21st Century Service Providers - Part I

 Note to Reader  

This paper examines the role, objectives, methods, and structure of our user community’s service provider organizations. Building upon our previous papers on our user community and issues, it continues the evolution of Synallagi through a series of initiatives that strengthen both the organizational framework and the software itself. These developments will include the expanded application of Artificial Intelligence, the incorporation of stablecoins and cryptocurrencies, and the addition of two new Organizational Constructs: Trust and Transactions. (Note: transactions are not merely records—they are one of the fundamental organizational constructs around which the entire architecture is built.)

Each of these developments represents a significant subject in its own right. This paper, the first part of two on the Service Provider's Vision, introduces them as components of an integrated vision rather than attempting to examine each in exhaustive detail. Much remains to be written, and these concepts will be expanded in subsequent papers throughout our 21st Century Marketplace Vision series.

Readers will likely notice that these two papers are longer than previous publications and that many concepts are revisited from different perspectives. This is intentional. The architecture of Synallagi is highly integrated, with each component influencing many others. As new capabilities are introduced, they must be understood not only individually but also in terms of their relationships with the broader system. Revisiting concepts in different contexts helps establish those connections. This first paper of two speaks to many of the issues involved.

Although the overall vision is straightforward, the technologies and organizational structures supporting it are evolutionary. They build incrementally upon one another, with each advancement creating the foundation for the next. This reflects the direction in which business, software, and Artificial Intelligence are rapidly evolving. Our objective is therefore to introduce these developments in a disciplined, sequential manner, allowing readers to understand both the individual innovations and the larger architecture they collectively create.

The vision presented here represents only one stage in a much broader progression. As this series continues, additional research, refinements, and capabilities will be incorporated, progressively revealing the complete 21st Century Marketplace Vision and the role Synallagi is intended to play in the future of the North American oil and gas industry.

These papers are intentionally detailed. That level of depth is necessary for our user community and their service provider organizations to contribute the analysis, knowledge, and practical experience required to develop Synallagi over the long term. The architecture cannot be built from broad concepts alone; it requires comprehensive discussion of the underlying principles, assumptions, processes, and interactions that define the system.

Their length also reflects the realities of the Artificial Intelligence era. These papers are intended not only for human readers but also as training and reference material for the Artificial Intelligence tools that our user community and service provider organizations will employ. The greater the depth and context available, the more effectively those systems will be able to analyze the material, identify relationships, generate insights, and contribute new perspectives within their respective domains of expertise.

For many years I pursued brevity, and failed at it most every day. In retrospect, that failure may prove to have been an unexpected advantage. What once appeared to be excessive detail can now be recognized as a valuable asset in a world where powerful Artificial Intelligence systems derive greater understanding, richer context, and more meaningful insight from comprehensive bodies of knowledge than from abbreviated summaries.

An Entire New Discipline  

During the summer of 2004, while promoting the Preliminary Research Report, I had the opportunity to have an acquaintance review the work. After reading it, he offered a simple observation that has remained with me ever since:

“It’s an entire new discipline.”

Over the past two decades, no comment has resonated with me more deeply. It reinforced my belief that we were moving in the right direction and, more importantly, that the scope of what was being proposed had been recognized by someone whose judgment, experience, and accomplishments I greatly respected.

That individual was Mr. B. J. Seaman of Calgary. Together with his brothers, Doc and Don Seaman, he helped establish Bow Valley Industries, an organization that played a pivotal role in the emergence and growth of Canada’s independent oil and gas producer sector. He was also one of the original owners of the Calgary Flames, reflecting a lifetime of leadership, entrepreneurship, and commitment to the community. His obituary provides only a brief summary of a remarkable life, but it is fitting that I acknowledge him here.

More than twenty years later, I believe Mr. Seaman’s observation has proven remarkably prescient. What began as the Preliminary Research Report has evolved into Synallagi—a comprehensive architecture encompassing Enterprise Resource Planning software, marketplaces, Intellectual Property, our user community, their service provider organizations, governance, Artificial Intelligence, and new organizational structures for administering the North American oil and gas industry. It is no longer simply a software project or a business model. It is a framework for organizing an industry around resource preservation, performance, accountability, innovation, and profitability.

Looking back, I believe Mr. Seaman recognized something that was not yet fully apparent, even to me. The objective was never merely to build better software. It was to establish a fundamentally different way of thinking about the administration, governance, and operation of the oil and gas industry. In that respect, his assessment remains the most meaningful observation anyone has made about this work. His comment has sustained my motivation in the many trying times since.

It is, indeed, an entire new discipline.

Synallagi offers a solution to the systematic destruction of the shale endowment by the industry's leadership. Within a mere two decades, what was one of the greatest sources of wealth for the world's leading economy has been squandered and decimated. This outcome alone should be sufficient grounds to disqualify the continued tenure of those irresponsible, unaccountable and North American producer officers and directors. 

It is no longer sufficient for a producer to merely own oil and gas assets. Ownership of the reserves alone does not ensure profitability. Unprofitable reserves are valueless in a competitive market. Producers must have access to the software, systems, user community, service providers, Intellectual Property, and governance architecture that make those assets capable of generating profitable production. Everywhere and always.

Synallagi changes the operating discipline of the industry. Unprofitable production is shut in to maximize producer profitability, preserve reserves, and prevent the continued destruction of commodity value. Unprofitable properties are not abandoned to seek a new frontier. They’re transferred to the inventory of innovative projects where Synallagi’ user community, their service providers, and producer firms engineers and geologists work with standard, objective and factual accounting information and analysis to determine what is the most effective and efficient way to return them to profitable production and to perform financially and competitive as necessary in North American capital markets and to do so as quickly as possible.

This distinction is critical. The purpose of shutting in unprofitable production is not contraction for its own sake. It is disciplined value preservation. Producing at a loss destroys a property's reserves, weakens producer balance sheets, damages the service industry, undermines investor confidence, and contributes to continued commodity overproduction and overall price declines. Shutting in unprofitable properties creates the economic space required to safeguard other properties profitability, restore the shut-in properties profitability and rebuild credibility. (See Appendix VIII Synallagi' Price Maker Strategy.)

No amount of conventional cost control will solve the problem. Producers have spent decades reducing costs, pressuring the service industry, deferring maintenance, capitalizing expenditures, and stretching the productive capacity of assets and organizations. That strategy reached its limit decades ago and has only served to transfer the bust portion of the boom / bust cycle to the service industry. It is and has always been oil & gas overproduction, or unprofitable production and the resulting damage to commodity prices at issue.

