Change, Part III - That Makes Four

 In the past, many producers’ officers, and directors were questioned about the justification for their drive for consolidation. Continuing with their limited understanding of anything beyond their corporate world, they claimed consolidation was necessary because "small producers continued to overproduce to make their bank loan payments," thereby destroying commodity prices. In hindsight, they might want to reconsider their perspective.

The definition of a cartel is provided by ChatGPT.

A cartel is a group of independent businesses, organizations, or countries that agree to collaborate to control prices, limit supply, or restrict competition within a specific market or industry. The primary goal of a cartel is to increase members' profits by coordinating activities rather than competing.

Cartels are most commonly found in industries with only a few major producers, such as oil, gas, or certain commodities. A well-known example is the Organization of the Petroleum Exporting Countries (OPEC), which coordinates oil production levels among its member countries to influence global oil prices.

Key features of a cartel: 

• Members collude (secretly or openly) instead of competing.
• They may set production quotas, agree on prices, or divide markets.
• Cartels are usually illegal in many countries because they harm consumers by reducing competition and increasing prices.

In summary:

A cartel is a group that works together to limit competition and control a market, typically to boost their own profits, often at the expense of consumers.

People, Ideas & Objects designed the Preliminary Specification to accommodate all producers, regardless of size. Using Cloud Administration & Accounting for Oil & Gas shares the entire infrastructure needed to operate an oil & gas business. Through our user community and service providers supporting our software, ownership in a Joint Operating Committee or producer firm is unknown and irrelevant to them; it's just data. Therefore, whether the user is part of Exxon or a startup down the street, they are only charged for the overhead costs they incur.

For the publicly listed small producers that once existed, overhead was a fixed barrier that demanded $3-5 million per year in incremental free cash flow to be offset. This obstacle prevented them from pursuing their distinct competitive advantage in engineering & geological capabilities & capacity development, forcing them to focus on raising cash to survive. Those who did were not necessarily the oil & gas professionals driven to explore and produce.

People, Ideas & Objects finds this unacceptable, as the distribution of innovation funds among small firms is approximately equal to the amount spent by larger ones. Yet, it could be argued that most innovation is developed by those in the small sector of an industry. Nonetheless, this sector of oil & gas is on the endangered species list or technically extinct as we stand.

I have chronicled the lack of business understanding inherent in the officers and directors of oil & gas producers. When we published the Preliminary Specification, we were accused of proposing collusion and introducing a conspiracy. Nothing could be further from the truth. It's plain, common-sense business practice to stop the bleeding in any area of the business to maximize profitability. In oil & gas, there is an inherent responsibility upon all of us not to waste this limited resource by ensuring we produce everything profitably. Our Preliminary Specification provides oil & gas producers with the most profitable means of oil & gas operations.

The Change Element

In their zeal to pursue their seasonal objectives of consolidation, some producers may have accidentally revealed their true motivations. First, for them to deal with the small producers' overproduction is a fairytale of mammoth proportions. Second, their stewardship of the industry for the past year has presented a rather dismal outlook. Is it overproduction that's causing continued global price declines? Or is it the plateau of production volumes and the realization that the steep decline curves of shale cannot be dealt with by the service industry they so carelessly destroyed? Contradictions are a byproduct of oil & gas officers and directors.

A strong history of collusion and cartel activity has haunted oil & gas for decades, sponsoring onerous regulations and a consumer backlash that has officers and directors cowering in the corner. Yet, on several occasions, we hear the need for consolidation based on the pretence of small producers being out to get them.

The Solution

It's unfortunate for the hardworking people stuck in these firms. If only there were alternatives such as the Preliminary Specification. To prove consolidated producers were not involved in a conspiracy would be difficult for the officers and directors. How could they provide evidence to the contrary? How could they now take positive steps to support the small producers?

I could be seen as biased if I promoted the Preliminary Specification. Since I don’t care much what they think, I’d say it’s the solution that solves many of their issues, such as:

• “Issue Mitigated, Nothing Litigated” strategy regarding their risk to investors who may pursue natural gas losses. Insurance coverage can’t be lost if actions are taken to mitigate officers and investors risks. (I’m not a lawyer.)

• Implementing next generation AI enabled ERP systems based on Oracle Fusion ERP and People, Ideas & Objects. 

• Participating in what appears to be the 4th Industrial Revolutions initial traction beginning to take place.
• Oracle Cloud ERP Keynote: Rocket Forward with Agentic Finance Now
• Oracle AI in Fusion Networks

• Prove they did not form an illegal cartel while consolidating their operations and blaming small producers. 

