The Product Owner in our Leadership Team Part II

Our second installment of the Product Owner positions series begins to look at the desirable characteristics of the individuals in these roles. I will be quoting heavily from the book “Agile Product Management with Scrum: Creating Products that Customers Love” by Roman Pichler. As Product Owners I want them to be the individuals that are responsible for the success of the module that they work with. That their user community is how they achieve that success and they hold our development team to be accountable to the needs of the user community. In order to achieve the oil and gas industry wide software development capability that I think is necessary. One that identifies and overcomes the industries issues and implements its opportunities on a real time basis. I think this is what will be required on a minimum basis.

I have always classified the world into two types of people. Thinkers and doers. I'm a thinker and thankfully there are few of us. The rest are doers. And the book by Roman Pichler says that the Product Owner needs to be a visionary and a doer. I don't think I've personally met anyone with those qualifications but we'll take his word. He defines the Product Owner as an “entrepreneur, the product owner facilitates creativity; encourages innovation; and is comfortable with change, ambiguity, debate, conflict, playfulness, experimentation, and informed risk taking.” All attributes that everyone would encourage.

The next attributes that are highlighted are “Leader and Team Player” and the author has highlighted a phenomenal quotation that I've quoted below.

The Entrepreneurial Team 

We sometimes focus on an individual as the amazing entrepreneur or the outstanding leader -- thinking of Bill Gates, Steve Jobs, and other celebrity leaders. In reality, very few innovations are a stroke of genius attained by one person. And even if the product owner is Mrs. or Mr. Innovation, the individual still needs a team to bring the product to life. No entrepreneurial genius can make all the right decisions. In fact, neuroscientific research reveals that even the best qualified person in the right job at the right place can make wrong decisions -- if that person decides alone. Finkelstein and his coauthors attribute this to the way human cognition works (2009). They recommend using at least one other person as a sounding board. A team provides plenty of sparring partners to test ideas and arrive at the right decision. Ed Catmull, president of Pixar (2008, 68), says this: 

… if you give a mediocre idea to a great team, they will either fix it or throw it away and come up with something that works. 

The wisdom of many is preferable to the brilliance of one.

Which says all there really needs to be said about what we are trying to achieve here at People, Ideas & Objects. The user community is the key to the success of the oil and gas industry in terms of its abilities and capabilities. Software defines and supports organizations. The user community defines the software. Therefore a great team positioned in the user community would be the objective that we should all be pursuing to ensure a successful oil and gas industry. And the Product Owner has an interesting view of these events.

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.

A Choice for the Oil and Gas Investor

Commodity prices are not behaving as the bureaucracy would want or expect them to. It would seem to me at this stage in the oil and gas industries development that we would have figured out that if we were going to produce oil and gas that it would at least be profitable. It seems rather wasteful to be taking the commodity that is irretrievably lost once its used and dispose of it with a handful of financial losses with it. The value that the oil and gas industry provides other industries and consumers doesn’t seem to earn the respect of the bureaucrats who just produce oil and gas no matter the consequences. I'm pretty sure we'll look back on this era as a time when we'll regret our waste and the havoc that has been caused in the financial markets. But please note the important criteria that none of the bureaucrats jobs have been lost in this effort, nor have any pension funds been un-vested with any of their pensions, if un-vested is a term. And if things do get bad for them they do have other choices in other industries.

Why should the industry be focused on profits? The simple answer is that we have a lot of work to do. We can't rely on the capital markets forever. This is a mature business, which would indicate that it provides for its investors and has some control over its day to day. Neither can be stated to be the case in oil and gas today. The investors are unhappy, and only the bureaucrats are happy that they have construction for the cabin’s expansion underway this winter. Oil and gas is sold at whatever price is available today. And don't ask them about the cost of what that property is. That only makes the bureaucrats blush. All this talk that it takes $50 oil for shale to make money is what the analysts are determining. Not the producers.

People, Ideas & Objects offers the oil and gas investors a fundamentally different business model that we call the decentralized production model. It is part of our Preliminary Specification. It provides the dynamic, innovative and profitable oil and gas producer with the capability to employ the “price maker” strategy for their oil and gas production. Simply if the property can be produced at a profit then it is placed on production. If not, it is shut-in and worked on by the geologists and engineers to determine how to make it produce profitably at the commodity prices in the marketplace. And when the Preliminary Specification determines the profits it will be the actual profits of the property. The revenue less royalties less operating costs less accounting and administration costs that are incurred by the property. The actual costs, not estimates or accruals, actual costs.

The advantages of doing this are simple however significant. Based on the decentralized production model we have calculated our value proposition in the trillions of dollars. When a property is shut-in it keeps the reserves that would otherwise incur a financial loss and be wasted. And saves them for a time when they can be produced profitably. The producer will increase their profits during the financial period as a result of shutting-in unprofitable production. Even though their production profile will be lower their profits will be higher as they will not be carrying any unprofitable properties. And the best part is that the commodity markets have less oil or gas in the marketplace placing upward pressure on the commodities prices. Moving the commodity markets to the marginal costs. The key to our value propositions creation of value. As evidence by today’s market prices, and actions by the bureaucracy which shows they can’t, won’t, don’t, will not do this, ever. Bureaucracies do not change, ever. People, Ideas & Objects is offering a choice as the only alternative to this insanity in the marketplace.

If this seems logical and simple to you go ask a bureaucrat why they don't implement it. Watch them explode. The net effect of implementing the Preliminary Specification is that the bureaucrats are put out to pasture permanently. They're not needed and will be rendered useless in no short order. Much like the record store manager was by Apple iTunes. This is why the bureaucrats are being careful what they say. Making sure they don't get caught in a trap they can’t get themselves out of. Like saying they can cut back on production. Which of course they can't because they're just not built that way.

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 Product Owner in our Leadership Team Part I

Something people have to keep in mind about People, Ideas & Objects is that we are currently in development. By focusing on developing the user community, this is a key part of the software development and the software development capability that we will be providing to the industry. It may seem to the casual reader that things are static at this point, however, as this year develops we will see that this development in the user community will bring about many of the desired outcomes that we anticipate. Stay tuned, I promise this will be an interesting year.

One of the things that we are experiencing is that with the Internet and cloud computing our progress is able to move at the speed at which change is happening. We are not being constrained by the traditional resources of a software developer. Everything is virtual at this point and as a result is able to accommodate the needs of the people we are appealing to and the oil and gas industry. We have a lightweight footprint that is unconstrained by the physical world.

One of our objectives is to recruit the user communities leadership team and have them represent the user community to the oil and gas investors. This was to secure the funding necessary to develop the Preliminary Specification and have the user community and service providers developed. I recently changed my mind on this point. We will continue to recruit these positions, however, we are not going to expose any of these individuals to the antics of the bureaucracies vindictive ways. There is no reason that these people need to take on any career risk by being named here. Therefore from the point of view of what will be expressed to the investors, what you currently see, is what you get.

