Change at Oracle Corporation

News regarding Oracle’s CEO Larry Ellison stepping down from the CEO role came after the close of yesterday’s trading. At 70 years of age some are saying that the time has come for him to take a lesser role in the company. Replacing him as CEO will be Safra Catz and Mark Hurd who have been part of the team at Oracle for many years. Many of the pundits seem to be jumping on the poor financial performance of Oracle in the past few years and attributing that to Mr. Ellison. This announcement coming at the same time as the news that Oracle missed analysts estimates for the quarter in a material way. I expect that the piling on of the industry leaders and others to continue, Larry hasn't made many friends in the days of building Oracle. I too have been at the losing end of some of his antics back in February of 1997. However, I think that what the analysts, the pundits and everyone else will be wrong about is that Larry is doing nothing close to stepping aside. I think they are very wrong and unless there is more information regarding his health or other issues, I think it is fair to assume the following.

Larry Ellison is a visionary. He is the fifth wealthiest man on the planet based on his skills of implementing his vision. Oracle’s technologies are miles ahead of anyone elses in the marketplace. The breadth of offerings is fully diversified in the hardware, software and services domains. Oracle is the IBM of the 1950’s and 1960’s. There are no others that can play the game that they are in. Its just that the game is not being played at this time. People are comparing the financial performance of the firm against the other “cloud” companies such as Salesforce and Workday. I think Oracle is looking to compete in the marketplace that is defined in the Preliminary Specification, the user community and the service providers. Where industries are being disintermediated by technology and looking for the entire technology stack to be provided by one solutions provider.

Oracle has invested $50 billion on over 100 acquisitions over the past decade. They have also invested massive resources in terms of research and development based on Larry’s vision. The products are there, I can see them, and they make me want so badly to get to them. What is needed is to take these disparate products and package them into a coherent single unified message and market that to industries on the basis of what could be. Much as what we are doing here for oil and gas at People, Ideas & Objects. Technically Oracle has the opportunity to provide the hardware, software and related services to the commercial world. Just as IBM did in the 1950’s and 1960’s. Who is going to stop them. And who is going to provide that infrastructure to those industries in the next decade?

IBM’s technology isn't there anymore. They sell very little hardware and the software they do sell is Linux based. Not even their own proprietary operating system. DB2 was a challenger in the database in the past, but can’t hold a candle to Oracle in the distributed computing world. And Oracle was dominant there a decade ago. Sybase is a SAP technology, which is an ERP system, and only an ERP company. HP is on life support. Dell is restructuring. Most of IBM is Lenovo which is Chinese, and therefore government. Where exactly is the competition to Oracle’s unified, diversified, integrated, hardware, software and services offering going to come from? There is no choice. And anyone will need at least two decades to catch up to Larry Ellison's current position.

I’m sure Larry Ellison is frustrated with the impatience of his investors. He still holds 25% of the company and would like to see the developments happen quicker too. He however has seen his impatience get the better of him in the past. He still pays dearly for his attack on his partners in February of 1997. I wasn't the only one. He has been moved to the Executive Chairman position which means he’s still full time. And he is also now the Chief Technology Officer. So maybe it is his chief responsibility to make a coherent message of this broad product range. I see this as removing the constraints of being a CEO and enabling him to focus on where he builds the most value. On developing the overall vision and delivering the products of the firm.

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. 

There is a Precedent

There is a precedent where the investment community was able to pressure the bureaucracy to change their business model to one that was more amenable to the interests of the investment community. This is the strategy that People, Ideas & Objects are employing in having the Preliminary Specification, the user community and service providers implemented within the North American marketplace. Our business models value proposition provides trillions of dollars in incremental profits to the investors if the producers change their business model to the Preliminary Specification. This strategy on the surface seems to be a chance in a million that will never have the desired effect. However, there is one pertinent example that is directly on point and occurred in the 21st century. It is the Canadian Royalty Trust example.

Royalty Trusts were enabled in Canada through tax legislation in a number of administrations. It was felt that it provided a means for smaller oil and gas companies to provide their investors with a means to recapture their investments from the oil and gas producer in a safer and quicker fashion. This involved the Royalty Trust declaring monthly dividends to the investors that represented a taxable income to the investor. Essentially the producer firm was not having to pay income tax or what is commonly believed to be the double taxation normally associated with the traditional corporate model. In the early part of this century the pressure to convert your organization into a royalty trust was quite strong. And if the firm did convert, the results were that you would receive a higher stock market valuation and greater access to capital. Those that resisted were treated poorly by the investment community by way of receiving little attention in terms of new capital investment.

The trend therefore became quite strong to convert to a Royalty Trust in Canada. The pressure then grew to the intermediate producers with the majority of them converting. Then it became fashionable to employ the business model outside of the oil and gas arena and other industries began actively pursuing this corporate model. It wasn't too long afterward that even large producers were contemplating the conversion to a trust model, and even large corporations outside of the oil and gas industry began converting. It was at that time the Canadian government stepped in and announced an end to the tax legislation defining and supporting the Canadian Royalty Trust model. Effective as of 2011 all active Royalty Trusts have had to convert back to regular tax paying corporations. This was done by the Federal government to mitigate the large and growing loss in their corporate tax base.

Here we have an example of the ability of the investment community directly pressuring the organization to make the necessary changes to affect their business model. If they didn’t make the changes then the producer was somewhat ostracised in their ability to raise capital in the investment community, and their valuations were encumbered by the premium that was attached to the Royalty Trust model. In the financial investment community you have to compete. By opting out of the Royalty Trust model you essentially stated that you would not compete for capital.

We can, and we are implementing this same strategy. The investor can state that they want their producer firm to implement the Preliminary Specification in order to provide for the most dynamic, innovative, and profitable means of oil and gas operations. The material affect of our value proposition is significantly more pronounced than it is in the Royalty Trust business model. We provide real value increases, not just a minor reduction in the taxes that would otherwise be paid. As each individual producer converts to the Preliminary Specification. A conversion that is done by simply paying their share of our development costs and issuing a press release stating that they have done so. It will be at that point that the investor will begin to see the benefits of the pressure that they put on the producer through the fact that the valuation of the producer firm will have been adjusted to reflect the new realities. Then the pressure will build on the other producers to convert to the Preliminary Specification as well.

The decision to support People, Ideas & Objects in January 2017 doesn't seem to far away, nor as impossible now. Investors do have power to make the changes that we are asking of them. And we will continue to appeal to them to make these changes at their producer firms.

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. 