• Our Preliminary Specification specifically addresses all sectors equally, fairly and in a transparent way. Providing proof that no such cartel was formed.
• Realize the benefits of a purpose built Cloud Administration & Accounting for Oil & Gas focused solution. 
• Designed to provide profitable operations everywhere and always. With a value proposition far in excess of any cost they may be facing.

With all that's happening outside the oil & gas industry, is it not time for people to begin their participation? Or is "muddle through" so comfortable, or so constraining, that action is beyond consideration? It’s time for everyone to personally decide what the industry needs and what their individual role is, and maybe if they too have an obligation to act. If we don’t act, who will consumers turn to for their energy needs?

Change, Part II - Not So Changed

 As much as the velocity and trajectory of change are accelerating, some elements of the Preliminary Specification will remain constant. We would only consider changing something if it represented an improvement. This applies particularly to the reduction of overhead costs for both producers and Joint Operating Committees. People, Ideas & Objects, along with our user community, have dramatically cut overhead costs to mere pennies on the dollar, leading us to question why officers and directors so strongly resist our initiative.

We are not focused on minor adjustments to individual costs or contracts. Instead, People, Ideas & Objects is pursuing fundamental, structural changes that will yield significant benefits and outcomes. There are synergistic advantages, where improvements in one area enhance others. For instance, specialization and the division of labor are built upon the shared infrastructure of our upcoming Cloud Administration & Accounting for Oil & Gas software and service. Here's our approach to overhead:

Turn All Costs Variable

The reorganization and configuration supporting Cloud Administration & Accounting for Oil & Gas aim to make overhead costs variable, tied directly to profitable production. This enables producers to shut in unprofitable production, resulting in a null operation—no profit, but also no loss. This maximizes corporate performance, conserves reserves, and offers numerous other specific benefits.

Directly charging Joint Operating Committees for these overhead costs allows producers to include overhead in the current month's costs, which are then passed on to the consumer. As these are part of profitable production, the cash incurred to fund these costs is recovered within 30-90 days. Producers will no longer face decades-long waits to recover this cash, a consequence of their current policy of capitalizing most overhead costs.

As a result of these changes, overhead costs will cease to be a significant burden for producers. If a property is unprofitable, it will be shut in, and no overhead will be incurred. If a property is profitable, it will incur overhead and draw financial resources from the producers recurring monthly cash float established by using the People, Ideas & Objects Preliminary Specifications methodology.

Sharing of Accounting & Administrative Infrastructure

Applying Professor Paul Romers New Growth theory to oil & gas accounting and administrative infrastructure frees each producer from the need to build identical, non-competitive accounting and administrative capabilities. By consolidating industry resources and developing a single solution, producers can reduce their accounting and administrative resources and infrastructure, relying instead on our service providers through our Cloud facility. 

Our Cloud Administration & Accounting for Oil & Gas eliminates the redundant duplication of building the same infrastructure within every producer. We have reached a point where the IT resources are no longer available for each producer to undertake these tasks, where the financial burden has become too significant, and the task too complex for individual producers to manage. These are not part of a producer's distinct competitive advantage. Today, Cloud Computing is the only viable solution. As a related example, no one would suggest building their own infrastructure and capabilities for their own Artificial Intelligence’s Large Language Model’s (LLM) use. People, Ideas & Objects believe this same principle applies to oil & gas ERP.

Would any producer subscribe to an Exxon or Chevron-derived oil & gas ERP system? Our independence provides all producers with a standard, objective, actual, and factual accounting of their operations. This is essential. If a producer faces a property reporting a loss, they need to confidently know that all properties were subject to the same independent accounting criteria as theirs. Otherwise, production discipline will devolve into an accounting exercise aimed at boosting earnings, much as it is today.

Specialization and the Division of Labor

Producers have argued that our scope and scale are too complex and difficult. Yet, in making this argument, they fail to see that our scope is only marginally greater than their own. Our task is as substantial as their responsibilities and obligations. It is our scale that we need to address, and we are finding with these AI facilities that bigger is more efficient. The limiting factor is now the number of available natural gas turbines to power the cloud.

The configuration of accounting and administrative resources, as reorganized in the Preliminary Specification, presents a unique opportunity—one unavailable to any producer today or tomorrow, regardless of their size. Specialization and the division of labor are currently out of reach for most producers. They have been maximized to the point of diminishing returns; the greater the division of labor, the less efficiency is gained, as the volume of work within the organization does not justify the change. Low percentages of resource utilization diminish any benefits from task specialization.

However, by approaching the industry as a whole, we gain the transactional volume necessary to justify specialization and the division of labor, thereby realizing those benefits. Taking these advantages to our next category of automation and Artificial Intelligence, we see some of the synergies between these major categories in how People, Ideas & Objects reduces overhead and builds further incremental value.