Since 2012, Synallagi has been in the marketplace offering a full “rip and replace” Enterprise Resource Planning software development and implementation model. The past fourteen years, including the past eleven years in which producers’ capital structures have lacked any support, reveal two defining characteristics of the status quo.

First, the “muddle through” culture remains deeply entrenched, persistent, and immovable. Second, the industry’s recurring strategic redirections—from heavy oil, to shale, to clean energy, back to shale, and now toward international opportunities—have followed a predictable eighteen-month cadence without resolving the underlying issues. Each pivot has deferred accountability rather than restored performance.

The result is not stabilization. The difficulties have become more prevalent, systemic, and chronic. The deeper and broader our analysis proceeds, the clearer it becomes that the existing organizational configuration is incapable of resolving the industry’s structural problems.

Synallagi’ cumulative value add is therefore material. It is not a marginal efficiency initiative. It is a market rehabilitation mechanism. The oil and gas commodity markets will require a dedicated multi-year rehabilitation and recovery. That recovery cannot occur without effective production discipline. Synallagi provides that discipline through standardized, objective determinations of profitability at the Joint Operating Committee level and the operational consequences from unprofitable production being shut in until it can be returned to profitable status. Something we have stated repeatedly over the past fourteen years, yet the monetary value of the issues has only amplified.

Production discipline is ultimately established through the North American capital markets. Producers who wish to maintain their capital structures, independence, and access to investment capital must consistently meet the performance expectations of those markets. Failure to do so inevitably places both their financial independence and long-term future in question.

Only disciplined production provides the means to optimize a producer’s production profile in accordance with those expectations. By ensuring that only profitable production occurs, production discipline preserves capital, protects commodity values, strengthens investor confidence, and establishes the financial performance required to compete successfully in the North American capital markets. It is not simply an operational objective; it is a foundational requirement for long-term producer performance and independence.

The full paper can be accessed here.

Another Day, Another Paper

 In keeping with our tradition of publishing the ugliest content we possibly can—and doing so consistently—People, Ideas & Objects is pleased to announce the third paper in our 21st Century Marketplace Vision research series.

From the outset, it became apparent that the concepts underlying Synallagi had grown too broad and too interconnected to be presented effectively in a single document. Attempting to do so would produce a paper so large and complex that much of its meaning would be lost. Instead, we have chosen to publish this work as a series of focused papers, allowing readers to absorb the concepts incrementally and build a deeper understanding of where Synallagi is headed with Autonomous Asynchronous Transaction Orchestration.

This third paper examines the role of our user community’s service provider organizations. The subject has been divided into two papers, with this publication representing Part 1 of 2.

Our service providers are the operational foundation of Synallagi. They combine their tacit industry knowledge with the explicit knowledge embedded within the software, delivering both to the North American oil & gas industry. Their role extends beyond implementation and support. They are responsible for continuously refining business processes, developing innovations, and ensuring that producers realize the full value of Synallagi.

Like members of our user community, service providers participate in a performance-based compensation model that rewards measurable value creation. Performance incentives remain persistent with the individual, and shared with our user community members, encouraging long-term innovation and continuous improvement. These incentives are objectively calculated through the Synallagi Targeting Framework, which measures the economic value generated by service provider innovations and allocates compensation according to the benefits realized by producers. The Synallagi Targeting Framework will be the subject of a future paper in the 21st Century Marketplace Vision series.

This paper may also be read in conjunction with the accompanying Appendix 1 Our User Community Compensation:

To make the material more approachable, we will publish the paper in sections over the coming weeks, allowing readers to absorb the concepts in manageable portions should they prefer a more gradual approach.

At the same time, we are expanding the Synallagi wiki to distinguish between what has traditionally been the Business Specification and the next stage of development—the integrated Technical Specification. Increasingly, these two perspectives cannot be separated. The technical architecture has become an integral component of the business architecture, particularly as Artificial Intelligence, automation, orchestration, governance, and marketplace design become inseparable elements of the overall system.

These technical specifications will be published alongside these research papers and incorporated into the wiki as development progresses. And you can be assured I’ll never forget about the podcasts, which somehow figure out what it is I’m saying. 

21st Century Marketplace Vision - Our User Community - Part XVI

Autonomous Asynchronous Transaction Orchestration

Material Balance Report Example

Extending our Material Balance Report example to include Autonomous Asynchronous Transaction Orchestration is where additional value is created through autonomous action.

The first installment of the Material Balance Report example primarily addressed automation. This second part addresses autonomy. (Please see the full Material Balance Report example in the Master Appendix of the Reference section in this paper.)

Automation is process management operating under human control. It executes defined and repeatable work. For example, net propane production multiplied by the price received equals revenue. The system then writes the result as an entry to the General Ledger. The process is completed without human handling. It can also be reviewed, corrected, or intervened upon without disrupting the broader system.

The autonomous nature of the Material Balance Report is different. It operates within the dynamic monthly balancing of a corporate volumetric system. This process considers volumetric reporting from other producers across the North American oil & gas infrastructure. It balances production from source through to each commodity’s ultimate disposition. Human intervention in that autonomous process is disruptive. The implications of such intervention are unknown and unknowable in advance.

Material and Partnership Balance

In addition to the overall and comprehensive System Balance, Synallagi’ Material Balance Report is supported by the Material Balance and Partnership Balance.

At first glance, these may appear heavily facility-dependent and straightforward. That assumption would be wrong. This is where the autonomous nature of Synallagi begins to earn its value. Within a defined functioning domain, autonomy will operate predominantly in this area.

The advantage is that the operational and accounting requirements of each Joint Operating Committee are extensively documented. These documents define volumetric reporting, product disposition, ownership interests, facility interests, processing arrangements, and settlement obligations. The complexity of these agreements is dynamic. No two Joint Operating Committee volumetric allocations should be assumed to be the same.

This is fertile ground for autonomous operations. The objective is to reduce data rework, improve accuracy, and increase partnership satisfaction.

Is the property natural gas or oil? Do all partners own any gathering and processing facilities equally? Do some pay custom processing fees? Where is the point of sale calculated? What volumetric trade-offs have been made among partners? Some partners may exchange oil for gas. Others may purchase gas at the wellhead to satisfy a gas contract indexed to Henry Hub pricing. A producer’s share may be defined up to a maximum volume, with an option to take the remaining balance. Royalty responsibility may vary by agreement, product stream, ownership interest, or disposition.