Who Will Work Within the User Community

Its true that not everyone will qualify to work within the user community. This applies to both the leadership team as well as the general community. We will be looking for certain individuals that are unique in their skills and understanding of the oil and gas industry. That is a given. And the diversity of those skills will make up the entire scope of the oil and gas industries administrative and accounting needs. It is these skills and understanding that are the primary concern that need to be addressed in the work that is done by the user community. The ability to analytically breakdown the processes and design new effective ones that are consistent with the Preliminary Specification is not something that will be easily done. That is why we have costed this work in our budget at the $195.00 / hour rate for the user communities participants. We are looking for people of that calibre.

As I noted the primary concern is that the user community participant be trained and experienced in the disciplines that fall within the administrative and accounting areas of oil and gas. However, we expect that there will be a strong element of Information Technology aptitude that will be inherent in their skill set. Particularly in the two areas we have mentioned before of relational databases and Java. Having a good working knowledge of these technologies, on top of your current skills, will make the design and development of the software, which will be your job after all in the user community, that much easier and better. The importance of this IT aptitude will make a significant difference in the quality of the People, Ideas & Objects Preliminary Specification in many different ways.

First it will permit you to better understand the issues and opportunities that the technology provides. What is possible to you as a result of the Oracle database, its deployment in a cloud computing environment and Java from a conceptual level offer interesting new perspectives and dimensions in ERP software. To add these to your tool kit and be able to employ them, either to use them as a service provider, or to ensure that the producers who use them are provided with the most dynamic, innovative and profitable means of oil and gas operations, should be of concern to all within the community.

Secondly your ability to communicate with the People, Ideas & Objects developers in their primary skill set will be necessary to enhance the communications between yourself and them. It is easier for you to understand the elements of these concepts in relational theory and Java then it is for them to comprehend the full understanding of the oil and gas industry which is represented in the entire user community. Therefore to enhance the communications between the developers and the user community it is by far the easiest for the user community to speak the language of the developers. As there is no way in which the developers are ever going to understand fully the scope and scale of the oil and gas industry which is contained in the entire user community.

This understanding of the technology may take three or four university level courses in order to acquire the type of understanding that I think is necessary. Thankfully we are not looking to start this type of development work until we are funded by industry in January 2017. Which provides ample time for you to acquire that knowledge if you should choose to do so. Think of it as an investment in order to earn those handsome hourly rates. The thing about providing the oil and gas producers with the most dynamic, innovative and profitable means of oil and gas operations. Is that you are able to prove substantial value propositions such as what we have. And therefore, as a result everyone benefits monetarily.

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. 

Who Are the Industries Next Leaders

The bureaucracy are managing their time until they are forced out, or their retirements allow them to live like kings. Either way they will be gone and the investors will be left holding the bag, as they say. Who then are the oil and gas industries next leaders. Dedicated, committed and looking to build on a flexible framework provided by the People, Ideas & Objects user community. Leaders that we can rely upon. And how do we recruit them into the user communities leadership team? Last week we went through how the user community and service providers can benefit the industry, the oil and gas investor, but particularly you the individual that is interested in participating in the user community and as a service provider. Bureaucracies are leaderless and not change oriented. However they are established. Their choice as individuals are to continue on in an unprofitable enterprise where you push paper in a system that is as frustrating and boring as is humanly possible, or to begin that permanent vacation. Bureaucrats know there is a better way, they also know there is nothing they can do to change things.

If you think that People, Ideas & Objects offer the alternative that the industry needs. One in which the focus will be on the dynamic, innovative and profitable oil and gas producer. Where the individual, working through the user community and the service providers has the ability, the capability and the power to make the changes that are necessary to keep the oil and gas producer dynamic, innovative and profitable. Then maybe there is a role for you in the leadership team of the user community. After all leaders need an organization, and roles within those organizations in order to practice their skills.

We showed last week that the People, Ideas & Objects user community has significant power that they can exercise within the oil and gas industry. This power is approximately equivalent to what the bureaucracy currently holds today in the oil and gas industry. The difference is that the bureaucracy have chosen to line their pockets by abusing this power, and employ the muddle along strategy. In other words they do nothing but use this power for their own self interest. We have chosen to prioritize the oil and gas producers dynamic, innovative and profitable capabilities as the keys to our competitive advantage. It is this competitive advantage that will sustain the user communities power for the long term. As long as we remain focused on these priorities we will remain the chosen method of oil and gas administration and accounting, ways and means.

We have established reasonable timelines for people to participate within the user community. We need to have the leadership team in place and operational prior to the January 2017 deadline that we established for industry, and the investors to support this initiative. It will be on the strength of the leadership team and our commitment to providing the oil and gas producers with the most dynamic, innovative and profitable means of oil and gas operations, and of course the Preliminary Specification that they will fund us. This does not preclude people from joining the user community prior to January 2017. After all we have much work to do.

Our leadership team consists of the traditional board of directors. We have set the total number to six, I have appointed myself as chairman and hold two votes. There are also the C class executives of the user community that need to be filled. That is the CEO, CFO and COO. Lastly there are many product owner positions that we have defined in the user community. Each product owner will be responsible for one of the modules of the Preliminary Specification, or one element of the development. For example the data model, or the user interface, etc. As a result the total number of people we are looking for to fill out this leadership team will be upwards of thirty people. If you have an interest in these positions or know of someone who might be a good candidate then pass this data on to them. After all it looks like we might just change the world after all.

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 Absolute Power of the User Community

We commented in our last post that the People, Ideas & Objects user community was unlike anything your grandfathers user community was like. Those were formed to usually report on some preconceived notion of what a systems development would be. From there people would usually meet to shuffle some papers and make a final recommendation that was hastily filed away for no one to read. At least that is the way that I saw most of the user communities over the past few decades. The problem with user communities, in terms of implementing them appropriately, is they are very expensive and time consuming. So if you're going to have one you need to commit these resources in order to earn the benefits. In the past no one wanted to lose control of their budget so they formed the user community without the commitment necessary in terms of time and budget. This post is to explain the key differences between the People, Ideas & Objects user community and these poor excuses from our past.

Granted the first contradiction I have to make is that the user community is using the Preliminary Specification as the base of their developments. This vision is the result of ten years of my research and provides the dynamic, innovative and profitable oil and gas producer with the ways and means in which to operate. It is a start, and that is where the user community can begin its building process.

The second element is that we have committed a large portion of our development costs to the user communities use. These have been costed at $333 to $667 million and represent 1,000 to 2,000 man years of development time. These will be incurred during the time from January 2017 to the initial commercial release of the People, Ideas & Objects software. January 2017 is the timeframe in our plan that we expect industry to fund our project. These are also only the initial development funds. The user community will be funded at approximately these levels on a continuous basis, as a going concern. These funds are derived from People, Ideas & Objects and are raised through our efforts.