Automation and Artificial Intelligence

We have discussed the benefits of automation in the highly specialized process management within Cloud Administration & Accounting for Oil & Gas software and service. It is reasonable to assume that the benefits from specialization and the division of labor will be substantial, and subsequent automation and Artificial Intelligence will be limitless in the short term—an empty canvas on which to build value for the industry and achieve the objective of People, Ideas & Objects, our user community, and service providers: to provide the most profitable means of oil & gas operations.

With discussions on how People, Ideas & Objects has adopted the high levels of automation and Artificial Intelligence embedded in Oracle Fusion ERP and their Database 26ai as a third, foundational justification for producers to support the development and implementation of the Preliminary Specification (as discussed in yesterday's blog post), there are many areas in the oil and gas industry where overhead costs are endlessly consumed. Production reporting processes are noted as the greatest consumer of all. Recall how our Material Balance Report (Podcast 32) and the subsequent automation of related processes are designed to address these issues.

A Conclusion

People, Ideas & Objects would strongly refute the idea that we are applying Oracle technologies for technology's sake to the business issues of oil & gas. That is not, nor has it ever been, our approach. We have consistently used advanced technologies to resolve business problems. We are not the ones who will tell you Windows 11 will make everything right. Oracle is using AI as a technology to solve business challenges, just as we are. The difference is stark, and it is the reason we are now adding their AI initiative as a fundamental justification for the survival of oil & gas producers.

Producers may report that all their operations are profitable yet still report corporate losses. If overhead costs remain as they are today, chronic and systemic corporate losses will continue. The magnitude of these changes introduced by the Preliminary Specification will reduce overhead costs to single-digit pennies on the dollar.

Let's assume, for discussion purposes, that the shared infrastructure of Cloud Administration & Accounting for Oil & Gas reduces overhead by 50%, which I would consider the minimum. Recall Adam Smith’s research at a pin factory, which yielded a 24,000% increase in production from specialization, the division of labor, and mechanical automation. What could intellectual automation yield in accounting and administration? Making all costs of the producer and Joint Operating Committee variable introduces an operational flexibility that People, Ideas & Objects believes should be welcomed.

It's easy to think these changes will make a producer profitable. I would beg to differ. They will help; however, the industry operates at a low level of competitive efficiency—a level that is unprofitable and far from competitive or profitable. It has a culture of "muddle through," which is anti-initiative and ingrained over at least 40 years. Hence, People, Ideas & Objects' much-needed rebuilding through the Preliminary Specification.
Drilling and producing is the only business model producers currently have. Accelerating their level of competitiveness to profitability will be an engineering and geological pursuit. Accounting and administration will serve in support, providing the much-needed understanding of what works and what doesn't from a financial and business perspective. The challenges of ensuring profitable, abundant, affordable, and secure energy are competitively produced are their responsibility.

We believe it's time for everyone in the industry to decide what their role will be in this rebuild.

Change, Part I - The One Constant

 When People, Ideas & Objects considers the commercial release of the Preliminary Specification as it's currently configured, we anticipate being one or two generations behind market needs. This is unacceptable. While the industry configuration and the software's value proposition within the Preliminary Specification remain sound, the methods of its construction, implementation, operation, and usage will undoubtedly evolve. This is where our focus and energy must be directed today. People, Ideas & Objects and our user community are now “AI First” in our product and services. 

I strongly recommend watching this Oracle conference video (registration may be required). It demonstrates how Oracle Fusion ERP, enhanced with Agentic AI, transforms various familiar roles. With just a few prompts and some user thought, issues that many companies might not have previously considered, primarily due to limited accounting capabilities, were resolved. These material problems were addressed in seconds, as opposed to days. Consider what impact this would have for an engineer reviewing the costs in a Joint Operating Committee.

Oracle Cloud ERP Keynote: Rocket Forward with Agentic Finance Now

These features are only accessible when data is managed appropriately within the database, specifically Oracle AI Database 26ai with the Preliminary Specification. Many of these capabilities are a direct result of AI being embedded within this database.

In previous blog posts, we discussed the revenue losses incurred by officers and directors due to unrealized natural gas prices. This was caused by chronic and systemic overproduction since the shale boom began in 2009, driving prices from a 6:1 ratio to oil down to as low as 50:1. This situation is intolerable and should have been addressed by officers and directors at some point since 2015, the time when producers' investors demanded performance and accountability.

Our Preliminary Specification has been available since August 2012, offering producers an opportunity to tackle this issue by introducing production discipline through profitable production.

I am now adding the introduction of Oracle's 26ai Database and Oracle Fusion ERP with Agentic AI as a third pillar of justification for beginning the development and implementation of the Preliminary Specification. We've all witnessed the effectiveness of chat-like interfaces in LLMs. Apply that lesson to oil & gas ERP systems and consider what they'll be capable of providing. Without the Preliminary Specification, your corporate "dark ages" are imminent.