Each month’s composition is guaranteed to be different. Yet the variables remain consistent. They are based on complex formulas, chemical compositions, ownership positions, contractual elections, and operational outcomes.

Consider a well completed in a dual zone as a test to evaluate the performance of the second zone. That decision changes the chemistry of the well’s production. The completion may have included new producers in the area, while some existing partners opted out and accepted a penalty on their interest. The surrounding area may contain many unique Joint Operating Committees, each representing distinct assets and ownership interests, all serviced by one comprehensive gas plant that ships specification products by pipeline and tank car.

In that situation, the facility must first satisfy the Partnership Balance of the parties involved. It must then satisfy the Material Balance of internal production, gathering, processing, disposition, and sale. Only then can it participate in the broader System Balance.

Any change to the System Balance, Partnership Balance, or Material Balance must be evaluated against the other two balances. Do they need to be adjusted? If so, why? If not, why not?

A change in the Material Balance may cause the Partnership Balance to change while leaving the System Balance unaffected. These relationships are dynamic, fluid, and influenced by producer actions and decisions both within individual Joint Operating Committees and outside their asset ownership group.

Autonomous’ Impact on Automation

Astute oil & gas readers will recognize that many autonomous actions will trigger the automations discussed in Part I of the Material Balance Report example. That is expected, desired and also appropriate.

Automations are driven by accounting, production, and regulatory reporting requirements that are mechanically derived from specification volumes, ownership allocations, pricing, or sales values. Therefore, any change in prescribed volumes can trigger an amendment to a General Ledger account or create an accrual.

During the course of a month, an automation may be triggered many times by autonomous amendments. That does not blur the boundary between automation and autonomy.

Automation executes defined accounting, production, and regulatory processes. Autonomy evaluates, adjusts, and balances within its authorized domain, based on the factual knowledge of the Joint Operating Committee, its operating environment and dynamic nature. At no time does automation wander into the autonomous domain. Likewise, autonomy does not enter the automation domain. Each operates within its licensed authority, defined scope, and controlled purpose.

Our User Community Experimentation

Artificial Intelligence Experimentation

I have often noted the step change Artificial Intelligence made in Information Technology when, in 1997, it defeated Garry Kasparov in chess. Nineteen years later, Artificial Intelligence defeated Lee Sedol in Go. In both instances, Artificial Intelligence generated strategies and moves that had not been previously documented or anticipated.

This was not new thinking in the sense of inventing new rules. It was the application of long-standing rules in ways human beings had not seen, discovered, or accepted. People such as myself once considered Artificial Intelligence to be nothing more than algorithms and vast processing power. That remains technically true. However, the ability to identify what we have overlooked, ignored, or blinded ourselves to is materially different from dismissing Artificial Intelligence as merely algorithms and processing power. Once discovered, these insights often appear obvious. The value lies in finding them.

A further development is now emerging in software development itself. First, for those unfamiliar with an Integrated Development Environment, that should be corrected. Software development has achieved substantial productivity gains over several decades through these tools. They provide support, assistance, automation, and structure to the development process. Operating on top of the ubiquitous nature of object-oriented programming, they have materially improved developer performance. Modern programming languages can reuse frameworks, including Oracle Cloud Enterprise Resource Planning, by adopting established object libraries and related software structures. I would like to see our user community take the example of the IDE and apply that iterative development to the Material Balance Report and other areas of Synallagi. 

A significant opportunity now exists in legacy systems. COBOL code has been running on mainframes for more than half a century. Many of the people who wrote those programs are no longer available. Those who still understand COBOL are scarce, and few are volunteering to maintain these systems indefinitely. As a result, the useful life of many of these applications is limited. They must eventually be rewritten in modern languages.

Artificial Intelligence tools such as Claude from Anthropic and ChatGPT from OpenAI are now being applied to that backlog. Their purpose is not merely to generate code fragments, which has become a common use of Artificial Intelligence in software development. They are being used to analyze and rewrite substantial legacy code bases. Developers are discovering something consistent with the earlier chess and Go examples. Artificial Intelligence is providing a new perspective on software that has operated for decades. In doing so, it is identifying bugs that may have existed for the full life of those applications, correcting them, and improving the underlying systems.

This is an important distinction. Producing small portions of code within a much larger code base is one thing. Applying Artificial Intelligence agents to entire legacy systems is another. The latter may provide more efficient, more reliable, and more resilient software. It also introduces a new method of reviewing, understanding, and improving systems that have long been treated as operationally untouchable.
This is only the first-order consequence of applying Artificial Intelligence to large volumes of COBOL code. We are still at the beginning of this process. We should expect further changes in how Information Technology is designed, developed, maintained, and governed. It is reasonable to expect that programming languages themselves will soon evolve in response to these capabilities.

For People, Ideas & Objects, this has direct implications. Our user community and their service provider organizations will not merely operate software. They will act as architects and designers of the Enterprise Resource Planning software for oil & gas. Their role will be to develop, design, implement, continuously improve and iterate on the software processes that provide producers with the most profitable means of oil & gas operations.

People, Ideas & Objects has experienced, throughout its history, the belief that producers have constrained budgets for Enterprise Resource Planning and accounting. Those constraints have produced systems capable of meeting corporate tax, Securities and Exchange Commission, and other statutory reporting requirements. They have not produced adequate management or operational accounting. Engineers and geologists generally do not see accounting information because it does not exist in a usable operational form. Instead, they rely on independent engineering estimates as their principal source of information. This reinforces the mistaken belief that accounting and Enterprise Resource Planning budgets are unnecessary. From that perspective, the system only needs to pay the bills.

Our user community configuration is theoretically capable of providing overhead at single-digit percentages of what is incurred today. This cost-performance expectation is supported by converting fixed overhead into variable cost, applying hyper specialization, and sharing non-competitive elements of a producer's infrastructure including accounting and administration. The appropriate question, therefore, is not only cost but quality will be enhanced.

Assume the budget has been constrained, as I suggest. There is no compelling reason to accept or reject that claim outright. However, when viewed through the Chess, Go, and COBOL examples, Artificial Intelligence creates a practical question. What is the probability that our user community and their service provider organizations will begin generating value for producers through management, administration, accounting, and systems capabilities that no one has previously had the opportunity, incentive, or tools to consider?

That probability is material.

When this is combined with the compensation model defined in this paper, the incentives model becomes stronger. Our user community and their service provider organizations will be motivated to search for these improvements on behalf of producers. Because the infrastructure is shared, innovations developed in one area can be applied across a broad spectrum of producers. Our user community members operating domains are defined by Intellectual Property licenses. Therefore sharing of these innovative approaches may occur. Even small improvements become economically meaningful when they are deployed at industry scale.