The third element is the user community is the source for the industries needs for changes in their systems. When the oil and gas producers need changes to the systems and procedures that they use. The only place they can turn to will be the user community. The user community has as their audience the producer firms and the service providers that provide accounting and administrative services to the producer firms. There is no one else that has the capabilities to deal with the systems and producers other than the user community. The only people that the developers from People, Ideas & Objects will listen to are the user community. It is user community who have sole control over the makeup of what is contained in the software and the processes that are managed in the administrative and accounting domain of an oil and gas producer.

The fourth element is with regards to the Intellectual Property that is derived from the Preliminary Specification. I am the beneficial owner of the copyright of the Preliminary Specification. Through a license to People, Ideas & Objects I provide certain rights and privileges. It is through there that another license is provided to the user community and then on to the individuals within the user community. The purpose of these licenses is to ensure that all the developments to the Preliminary Specification are kept whole and available to everyone. Therefore the Intellectual Property that is developed in the user community is owned through these licenses by myself. And in turn through the licensing, available to everyone within the user community. This Intellectual Property is therefore available in its entirety without charge or encumbrance to everyone within the user community. The money that is paid to support the user community by People, Ideas & Objects is compensation in acquiring this Intellectual Property of the user community.

However, it is the user community that controls that Intellectual Property for the benefit of the oil and gas producers and the service providers. It is through this control of the Intellectual Property, which they acquire through the license, that they acquire the power that is necessary to ensure that the industry remain dynamic, innovative and profitable. It is through this control that the user community affects change within the service providers, of which the user community members are an integral part of.

Lastly, People, Ideas & Objects uses the Intellectual Property to assess the fees on industry to develop the software and support the user community. The service providers are able to raise their own revenues from the services they provide the producer firms. However that too is through a license which is granted from People, Ideas & Objects.

It is through the budget, the control of the Intellectual Property and the user community being the sole point of contact that make the People, Ideas & Objects user community different than any other user community that came before it. These differences provide it with the power necessary to effectively control the ways and means of the North American oil and gas industry. Providing it with the focus on its dynamic, innovative and profitable nature. People, Ideas & Objects are committed to user community developments. We completed the Preliminary Specification in November 2013. Since January of this year our primary focus has been the user communities development. We have endowed it with these capabilities and with this power. I think we are beginning to look rather interesting, don't you?

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. 

Providing For a Dynamic, Innovative and Profitable Oil and Gas Industry

One thing that will be a defining characteristic of the future oil and gas industry will be that it operates on the individual initiatives of the people that work within the industry. People such as yourself who, as in yesterday’s discussion, plan and prepare to participate in the user community and service provider organizations. Not seeking the approval of anyone in order to make the transition. And not seeking the approval of anyone in order to make the transitions necessary for the industry to move from one business model to the next, say in 2025. Providing the industry with the kind of dynamic, innovative and profitable make up that we are seeking for the most profitable means of oil and gas operations. As that is our priority and our concern, to make the industry as profitable as it can be.

This dynamic is held up as the alternative to the bureaucracy with their tried and true muddle along strategy. We are asking the investors and the progressive producers to make a decision and as a result fund the developments of the Preliminary Specification and the user community. This decision and funding is due in January 2017. Those people that take the advice from yesterday’s post and plan and prepare to participate in the user community and service providers within this timeframe will be offering the industry an indispensable opportunity and future. One that provides the dynamic, innovative and profitable elements that are necessary for the 21st century. It is this offering that we collectively will be providing to enable an alternative means of organization for the investors and progressive producers to use.

Change at this level can not be conducted within the traditional organizational context. We have seen how the bureaucracy has responded to the ideas put forward in the Preliminary Specification. Their plan was to hope for a cold winter. When that happened and it did not materially affect the natural gas prices. They gave up on any planning for the future. We on the other hand provide the producer with the price maker strategy through the decentralized production model. A starker contrast can not be made. The fact that the bureaucracy will not entertain or consider the Preliminary Specification is due to the fact that our system eliminates their existence. It’s suicide for them to consider us. So we need to find other ways in which to have the Preliminary Specification operational in the oil and gas industry. The only other way is to provide an alternative in which the industry can choose which way they want to have their assets managed.

Therefore there is a need for people to begin the development of these communities. And prepare and plan for their participation in the user community and service provider organizations to enable the industry to have an alternative means of organization. And this is a far more exciting path to be on. One where the needs of the producers profitability drive what the user community and service providers enable. It is the users who control the Intellectual Property that comprise the Preliminary Specification and all that comes after it. It is they who have the sole focus of the People, Ideas & Objects software development capabilities. And as a result are able to make the changes they need to keep the producers moving forward as they should. It is the user community and service providers who have the power in terms of the “what” and “how” of the oil and gas industry, and the ways and means of the oil and gas accounting and administrative domain.

But its not just in the accounting and administrative areas that they hold the power. It is also within the operational areas that the user community and service providers hold significant influence. It is the business models of the dynamic, innovative and profitable oil and gas producers that fall within the scope of what these communities control. Business models like the Joint Operating Committee, the decentralized production model and the effect they have on the operations in the Preliminary Specification. And if they were to discover a breakthrough in terms of a new business model then they would have the ability to implement that business model if it had an effect on the producers profitability. This is after all, not your grandfathers user community. As you can see.

The Preliminary Specification and user community 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. 

What Are Your Plans?

If we position ourselves as the alternative means of organization for the investors and progressive producers in the oil and gas industry. What does that mean for you as an individual that is interested in participating in this community? If you're asking yourself that question then it assumes that you have some entrepreneurial skills or desires that need some exercise. If that is the case, it would be incumbent upon you to spend some time reviewing the Preliminary Specification in detail. Understanding its differences and how it impacts the areas that you want to spend your time in oil and gas.

The next thing you might want to look at is our time lines and the prospects of change being implemented within the industry during that time period. Will these changes happen? Will they happen in that time frame? What would be needed in order for you to leave where you are working in 2018 or later and move to your own firm operating as a user community participant and service provider? What level of organization and preparations on your behalf would be necessary in order to make that change. Are the next four years adequate?

Not everyone will be able to make the transition from the bureaucratic systems that are operational today to the future that we are discussing. Look at any business magazine and they frequently discuss the effect that Information Technology is having on business. An effect very similar to the one here at People, Ideas & Objects. Like so many transitions in the past some people just can’t make the transition. Having time to prepare certainly makes the change easier from most people’s point of view, I think. Having control of the changes is maybe the most effective way in dealing with these changes. Therefore taking the initiative now to plan and prepare for the possible changes in the industry in January 2017 and 2019 might be a wise and prudent investment of your time and energy. After all what is the bureaucracy offering you as an alternative.