I am therefore going to begin to detail the specific positions that we are looking to fill in the leadership team and what those positions will be doing. The first position I want to discuss is the Product Owner positions of the user community. We expect that there may be upwards of 20 out of the total of 30 leadership team positions being Product Owners. Starting today I want to begin a discussion of that role and what they provide to the user community, the development team and to the software quality.

The quotations that I will be making are from the book, “Agile Product Management with Scrum: Creating Products that Customers Love” by Roman Pichler. What he suggests as the reason that the Product Owner role exists is to solve the issue of having too many cooks spoiling the soup. Having a single individual leading the development of the product from beginning to end provides this solution. Making one person responsible for ensuring its success and ensuring that everyone involved has a shared vision of the product is the Product Owner role in the development. In the broad scope and scale of the Preliminary Specification I am more or less its Product Owner. But each Product Owner in the leadership team will be either responsible for one module of the Preliminary Specification or some element of the technology. For example the data model, the user interface etc. So for example we will have a very senior individual who will be the Product Owner for the Partnership Accounting Module, and they will have the authority and responsibility for that module.

In the book the Product Owner role is defined as,

The Product Owner is the one and only person responsible for the managing the Product Backlog and ensuring the value of the work the team performs. This person maintains the Product Backlog and ensures that it is visible to everyone. 

If we think for a minute we may have 250 to 300 users in the Partnership Accounting module. This being a simple mathematical representation of the total of 3,000 people in the user population. There may be a need for far more people, especially considering the Material Balance Report which is a critical part of the module. The scope of the module is very broad, however it is consistent in terms of the type of work that is being done and therefore can be handled by one leader or Product Owner. Ensuring that the user community has considered the differences present in the People, Ideas & Objects Preliminary Specification. Having adopted those differences in their input and their analysis of what is required in their systems. It is then the responsibility of the Product Owner to ensure that the development team delivers that product to the user community.

The background of the Product Owners for People, Ideas & Objects purposes is from the business domain. Although a key member of the development team, their understanding of the business domain is what is required. Particularly with respect to the manner in which their understanding of these critical oil and gas processes are handled. It can take years, and sometimes decades before people are fully aware of the total scope of the processes under management in modules such as the Partnership Accounting module. A technological focus is not what we need to ensure product quality or to represent the user community. There will be significant developer and user collaborations and interactions throughout the course of product design and development. And the developers will have time to understand the nuances of the particular parts of the module from individual users, however there is the bigger picture that needs to be captured as well. And from a business perspective, that needs to be provided from the Product Owner.

We'll be discussing the Product Owner position in more detail in the next few days. If you have an interest in these positions, or any of our leadership teams positions please contact me.

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. 

A Quick Review of Our Plan

I made the statement last week that I would not work with the bureaucracy in the development of this software, its user community or the service providers. Seeing how they had chosen to concern themselves only with their interests when they had the opportunity to work with us for the past decade. That we were providing them with the opportunity to expand the oil and gas industries output through specialization and the division of labor and provide higher profitability through the “price maker” strategy that we enable in the decentralized production model. Their choice was to take what we had developed and attempt to eliminate it without any compensation towards us. Now that they have caused the oil and gas producers to lose money at a remarkable rate we don't need them and we certainly don't want to emulate their way of doing business. So why exactly do we want to work with them?

Our budget. The producers are the source of the financial resources that are necessary to make this community operate. One thing I can assure you is that the feeling of not working together is mutually held by the bureaucrats. And if the bureaucracy was concerned about the loses that the producers were incurring, don’t you think they would have begun the search for solutions to solve the problem? Maybe even five years ago when the natural gas prices declined. The only reason that they have the ability to stay in power in terms of the administration of the oil and gas industry is that there is no alternative for the oil and gas investor to turn too. And that is point that we have to make in this next year. That the failure of the bureaucracy will continue until an alternative is put in place. And we are that alternative. All that is necessary for this community to begin the transition is for our budget to be funded.

In order to do that we need to be prepared to provide that solution to the marketplace. We have detailed a vision that is complete within the Preliminary Specification. A method of how the oil and gas producer and their assets will be managed through the user community and service providers. We began January 1, 2014 in the development of the user community. This is the hard, expensive and time consuming work that most ERP systems skip. We have defined a leadership team for the user community and began recruiting for the 30 or so positions that make up that team.

Our plan is simple. Present our leadership team, the Preliminary Specification and our method of management to the investors in the oil and gas industry and have them fund these. I don't expect the investors to fund us directly from their pockets. I expect them to direct the oil and gas producers to do so.

As unreasonable and difficult as this appears in terms of it occurring. It is the best hope that we have of ever being funded. The bureaucrats will never fund a competing solution to their franchise. It is the equivalent of suicide to them. They intend to stay in power as long as possible and will not concede anything to anyone. For five years they have allowed significant losses to occur in the natural gas business without a word of discussion about what to do about it. Do you hear any discussion today about what they will be doing to “fix” the solution in terms of the losses that oil and gas companies are incurring today? And you won’t, ever.

Offering an alternative to the status quo is the best that we can do at this time. It is also what is being done in most industries by Information Technology. Some industries are far ahead in terms of the changes that are realized through technology. Some are far behind. Oil and gas needs to change now because of the difficulties that the bureaucracy are proving incapable of and too self interested to deal with.

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.

No Posting Today

In recognition of the U.S. Martin Luther King Jr. day.

A Brand New Sandbox

Anyone who reads the Preliminary Specification can see that it is fundamentally different from anything that is available in the marketplace today. This difference can be attributable to many things which include use of the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. When we make this change there is nothing within the oil and gas producer or the oil and gas industry that doesn't change from the point of view of what exists today. It is a mindset change where we stop working against the culture of the industry, the Joint Operating Committee, and adopt the natural flows of its legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. In order to complete this mindset change we need to make some changes to the way that both producers and the industry are structured. We discussed some of these point here on Monday and Wednesday of this week when we commenced the second year of development of our user community.

Now if we take the discussion that we have had in those days regarding the changes of the user community participant and their roles in the user community and as a service provider. (This discussion included the user community participant as the service provider founder. The size of the both the user community and service providers in terms of people and revenues.) Both of these roles are unique to the industry and to what a prototypical producer employs today. If we build systems for today’s bureaucrats we will just be endorsing their ways of losing money. Don't we want to break the industry of that habit? Producers today have thousands of people supported by systems and procedures that can’t be changed by anyone. They're on autopilot and the plane is in a steep dive. Nothing can be done. Why would we want to model systems to emulate that situation? We need to come to the table with a new vision of how the world will work. A new business model for the 21st century. One that is profitable and provides for societies needs. The Preliminary Specification.