This is the strategic implication of Artificial Intelligence experimentation. It does not merely automate existing work. Properly applied, it reveals the weaknesses, omissions, and unexploited opportunities embedded in legacy systems and legacy thinking. For Synallagi, this becomes a design principle. Artificial Intelligence should be used to discover what the industry has not seen, what current systems cannot express, and what producers have never had the operational information to act upon.

Our User Community Experimentation

A point of caution is required before discussing innovation or experimentation in software development. What is not required in the first development iteration is innovation in Synallagi’ business model itself.
Synallagi’ vision functions as an integrated architecture. Adjusting individual elements to accommodate specific local conditions may appear beneficial in isolation. However, those changes could unintentionally disrupt the broader model, impair related modules, or weaken operational capabilities elsewhere in the system. The initial development phase is therefore not the appropriate time to modify the business models embedded within Synallagi.

Those innovations can occur later. Once the software has been developed, implemented, stabilized, and placed into market operation, the Synallagi model can be tested, refined, and extended based on evidence.

There is already substantially more to accomplish than exists in a traditional software development process. We must not overextend the first iteration. Incur time the producers can not afford to lose. Initial work will include several one-time demands, including familiarization with Oracle Cloud Enterprise Resource Planning, onboarding new members into our user community, establishing development discipline, and integrating service provider participation. These activities will consume material time, attention, and organizational capacity.

For that reason, the first development phase should remain focused on Synallagi’ established business model. That focus will provide consistency, discipline, and clarity throughout development.

Once the software is fully operational in the marketplace, innovation on the model becomes appropriate. At that point, we can examine the interactions, constraints, and implications that arise across the various domains of operation. New producers may also have been formed around alternative value-generating operating models. Their requirements, performance, and influence on Synallagi’ development will need to be assessed and incorporated where appropriate.

The objective remains unchanged. People, Ideas & Objects is focused on providing the oil & gas industry with dynamic, innovative, accountable, and profitable operations, everywhere and always. Achieving that objective requires constant change within the activities of our developers, our user community, and their service provider organizations.

However, change must be sequenced. The initial development phase requires commitment to the overall vision. Innovation should strengthen the architecture, not fragment it before it is operational.

Conclusion

The defining characteristics of North American oil & gas producers today reflect a history shaped by a serial succession of once-in-a-lifetime events. The first major rupture was the collapse of oil prices to approximately $10 per barrel in 1986. That price environment cast a long shadow over the market through the remainder of the 1980s and much of the 1990s.

In response, the industry institutionalized one operating strategy: muddle through. It became systemic. It became cultural. It became the default method of management. I am not aware of the means and methods being used within producer organizations to deal with the pace and complexity of business today. It must be paralyzing. 

Muddle through is the business equivalent of a pilot announcing, “Brace for impact.” Everyone expects the next unknown event to disrupt operations. The industry has normalized operating in fear. In that environment, the capacity to endure uncertainty becomes an individual career advantage rather than evidence of effective organizational design. At the same time Information Technology has its own difficulties to deal with. As Jensen Huang states. 

Warning is good, scaring is not. We need to be more cautious about the role we play and the reputation we’ve earned (Y2K) is far more consequential than when we were not listened to. 

The 1986 collapse was not the result of a deliberate decision by the Organization of the Petroleum Exporting Countries to set oil at $10 per barrel. It was largely the result of a breakdown in production discipline. (See today’s headlines for definition and clarification.) Through the early 1980s, the organization attempted to maintain higher prices through production quotas. Several members exceeded those quotas (cheating), while non-member production continued to increase. By late 1985, Saudi Arabia, frustrated by lost market share, increased its own production materially. The result was a surge in supply and a collapse in prices by mid-1986. It was more accurately a market-share war than a coordinated policy to establish oil at that level.

At nearly the same time, experimental monetary policies were introduced in response to the market crisis that began on October 19, 1987. Those policies helped create an environment in which four percent interest rates are now treated as high. The long-term consequence may be one of the most damaging economic distortions of the period. When money is cheap, capital is misallocated. Misallocated capital investment across the economy is now one of the principal issues requiring correction. The culture of treating home renovations, vehicles or vacations as “investment,” including replacing marble countertops every few years, is one visible symptom of easy money.

Professor Friedrich Hayek offered one of the most compelling explanations of how the economy operates. His argument placed central importance on signals. Prices, markets, and the cost of capital communicate information that no central authority can fully know or properly administer. When those signals are distorted, muted, or intentionally confused, the economy itself begins to look confused.

That is the environment we now inhabit. Where the price system, markets, and the cost of capital are all distorted. Government signals are inconsistent. It should surprise no one that married couples now begin their economic lives carrying $300,000 in combined student loans and $500,000 in mortgages.

The solution is to move back toward the market system. Prices must guide decisions. Performance must determine outcomes. In oil & gas, that performance must be accurate, factual, objective, and unimpeachable financial performance.

If a property is not profitable, do we have the right to produce such a valuable commodity? It should be worked over to increase production, reduce costs, or otherwise improved until it can return to profitable production. Unprofitable production is not discipline, it’s wasteful.

This transition will involve serious dislocation, as Hayek’s work would suggest. The correction of distorted signals is rarely comfortable. Yet the alternative is the continued destruction of capital, capacity, trust, and commercial value.

For oil & gas administration and accounting, our user community and their service provider organizations represent the beginning of that journey. Their role is to raise performance, improve it continuously, and refocus the industry on the economically sustainable attributes required for profitable operation.

The objective is not to survive the next uncontrolled event. The objective is to build an industry that no longer depends on fear, excuses, or muddling through.

North American oil & gas requires a market-oriented, performance-driven, and accountable operating model. Some may argue that United States oil & gas has reached a ceiling in productive capacity. Within the current industry configuration, that may be true. An industry operated chronically and systemically without profitability, while taking investor capital for granted, will eventually exhaust its productive capacity.

That is not a geological limit. It is an organizational, financial, and operational limit.

Synallagi, together with our user community, provides the methodology for moving beyond that constraint. The opportunity is not merely to preserve existing capacity. It is to establish substantially greater capability through dynamic, innovative, accountable, and profitable oil & gas producers, everywhere and always.