There are no guarantees in life. And I am certainly not in a position to provide anyone with anything. There is no prospect of People, Ideas & Objects proceeding within the industry at this point. What we need to do however is to offer the investor community with the proven capability to operate the industry if they should choose to decide to make the transition to People, Ideas & Objects Preliminary Specification. There is nothing I can do to prepare for that possibility. Other than to plan and prepare for the Preliminary Specification, the user communities leadership and general communities development, the service providers and the app marketplace. And that requires people such as yourself to make the conscious decision to leave what they are doing now, down the road in 2017 or later, and plan and prepare themselves in their own interest as members of the user community or as service providers and app marketplace providers.

Its a chicken or egg type of thing. The individual acts of people, doing this for their own self interest in developing a sound service based business in oil and gas. And for the purpose of developing a solution on providing the innovative and profitable oil and gas producer with the most profitable means of oil and gas operations. The fact that time is on our side is the real value in considering this opportunity today.

We will be knee deep in technology in 2017, that is one thing that will be a certainty. Therefore it would be a good time to take some technology courses to help in this transition. I can certainly recommend that people take courses in relational databases and Java. Those technologies, and a general understanding of those technologies throughout the user community, service providers, and of course the app marketplace might, dare I say, be a mandatory requirement by the time we get there. In order to fully understand and appreciate the opportunities and what you can do in the application requires a full understanding of what you can do in the technology. The technological concepts are opening up new conceptual ways in which the People, Ideas & Object applications will be able to function. Service providers who are on the front lines of providing the producers with their needs could really provide a much higher level of service by fully understanding the relational model and Java, as well as their accounting or administrative oil and gas industry knowledge.

The Preliminary Specification and user community 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. 

Profits vs. Cash Flow?

There are many people such as myself. Particularly those that read this blog that agree that the manner in which the oil and gas producers are operated by the bureaucracies has to change. That profitability, in what can only be described as a mature industry, is the only responsible manner and priority to proceed from this point forward. I understand the desire to trade on multiples of cash flow. It happens in most industries when the businesses need to be built and the industry is young and is at the beginning of a long and hopefully prosperous future. The need to invest in the business fuels the demand for capital and the metric that is used to determine a healthy business is a multiple of cash flow. To be using that today in the oil and gas industry I think is as a result of the bureaucracy having the luxury of sitting on its hands, unchallenged, for so long that they think they can get away with it.

It used to be that I was the only one that thought that profits should be of concern. When I raised the point I was usually derided as not understanding the way in which the industry operated. I assured them that I knew how the industry operated. Knowing what we know today, and the fact that the decentralized production model provides the oil and gas producer with the ability to become a price maker. Who can argue that profits should not be the deciding factor in determining what should be produced? Today the bureaucrats don't have a leg to stand on in terms of arguing the point about profits, if they ever had.

I have to say that we have come a long way in making the arguments of having the Preliminary Specification implemented in the oil and gas industry. What was a chance in a million in 2004, albeit a significant threat, is now something that is under reasonable consideration by many like minded people. What was just an idea is now a defined business model for the innovative and profitable producer, the user community, the service providers, the app marketplace and lets not forget the effect it will have on the service industry as well. What we have is a budget and a plan as to when this will be put in place and how it will be funded. What we are going to do is offer the investors and the progressive producers the opportunity to fund this environment and build this alternative means of organization for them to manage their assets. An alternative means or organization to manage their assets based on the profits they can make in the mature oil and gas industry.

To suggest that the oil and gas industry needs to be “built-up” by investors in order to realize the value that exists in the shale reserves is a story that I don't think anyone is going to buy. I think the investors have been told many times that they were needed to move the industry just a little bit further and a little bit further too many times in the past. The story isn't selling. The bureaucracy needs the investors money in order to pad their pensions and add to their summer cabins. What the investors may have already realized is that the game was fixed from the beginning and they were mark. What they should quickly realize now is that, since they realized that they were the dupe, is that those dishonest players are going to take their cards and move to another scam. That is the bureaucrats are going to realize that their ability to play the investor for the fool is over and move on to another industry.

Therefore, the investor is going to need someone to manage their assets as the bureaucrats are going to be high tailing it out of here faster than you can say “where is a cop when you need one?” And that has to be this community, consisting of the Preliminary Specification, user community, service providers, app marketplace and all that we have discussed here. Its been 10 years since we started this and many things have happened to take this from one chance in a million to who knows what our odds are today. But if we keep at it and keep building like we have, we just might be the ones that the investors find that they can rely on. I’m certainly betting on it.

The Preliminary Specification and user community 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. 

Challenging Industries Pricing Assumptions

In today’s post I want to take one of the assumptions that industry is operating on and challenge it in terms of whether or not that really is the method that they want to operate the industry. The assumption is that the producers need $6.70 / mmbtu for their natural gas in order for them to be profitable. It is this assumption that we have also used in determining that the decentralized production model would provide the $700+ billion in opportunity costs to the industry. It is the calculation of $6.70 that may be incorrect in that it provides an average across the industry. Where the conventional gas profits, which would be substantial at that price, more than offset the losses in the unconventional areas. This I think is the inappropriate manner in which to operate the industry. Under this scenario, the unconventional gas should remain shut-in until the prices realized in the marketplace are adequate to produce a profit on the unconventional gas production as well.

This change would introduce much higher gas prices and higher opportunity costs for industry than what we have calculated before. Some may feel that People, Ideas & Objects are just looking to accelerate our value proposition by pumping up the value of the industries opportunity costs. The effect of this change could be in the order of three or more dollars in the price of natural gas and a doubling of our opportunity costs. The focus should not be on whether the oil and gas producer is profitable as a whole, it should be on the profitability of each individual property. If the property is producing, that imputes that it’s profitable. And that the producer is only producing profitable properties. Not that the producer is producing a mix of profitable and unprofitable properties, but on a whole is still marginally profitable. That is not the production discipline that we are seeking to instill in the producer firms.

The current high throughput production model rewards the producer with the highest production output that they can attain. That is why there is so much emphasis on the producers boe / day by the investors. The higher the production output the lower the costs of the overhead per barrel of oil. However, that metric no longer applies in the decentralized production model. If your producer firm is capable of 100,000 barrels / day of production. Your overhead per barrel of oil is $x.xx / bbl of oil whether your yield is 20,000 or 80,000 barrels on a given day. The fact that you are profitable at either 20,000 or 80,000 barrels per day is the point that needs to be considered. It is far more important to produce only profitable production as the criteria of concern rather than the overhead per barrel of oil in the high throughput production model. Investors will adjust to this new model and begin to recognize and appreciate the production discipline that profitable producers implement.

