Best Business Opportunity, Ever, Part XXXIV
I may not have shown the due respect to the producers of the oil and gas industry here on this blog. They have certainly made my life entertaining as a result of my offering People, Ideas & Objects Preliminary Specification to the industry. It is also difficult to sit here and not be critical of the destruction that is so extensive and will be so long lasting. Particularly when we have a solution in hand that addresses the issues that are affecting the industry today. That these solutions are not taken up by the industry is purely due to the fact that we disintermediate the people who are causing the destruction in industry today. However, the decision was made by these Western Canadian producers to decline TCPL’s offer. Now the way I see it, the Marcellus gas is highly competitive. It is abundant and has a very short distance to travel to Quebec and Ontario. Western Canadian gas has fueled Ontario and Quebec since the beginning of time. This over a vast distance provided by “Transcanada’s” Pipeline. We understand that the Western Canadian producers are between a rock and a hard place. Their choice is to give up on the Quebec and Ontario market or permanently recognize the differential (of about $0.50) in continuing to supply the Ontario and Quebec market.
Giving up on the market is typical of those that I’ve been critical of. They said they want a better offer. Ok, TCPL will get back to you in about a decade, how’s that. To oil and gas producers all business is the same. You're in business, you have to compete. They don’t understand that there are different classes of businesses that exist in the world. Some that have different rules and regulations. Different methods of existence. Such as TCPL for example, they are involved in a class of businesses known as “utilities.” Maybe you’ve heard of them before. Utilities don’t compete. They operate on the basis of cost plus. The cost of the shutdown of the Transcanada Pipeline, if shipments for some unknown reason should ever stop. Will just be shifted to some other part of their business so that the costs can be recovered there. Maybe the old Nova system.
Western Canadian producers may feel that they showed the world they’re tough businessmen. They only showed that they’re fools and don’t understand the business that they’re in. The Marcellus producers can walk into Ontario and Quebec with little fuss now. In fact, for no apparent reason, current month NYMEX:NG jumped over 5% the following day and all of the futures contracts echoed that sentiment. I guess that was a vote of confidence from the Ontario and Quebec consumers. Or maybe the Western Canadian production going offline. As we noted the other day, there is an attitude of entitlement in the oil and gas producers here in Calgary. Maybe the farmers and ranchers will pay for the TCPL tariffs to Ontario and Quebec.
Contrary to most of the posts in this Best Ever series this isn’t all good news for the startup oil and gas producer. It’s good news that you too will find these same people operating the industry today. Which is good. You always appreciate your competition doing stupid things. However, if you were basing your startup on Western Canadian gas, you may want to rethink your location and strategy. The good news is that as a startup you're still nimble and agile.
The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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.