21st Century Marketplace Vision - Our User Community - Part XV

Integrating hebia.ai’s Seven Pillars into Synallagi

George Sivulka’s seven pillars advocate for a fundamental transition: moving from individual Artificial Intelligence productivity toward a robust institutional Artificial Intelligence capability. This framework posits that durable value is not achieved by simply accelerating individual tasks, but by redesigning the institution to coordinate, learn, decide, and act collectively at scale.

Within this context, Artificial Intelligence in Enterprise Resource Planning represents a total redefinition of operational competence rather than a mere tool upgrade.

For Synallagi, the inclusion of these seven pillars of Artificial Intelligence within our Information Technology Organizational Construct. Means the architecture will evolve beyond providing user assistance. It must also function as an institutional operating system for oil & gas profitability—one that disciplines bias, detects signals, coordinates actions, and generates a strategic competitive advantage while acting autonomously within a framework of governed authority.

Tokenized Assets Demand Reporting Discipline

A Synallagi-driven marketplace assumes a world in which transactions occur among individuals and organizations operating across jurisdictions, currencies, and multiple representations of value. In that environment, the Internet of Information becomes inseparable from the Internet of Value. The network no longer serves merely to transmit information. It becomes the infrastructure through which value itself is represented, transferred, and exchanged. Currency, Intellectual Property, data, and asset interests all become capable of direct movement across the network. A Synallagi becomes the means and the method. 

That development has immediate consequences for oil & gas. If ownership interests in Joint Operating Committees are to become tokenized, then the underlying asset must be supported by accounting and reporting of a standard sufficient to attract capital and satisfy SEC compliance requirements. The aggregated and ambiguous financial statements of the producer firm will not meet that test. They do not provide the property-level, actual, factual, monthly reporting needed to support a tokenized operating interest. Each Joint Operating Committee must therefore be able to publish its own detailed financial statements. Synallagi is designed to provide that discipline and information. Offering an investor more shares in a producer will pale in comparison to the ability to own a crypto interest in a Joint Operating Committee directly.

The implication is fundamental. Tokenization does not diminish the need for accounting rigor. It intensifies it. As value becomes more fluid, accountability and reporting must become more exact.

The Operating Surface of Synallagi

Marketplaces will become the method through which oil & gas is viewed, managed, and acted upon. In practical terms, engineers and geologists will work with Synallagi’s Marketplace Interface on one computer screen and the Business Operations Management Module on another. Through those two environments, Joint Operating Committee operations and marketplace interactions, are brought together into the engineers and geologists working environment.

This is the operating surface of Synallagi. Beneath it sit the structures that make the environment function: transactions, contracts, currencies, participants, compliance requirements, and the logic of operational authority itself. These elements are not separate from operational action. They are embedded within it. The user acts once at the business level, and the system carries the action through its required transactional, contractual, and compliance consequences. That is what it means for institutional Artificial Intelligence to act unprompted, supported by Synallagi, our user community and their service provider organizations.

Governed Autonomy

Our user community and their service provider organizations are responsible for architecting, designing, developing, implementing, maintaining, and supporting this environment. Their role is not to perform each transaction manually. Their role is to build and supervise the system that performs the work. They intervene where necessary to remedy exceptions, improve design, refine logic, and oversee the Artificial Intelligence and automation that conduct marketplace activity. Engineers and geologists continue to exercise business judgment. Process execution increasingly resides with the system.

This is why Synallagi must be understood as Autonomous Asynchronous Transaction Orchestration rather than as isolated automation alone. The issue is not simply whether tasks can be automated. The issue is whether unprompted activity can be organized coherently across parties, assets, obligations, and time. That requires more than software. It requires trust, an assembled body of Intellectual Property, a defined authority structure, a licensing framework, and a disciplined organizational method.

People, Ideas & Objects have chosen to use the Intellectual Property of Synallagi with Autonomous Asynchronous Transaction Orchestration precisely to keep this unprompted environment within defined bounds. Unprompted execution without governing structure is not efficiency, it’s disorder.

Why Open Source Is Not an Adequate Governance Model

The attraction of open source development is understandable, but in Synallagi’s context it is inadequate. The issue is not whether software code can be written collaboratively. The issue is whether oil & gas transactions, compliance obligations, operational accountability, and autonomous execution can be governed through an ambiguous structure of ownership, support, responsibility, and authority. They cannot.

A community of developers contributing according to available time and personal interest does not constitute an accountable operating model for oil & gas. It leaves unresolved the central questions. Who owns the system? Who supports it? Who is responsible for its features or failures? Who has the authority to change it? Who can a producer call when a process breaks, an obligation is missed, or a design defect appears? These are not peripheral matters. They are the operating core of the system.

If producers surrender oil & gas transactions to autonomous and automated systems without a single overall method of organization, and without retaining some structured influence over that method, they leave themselves open to disorganization and failure. Open source software code is not the same thing as governed autonomy.

Why the Organization Must Be Rebuilt

The conclusion is straightforward. Artificial Intelligence will not be effective in oil & gas if it is merely layered onto existing organizational arrangements. The organization itself must be redesigned. Synallagi is built on that premise. The system is not a tool added to the producer firm. It is a reorganization of the institutional environment through which oil & gas business is conducted. We could compromise with today’s leadership and bring a hybrid solution. However, that would take much longer to deliver and be of a compromised and questionable value proposition.

The lesson is the same one raised in the comparison to the textile mills. The factories that electrified first did not necessarily win. The factories that redesigned the floor around electricity did. Oil & gas now has its electricity in the form of Information Technology and Artificial Intelligence. The question is whether it will redesign the factory. Synallagi is that redesign.

Synallagi Intellectual Property

Synallagi Intellectual Property Funding and Ownership Policy, Version 1.0

The development, protection, and controlled use of Synallagi ERP software depends upon a clear policy governing both the source of development funding and the ownership of all related Intellectual Property. People, Ideas & Objects’ position is that the ultimate source of funding for Synallagi should arise from the production of oil and gas. In the preferred case, producers would participate directly in these developments due to Synallagi improving their profitability, accountability, and operational performance. To date, however, producer response has indicated reluctance rather than support. Accordingly, People, Ideas & Objects proceeds on the basis that funding must ultimately be secured from the economic value generated through profitable oil and gas production.

People, Ideas & Objects does not regard conventional debt or equity financing at its own level as the preferred solution. Synallagi provides a distinct value proposition to producers. Where producers are unwilling to support a development that exists for their own direct benefit, there is limited rationale for outside lenders or investors to assume that burden in their place. The more practical structure may be one in which producers secure an appropriate financing instrument, and People, Ideas & Objects draws upon those funds for development requirements. In that event, the financing obligation should ultimately be retired through the producer's enhanced profitability generated by Synallagi.