Holding properties off of the market will become the common sense thing to do in the oil and gas marketplace. Since there will be no charge for operations, royalties or overhead in the decentralized production model. The shut-in property will record a null operation and will not influence the companies financial performance in the quarterly financials. Whereas by producing the property today has a negative effect or drag on the performance of the firm. The point of this blog post is that in order for the industry to be at full natural gas production will require the industry to realize much higher prices than the $6.70 that is currently assumed by the marketplace. To cover the costs of the unconventional gas production the price may have to breach $10.00.

If we attain $10.00 on all of the gas that is produced in the North American marketplace the opportunity costs as a result of the move to People, Ideas & Objects decentralized production model, moves well into the multi trillion dollar values for the decade 2009 to 2019. Producers have a choice. They can continue to develop the shale gas reserves with no hope of ever making a profit. Or adopt People, Ideas & Objects and earn the profits that the investors demand of the industry. It’s their choice.

The Preliminary Specification and user community 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. 

A Quick Note

Today I'm taking a mental health day. Don't tell anyone, and I recommend everyone do the same. 

A View From the Prototypical App Marketplace Developer

We recently announced that we had added the “app marketplace” to our offering. The app marketplace is designed to provide a service level offering of mobile applications to the people working within the oil and gas industry and the producers themselves. The division of labor would be that People, Ideas & Objects would focus on the industrial elements of the application needs of the producers and users in the industry. And the app marketplace developers would provide the industry with the mobile applications that can be of use and value to the users and producers in the industry. We would provide the app marketplace with access to our data model, an Application Programming Interface (API) and from there they would be able to develop these mobile applications. Stating this however does not preclude People, Ideas & Objects from having our features and functionality being delivered in a mobile environment.

In terms of the view of a prototypical developer in the app marketplace. Just as we have taken a rearward looking perspective on the producers, service providers and user communities activities this week. Today I want to look back from the future of what it might be like for an app marketplace developer. Gaining a perspective on how things may have developed.

You have always been employed in the oil and gas industry working on ERP systems development and deployment. These big systems have always provided a healthy lifestyle, however you also like to dabble in the technologies that were developing on the edge of the Information Technology frontier. Now with the early retirement offer and the proliferation of the app marketplaces for phones and tablets taking off in general, and one being developed for oil and gas, there was little choice really. Sure there are only a few hundred oil and gas companies, but there are well over 12 million people employed in the oil and gas industry. That is a large enough market that your ideas could be recognized and be reflected in a material sales volume.

Now that was a few years ago and I have three applications that have achieved commercial success. They are fairly simple applications but the users really appreciate their value. We continue to work on them to improve them based on our user communities contributions with updates being populated to the users almost immediately. Software development was meant to be this productive and this much of a value add.

We also have a few new ideas for two new apps that we are planning to develop later this year. The level of innovation in the app marketplace is astounding with so many app developers providing so many applications to the users in oil and gas. But that hasn't stopped the level of innovation. If anything it has created a whole new standard and sub-industry of innovation within the industry. Although I’m retired I've never been so busy or focused on the work that I am doing.

One of the advantages of working within this app marketplace is that the work that you do is protected by the license with People, Ideas & Objects. When I publish my app in the marketplace it holds the marketplace as the exclusive app provider for the industry. There are no “me too” app developers to come along and steal your thunder. If they try, they are removed from the marketplace. This helps significantly in the revenue area where I can focus on my user community and invest in making the app the best that it can be. The users end up with the best application at the lowest cost, and are not provided with ten poorly made applications providing the same functionality. Everybody wins.

Things have certainly changed over the past few years. I find the work to be much more interesting and I think the users and producers are getting the information and applications that they really want and need. A far different structure in the industry, but one that is more productive and profitable for all concerned.

The Preliminary Specification and user community 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. 

A View From the Prototypical User Community Participant

Just as in the previous two posts, this discussion will be from the point of view of the future looking back on the developments from the perspective of a user community participant. In this case someone who has extensive knowledge in oil and gas with a strong aptitude in Information Technology. This individual is a member of the user community and choses to work within the community and the service providers as their area of expertise.

Its been a few years that the People, Ideas & Objects systems have been operational in the oil and gas industry and there seems to be more work than ever. Using the Joint Operating Committee as the key organizational construct of the innovative and profitable oil and gas producer has been dramatic in terms of its impact on the industry. Certainly there is the performance that was expected however this new business model has so many areas to explore and develop. What we know today is only the beginning of what we can do with these systems, the user community and the software development capability available to us.

Adding to that we have only begun to understand what is possible in terms of how to automate the process, how to further divide the labor and of course specialize. These tools that we use in the user community are powerful in terms of how they can ensure that we provide the oil and gas producer with the most profitable means of oil and gas operations. For example we had a recent breakthrough in the Material Balance Report that “Margaret Thatcher” came up with that reduces the overall process by 15 days. Brilliant. We had it implemented industry wide within one week of her breakthrough. This one change is being reviewed to see what impact it will have on the rest of the process in terms of further improvements. As I said there is just no end to the work to be done.

I have worked on the Material Balance Report since the beginning, starting back in 2015. I have always worked in the production and revenue accounting process of the oil and gas industry and was frustrated, like so many others, with the archaic paper processes. The difficulties in automating those processes were beyond the scope of what one firm could undertake on their own. So when People, Ideas & Objects were organizing the industry to do the Material Balance Report and automation of the production and revenue accounting processes, I was hooked. This whole area has been a difficulty in industry. It needs to have the appropriate approach to make the solution real. We've now had that for the past few years and the current system is operational based on the Preliminary Specification. But it only shows what is really possible. There is so much more.

As a user community participant I am a member of the user community and participate with other members of the Material Balance Report and automation team. I also have a few service providers who are clients of mine that discuss with me their needs and concerns. However, I keep my ear to the ground through the user community to learn what is going on in the broader industry. I also have a strong relationship with the members of the development team for the Material Balance Report and work with them frequently to ensure that they fully understand our needs. I do all of this work by myself with my fees being covered by the user community and my service provider clients. I don’t ever imagine going back to anything else, this work is significant in terms of the value that it provides the oil and gas producers, the service providers who are providing the services to the producers and everyone else that I have contact with. The accounting and administrative processes associated with the Material Balance Report will eventually all be automated. Until that time there is much to do and producer profits to make.

The Preliminary Specification and user community 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.

A View From the Prototypical Service Provider

You have been fortunate enough to position yourself in the past few years to own and operate one of the service providers in this newly configured oil and gas industry. The process that your team is focused on is the Lease Rental Payment process. Your domain of operations is the United States. Paying lease rentals on behalf of all the oil and gas producers may not excite too many accountants or administrators. However, it is this process that is required for producers to maintain the title to the mineral rights that they are producing. One missed payment is unacceptable to the producer client, as it is to the leaseholder and you the service provider. Whether the payment is made to the federal, state or on private lands accuracy and timeliness, the two cornerstones of accounting, are the priorities in the management of this process.