Our user community participants need to therefore determine what it is that they need in this new world where we will provide oil and gas producers with the most profitable means of oil and gas operations. Who else is going to be able to make the changes necessary to the business models of the industry when the time comes. As we see with the bureaucrats, no one has control of the plane. We're all just passengers on a mindless adventure. That is until it ends tragically. In the future, the user community participant needs to be mindful of the dangers ahead and implement the solutions needed for the industry and the producers to avoid any pitfalls that might occur in our business models. We are providing the industry, and the producers, with the software, the software development capability, the user community and the service providers in order to ensure that they have the overall capability to avoid the death of their industry. The future may hold much more in terms of difficulties than we think. To lock ourselves into one software configuration is the lesson that we should be learning from the bureaucracies inability to change from the current status quo.

The other thing we need to be learning is this is a fresh approach. Don't bring your legacy thinking to this project and have it weigh down our approach. This is a brand new sandbox delivered last night while we were sleeping. It’s big, its wide and its deep. Plenty of room for everyone and their toys. So join me and lets have some fun.

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. 

Losses are Completely Unncessary

Those unnecessary losses of course being those that have been incurred in the past five years in the natural gas side of the business. And the losses that we anticipate will be incurred on a go forward basis on both the oil and gas sides of the business. What everyone knows inherently about the oil and gas business is that the commodities are highly inelastic in terms of the supply and demand curve. I know we all learned this economic principle in university so I won't go into too much detail. But the long and short of it is. Removing a small portion of the current oil or gas production from the marketplace, in an inelastic supply and demand situation, leads to large impacts in the prices of oil and gas. The reverse, or what we are experiencing today, where a small volume of excess production hits the market has significant downward pressure on the prices. Its good to see we all agree on these fundamental economic principles. Excuse my condescending tone, however there is a purpose.

As we indicated the other day, the bureaucrats who have been educated in the economic principles of specialization and the division of labor, have refused to deal with the issues of low natural gas prices for the past five years. This is with knowledge of the Preliminary Specification and decentralized production models availability in the marketplace. We know they know about our product because of their antics regarding our Intellectual Property. We also know that they know the principles of inelasticity. So why has nothing been done? I'm at a loss to understand how the custodians of an industry could have brought it to the brink of total destruction knowing what we know they knew.

What is currently being discussed in the industry regarding low oil and gas prices? I don't hear anything. Why is that? The bureaucrats have nothing to lose therefore what is there specifically to discuss? If everything fell apart tomorrow they would be faced with the fact that the cottages gardening could be expanded substantially to take up most of their time and energy. What exactly is the issue? Certainly there will be difficulty keeping occupied in the winter but that is why they moved the cottage to Costa Rica! If there is a need to keep working there are other industries outside of oil and gas. Clearly the perception of an issue being at hand is that which is held by a small group of concerned, self interested loonies.

And I have been called worse by our friends the bureaucrats for many years. There strategy of waiting this out and having the oil and gas prices eventually recover is valid. The trouble is that with natural gas reserves being as they are today, they will never recover without the ability to implement some form of production discipline in the marketplace. This is because of the new element of shale reserves in the marketplace. Show me a producer who doesn't have a trillion cubic feet of gas and I'll show you a start up. And as obvious as that is on the natural gas side of the business, it is the complete opposite on the oil side. Natural gas reserves from shale could last 50 to 60 years. On oil they may last 10 at current production volumes. And at the rate they are developing them they could have them exhausted far earlier. Under either scenario, its the prolific nature of the flush production that dictates the price destroying characteristics in the marketplace. Its not that these producers are playing with matches, they’re playing with dynamite. And they need a method of production discipline to ensure that they don't destroy the marketplace every time they drill a well. The decentralized production model provides production discipline and the “price maker” strategy in the Preliminary Specification but that requires the bureaucrats will need to first work to build the software and then be forced into retirement by the software’s existence.

I’d rather be a loon than someone who consistently detonates their business interests. And so unnecessarily. I’d like to think there is some intelligence in the oil and gas business. An expectation that provides proof once again that I am a loonie.

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. 

This is How it Will Work

If you've worked in oil and gas accounting or administration, the earth science or engineering disciplines and have some ideas on how things could be improved. If the Preliminary Specification resonates with your understanding of how the industry should operate. Maybe you should be part of the user community and become one of the many participants that will work with our developers to provide the most profitable means of oil and gas operations. This would be a business decision on your behalf. After People, Ideas & Objects budget is funded a significant portion of our development costs are used to support the people who are involved in the user community. The revenues you would earn from being a user community participant would provide you with a good foundation for a new future in the oil and gas industry.

Consider for a moment that the industry would be changing structurally and substantially when we proceed. The producer itself would no longer directly employ any of the people involved in any of the administrative or accounting areas. This is a substantial reallocation of the General & Administrative costs of the industry to the service providers that as of today do not exist. And People, Ideas & Objects will be looking exclusively to the user community participants to form these new firms and establish these services for the producers. It is the user community participant who will be designing a new oil and gas industry, and the way that they will interact and engage with industry from a commercial point of view.

These services that provide the process management that the user community participant defines will make up the majority of the revenues that are earned by the user community participant / service provider in the new oil and gas industry. And they will be sizable. Depending on the process that is managed and the number of people that are employed by the service provider they will share in the “new” service provider “sub-industry” that they are creating that replaces the G&A costs of the producer firm. These are estimated currently to be in the region of $40 - 60 billion per annum in the North American oil and gas industry.

On a day to day basis as a service provider you'll be responsible for managing the process on behalf of your clients, the oil and gas producers. This will involve mostly automated processes that People, Ideas & Objects software and your staff will conduct to ensure that the producer maintains the most profitable means of oil and gas operations. The other half of your organization will be in a constant state of review of your processes and determining the ways in which they can be improved in terms of the efficiencies and costs to the producers, but also the quality of the products that are delivered. It will be this work that will involve the developers of People, Ideas & Objects in which you make the necessary changes in the software to increase the specialization and division of labor, incorporate new business models or provide business changes from the environment the producers operate within. This area of the service providers business will be very advanced and scientific in terms of the type of work that is undertaken. Providing much of the real value add in you firm.

This should help to further define the type of people that we are looking for to make up the user community participant. The number of service providers will be very large as the size of this industry is significant, as is the number of processes under management. If this appeals to you and you think that this is the future of how work will be undertaken in the oil and gas industry you should think about the future here. There is much to do in preparation. Preparation that needs to be undertaken for any future, such as the augmenting your technology skills with those Java and Relational Database courses. Risk? Sure there is risk, but the risk that the bureaucrats further destroy the industry is much higher in my opinion.