During development, People, Ideas & Objects charges producers for access to and use of its Intellectual Property. These revenues are used to fund the costs of People, Ideas & Objects and its developers. In addition, People, Ideas & Objects provides the funds necessary for our user community to create and assign to People, Ideas & Objects the Intellectual Property developed in connection with Synallagi. This structure is necessary to preserve Synallagi’s Intellectual Property as a single, defined, and controlled source.

That principle is absolute. All Intellectual Property relating to Synallagi, including source materials, derivative works, improvements, reusable configurations, process designs, development outputs, and related materials created by our user community or arising from the system’s development or use, must vest in People, Ideas & Objects. Such rights may be granted back by license for authorized purposes, but never by divided ownership. Producers payment in any form for development, contribution of ideas, operational participation, or producer funding does not create co-ownership, beneficial ownership, or any residual proprietary claim in Synallagi or its Intellectual Property.

Where Intellectual Property is acquired from our user community, it may be made available back to them through license so they may continue development and related authorized activities within the Synallagi framework. That license must be sufficiently broad to permit productive work, but sufficiently controlled to preserve unified ownership, governance, and architectural integrity. The purpose of this structure is to ensure that Synallagi remains coherent, enforceable, and commercially viable as a long-term platform.

Our user communities service provider organizations are configured differently. Their primary role is not software development, but implementation, operations, and day-to-day task execution. They will bill directly to each Joint Operating Committee, producer, or relevant service industry participant for the services they perform. Those services will be conducted in Synallagi and will be subject to the Targeting Framework. Unless expressly agreed otherwise in writing, such activities do not create ownership rights in Synallagi, its underlying Intellectual Property, or any reusable improvements of general applicability.

This policy is intended to ensure long-term sustainability for People, Ideas & Objects, our user community, and their service provider organizations. Producer revenues must ultimately support the continuing development of Synallagi. People, Ideas & Objects and our user community provide producers with a tangible value proposition that justifies that support. The timing and method by which this support is fully realized remain uncertain at present. What is not uncertain is the policy foundation: Synallagi can only be developed, maintained, and protected if its Intellectual Property remains centralized under the commercial license and control of People, Ideas & Objects.

All Intellectual Property relating to Synallagi, including derivative works, improvements, reusable configurations, and development outputs created by our user community or arising from system use, must vest in People, Ideas & Objects as the single controlled source, with rights of use granted back by license only and never by divided ownership. In turn People, Ideas & Objects commercial license ensures all Intellectual Property remains wholly owned by the original author, Paul Cox. 

For the purposes of this paper, we have outlined the broad commercial and licensing structure of the Intellectual Property relating to Synallagi. This outline is necessarily high level and non-exhaustive. It is provided for explanatory purposes only and does not constitute a legally binding statement of rights, obligations, ownership, or license until such time as the relevant definitive agreements have been prepared and duly executed.

Legacy of IP in Synallagi

People, Ideas & Objects has been engaged with producers since August 2003 on the issue of Intellectual Property ownership. This has been one of the most difficult matters for us to overcome. Producers have shown no interest in losing access to, or control over, a legacy they had long assumed would remain available to them without meaningful compensation.

In August 2003, People, Ideas & Objects published a research proposal to review the use of the Joint Operating Committee as the organizational basis for oil & gas Enterprise Resource Planning. The proposed budget was $750,000. The industry response was systemic and dismissive: “We do not use small research firms.” Producers then engaged a large research firm, which published a precursor document in April 2004. I understood that document as part of the process by which producers could begin to consider whether the Joint Operating Committee was appropriate for Enterprise Resource Planning.

However, People, Ideas & Objects completed and published the proposed research project in May 2004. That publication effectively precluded any later claim that others had independently developed the same concept after our August 2003 proposal. People, Ideas & Objects also notified the other research firm of our work and position. No further action was taken by that firm on the project.

To compete against the Intellectual Property of People, Ideas & Objects, as personally licensed by me, a competing party would need more than an assertion. They would need to refute our ownership and produce a publication history establishing a prior and superior claim. I am unaware of any such publication history.

The current ownership structure is unusual. In most commercial environments, it would be uncommon for an individual to retain ownership of Intellectual Property through this stage of a project, particularly where the expectation is that the same ownership structure will continue. People, Ideas & Objects has established that one third of its revenues are to be paid as royalties to Paul Cox. In conventional producer thinking, this has become an unwanted and difficult issue. The proverbial 800-pound gorilla has entered the boardroom.

That outcome was not accidental. It arose from producers’ short-term thinking and their “muddle through” strategy. By failing to address the issue properly when they had the opportunity, producers left open a series of vulnerabilities that People, Ideas & Objects was able to occupy through persistence, publication, and continued development.

Several critical points form the foundation of this Intellectual Property.

Since early May 1991, I have held the view that the Joint Operating Committee methodology could resolve the structural issue that contributed to the July 1986 oil price crash: chronic and systemic North American overproduction. That overproduction was not merely a market event. It was a symptom of the industry’s organizational structure, and that structure remains visible today.

In May 1991, I began my first attempt to address this issue through a product development initiative then known as Genesys.

During the 1990s, the oil & gas Enterprise Resource Planning market included as many as ten competing vendors. There was, at that time, a robust market offering. Producers, however, chose to exploit those vendors by forcing sales at low or no margin so that vendors could “get their foot in the door.”

The financial consequences were predictable. Enterprise Resource Planning vendors could not generate adequate returns from the oil & gas market. Their investors and bankers concluded the market was too small, too difficult, or insufficiently profitable to support continued development. They exited permanently. The pattern resembles what has more recently occurred in the service industry.

Subsequently:

Oracle left the oil & gas Enterprise Resource Planning development market in 2000 due to a lack of producer interest in new development.

People, Ideas & Objects made its Intellectual Property claim in 2003 and 2004.

In 2005, IBM sold its oil & gas Enterprise Resource Planning application due to a lack of producer interest in building new products. This left Synallagi as the only proposed redevelopment that has continued uninterrupted for the past twenty-one years.

As a consequence of this history, I am persona non grata in the industry.

It is now 2026. I have received no revenue from producers since August 2003. That fact explains why the Intellectual Property is managed as it is. There are no producer investors whose capital contribution would justify assignment of ownership. There are no external investors whose participation requires a different structure. The Intellectual Property remains where the risk, cost, continuity, and authorship have remained.