It's clear that oil & gas producers do not share my concern regarding their legal liability to shareholders concerning fiduciary duties and natural gas revenue losses. No producer has yet adopted our "Issue Mitigated, Nothing Litigated" strategy. Investors will make their own decisions on their own timelines. I am confident in my position, and both People, Ideas & Objects and the producers cannot simultaneously be correct on this matter.

Nonetheless, the writing is on the wall. Will producers remain in the metaphorical "dark ages" with their current systems? This video even states that these features are not available as a bolt-on implementation. Therefore, a cultural transformation, as prescribed in the Preliminary Specification, is the appropriate remedy for their predicament. 

I believe officers and directors who recognize this opportunity to adopt and implement the Preliminary Specification will sleep better tonight than they have in decades past. When all is said and done, they’ll be seen as geniuses for the high performance they’re able to attain from the most profitable means of oil & gas operations, everywhere and always thanks to People, Ideas & Objects and our user community. 

Podcast # 34, Artificial Intelligence Part II

 Last week, Oracle hosted its annual conference, now aptly named Oracle AI World. While there were no major product releases beyond Oracle AI Database 26ai, the event focused on integrating Artificial Intelligence across their product line, particularly in Oracle Cloud ERP (also known as Oracle Fusion ERP), which forms the basis of our Preliminary Specification.

The name People, Ideas & Objects is inspired by Professor Paul Romer’s Nobel Prize-winning new growth theory, which emphasizes sharing non-rival costs. Object-based software is the ultimate expression of this concept. As the owner of Java, Oracle developed Fusion ERP as the first ERP system written in Java. Consequently, People, Ideas & Objects benefit from the AI features introduced in these Fusion ERP and database updates.

Larry Ellison’s keynote presentation, as always, offered compelling insights. He highlighted that current LLMs primarily utilize public data, whereas the majority of private or corporate data resides on Oracle Databases. With Oracle AI Database 26ai, users can activate a feature that allows their private data to be incorporated into the LLM they are using. This feature will be particularly valuable to North American oil & gas producers seeking to broaden their analysis and combine their private data with public data. It is important to note that this process does not publish the firm’s private data; it only accesses what is necessary to resolve the prompt query, addressing initial confusion about data publication.

Oracle AI Database implements NIST-approved quantum-resistant algorithms (ML-KEM) to encrypt data-in-flight. Combined with the existing support for quantum-resistant encryption for data-at-rest, Oracle AI Database’s data protection approach is designed to prevent hackers from harvesting organizational data now and decrypting it using quantum computers later. Other vendors have implemented quantum-resistant algorithms either in their network and storage architectures or in their database services, but not both.

Although not explicitly discussed in Larry Ellison’s presentation, subsequent client discussions revealed an interesting tension. I have often criticized officers and directors for their failures stemming from their defense of the status quo. This defense is now permeating Oracle client organizations. My conclusion is that Artificial Intelligence is generating FUD (fear, uncertainty, and doubt) across organizations. It is by far the fastest technological adoption we have witnessed, and it is perceived as a direct threat to productivity. Furthermore, understanding how to leverage AI competitively is challenging, especially given that "others" are already using it in ways that could impact their jobs. I see significant push back starting. 

Today’s podcast touches on some of these highlights and raises many more. 

Saturday evening update, I review these podcasts after some time has passed and feel I need to place a warning on this one. It made sense when I made it, but there’s too much data too quickly and is overwhelming even for me. I’ll hopefully get some time to break it down and make it palatable so be warned beforehand. 

Pod up

🎙️Podcast
📝Specification
📚Index

The Cost of Inaction, Part IV Consequences

 I’ve consistently presented my perspective on the extensive and intricate challenges confronting oil and gas executives and directors. Simultaneously, there's an effort to narrow the issue's scope to only LNG production by the industry, specifically Venture Global's contracts. Natural gas revenue losses stem from a decline in the structural market price, shifting from a 6:1 heating value equivalent to oil to as high as 50:1. Based on oil and gas prices and volumes this century, the unrealized natural gas value stands at $4.7 trillion.

Currently, discussions revolve around a potential oil surplus in the global market, with concerns about large tanker inventories and chronic oversupply projected for 2026. North American shale and heavy oil, being the highest-cost producers, have contributed to these oversupplied markets by refusing to act as swing producers.

Concurrently, citing field operational shortages, discussions about shale's steep decline curves are raising concerns about production deliverability. Who would have anticipated such a scenario in the 21st century? Fortunately, the Preliminary Specification offers a solution to these issues, aiming to rebuild the industry on a foundation of reserves preservation, performance, and profitability.