Your clients include that start up that just purchased some producing properties, ExxonMobil and everyone in between. As their agent you will be paying the lease rentals as they become due for all of their lands that they wish to keep. Therefore during development of the People, Ideas & Objects Preliminary Specification your participation in the user community was critical in defining exactly what was necessary in terms of your access to the People, Ideas & Objects systems and data. You were also able to have the process approved where the task and transfer network of the Preliminary Specification would trigger the lease rental payment for the appropriate Joint Operating Committee, 60 days prior to the due date. This would enable the producer to approve the payment and trigger the release of the electronic funds within the appropriate time to the appropriate lease holder.

It is upon the successful payment of the lease rental that your service fee is earned. The task and transfer network calculates your service fee at $x.xx per successful payment of lease rentals charged directly to the Joint Operating Committee that the lease rental is part of. This creates a consistent flow of revenue for your team in which to base your operation. Up to this point we have been concerned with the day to day of paying the lease rentals and the various attributes of the client base and the importance of paying the lease rentals on time. This will be a natural part of each and every one of the service providers in terms of the management of the process that they carry out for their producer clients.

The second element of the work that you will undertake is to look at the process in terms of how it could be improved in both the software and the process itself. Using the division of labor within the team to optimize the workload and automate as much of the process as possible is one area that you will be constantly improving. People, Ideas & Objects software development capability will be available to you the service provider to change the systems at your request as there will be no other service providers in the US region authorized to manage the Lease Rental Payment process. Therefore People, Ideas & Objects only have to update the systems to accommodate this one service provider to meet their needs. And since the one service provider is initiating the change, the implementation of these changes will be minimally demanding on the software developers.

It will also be possible for this service provider to become more specialized in this service offering to their oil and gas clients. Particularly in the area of better service offerings. Knowing lease rental payments, and every attribute of them in the US on behalf of the oil and gas industry will be a skill that they will be able to relate to their producer clients in new and innovative ways that are beyond what producers can develop today. Unable to do so today because of the scale of their lease rental data is too small to engineer the most efficient process or develop the software to deal with that process in the most efficient way. Attributes that the service provider will be able to easily obtain due to the scale of the data that they deal with, the service fees that they receive from the industry, their participation in the user community and the software development capability from People, Ideas & Objects.

The Preliminary Specification and user community 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. 

A View From the Prototypical Producer

Imagine for a moment that you're a producer operating in the environment where the People, Ideas & Objects Preliminary Specification is operational. This has had a dramatic effect on your firm and your profitability has been soaring as a result. That’s just the first outwardly noticeable change that people see. Within the firm itself the difference is night and day. Gone are over half of the staff that used to occupy the many thousands of square feet that you were able to sublease back onto the marketplace. Those people are now part of the service providers who are providing their services to your firm and other producers on a service fee basis. Gone are the needs to concern yourself with the need to build the accounting and administrative capabilities necessary for an innovative and profitable oil and gas producer. These capabilities are now provided as a service to you from the service providers who provide these to their clients, the oil and gas industry.

As a result your CFO is able to focus on the priority of the firms relationships with the investment community and provide you with the financial resources necessary to fully develop your asset base. And it is your key competitive advantages of your land and asset base, and your earth science and engineering capabilities that you are able to dedicate your focus too. Due to the alignment of the compliance and governance frameworks with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. Not only your organization, but your working interest partners are all focused on these competitive advantages. The conflicts and contradictions that were introduced by the old corporate model no longer exist and the speed, accountability and innovation that is as a result is surprising. You not only know of the innovation, you know who initiated the innovation.

The industry has exploded in terms of the research and development being undertaken in the earth science and engineering disciplines. Participation by your firm in many of these working groups and studies has been facilitated by the People, Ideas & Objects Partnership Accounting modules Work Order. This has enabled producers to work together to study various elements of the sciences involved in oil and gas. Participation in these groups are no longer the accounting nightmare they used to be as the focus on the partnership being the organizational construct is the way that the Preliminary Specification is structured. It is the Joint Operating Committee that is the key organizational construct of the innovative and profitable oil and gas producer. It is People, Ideas & Objects recognition of this that we are able to provide the Preliminary Specification. And as a result we are able to extend this organizational construct to the Work Order.

Another benefit that is not so obvious is that the compliance no longer drives the business. It is a result of the business. As the producer firm your concern is to the innovative and profitable pursuit of your key competitive advantages. Not the implementation of the appropriate Sarbanes Oxley compliance provisions, for example. Its not that these are no longer your concern, it’s that they are no longer your priority. The service providers have undertaken to provide these services on your behalf and have what they need in order to do so. It is their business to know intimately what the compliance requirements are. A benefit of the toolset of the division of labor and specialization. The service providers are specialized in their specific areas of expertise. And it will be the service providers who are able to implement the appropriate controls and methods in their process or the People, Ideas & Objects software in order to ensure your compliance. This division of labor is appropriate for the 21st century to ensure that the scope and scale of one organization does not become so broad as to become unfocused, untenable and unprofitable as the oil and gas producer of 2014 is.

The Preliminary Specification and user community 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. 

Labor Day

No posting today in recognition of the Labor Day holiday. Returning tomorrow.

How Does the Industry Change?

In terms of being a change initiative People, Ideas & Objects certainly have the overall concept down. As a result of implementing the Preliminary Specification there isn't a molecule in the oil and gas industry that isn't disrupted from its otherwise cozy routine. The one redeeming quality of this change initiative is that we are not having to “map” out for people how things will be in the new environment. We are moving to the natural manner in which to operate the industry. One that is logical and one that fits in with the culture of the industry. Therefore anyone with a few years of industry experience will be able to grasp what the change objectives are and be able to move to the new environment with little effort.

The overall guiding principle in making these changes is to provide the oil and gas producer with the most profitable means of oil and gas operations. This spells out part of the key motivation for people to get involved in the development of the software, participation in the user community, development of the service providers, the app marketplace and implementation of the changes within the industry. There is also motivation for all of the people that are involved in those groups to do so. We are establishing in some cases sub-industries with multi-billion revenue streams where no businesses currently exist. In other words there are substantial financial rewards available to those people as well. Change for the sake of change is not what People, Ideas & Objects are about.