If IBM sold its oil & gas Enterprise Resource Planning system in 2005 despite holding a majority market share, the obvious question is what that says about the systems producers continue to use today. It suggests that no meaningful systems development has occurred in this market for decades. That outcome is the direct consequence of inadequate payments to Enterprise Resource Planning vendors over time. You get what you pay for.

Producer conduct created the opening for People, Ideas & Objects to establish, preserve, and extend its Intellectual Property position. The industry’s refusal to fund development, support vendors, or engage constructively with the Joint Operating Committee-based architecture left the field open. People, Ideas & Objects occupied that field through publication, continuity, and personal financial commitment. Now, with no investors other than myself, there is no commercial or legal basis to assign the Intellectual Property to producers or any other party. 

Synallagi IP Enhances Trust

People, Ideas & Objects method of Intellectual Property ownership is now strategically significant for North American oil & gas producers. Synallagi provides producers with a system whose domain, authority, and operating boundaries are defined, enforceable, and durable. That should be recognized as timely. Producers now require systems capable of operating in today’s markets while preparing them for tomorrow’s Information Technology-led Industrial Revolution.

As People, Ideas & Objects stated in the March 17, 2025 paper, Hyper Specialization in Today’s Artificial Intelligence and Intellectual Property Enabled Workforce, and in the related podcast, “Artificial Intelligence is the killer application of Intellectual Property.”

This is not merely a statement about ownership. It is also a statement about trust.

Our user community and their service provider organizations know the scope of their domains and authority. They apply their competitive advantages within those boundaries. Synallagi then enforces those boundaries through software, licensing, and blockchain smart contracts. This will also constrain Artificial Intelligence from operating outside a service provider’s defined authority and responsibility.

That enforcement is essential. It ensures that Autonomous Asynchronous Transaction Orchestration does not become uncontrolled automation or autonomous operations. Instead, it operates within defined permissions, auditable rules, and traceable authority.

Our Targeting Framework can then evaluate a given set of values within a controlled environment. Those values remain auditable, traceable, and accountable. This supports Compliance & Governance for the producer, the Joint Operating Committee, and the markets.

The result is a system architecture that provides the security, accountability, transparency, and trust required in an environment where human capacity is increasingly the limiting constraint. Intellectual Property is therefore not only a legal asset. In Synallagi, it is the governing structure that makes Artificial Intelligence, hyper-specialization, and market-based operations reliable at scale.

21st Century Marketplace Vision - Our User Community - Part XIV

Four, Edge 

Individual AI optimizes for usage. 

Institutional AI optimizes for edge. 

Coordination, signal, and bias defining the first three institutional challenges of Artificial Intelligence, edge defines the fourth. The issue is not whether a technology is widely used, but whether it creates a differentiated capability that matters economically. Usage alone is not strategy. Edge is.

Cloud computing introduced a cost-sharing logic that is difficult to dispute. The sharing of the capital, operating, and maintenance costs of Information Technology infrastructure is a rational response to the inefficiency of requiring each firm to build the same foundational capabilities for itself. That advantage becomes especially important where computing demands are dynamic and where on-demand access to processing capacity provides both flexibility and cost discipline.

Those benefits are now being challenged by the growing fashion for so-called edge computing, in which some functions previously performed in the cloud are reclaimed within the firm itself. From my admittedly biased perspective, this often appears to be a classic Information Technology turf war between competing empires. Firms that pursue edge computing for reasons of data control or institutional preference may be redirecting resources toward areas in which they possess no competitive advantage and which do not form part of their distinct competitive advantage. To restore their decimated empires in Information Technology.

This issue becomes even more pronounced when one moves from edge computing to edge Artificial Intelligence. In that setting, the argument strengthens for shifting more computational capability back inside the firm. If accepted uncritically, that logic begins a long march away from cloud computing, along with its cost advantages and its dynamic access to scalable computing power. That may be appropriate in narrow circumstances. It should not, however, be mistaken for a general institutional advantage, particularly where firms’ real strengths lie elsewhere. Or in areas such as accounting and administration that do not form distinct competitive advantages of the firm.

For Synallagi, that distinction is important. The 21st Century Marketplace Vision for Oil & Gas papers being written for 2026 address the development of the Petroleum Lease Marketplace, Resource Marketplace, and Financial Marketplace, together with the Targeting Framework. I do not presently see any necessary dependence of those structures upon edge Artificial Intelligence. That point is not especially material in any event, because the architecture, design, and development of Synallagi have now been passed to our user community. If they identify a productive use for such an approach, they will be in a position to implement it. What remains important at the architectural level is that one of Synallagi' principal benefits lies in the consistency of its Organizational Constructs, including Professor Paul Romer’s theory of Endogenous Technical Change, or sharing and its massive cost reductions.

This returns us to George Sivulka’s central point. The goalposts in Artificial Intelligence move continuously. Foundation model firms iterate rapidly and compete across broad populations of users. Yet the true edge does not lie with broad access alone. It lies with purpose-built applications that remain ahead in their specific domain because of their unyielding focus on a defined commercial problem. Even as foundation models improve, the capabilities that matter most for business outcomes will continue to reside in products designed for particular tasks, industries, and institutional purposes and not technologies.

That is the sense in which edge should be understood here. It is not primarily a question of where the computing physically occurs. It is a question of where differentiated institutional capability is created. Synallagi is designed to create that edge through domain-specific transaction architecture, process discipline, standardized accounting, and coordinated execution across oil & gas. Its edge lies in the structured integration of Information Technology, Intellectual Property, the Targeting Framework, and the specialized knowledge of our user community. That is a far more durable basis of advantage than the internal ownership of computing infrastructure for its own sake.

None of this should be confused with the tools of the user. It is entirely reasonable to expect that users of Synallagi will access multiple cloud computing services through many different devices, and that much of that access will increasingly be mediated by Artificial Intelligence-based tools that either interact with Synallagi. That is not the issue. The issue is whether the producer firm should begin rebuilding substantive administrative and accounting infrastructure within itself under the banner of edge capability.

People, Ideas & Objects’ view is that this would be a strategic error. We regard oil & gas producers as possessing distinct competitive advantages in their land & asset base, and in their engineering & geological capacities and capabilities. Our domain of concern is the most profitable means of oil & gas operations. Administration and accounting are not competitive advantages in themselves. They are competitive necessities. For producers to leave those functions to those who choose to make administrative and accounting capacities and capabilities most profitable for producers is, in our view, the wiser decision.