Most would have expected the dynamic nature of consolidation to have taken effect by now. Over the past decades, executives and directors have repeatedly made poor decisions regarding the industry's direction and survival needs. Consolidation appears to be a contender for a medal against the shift to clean energy, the classic reversal from "shale will never be commercial" to "shale is the future," or the gold medal performance of ignoring their investors for a decade. The reality is that the oil and gas industry is fundamentally broken.

Investors hold interests in these producers from which they cannot easily divest, as doing so would lead to even greater, more permanent destruction. While dividends in recent years have offered some relief, most positions remain underwater. What are investors to do? They could remove the officers and directors at the next AGM, but that's akin to herding a million cats in less than an hour.

Public company officers and directors are covered by Directors & Officers Liability Insurance in case of shareholder lawsuits. I believe lawsuits based on Negligence and Willful Misconduct would be justifiable, if ever there was a case to be made. I am not a lawyer, and this is not legal advice; it simply reflects my interest in resolving industry issues through the development and implementation of the Preliminary Specification.

That's a long journey to build the Preliminary Specification and rebuild the industry. Yes, but my conviction is tempered by the fact that officers and directors can avoid their problems by actively seeking solutions. If they choose to build the Preliminary Specification, they can demonstrate their commitment to rectifying the situation. Issue mitigated, nothing litigated, as I like to say.

I would assume there's a need to choose a viable option. The shift to clean energy was unauthorized and failed the laugh test. Shale's flip-flop may be remembered as the most confusing business strategy. Consolidation is already enshrined in the Smithsonian. None of these identified strategies were viable solutions, adequately addressed an issue (consolidation blamed small producers), or proposed a genuine solution. What purpose do these people serve, and why are they there?

Podcast # 33, Decentralized Production Model

I’m very pleased with the exceptional value these podcasts are delivering. Admittedly, I may be biased, but they capture precisely what I intended to convey in the Preliminary Specification. They allow anyone with even a passing interest in the project to get up to speed quickly, thanks to the AI’s remarkable ability to synthesize and communicate the material efficiently.

Today’s episode focuses on our Decentralized Production Model—the core value-adding framework that enables the industry to manage reserves responsibly and eliminate the chronic waste of producing unprofitably. All in just 14 minutes.

Pod up

🎙️Podcast
📝Specification
📚Index

The Cost of Inaction, Part III Culpability

We resume the discussion by revisiting the question of how critically the industry required the use of the $4.7 trillion in lost natural gas revenue. The only reasonable conclusion, after reviewing the prior analysis, is one of utter devastation. Officers and directors appear either oblivious to the scale of the damage—or perhaps are concealing a deeper sense of culpability. At this stage, attributing such negligence to mere naivety or ignorance strains credibility.

Investors voiced their dissatisfaction in 2015, citing concerns over performance and accountability, yet producers have made no changes. In a healthy and profitable industry, profits should easily cover debt, dividends, and capital requirements. While investment is needed, there are multiple capital sources; not every company lines up on Wall Street for more money each year. The primary goal is to make money, and despite efforts to educate oil and gas leadership, they have ignored their investors' message.

The strategy of "waiting out" investor demands for accountability, under the assumption that investors "understood" the industry's decline curves and would eventually be forced to invest, was both sophisticated and dangerously unpredictable. This has led to an unprecedented environment where steep decline curves are experienced, even though prolific shale makes up the majority of the industry's deliverability.

In 1991, I began pursuing the application of Information Technologies to solve business issues in oil and gas. My team and I developed a business plan to raise private capital, and in 1992, we signed a joint development agreement with Oracle. This venture failed in 1997 for reasons I only understood in the 21st century, when both Oracle and IBM exited the industry after failing to attract producer interest in developing ERP systems. What Oracle, IBM, and subsequently People, Ideas & Objects learned is that there is no desire to establish accounting systems that would bring about appropriate levels of accountability in oil and gas. IBM was the last to leave in 2005, leaving only People, Ideas & Objects as potential "new" providers in the ERP market. It was far easier to discredit a startup than a multinational tech firm.

Our conclusion of "designed unaccountability" is supported by the lack of ERP market entrants. SAP had a strong uptake in many of the consolidated producers five years ago. The lack of any issues being resolved proves our argument that they are the bureaucracy. People, Ideas & Objects have faced adversarial treatment for two decades, as documented here. We believe there's more to this. ERP is one aspect of accountability; accounting is the other. Neither has been prioritized in producers' budgets. It's one thing to question why the logic of making money through the Preliminary Specification hasn't been implemented, or why we've failed to follow through for two decades. But why has there been no internal change in either ERP or accounting? Budgets have been slashed to prevent accountability from being determined. And why, after a decade, has no one listened to their investors?