If we had to quantify it today it would be along the lines of, “The new manner in which to operate the industry profitably, for all concerned, for the 21st century” as the overall objective. To take what I perceive as a failing industry. Failing in the sense of performance, leadership, accountability, innovation, strategically and tactically. Some might argue that the industry has performed well in terms of the past few years with the discovery and production of shale reserves. However, they are not making any money on those reserves, and they have no prospects of making any money on those reserves. Many would disagree with my assessment of a failing grade on all these metrics. I however stand on the fact that I am able to provide our value proposition through the proposed Preliminary Specification as evidence of the current industries failure.

It may be difficult to see the problems that I see. However, I have been in accounting and audit in oil and gas long enough to know the tricks of the trade to know that the industry is not making any money. Capitalizing royalties in Canada only shows the level of desperation. I see a dead industry that nobody has told that it has died. A ghost going through the motions not realizing that its not really there. No future, no plans and no energy to undertake any new direction or initiative. Dead. Driven by a self interested bureaucracy that in 1950 would have been considered progressive, but in 2014 is primarily responsible for the deforestation in North America. Other than the vast amounts of paper it consumes not many can point to anything that the bureaucracy does. If given another five years the bureaucracy will have the opportunity to upgrade their summer cabins. Which is the only thing you here in the coffee shops and the elevators. The business of the business is dead.

People, Ideas & Objects as a change initiative is therefore more of a survival of the industry than it is anything else. What will you do with the oil and gas industry when it is in the state that it is in? Who is responsible and what actions can be taken to deal with them? What effective actions can be taken to change the course the industry is currently on? Good luck thinking of something. I’m sure the bureaucracy will have as much fun with you as they have had with me. To put the industry on the appropriate trajectory, one with a heartbeat, needs some serious action. I propose the Preliminary Specification, the user community, the service providers and app marketplace. And that way we can have the dynamic, innovative and profitable oil and gas industry we need for the 21st century.

The Preliminary Specification and user community 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. 

Decisions, Decisions, Decisions

We have not clearly discussed the role that the producers would have in the development of the People, Ideas & Objects software. Up until now I have isolated them from having to be involved in these developments. The bureaucracy, which operates the producer firms today, will have nothing to do with People, Ideas & Objects. And that I think is why we see such systemic losses, except of course for where the producer capitalizes their royalties. The user community, the service providers and app marketplace are driven by self interested individuals that will take People, Ideas & Objects to the point where we will build the best software possible. There is however a role for the producer in this task, and it is one that requires they undertake a different footing and posture in terms of how they approach their business from this point forward.

I am of course speaking of the muddle along strategy that has been in place throughout the industry for the past number of decades. Sitting around waiting for events to turn favorable really looks inappropriate when you consider the full scope of the value of the shale reserves potential. Are we to muddle along until these reserves are produced unprofitably in their entirety? Is that the strategy of the industry? The ability to let things play out will no longer favourably benefit any producer. That assumes that this strategy ever favoured any producer in the past. And it will be the same with the next issue or opportunity that the industry faces. The time to be proactive and deal with the issues and opportunities that the industry faces is how the industry needs to be managed in the 21st century.

That is “what” the industry needs to do. “How” they do that is through adopting the toolset that People, Ideas & Objects is offering. The software that we develop. The software development capability to deal with the opportunities that occur, and to eliminate the constraints that the software might impose. Our user community and service providers to deal with the changes within the industry, and provide the services that are necessary for a proactive, dynamic and profitable industry. Software’s role in society is much more involved than what the oil and gas industry considers it is today. It is not just a cost of doing business today. Anyone who reads the Preliminary Specification should see that the ability and capability to manage the producer organization strategically and tactically are the capabilities that are being provided. Managing the organization and its development within the industry itself are what the Preliminary Specification provides the innovative and profitable producer firm to undertake.

It appears to me that the majority of people believe that software had its heyday in the build up to the dotcom crash. Pets.com, WebVan and the ridiculous business models that were valued in the billions of dollars one day, and evaporated overnight, were the rightful course of action for the Information Technology want-to-be’s in business. I agree with the assertion regarding the ridiculous nature of the business model’s that were proposed in that era. However, I think that since that time there is an important lesson that needs to be learned. With the Internet, everyone could see the capabilities that it would provide to change everything. The important thing to remember about change is that it is always overestimated in the short term, and underestimated in the long term. The fact that we can provide a value proposition in the trillions of dollars over the life of shale based reserves should be evidence that we are now in the long term perspective of the impact of the changes from the Internet.

A producer therefore cannot just sit idly by and have this activity go on around them. If they do they will be flushed out with the bureaucracy. This change will be comprehensive, quick and unforgiving. Those producers that are progressive and that are with us will have obtained significant competitive advantages. Those that choose to sit and side with the bureaucrats will see their unprofitable assets sold at a discount in the marketplace. If you can't make a profit in a dynamic industry then what other purpose will you serve? Therefore it is incumbent upon those producers to determine if they are in, or are they out of the People, Ideas & Objects software development and user community environment? There is time to consider your decision, but I wouldn't take too much time.

The Preliminary Specification and user community 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. 

Providing Choices to the Innovative and Profitable Producers

We see with yesterday’s blog post that the decentralized production model is so much more than just an operational strategy that deals with a producers production. It is an operating model that is a key part of the business model contained within the Preliminary Specification. Having the capabilities provided by the software that defines and supports these desired characteristics is what People, Ideas & Objects is building. We are also providing the user community and software development capabilities necessary for the innovative and profitable oil and gas producer to change these business models, if necessary, to deal with the issues and opportunities that will inevitably occur within the industry.

What is unique, and where the capabilities are derived from is the fact that the Preliminary Specification uses the industry standard Joint Operating Committee as the key organizational construct of the innovative and profitable producer. By doing so we have moved 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. It is as a result of this alignment that the business, operational and decentralized production models are able to provide the value to the producer. It is through this alignment that we are able to offer our software that provides the speed, accountability, innovation and profitability over the corporate model that is currently employed in all of the producer firms today.

The Preliminary Specification comes at a substantial cost in terms of the effort on behalf of the oil and gas producers, and of course the financial resources of the producers. I’m sure our budget provides its share of shock value to those producers. I would point out two important points regarding our budget. First that there are a variety of cost effective software solutions on the market today. And that our value proposition is valued in the trillions of dollars when taken over the lifetime of the shale gas reserves. You have an interesting choice to make, I am selling an alternative that I think provides real value. There is a cost to that value. And I would suggest that today’s existing software solutions have a cost that hasn’t been clearly identified or understood by the producers that are using them. Software is of greater importance to our organizations than what the oil and gas industry currently considers. People, Ideas & Objects is working to change that understanding.