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. 

It's Time For Change

People, Ideas & Objects is looking forwards to a very active year in 2015. With the decline in the oil prices in the last quarter of 2014. And the further decline in natural gas prices in the month of December, our time has come. The Preliminary Specification decentralized production model deals specifically with the commodity prices and enables the producers to enact “price maker” strategies. Nothing could be more timely. But its not just the decentralized production model that we provide as solutions for the industry. By using the Joint Operating Committee as the key organizational construct of the dynamic, innovative and profitable oil and gas producer. We are able to provide solutions to the current and future issues and opportunities of the producers administrative, accounting and operational domains. That is the real value of the Preliminary Specification, beyond how it resolves today’s problems.

However today’s problems are problematic for all producers. Year end has now begun for the majority of producers based on the oil and gas prices that were in play at the end of the year. Operational losses of material scope will be announced in the next few months. Additional write downs of assets to the commodity prices will also be carried out by the audit firms. This is perceived by many in the industry as being of a non cash item and therefore not of concern. Producers would be wise to remember that this was your investors money and is evidence that it is worth less than what it was when it was given to you. I expect to see a bloodbath.

Its not that there has been any real discussion of the issue of how the industry will deal with low commodity prices. Any strategic or tactical plans, or any discussion at all, appears to be missing from the discussion of lower oil and gas prices. CEO’s and CFO’s seem to have their heads firmly placed in the sand and are unavailable for comment. In consideration of their situation, its not that they can do anything about it. Their business model is completely inflexible in terms of its operating strategy and full production is the only methodology. Their only alternative was to talk to me and adopt the Preliminary Specification with its decentralized production model as an alternative operating model.

That was yesterday. Review of this blog’s calendar feature shows that we began writing this in late 2005. We published the proposal for the Preliminary Research Report which offered to research the idea of using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer in August of 2003. If you look at anyone of the entries in this blog it is regarding how we can build systems for oil and gas based on the Joint Operating Committee. At anytime during this eleven and half years you would have thought this research and discussion would have obtained an audience. I can tell you that it certainly has. And the bureaucracy has engaged me at every opportunity that they could. The highlights were on three occasions where they hired three other groups in attempts to steal the Intellectual Property that makes up either the Preliminary Specification or earlier work. This was, in my opinion, so that they could lay claim to it and shut it down, not to use it for its appropriate purpose of building something constructive.

It has been throughout this past decade that there has been a theme in all of my writing. That is that all economic growth can be attributed to enhanced organization through specialization and the division of labor. Our society today requires software to define and support any enhanced version of specialization and division of labor. People, Ideas & Objects software and our software development capabilities are therefore critical capabilities of the oil and gas industries future growth. Some of these attributes were discovered in the Preliminary Research Report and published in May 2004. The bureaucracy have twisted this to their benefit by never acting to change their systems, therefore their franchise will never be challenged. Understanding that economic benefits were at stake their franchise was more important. This was in addition to the value that was available from the decentralized production model in the last five years from low natural gas prices. The bureaucracy therefore can not be trusted. They have refused to deal with me and therefore have proven unable and unwilling to use these tools to the betterment of society. Now with losses growing in a material way its time for change and I am unwilling to work with them.

Did Steve Jobs need the assistance of the record store managers in the development of iTunes? He offered a clear alternative without the legacy constraints of the past. I don't want to compromise with the bureaucracy on their legacy needs and losing ways. We offer a viable alternative with the Preliminary Specification, our software development capability, our user community and service providers. This is a remove and replace strategy based on the greater force of economic change, creative destruction. The bureaucracy have begun their role in this process, its time the investors find the will to step up and direct the payments be made to us to begin these developments and for us to begin our work.

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

Our Focus

We enter 2015 as the beginning of our second full year of user community developments. These developments are the primary focus at People, Ideas & Objects. Being user community based software developments is the only software that is useful and worthwhile, in my opinion. There is too much that the user is involved in that is not captured in most ERP systems that render them ineffective in today’s environment. I think that software in the future will be much different. If it is not crafted by the user for the user, it will not be used. Therefore we have set about making our priority the developments of our user community. A step that in most ERP integrations is skipped due to the time and costs of having the user involved in the developments, and is therefore the first thing that is cut. People, Ideas & Objects however have the time and have made the budget commitments to their development.

The scope and scale of the Preliminary Specification involves the entire oil and gas industry. Within this specification there are thousands of individual jobs that take months to learn. This learning is based on years of experience, education, knowledge and understanding. Turning to our software developers they will be very good but to assimilate that knowledge and understanding without access to the people that make up those thousands of positions. Garbage in, garbage out. That is why we have budgeted 2,000 man years of user community time in determining what is required to make the Preliminary Specification exactly what you need. We expect to access this information from a population of approximately 3,000 users. None of this is permanent full time work for any of the users, however there are significant opportunities for users in the People, Ideas & Objects environment.

Specifically user community participants are those that we look too to form the service provider firms that will manage the administrative and accounting processes on behalf of the oil and gas producers. In the decentralized production model all the administrative and accounting resources of the producer are stripped out and reorganized into service providers who are focused on one process and bill the individual Joint Operating Committees for their services. It will be these service providers that will replace the G&A expenses that are currently incurred by the oil and gas producers. Creating a revenue stream for the service providers in the range of $40 to 60 billion for the North American marketplace. A significant business opportunity for the user community participant. The ability of the service provider / user community participant to then have changes to the process that they manage can be easily accommodated through the software development capability provided by People, Ideas & Objects. Providing a constantly improving process based on improved specialization and division of labor efficiency, changes to the underlying business model, or other necessary business changes to the software. Providing the oil and gas producer with the most profitable means of oil and gas operations.

It is the user community participant that is the source of the quality of our software offering and the services that are provided. We are all focused on providing the producer firm with the most profitable means of oil and gas operations as our key competitive advantage. A stark contrast to the current regimes chronic losses and self interested, self dealing. If this business opportunity is of interest to you then you should read our user community vision and follow the processes that are provided there.

Information Technology is disintermediating all industries. We are the oil and gas solution. The bureaucracy will be around for a while longer and will provide its own opportunities. If your comfortable there and you have plans to retire, or technology is not your cup of tea, then we might be the wrong choice for you. In fact I know we will. We expect that our users will all have high levels of Information Technology education that includes up to five or six university level course in Java and Relational Databases. If you don't have those, now is the time to register as there is plenty of time to get these behind you. You'll need them no matter what you do in the future. Its just becoming a different world in which to work.

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. 