This is not merely a disappointing record. When we consider the $4.7 trillion in natural gas losses, we see that decades of unaccountability and inaction have led to atrophy. Today's expectation is that the business will need to be saved by investors, who are expected to pour in capital despite no changes or improvements in accountability. This is more than we can quantify or qualify, other than deliberately abusive.

Chicken Little began this campaign in October 2023 to highlight and seek solutions for the natural gas revenue losses incurred by North American producers. For almost two years, I was ridiculed for stating such "ridiculous things" while those incurring the losses belittled and ignored the issue. To put this in perspective, these losses should have been the first issue raised and resolved in every boardroom since 2009. Natural gas prices shifting from a 6:1 to a 50:1 ratio with oil is unprecedented. The only visible action was that it provoked boards of directors to silence the messenger—the one with the solution, People, Ideas & Objects.

As we know, shale began the deterioration in natural gas prices in 2009. If producers were aware of the Preliminary Specification as a solution in August 2012, why has there been no change in the accounting and ERP budget to accommodate this? The problem exists, is semi-permanent, and demands action due to its material nature and increasing magnitude. Investors demanded accountability and performance in 2015. After being confronted with the actual, factual $4.7 trillion in losses, only LNG contract litigation and ad hominem attacks followed. 

This raises critical questions regarding the industry's resistance to adopting a proposed solution. While a fear of operational change could be a factor, it does not fully account for the sustained financial losses and the unresponsiveness to investor demands. Consequently, the possibility of corporate culpability emerges as a significant consideration in explaining this prolonged inaction. An inaction that has left the industry with a tragic financial consequence it will never recover from. 

The Cost of Inaction, Part II

 Since August 14, 2025, People, Ideas & Objects' X account has been ghost-banned, preventing further communication of our message through that channel. When asked why we use Blog Spot for these posts, my answer is now clear. It is reasonable for the general public to assume, based on the flimsy evidence of a ghost ban on X, that stopping the messenger may have been producers only activity during this period. I believe that to be a safe assumption.

Metaphorically running around the internet, screaming about the sky falling, is easy to belittle in hindsight. The truth of the matter didn't seem to matter; the harder I tried, the crazier I appeared both within and outside the industry. It was complicated. The spreadsheet is messy and filled with volumes of data, including production volumes by field and prices for the 21st century. It was a losing battle.

However, if there was truly nothing to our claims, why did Shell, BP, and others sue Venture Global to reclaim what People, Ideas & Objects were asserting? I would assume that if there was nothing there, then there is nothing there. The contradictory nature of these judgments, with money being awarded to both Venture Global and BP in multi-billion dollar amounts, does not confuse the situation from our perspective. Therefore, our "crazy" hypothesis regarding officers' and directors' willful misconduct and negligence concerning these material revenue losses is proven true.

The question remains: what has been happening? Officers and directors called someone crazy, ghost-banned his X account, and attempted to reclaim revenues through litigation. Outside of this, oil trades at 19 times the price of natural gas, which may seem like an improvement. However, the September 2024 oil price of $70.24 was higher than Sunday's $58.90, possibly indicating the officers' and directors' method of resolving the distorted gas:oil factor.

We have been on quite an adventure these past decades, and "we" in this context refers to all those involved in oil and gas. Some actions did occur, but most were ultimately just words. The record of producer officers and directors during this period is nothing short of shameful. A trip down memory lane provides an understanding of the depth and quality of their thinking. I am unaware of any redeeming quality that could be attributed to this list:

• "Profits don’t matter, it's cash flow."

• "The fix for low prices is low prices."

• "Praying for a cold winter."

• "Microsoft Windows v. 8 will solve it."

• "Oil & gas prices have to stay below alternative energy prices to keep them out of the business."

• "The service industry is greedy and lazy."

• "New found commitment to production discipline."

• "Market rebalancing."

• "We’re innovative."

• Included historical accounting innovations such as declarations of "profitability at $70, $60, $50, $40 and $25," as commodity prices declined. These are impossible, inappropriate, and fraudulent claims.

• "Artificial Intelligence is being used to …"

• People, Ideas & Objects' July 4, 2019, white paper noted that producers could achieve energy independence through shale commercialization. Producers responded by stating that our decentralized production model or price maker strategy "is collusion and unworkable."

• Unworkable as “production can't be shut-in.” Producers claimed it's damaging to the formation to shut production in and costly to restart.

• The global pandemic forced 25% of oil production to be shut-in.

• "No formation damage or production deliverability declines" were reported globally.

• "Shale will never be commercial."

• Officers and directors took oil & gas revenues away from the business without authority to invest in clean energy.