Others might want to approach the Preliminary Specification from a limited scope. If all of the benefit is gained from the decentralized production model, why not implement the necessary components of the decentralized production model. To that I suggest the reader read the Preliminary Specification, which they obviously haven’t. Using the Joint Operating Committee as the key organizational construct of the innovative and profitable oil and gas producer changes everything within the industry. There is nothing that is untouched as a result of this change. We are moving towards the manner in which the industry operates naturally. No more contrived corporate model superimposed over the culture of the industries use of the Joint Operating Committee. It is the Joint Operating Committees and the fact that producers are working interest owners of those organizational units. This change to the Joint Operating Committee is the detail that demands the scope and scale of the Preliminary Specification.

There is value to the industry in proceeding with the development as proposed here by People, Ideas & Objects. We are going to continue on with the developments of the user community and particularly the leadership team up to January 2017. It will be at that time that we expect the investors and the oil and gas producers in the industry to support our budget and proceed with these developments. It is after all in their best interests.

The Preliminary Specification and user community 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.

The Decentralized Production Models Effect on Exploration and Development

Natural gas producers desperately need to get a handle on their business model. Continuing on with the high throughput production model and producing at capacity. Which incurs these losses that are being realized throughout the industry will bankrupt the industry in very short order. There are a few surprises in this summers natural gas marketplace. One is the resilience of the natural gas storage volumes. The ability of the natural gas storage volumes to recover from one of the coldest winters will place a limit on the upside of any future price increases. And the second is the volumes of natural gas from shale. Shale gas production is now well in excess of 50% of the source of the United States natural gas production. A phenomenal volume considering it was as little as 8% in 2008. Looking at the US production capacity increases in just the past 6 months, which are in the area of 3 bcf per day, it would appear that shale gas has not even hit its stride yet.

Producers must implement a method to deal with the realities of the shale based reserves. And enable themselves to allocate production based on profitability. And produce at a fraction of capacity. People, Ideas & Objects have proposed the Preliminary Specification with the decentralized production model which provides this capability to the innovative and profitable oil and gas producer. The question this asks is, does the decentralized production model therefore determine a slower exploration and development of shale gas reserves?

From my point of view I don't see any difference in the approach to the development of the shale gas reserves, or for that matter any of the conventional reserves as a result of the Preliminary Specification. The decentralized production model deals with the production of those reserves in a profitable manner, not with their development. It would be appropriate for a producer to develop their shale gas reserves and their production profile to the extent that they can. Just as they do today with the high throughput production model. The difference is they may hold some of those reserves off of the market while they may be unprofitable to produce. Waiting for the time in which the natural gas prices will rise to the point where profitable production will return. In an era with such prolific production, this capability to withhold production from the market when prices are low will be a necessary function of the innovative and profitable oil and gas producer.

Pursuit of a higher production profile will continue regardless of the current natural gas prices. Higher production volumes are dependent on the economics of the reserves and will be subject to the investment decisions of the producers. With only profitable production making up the producers production profile there will no longer be any unprofitable production consuming capital that needs to be added to the costs of the reserves. Enabling greater capital to be allocated to the exploration and development of future reserves. Therefore the innovative and profitable oil and gas producer will attain a higher production profile under the decentralized production model due to the fact that they will have greater volumes of capital available to invest. Their ability to consistently produce profitable operations will also attract the capital markets to invest further, creating even higher production profile capacities.

And there’s more. With the Preliminary Specification the focus is on the earth science and engineering capabilities of the oil and gas producer. These are the distinct competitive advantage of the oil and gas producer. The Preliminary Specification is focused on innovation and provides the producer with the toolset and the organizational structure to enable innovation. This will enable them to reduce their costs per barrel and in turn allow them to compete as a lowest cost producer. Keeping their production on the market, profitably, will enable them to fully exploit their reserves and optimize their production profile.

The decentralized production model is not an excuse to do nothing for the oil and gas producer. It is the first step in a process where they can begin the process of innovation to bring the costs of the property down, expand the reserves base, enhance the production or all of these things in order to bring the property back on production profitably. It is a means in which to do this in a way that the producer can remain profitable and adjust their overhead immediately to the production profile that exists that day. A flexibility that is necessary in the new shale gas reserves era and one that can ensure that this prolific and robust era can be properly managed.

The Preliminary Specification and user community 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. 

People, Plans and Priorities.

Our plans for developing the Preliminary Specification and the user community are currently in effect. They will see us continue on with our priority of developing the user community through to January 2019. It is the user community that will make the Preliminary Specification and everything associated with this product stand out as a quality product for the innovative and profitable oil and gas producer. Our commitment to the user community and its development in these next few years will become one of our key competitive advantages. We have established January 2017 as the deadline that we expect the investment community will financially support our user communities development. Support in the form of the advancement of our budgets funds. It will be at that time that we can begin the full development of the user community for the remaining two years prior to the softwares development that commences in January 2019.

There are many things to be done within these time frames. The first order of business is to establish the leadership team of the user community. I have set out approximately 30 positions that need to be filled before the January 2017 deadline. These consist of the board of directors, the executives and the twenty or so product owners. Having a dedicated leadership team that provides the investors in oil and gas with an alternative means of managing their assets is the strategy that we are using to convince them to fund these developments. Providing this as an alternative to the existing bureaucracy and asking them to choose which method they want their assets managed. It is in this manner that the bureaucracy is removed and replaced by an alternative. This is the only means in which to change the ways and means of the oil and gas industry.

The bureaucracy have had every opportunity to deal with us in the past 10 years. They have chosen not to do so. We have a very storied history with these people. Last winter they prayed for a cold winter so as to increase the natural gas prices. And there were moderately higher natural gas prices thanks to a cold winter. However that did not motivate them to change their business model and their overproduction continued. Now the natural gas prices are declining and they say, pray and do nothing. That is because they know no one can remove them from their positions within the industry. Who has the power to make the changes. If the investors want more profitability then they will have to be satisfied by the bureaucracies accounting wizardry to capitalize more royalties. They are corrupt and self serving and know that they are permanently installed and without an alternative.

It will be a group of like minded people in the user community who are able to offer an alternative to the oil and gas investors. People motivated around the business opportunities provided within the user community, but mostly they will be motivated on the basis of providing the oil and gas producer with the most profitable means of oil and gas operations. Our business models within the Preliminary Specification can do that for the industry today and tomorrow. Our user community can lead the industry in resolving the issues and opportunities that occur on a proactive basis. Permanently dispatching the muddling along strategy of the bureaucracy to the scrapheap of history.

The first action of this new and dynamic oil and gas industry will be the change that we exercise in removing and replacing the bureaucracy. By organizing the user community, building the software which defines the ways in which the industry will operate. We will determine its future direction. The bureaucracy will be squeezed out and eliminated through attrition. Deliberately by us. And one day we can say so long, it wasn't nice knowing you.

The Preliminary Specification and user community 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.