Where we Stand Today

We're heading into the Christmas season and a new year will be upon us soon. Its time to look back on 2014 and see what it is that we have accomplished, where it is that we are headed and what our plans are for 2015. Final editing of the Preliminary Specification was completed on December 20, 2013 so it is timely to say happy first birthday to our completed product. We started first thing in January of 2014 to begin the development of our user community. Therefore it is reasonable to state that we have now completed the first year of our three year plan to put the user community in place for the development of the Preliminary Specification. People, Ideas & Objects are committed to user based software developments. This commitment should be starting to show.

With respect to the development of the user community we were able to specify and publish our development budget. Although the budget details a range of what our costs will be. It has been determined that we will only commence developments with the full budget of $4 billion in place. It terms of the character of the user community we were able to determine a variety of specific positions within our leadership team. These positions number upwards of thirty and we have been actively recruiting for these positions throughout the year. Stay tuned for more information on these. If you have an interest in any of these positions please contact me through any of the contact information below. We have also seen a number of people that are interested in participating in the user community begin to make their presence known. These people do not have the desire to be part of the leadership team, however are interested in the work that we are doing and / or are interested in the work of the service providers. Lastly we were able to publish a user community vision that identifies the reason that this user community is not what has typically been a software development user community. And we will continue to build on these developments throughout 2015.

These efforts have to be undertaken and would be our priority even if we had the development resources in place. Our approach is different and therefore we have to educate the market to this difference. Therefore we are already incurring time and energy in efforts that would need to be incurred during our development. And as a result we are not wasting anytime as long as we stay focused and committed to our primary objective of developing the user community. It is important to note that we are not constrained in the development of our software deliverables by physics or anything tangible. It is the development of the user community and the ideas that will be generated within that domain that are our primary constraint. The abilities and capabilities of the user community are the constraints that we must live within. And those constraints are limited in the physical world by the speed of electrons. Therefore the need to start this work now is critical to the success of our entire initiative. Since we are working on that, it is therefore reasonable to state that we are in development.

People, Ideas & Objects have become very lucky as our decentralized production model has driven our value proposition into the stratosphere. And that was before Opec stepped in. I’ll be recalculating our value proposition in the new year but its probably safe to just start saying that its valued in the trillions. The downside of this is its just one issue. We provide so much more value for the dynamic, innovative and profitable oil and gas producer beyond just enabling them to be price makers. On top of all that the Preliminary Specification does do. We enable them to become organizationally flexible to address the future issues that will need to be addressed in similar ways through organizational changes in either the industry, producer or Joint Operating Committee. Something that they will be able to address through participation in the user community and its vision.

As we have discussed we'll be looking in early 2015 to the possibility that we can get some attention in terms of our solution in the marketplace. Attention that could enable our budget to be funded by the investors in the oil and gas industry directing their producer firms to fund our budget. This is an opportunity as the short, medium and long term commodity prices look terrible in North America and the bureaucrats think they are in the catbird seat. We need to at least get the attention of these investors to let them know that there are alternatives to the bureaucrats and they don't necessarily have to take the continued losses that they provide. This opportunity might provide us with the ability to reduce our development time by one year. Therefore it is something that we will make a reasonable attempt at. Otherwise we are sticking with our plan of developing the user community up to January 2017. At which time expect that the user community leadership team will be able to prove to the investors that we offer a viable alternative to the existing bureaucracy and our budget can be funded at that time.

In an earlier posting I noted that I would be taking six weeks off returning January 12, 2015. 2014 was a very good year for us. I think 2015 will be even better, so we'll see you then.

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. 

No Posting Today

In recognition of the American Thanksgiving holiday.

What is the Long Term Outlook for Commodity Prices?

Oil and gas commodity prices continue to disappoint those within the industry. What we have currently is a situation where prices are depressed on both sides of the business. Creating difficulties for the North American producers. It has traditionally been the case that either oil or gas have been healthy enough to carry the other side of the business in terms of financial performance. It has been very rare that both sides are suffering at the same time as they are now.

Natural gas prices have declined and found a new pricing structure around 20 to 1 in terms of its valuation to oil. This is as a result of the shale gas production that began in 2008 and has flooded the market with almost 38 bcf / day in current production. That’s just in six years. Producers continue to develop the shale gas fields, and with their prolific production flood the market with new sources of natural gas. We should expect that this increase in shale gas production to continue as there has been no characteristic change in the behavior of the producers.

Oil prices began to decline in the summer as a result of Opec not wishing to continue to be subject to the loss of indirect market share from the U.S. shale oil producers. Saudi Arabia began to identify the U.S. specifically as the issue in terms of their justification for continued over production. If the U.S. shale producers can produce unprofitably at capacity, so can Opec.

So now we have a situation where the U.S. producers will see their fourth quarter financial results showing losses on all of their operations. The response to this situation by the bureaucrats that operate the producers is the classic shrug. Who is going to do anything about it. And they're right, without People, Ideas & Objects, the user community and the service providers the investors in the industry would have to sit and listen to this garbage.

If we advance this oil and gas pricing scenario forward any material amount of time, what happens? On the natural gas pricing side of the business the bureaucrats were granted their prayers with a cold winter in 2013 / 2014 that caused the prices to perk up a bit. However the shale gas producers have been able to reestablish those storage volumes during the 2014 summer season and now are producing more than ever. Assuming we get through the winter with a balanced supply and demand situation what will happen when the storage volumes don’t require the rebuilding that they traditionally need and the market is well supplied? Will the natural gas prices find a new market pricing structure around 35 to 1? What is the long term outcome of the natural gas producers strategy of producing at 100% capacity?

Pushing forward the oil and gas pricing scenario on the oil side sees a similar outcome. Recently the producers were found to be stating that they could continue to produce at much lower prices in the face of stiff Saudi opposition. Such is the need of the bureaucrat to ensure that they are seen as superior. Maybe I should have more respect for our potential customers as opposed to calling them fools and foolish. But they are fools for thinking that they can sit there and taunt the Saudis by saying they can make money at lower prices. The only people you are scaring are your investors. They have seen this behavior before when the natural gas business went under, they don't want to see the oil business go the same direction. The point being that continuing to lose money on production when you are producing at capacity is a fools game.

In both the oil and gas situation the market looks like more of the same to me. And the bureaucrats think that the situation is too difficult to change so they will remain in the position of power for the foreseeable future. Certainly long enough to complete that expansion on the cottage. “So why bother with anything, its not our money, lets just keep the show moving.”

This is why the investors need to read the Preliminary Specification. Become familiar with the user community and the service providers. They should be particularly interested in our value proposition and how we provide the oil and gas producer with the most profitable means of oil and gas operations.

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. 

A Foolish Consistency

“A foolish consistency is the hobgoblin of little minds.”