• Declarations of "clean energy is the future."

• Realizing their mistake, if they want to be in clean energy, they should start from the beginning. Officers and directors cannot take the proceeds of shareholders' investments in oil & gas and use them in other lines of business!

• "Shale is the future."

• Declarations that "small producers are the problem to shale profitability. Corporate consolidation is the solution."

• Producers anticipate declining production deliverability, execute large layoffs, and record poor performance. Overproduction in both oil & gas increased, leading to further commodity price declines. We await the inevitable declaration of consolidation strategies' failure.

• What's next? What's the vision? How could the industry in its current configuration, with incumbent leadership, resolve performance issues?

Such a record, created through a passive culture defined by its strategy of "muddle through," stands in stark contrast to the potential benefits of People, Ideas & Objects' Preliminary Specification software and services. Our solution establishes a rebuilt industry around a revised culture of reserves preservation, performance, and profitability.

• People, Ideas & Objects provide oil & gas producers with the most profitable means of oil & gas operations.

• It’s time for each individual and organization to decide if this is meaningful or not.

• Leadership for the next generation needs to stand up.

• Producers would have all the cash they need if they ran profitable operations.

• Producers would gain independence and be able to pursue opportunities.

• Oil & gas reserves NPV are worthless if they can’t produce profitably.

• Profits are the only resource large enough to satisfy this industry's long-term capital needs.

• Investors and governments only reallocate resources.

• Why would producers not invest in their organizations' profitability and performance? Investors have demanded performance and accountability as a precondition to their return since 2015.

• People, Ideas & Objects points to investors' inability to motivate officers and directors this past decade as partial justification for our Preliminary Specification's poor performance since 2012.

We are entering the most challenging and exciting time in the history of this industry, and we could not be more ill-prepared to take this on.

• The industry has a leadership team that is trash.

• Producer organizations hold no inherent structural value. They are old, slow, and incapable of managing today’s complexity or changing dynamics.

• They are cash-poor, unable to make money, don’t know how profitable operations are conducted, and are culturally incapable.

• They have unsupported capital structures.

• The service industry is operating at 25% capacity.

• It is financially ruined with capital structures also unsupported.

• After decades of abuse at the hands of producers, they are unmotivated; they don’t trust, have faith, or any goodwill to extend to producers.

• They expect producers to philanthropically fund the service industries' rebuild.

• Producers broke it; they can fix it.

• With some skin in the game, producers may then think twice about their actions.

Reiterating last Friday's compelling argument for producers to shut-in any unprofitable production serves as further evidence of the lunacy of the material losses of $4.7 trillion in natural gas this century. Why wouldn’t it be done? We should assume oil incurred similar losses; however, unlike natural gas, we have no objective way of assessing what the price should be. These are simply pricing issues and are the most glaring and material issues that the Preliminary Specification resolves. There are dozens of other issues we approached in the business model, and some may not have a quantifiable value. We only highlight the natural gas price losses as representative of how all issues are managed by officers and directors with their "muddle through" strategy.

• Maximized Profitability: Producers maximize profits by eliminating losses from unprofitable properties.

• Strategic Reserve Management: Holding reserves until production is profitable avoids incurring any incremental costs associated with losses.

• Cost Reduction: Keeping oil & gas as reserves reduces production and storage costs tied to excess, unprofitable output.

• Market Stability: Removing unprofitable production allows commodity markets to determine the marginal cost, establishing fair prices for all production.

• Reserves Valuations: Market prices accurately reflect the value of petroleum reserves and expand proven recoverable reserves to fulfill fiduciary duties.

• Innovation Opportunities: While properties are shut in, producers can explore innovative ways to increase production, reduce costs, or expand reserves to restore profitability and return the property to production.

• Replacement Value: Market prices must reflect current exploration and development costs, representing the true cost of energy produced today.

• Production Discipline: Profitability is the only fair and reasonable criterion for production discipline.

• Innovation as a Foundation: Higher commodity prices finance greater innovation, providing financial resources for future industry challenges.

To producer officers and directors, this is somehow considered unacceptable. There is also a consistent pattern of dishonesty in their dealings throughout. In terms of working with their investors, why persevere through a decade with no support? What benefit would have been gained if producers responded quickly? The service industry is in a crisis from the oil & gas industry's point of view, yet we see the classic expectation that it's someone else’s problem. Yes, oil & gas operates in a market economy; however, officers and directors have abused and betrayed every industry, company, individual, and source of capital. No one will do anything on behalf of the industry until they see a wholesale change in leadership, profitability restored, producers' financial contributions in the rebuilding process, and some integrity. I wonder where we would be if the industry had captured that $4.7 trillion in natural gas losses; could we have used that money? A better question might be, in hindsight, wasn’t that money necessary?

