital is being destroyed at a remarkable rate and there is no plan, no hope and no prayers to do anything about it. The bureaucracy are satisfied that they are in control and expect to remain unchallenged. Their interpretation of “earnings” is an example of the disrespect and slack approach they take to the business of the oil and gas business.

I’m confused, when a CFO or a CEO touts their earnings numbers in an investor meeting, do those numbers include a deduction for the costs that the producer incurred for overhead or depletion? Someone should ask that question directly because I think that in most cases the investors assume that the overheads are deducted, and in nine cases out of ten, the bureaucracy has not included the deduction for overhead when they are promoting their next big program. What they are selling is just the revenues less royalties less the operating costs. And that’s it. The overhead and the costs of capital are things that will be eventually accounted for in the Annual General Meeting that will spill all the bad news at once. And say “things didn't turn out like we expected them to.”

And these are the earnings of the industry according to the bureaucrats in power. What came into one pocket, and left the other pocket, leaves what's left, which is my profit. Why would an industry operate on such a basic level? Think about it for a minute. It makes things so easy. There is no hard work in an environment where all you have to do is count the money that’s left at the end of the day. No planning, no budgeting, no thinking about the things that you should do right. Its just what you have in hand at the end of the day. For a bureaucrat it is a great business.

Some investors have become wise to the ways that the industry has operated. They see the bars fill up at 4:15 each day and have stopped wondering where these people are coming from. The party is almost over and there will be a reckoning for those that participated in this charade. Or alternatively, I'll get even fewer invitations for lunch. At some point the industry will need to account for the actions of the past decade and the value that has been destroyed.

What needs to happen is for a proper accounting of the properties performance begin to be provided. That is the revenues less royalties less operations less the overhead costs, a return on investment, and depletion of the capital be accounted for. And in that way if there is no profit recorded questions can be asked as to why. Because there is no reason that the producer should be producing losses at this time. Particularly with the industry wide capabilities in the Preliminary Specification to make the natural gas prices what are necessary for profitable operations. This shrugging of shoulders and shaking of heads that “its not my fault that prices are this low” isn’t going to fly anymore now that a solution has been proposed. A solution has been proposed and the bureaucracy has done nothing to work with it to make it viable in the industry! How does that work when you go to ask for more money?

It will be the user community that provides the alternative to this charade. And its development is our priority at this time. Real profits are what make the industry operate for the short and the long term. And real profits are the hard thing that an industry has to do. That is why the bureaucracy has avoided the topic. Its the hard work and they are not accountable to anyone, so they have let the profitability slip. Therefore its time to hand the reigns of the administrative power over to someone new and that is the user community who are defined in their own vision.

The Preliminary Specification provides the oil and gas producer with the most 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. 

Internal Use of the Work Order

The last time we took a short break was to discuss the Work Order of the Partnership Accounting module of the Preliminary Specification. Then we discussed the ability of like minded producers to participate in a much greater number of industry based research and study groups without the associated bureaucracy that they cause in today’s environment. There is another aspect of the Work Order, and that is the topic of discussion for today’s break from the conversation.

When we last discussed the Work Order we noted the capability of the Work Order to provide cost distribution to any working group that was formed. That would include producers that you had worked with before, and of course the producers and vendors that you may have not worked with in the past. The Work Order is unlike the AFE and Lease ID in that it is not dependent on an agreement in which to pull its working interest distribution from. It can therefore have any combination of participant distribution that it needs to have in order to accommodate the working group, and for the purposes of its internal use, the topic of today’s blog post.

One thing we didn't mention in our April 1, 2014 blog post was that the Work Order has an approval process similar to that of an AFE. And this is required for the internal needs as well. What the Work Order is used for internally is very simple. To control costs. With the producer firm stripped down to the C class executives, the earth science and engineering resources, some land, legal and support staff. Most of these people should be chargeable to the joint account, or in other words a Joint Operating Committee. However, not all of their time will be chargeable to one Joint Operating Committee and some of their time will be spent on internal work that is for the producers purposes only. These may have special charge codes that charge them to the various capital accounts of the firm. The method that the employee uses to charge their time to the various properties, overhead items or research and working groups is through the Work Order.

The next aspect of this process is the critical one. All of the employees time needs to be charged to a Work Order at all times. At no time during the day should the employee not have coded into their phone, their tablet or computer a Work Order number that is associated with the work that is being done. If there is a departmental meeting then everyone at that meeting should be charging the departmental charge code while they are there. It is in this way that the costs of every operation and task is detailed down to the minute. If you receive a call that is for a different Work Order, then you will be able to assign the time of that call, and that calls costs to the Work Order that you key in after the call. It is this level of cost control and identification that is necessary for the innovative and profitable oil and gas producer.

When we look at the financial statements of the producer we will be able to see the Revenues less Royalties and Operating Costs for their share of the field costs. In addition, with the People, Ideas & Objects use of the Work Order the capital accounts will have detailed entries into each of the properties for the types of overhead costs that were incurred primarily by the earth science and engineers. Their work is primarily of a capital nature and will be capitalized on the balance sheet. The administrative and accounting charges will be coming through from the service providers who are not on the payroll of the producer but are billing for their services, when the property is producing, and the producers share of these costs are showing up on the Income Statement as General & Administrative costs. As a result the accounting during the month will be extremely precise, will be highly specialized with advanced divisions of labor for efficiency and effectiveness. This is how the oil and gas industry needs to be operated in the 21st century. The bureaucracy wants to keep selling shale gas that barely covers the costs of operating. Its time for the user community to be given the chance to operate the industry, and show the investor that they can provide for the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most 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.