When Innovation is Implemented
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.