The Cost of Inaction, Part I

 The tangible nature of the losses realized by litigants in the Venture Global actions unequivocally proves that People, Ideas & Objects' calculation of $4.7 trillion in natural gas revenue losses is accurate. Thursday's decision against Venture Global resulted in nearly $11 billion, or 32.26%, of market cap losses by Friday. Today, I will delve into the $4.7 trillion in natural gas losses and the severe, unaddressed, and irresponsibly managed repercussions.

We occasionally hear that "natural gas is a byproduct. There is nothing that can be done about it when Permian oil has associated gas produced." While we are not engineers or privy to their operational structures, we recognize chronic, repeated bad excuses. An industry with such significant revenue losses cannot justify it as a mere byproduct. When LNG offers new markets, optimize their value. Or others, such as Venture Global will make good off of the producers' sloth. When investors abandon you, don't just wait for their return. They will not return on that basis. They are seeking fundamental change, which implies new leadership. And do not deny new solutions the light of day; when leadership is inactive, what can it expect from the rest of the organization?

Here is a business lesson that the producers' leadership must now learn. The question is how much future revenue will be consumed to offset the losses from these "byproducts." The answer lies in the amount lost. Is the number an assumption that a 10% profit on all future production would be required to compensate for this "oversight"? Therefore, at 10%, the industry would only need $47.0 trillion in revenues to make up for it! Or is there a more complex answer to the question?

For instance, if we examine a random sample from April 2012, we see oil trading at 48.77 times the price of natural gas. This gives us an actual realized price of $1.95 and a mythical heating value equivalent price of $15.85 (with $95.11 oil). Let's assume $15.85 is profitable at 10%, yielding an overall production cost, in the officers' and directors' scenario of a "byproduct," of $12.31 ($15.85 - 10% - $1.95), which I find reasonable for shale. The amount of profitable reserves needed to cover the calculated loss of $12.31 and $1.58 in profit is 7.77 replacement natural gas volumes. Or $12.31 + $1.58 = $13.89 * 7.77 = $107.93 in natural gas revenue.

As with the specific case of April 2012, the differential forms the basis of all months in the People, Ideas & Objects assessment. Therefore, with a profitability assumption of 10% for that month, the revenue needed to offset the loss of just one MCF would be $15.85 - $1.95 = $13.90 x 10 = $139.00. 

The total value of the differentials is $4.7 trillion as of December 31, 2024. No wonder I didn’t get the attention of the officers and directors; perhaps I should have used a range between the reserves method of $36.5 trillion and the profit method of $47 trillion to motivate them.

While leadership offered excuses, blaming and finding viable scapegoats, we were all belittled by their superior understanding of oil & gas and their dismissal of our comprehension. Decades later, we now witness the results of their obstinate inaction and continued self-righteousness. The undeniable truth is they cannot account for this; it is a magnitude so obscene that no one ever could.

The futility and ineffectiveness of banning my X account in recent months, an attempt to silence me as they dealt with the fallout from lawsuits, was indicative of their actions and what we should continue to expect. I have called for their departure before, and I ask again, what harm is there in their exit?

Podcast # 32, Material Balance Report

 A brief note on yesterday’s BP vs. Venture Global arbitration ruling: while BP’s victory contrasts with Shell’s recent defeat, the outcome underscores that the $4.7 trillion in lost natural gas revenues remains a tangible and consequential issue for at least one side of the dispute. People, Ideas & Objects would further highlight that the LNG component of those losses illustrates the sheer absurdity of the producers’ rudimentary business logic. The material financial losses stemmed directly from the collapse of natural gas prices from chronic and systemic overproduction, which fell from a traditional 6:1 ratio to as low as 50:1 by 2024.

Following the detailed podcast on Work and Job Orders, this podcast provides a high-level summary of the Material Balance Report. This AI impressively prepares summaries of the Preliminary Specification, offering readers and listeners a comprehensive understanding of how production volumes are managed, balanced, and automated through to financial statements.

Our Material Balance Report presents an opportunity to develop software previously impossible. Creating a highly engineered, costly development like our Material Balance Report would not have been cost-effective for even the largest producers to undertake, and the benefits for a sole producer would not justify the investment.

However, when we approach the Material Balance Report from an industry-wide development and implementation perspective, everything changes. The cost would be distributed across the industry on a barrel of oil produced basis, making it affordable for all producers. The real value emerges when reporting through the Joint Operating Committee is managed and integrated into the broader North American oil & gas infrastructure. This integration opens the door to high levels of automation of the comprehensive reporting requirements derived from production data, all the way through to the financial statements.

Pod up

🎙️Podcast
📝Specification
📚Index