Ralph Waldo Emerson

That is what comes to mind when I read so many comments from oil and gas bureaucrats regarding how they perceive the decline in oil and gas commodity prices. Each of their responses are the same “that we are still making profits” and nothing has changed. My first argument concerning these comments is that the net proceeds from the field are not profits, they're margins. When you take the revenues less royalties, production and transportation costs that is the margin that the property is providing the producer. There are significant additional costs included in determining the profit of that property. Such as what it cost to drill the well which needs to be depreciated and the reserves depleted. Additional costs include an allocation of all of those thousands of people you employ in the head office. Then maybe you will begin to determine what “profit” really is.

As I have stated before it is detrimental to the industry to display that the bureaucrats have such a poor financial understanding. If they do not comprehend the business from a level in which they can articulate the situation to the financial community. In a way that is consistent with financial expectations then they should find someone who can or just be quiet. Right now all this talk of continuing to be profitable is setting up expectations that they are still profitable. And we all know that if the producers are operating on skinny margins in the oil sector, they are losing money after the deduction of the capital costs of current production and the associated overhead. Adding the losses on the oil side to the known losses on the natural gas side of the business and these bureaucrats will be reporting big losses in April and May of 2015 for the fiscal year of 2014. So why set yourself up for angry and disappointed investors that will believe you deceived them?

One producer was quoted in World Oil as stating...

“They're not shutting in because that’s all ‘sunk costs,’” he said of U.S. shale producers, “So you're not going to get a lot of producers stopping at 75 buck oil.”

This logic is a holdover from the 17th century. In the 21st century the dynamic, innovative and profitable oil and gas producer will use People, Ideas & Objects Preliminary Specification. Which will enable them to use the decentralized production model and agree among the Joint Operating Committee to shut-in their unprofitable properties. And by doing so they will be able to remove the excess production from the marketplace, increasing the price of the commodity. Save their reserves for the day when they can be produced profitably. And reduce the unprofitable property from their inventory of producer properties, therefore increasing their firms overall current profits. Again this would be a more constructive posture than applying confusing messages to the investment community and applying 17th century thinking to the current situation. However, I am on record as being on the outside of the industry due to the bureaucracies dislike of my ideas. Therefore I am liberated in my application of criticism of their performance, or lack of it.

Does anyone believe that these bureaucrats would, could, wanted to, are capable of, or are willing to change? I think the investors are beginning to see the extent of the little minds that are at play in the bureaucracy of the oil and gas industry. I see the commodity price issues as being a severe challenge to many of the oil and gas producers. There however seems to be an ongoing orchestrated discussion regarding climate change, carbon capture, carbon tax, carbon exchanges and the like by the CEO’s of the major producers. Why, it should be asked, would they discuss the potential losses they're incurring? This situation is fascinating to me. It will soon be time for the investors to act and direct their producer firms to fund People, Ideas & Objects and begin a new way of operations in the oil and gas industry.

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

What it is that we are doing.

We are moving to provide the organizational structure, software and industry infrastructure for the producer firm to achieve the most dynamic, innovative and profitable means of oil and gas operations. This is done through an innovative business model that is defined and supported in the People, Ideas & Objects ERP software. The innovative business model is built around the industry standard Joint Operating Committee the legal, financial, operational decision making, cultural, communication, strategic and innovative framework of the industry. By adopting these frameworks in our software and aligning them with the hierarchies compliance and governance frameworks. We achieve a speed, innovativeness, accountability and profitability in our producer firms.

We are user community based software developments. We have developed a unique revenue model and used it as the basis of our user community vision. A vision that empowers the user community with the capabilities to enact change within the industry. Creating a change dynamic in the organizational structure of the dynamic, innovative and profitable oil and gas producer. Software is the cement that holds organizations together in the 21st century. Once the software is operational in your organization it is also the biggest constraint to any future changes. Without an empowered and capable user community these constraints will disable the oil and gas producer to make any changes in their tactical or strategic operations. Much as what we see today in their response to the decline in natural gas prices and will see in response to the oil price declines. Without the enabled and capable user communities ability to foresee the difficulty in the producer firms. Determine the correct changes that need to be made to the software to enable the producer firms to avoid the negative situations. We will see the negative behaviors continue on in a never ending cycle of failure. Much as we have seen in the continued operation of the natural gas business since the collapse of the commodity prices.

The user community has been empowered with the level of capabilities and power that they need in order to make these types of changes in the oil and gas industry. Without the user community vision they would be just any other user group that people would participate in and push some paper around. That is not the type of user community that we are developing here at People, Ideas & Objects. First of all through the revenue model the user community will be provided with the resources to undertake the substantial work that we are discussing. Secondly they are the go-to group in terms of the changes that are needed by the producers. People, Ideas & Objects are committed to the user community in terms of listening only to them in terms of what to develop. We engage in no Service Level Agreements with producers and have no direct relationship with them other than the license agreement that they use our Intellectual Property for and we generate our fees from. If they need something it is the user community they need to turn to. Thirdly, under license from myself the user community is in control of the Intellectual Property that makes up the software. Therefore they are able to prepare derivative works and provide the solutions that are necessary to meet the industries needs today and tomorrow.

By using the Joint Operating Committee in the Preliminary Specification we have shown that its use is able to deal with the administrative and accounting issues of the industry. But what is more important is that it is able to solve the operational issues as well. And particularly the way that the decentralized production model would solve today’s problem regarding low oil and gas commodity prices. As well as other operational difficulties. Use of the Joint Operating Committee is a powerful tool for a software developer. And in the hands of a user community it will provide extensive value beyond the trillions of dollars that we can already quantify today.

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

"The Big Crew Change" and Our User Community

Some have begun calling the issue of the turnover in the earth science and engineering disciplines over the next few years “The Big Crew Change.” The difficulty of course is that it is expected that upwards of 50% of the existing technical resources will be retiring in the short term. This of course can’t be handled by the universities as there are only so many people that are oriented to petroleum geology and engineering and it takes at least ten years to effectively train an individual. Therefore the industry has a clearly identified issue however, with the bureaucracy, they are clearly able to see the issue, as in low commodity prices, but unable to think of anything to do about them or implement any plan to deal with the issue. This post deals with the Preliminary Specifications method of dealing with the “Big Crew Change” and the user communities involvement during development.

Simply in the case of technical resource restrictions of the like that the industry is faced with. The only method of dealing with the issue is through specialization and the division of labor. If we look at the configuration of the oil and gas producers as they are today we see that each and every producer is developing their earth science and engineering capabilities to deal with every contingency that they are responsible for as operator of the properties. Therefore they have to build in contingent resources in order to ensure that they are able to deal with the ability to meet the demands of what the makeup of their properties might require. This surplus capacity leads to unused and unusable surplus capacity that the producer incurs on a day to day basis in their earth science and engineering resources.

If we aggregate the unused and unusable surplus capacity of the industry we have a sizeable amount of resources that are made available to us if we reorganize the industry. If we dispatch the concept of operatorship to the scrap heap. And introduce the idea of pooling of the technical resources within the partnership represented in the Joint Operating Committee. We can effectively eliminate the unused and unusable surplus capacity within the industry.

In addition we can have the individual producer firm focus on areas of specialization and further provide a division of labor in the earth science and engineering disciplines that will enable us to deal with the “Big Crew Change.” If we assume that these technical disciplines continue with their current progress. The status quo requirement of a producer will require each producer to cover off each of these new technical specializations themselves. Rendering the producer firm uncommercial in the marketplace due to the overhead caused by the expanded earth science and engineering resource requirements. Approaching this issue in the pooling fashion of the Preliminary Specification, where each producer specializes and then pools with their partners, is the only reasonable manner in which to deal with the “Big Crew Change.”

The user community has a distinct role in the development of this solution. The pooling of these technical resources is handled in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. It will be there that the specifics of the producers capabilities are listed and promoted between the members of the Joint Operating Committee in order to be selected as the key member to deal with the specific technical demands as they occur. The software developments in these modules will need to have the know how and understanding of how to create and enable these new and innovative interfaces in the oil and gas industry and that will come from the user community.

It is the resolution of the big issues that the industry faces that the user community is addressing in the developments of their software. That is the importance of this user community in the industry. They are the ones that are able to make the changes in the makeup of the industry. To reorganize the resources in different ways in order to solve the problems that we face. And that is the power that is provided to you the user community through the user community vision. And this must be how the oil and gas industry develops from this point forward. As we can see the bureaucracy is failing on all major elements of the industries needs. And through People, Ideas & Objects, the user community and our service providers the bureaucracy needs to be removed and replaced.

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 Speed Limits on Change, Have Been Erased

We are about to move into the Christmas season and all will slow down for the next couple of months. I think that it will be an appropriate time for people to assess the situation in terms of the future of the oil and gas industry and which side they want to be on. The bureaucracy, or to be with People, Ideas & Objects user community. I would suggest that each individual in the oil and gas industry has to make this decision at some point in the next few years. You're either with us, or against us, there is no common ground with the bureaucracy. Theirs is a form of organization and means of operation that is finished. I think the writing is on the wall with both oil and gas prices falling now, incurring financial losses and producers having no ability to deal with the problems.

Bureaucracies can't, won't and don't change. The level of change necessary within the industry to address the issues presented by the drop in these commodity prices. Require such high levels of organizational and structural change that the time, energy and capabilities to complete these changes are beyond what can be expected of these bureaucracies. Or, they have the choice in which they could implement the Preliminary Specification. Which they won’t do because it is effectively suicide for their like and its way of life. They have had almost a decade to deal with me. They have chosen at each opportunity to not deal with me. I now chose not to deal with them. Theirs is a value proposition and opportunity without any future. We would only be dragged down into a death spiral with them.

That is to say that for an individual to be choosing to stay with the bureaucracy is not an irrational choice. For personal reasons someone may be at the end of their career and looking to top out of their pension plan. Who could argue with that. Some may feel that we are to much change. Which they are uncomfortable with and therefore will stick with what they know. There are many reasons that people will reasonably choose to stay with the bureaucracy. There is a job that needs to be done while we are in our software developments and it will be up to somebody to do it while we are otherwise busy. The bureaucracy will be around for a while longer and these people can finish out their careers there.

In terms of the choice of moving to People, Ideas & Objects I can only assure you that it will be interesting and it is probably best to think of it as an adventure. I don't think anything of this scope and scale has ever been undertaken in the industry before. We won't be boring. I think it is evident that the demand for industry level change is in the air and we can leverage that to have our budget funded. I don't expect anyone to have to make any financial sacrifice in order to participate in these software developments. There is career risk however, that is something that will be within your control. And what exactly is the bureaucracy offering you in the future with their flawed business model?

In 2015 the speed of “things” is going to become an order of magnitude faster. The future will belong to those that are prepared. That will be the only manner in which to earn a living. Being prepared for what’s next. If you sit and wait for things to involve you, I think you’ll be living in the poor house and subject to the negative consequences of change. Information Technology driven change in commercial enterprises will be the trend in the next 20 years that will not stop. People, Ideas & Objects is configured to be that change driven agent in oil and gas. Your participation with us is your choice. The fact of the matter is that 2015 will be the year that people will look back and consider that that was the year that it all started to happen. That’s when Information Technologies in all industries began to make the economy more productive and businesses more profitable. That’s when things really began to change.

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. 

General Comment on the "Shaky" Economy

From time to time I have made my views known on the state of the general economy. This is an important issue to People, Ideas & Objects, the user community and the service providers as the economic trend that began in 2008 works its way through the economy. I recently posted that I saw things beginning to look a bit “shaky” again. I think we can now put some definite facts on that “shaky” hypothesis. If you select the Perez label from this blog you will find the posts that discuss Professor Carlota Perez’ theories on Information Technology based change. She has been one of the leading researchers in the area of economic change as a result of innovations. Her analysis shows the phases that economies progress through in order to implement the type of changes necessary to accept a new technology. For the oil and gas industry to accept People, Ideas & Objects, the user community and the service providers a higher level of general economic pain would be necessary in her model. Once this occurs we can reach the highly productive, highly rewarding new economy that awaits us. Much like the industrial revolution which her theories are based upon.

In my last post regarding the general economy I suggested that the best description that I have heard about why the great depression occurred was that it was the failure of governments. Since 2008 we have seen the heightened role of governments in the general economy of all countries. Possibly Japan is the best example of this as they have been in a poor economic situation since 1992. And it was in 1992 that they had a remarkably high level of government involvement of 30% of GDP in their economy. And today that is at an unbelievably high level of 40%. Whether its Japan, Europe, the U.S., or China it seems that the news regarding the economy is usually directed by the government. The reliance on markets is something that got us into the difficulties of 2008, is the thinking. And markets is what needs to be regulated out of the system. We are so far from being a capitalist or free system that it is frightening to think how far we have come. Canada should be held out as the last good hope.

Of course the ability to deal with the problem is not being addressed by these governments. Addressing the debt of these countries is the issue. In a zero interest rate environment no one has reduced their debt or balanced their budget. Each country continues on in an unsustainable manner borrowing, or now printing, their way out of the difficulties they face. European debt commands less of a discount rate than the U.S. This is only evidence that its a confidence game. Are you really going to buy that European paper? Japan has now fallen into a recession. The U.S. dollar is surging as there is probably an ongoing flight to quality.

However, one of the most effective economic indexes in these trying times has become the Baltic Dry Index. The cost to move freight collapsed in 2008 as there became an overcapacity of container ships. You can’t idle containerships. Their hull’s will become infested with mussels and can become unusable due to the high fuel costs needed to propel them. Therefore they are deployed for just the fuel costs. Hence the Baltic Dry Index will drop in times of low economic activity. The Baltic Dry Index collapsed in 2008 and hasn't really recovered. It is once again under stress. Governments can’t control the microeconomic levels of supply and demand of individuals and businesses. And therefore we could be heading into another downturn.

What tools are at the government's disposal to fight another downturn? In a word, nothing. All the bullets have been fired that can be. At some point the market will do what it thinks is in its best interests. If that involves an individual cashing in that bond then that is what it will do and the government, if it still exists, will pay the owner what its worth, or what it can.

This will go down as the next big example of the failure of centralization. The movement to markets will be the solution and decentralized decision making within those markets the answer. Centralization and bureaucracies are both failures. Why we have to turn to them is something that we just seem to do. Once they fail however we seem to make the right choice and turn to the marketplace as the solution. The Preliminary Specification has three marketplaces, the decentralized production model, and provides the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations.

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. 

What it Would be Like to Participate in the Developments Part II

In our prior post we were discussing the user community participants involvement in the software development of the Material Balance Report of the Partnership Accounting Module of the Preliminary Specification. Today I want to discuss that further and talk more in detail about some of the things that user community participants will be involved in during these software developments. If we look at a production volume it is a pretty simple thing. That is until we qualify it. Is it a daily or monthly, gross or net, partners share, royalty share, inventory, fuel or meter loss, or any number of the possibilities in the oil and gas domain. You have products in various stages of process. A variety of different interested parties that all have some need for the data whether that is regulatory or ownership related. And finally you have the science of engineering being applied to the chemistry of the petroleum products in the development of the plants that process the production. I am certain that we have not determined the full scope of every permutation and combination that these variables provide in the industry at this time. However one day we will. To say that any production is the same shows the lack of understanding of the unique nature of the oil and gas industry.

The Material Balance Report is designed to report on the process of production and distribution of the products from the point of production to their disposition within the various systems. It is the report that has been used in the oil and gas industry, from the operational side since the beginning. Accounting rarely involves themselves in the report. What is different about the Preliminary Specification and the Material Balance Report is that the accounting for production, revenue and royalties as well as all of the production administration processes, marketing and other processes that depend on the Material Balance Report for their information are automated based on the data within the report. By tying the accounting information into the production data we are imputing the integrity of the production data to be consistent with the integrity of the accounting data. Subject to the usual amendment process of course.

Understanding these two principles in the Material Balance Report is the role of the user community participant to define the population of possibilities that could occur under the above scenarios. Once those possibilities are defined, ensure that the Material Balance Report has an effective user interface designed to deal with each instance of that population of possibilities. Then they will go about the process of developing the process management software that will be used to manage those processes, in an automated fashion, for the service providers to use for their oil and gas clients.

I know enough about this process that I know this can be done. I also know it can't be done in the current environment where every producer firm is an island of accounting capabilities on their own. Each Material Balance Report must balance to the accounting system. And each Material Balance Report must balance to the next Material Balance Report up the system that the producer may have nothing to do with. And that Material Balance Report will have to balance to the accounting of the producers who own those facilities, who are dependent on the volumes in the predecessor Material Balance Report. This dependency can be dealt with through our proposed service providers who are focused on one individual process and are representing the industry for that one process. It is in that way that we can bring the integrity of the accounting that we are providing the producer firms to a much higher level than what is attainable in the current bureaucratic nightmare of fudged accounting. I’m sure everyone in that area knows what I mean when I say that.

We have the budget designated for the development of this system. It is well beyond what has been attempted before. We will also keep developing the system over the 20 to 30 years that People, Ideas & Objects are operational in oil and gas. What is key to its development are the users within the user community. They are the ones that are defining what the system will do and how it will operate. They are the ones that know and operate the industry and it will be they in the People, Ideas & Objects user community who determine what their systems need to be to do their jobs.

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. 

What it Would be Like to Participate in the Developments

Lets assume for a moment that you are a user community participant that has an interest in the Material Balance Report of the Partnership Accounting Module of the Preliminary Specification. Your participation in the user community is oriented around the opportunity to take the Material Balance Report and automate many of the accounting and administrative processes that are dependent on the data in that report. Data and information that is used in the revenue, royalty and production accounting areas. Also in the product marketing and nominations of the products for delivery into pipelines. And determining the product balance in inventories of the commodities. There are many processes that are derived from this data. The Material Balance Report in the Partnership Accounting module holds a special significance to all of these subsequent processes in that the integrity of the data that is published in the report is unimpeachable and therefore the appropriate input for any and all of these subsequent processes. And of course we say unimpeachable from the point of view that these data elements may be subject to amendment, and these amendments would also be automated in the processes.

As a user who has worked within this area for many years you have always marvelled at the physical effort necessary to process the data and information within this domain. Seeing the broad scope of operations in terms of the number of people involved in the accounting and administration of these processes, and the never ending but necessary amendment process, you have always thought that there must be a better way. You knew that it always could be done however the costs and the time commitment necessary for someone to map out all of these processes and make a system work that deals with these is well beyond the scope of what is possible for any one individual oil and gas producer. And that will remain the case for the foreseeable future. However, People, Ideas & Objects are aggregating the resources of the industry in order to apply the solution industry wide, and therefore the scope and scale of this issue are addressable. As a result you have joined the user community and are involved in the developments of these systems.

While in the user community you will be working with other user community participants who have similar skills and understanding of the oil and gas industry. What is interesting is the different perspectives, focus and areas of issue between the users. Everyone has a different history in terms of their understanding and experience in working in the industry. And although that understanding and experience is in many ways the same, the differences can be either enlightening or create tension. Luckily we are all made aware that conflict is the source of creative breakthroughs in terms of solving the difficult issues that we face. And we can see that the Material Balance Report will be a creative and lively environment.

Everyone is well aware of the issues involved in the development of this area of the Partnership Accounting module. We can all agree on what the issues are and to a large part how to solve them. However the devil is in the details and that is where we need to get to and spend the time and energy necessary to make the Material Balance Report of the Partnership Accounting module the system that we know is possible. There are few opportunities in ones career to make the kind of difference that we have here with the People, Ideas & Objects software developments. This will make a significant difference in the lives of those that work in the oil and gas industry. No more of the tedious filing of amendments and chasing data. Instead people will be focused on solving problems, providing leadership, collaborating, being creative, doing research, generating ideas, designing and planning. Things that we need to be doing in order to ensure that we provide the oil and gas producer with the most dynamic, innovative and profitable means of oil and gas operations.

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.