That is the underlying point. Edge, properly understood, is not a matter of reclaiming infrastructure for symbolic control. It is a matter of concentrating institutional effort where genuine advantage can be created. Synallagi is designed on that basis. It does not seek to make producers owners of more internal Information Technology territory than they need. It seeks to provide them with a purpose-built institutional capability that strengthens profitability, coordination, and execution across the marketplace.

Five, Outcomes.

Individual Artificial Intelligence saves time.

Institutional Artificial Intelligence scales revenue.

Since the initial publication of Synallagi in August 2012, People, Ideas & Objects have advanced a value proposition in the range of $25.7 trillion to $45.7 trillion over the first twenty-five years of operation. That proposition was set out in greater detail in a series of publications during February 2013 and in value calculations prepared on February 23, 2015. Its logic has since been reinforced by our analysis of continental natural gas revenue losses this century, which exceed $5 trillion.

A central element of this value proposition is the treatment of capital. Over the same twenty-five year period, consensus capital requirements appear to fall within a range of approximately $20 trillion to $40 trillion. Synallagi’ management of capital differs fundamentally from current industry practice. By recognizing capital within a competitive time frame consistent with the expectations of North American capital markets, Synallagi replaces the failed doctrines of “building balance sheets” and “putting cash in the ground” that have characterized the industry’s muddle through strategy.

This approach is appropriate to a capital-intensive industry. In such an industry, it is reasonable to conclude that a substantial portion of the goods and services purchased are capital in nature. Those costs should therefore be passed through to the consumer. Under that framework, cash previously absorbed by capital programs is returned to the producer for repeated reuse. That is a material departure from current practice, where capital is often recovered over decades. People, Ideas & Objects believe North American capital markets are now effectively requiring return of capital in roughly thirty months, and oil & gas should be competitively aligned with that commercial standard.

When combined with Synallagi’ price maker strategy, this capital treatment would generate a materially stronger cash position. As capital costs are recognized and passed through to the consumer, previously committed cash is restored to the producer and becomes available for redeployment.

These elements represent only part of the broader method through which People, Ideas & Objects generate value through Synallagi. At its core, Synallagi is a business system designed to provide the most profitable means of oil & gas operations. These are not technology-led changes in search of a purpose. They are business problems resolved through Information Technology.

When People, Ideas & Objects first published Synallagi’ value proposition, the reaction was severe. Our reputation took a substantial hit and, at the time, we were treated as a laughing stock. In fairness, that response was understandable. The scale of the numbers appeared extraordinary. Yet the underlying assumptions were sound. Massive, industry-wide, chronic overproduction, and prolonged periods of unprofitable production, compound into extraordinary destruction of value. Equally important, the capital-intensive nature of oil & gas dominates the economics of the business. Against that reality, the industry’s attachment to “building balance sheets” and “putting cash in the ground” stood in direct opposition to commercial reasons. Those conditions were the basis on which we confidently published our now substantiated value proposition.

Six, Enablement.

Individual Artificial Intelligence gives you a tool.

Institutional Artificial Intelligence shows you how to use it.

People, Ideas & Objects have chosen to concentrate on three competitive advantages: our user community, Intellectual Property, and Research. Of these, our user community is the principal focus. It is the center of gravity in our organization. They are our customers. The rest of our effort is organized around them.

Accordingly, we are not allocating our energy to building an in-house software development capability. That work will be secured contractually through Oracle. We do not see value in entangling People, Ideas & Objects in a multi-year effort to assemble and manage a software development organization capable of meeting Synallagi’ requirements. We regard software development as an increasingly standardized commercial capability, and one that Artificial Intelligence will further commoditize. Where capability can be purchased effectively by contract.

The effort that would otherwise have been consumed building such a team is instead deployed into our user community. That distinction is important. Our user community are not employees of People, Ideas & Objects for the purpose of designing and developing Synallagi. They are independent businesses licensed to design and develop Synallagi and to own and operate service provider organizations. Their customers are North American oil & gas producers. People, Ideas & Objects retain no financial interest in those businesses beyond the issuance and control of Intellectual Property licenses.

Our user community will consist predominantly of accountants and administrators, though it must also include sufficient Information Technology capability to manage the underlying technical environment. The key point, however, is that domain knowledge comes first. The future value lies less in generic software skill than in the ability to encode business processes, operational logic, and institutional knowledge into working systems.

George Sivulka of hebia.ai made an observation that aligns closely with our own thinking. He argued that whether one calls it process engineering or the preparation of system instruction files, the future of institutional Artificial Intelligence will require an industry dedicated to encoding firm processes into agents and carrying out the change management required to put those agents into operation. He further argued that process engineering may become one of the most important technology disciplines in the near term, and that in this work business and industry expertise matter more than software expertise. That judgment is highly relevant here. Domain-specific solutions require professionals who understand the business itself, the deployment environment, and the organizational changes necessary to make the system work in practice.

That is precisely the orientation of People, Ideas & Objects. We believe the best software is user driven, and that this principle applies with particular force to Enterprise Resource Planning systems. In oil & gas, implementations have historically begun with strong user participation and a stated commitment to user involvement. That commitment has often lasted only until the early budget and progress reports revealed that time and cost had been underestimated. At that point, user participation was deemed the first casualty.

People, Ideas & Objects have worked to reduce the time required for our user community to complete its work. The conceptual model of Synallagi is highly intuitive. The seven Organizational Constructs give industry participants a built-in understanding of how activities are organized and why they are performed as they are. Synallagi has also been present in the market for more than a decade. People have had time to consider it. It is not appearing without context. It has been absorbed, debated, and reflected upon over time.

At the same time, we are not constrained in software development capacity. Oracle and its associated capabilities provide a practical path to delivery. This is not an argument for celebrating their consultants as such. It is simply recognition that large-scale projects have been completed successfully before, and that People, Ideas & Objects do not need to vertically integrate software development capabilities in order to move Synallagi forward.

The more important question is whether this opportunity has real value for our user community members. I began Synallagi with the objective of resolving the overproduction problem in oil & gas through the Joint Operating Committee. From that starting point emerged a larger commercial opportunity: ownership of a licensed process within an Enterprise Resource Planning system designed specifically for oil & gas; a compensation system oriented toward performance and innovation; and a business model in which value delivered to producers is translated into recurring and increasing monthly income.

That is not a conventional employment proposition. It is a 21st century marketplace opportunity our user community members must consider. 

Seven, Unprompted 

Individual Artificial Intelligence responds to human prompts.

Institutional Artificial Intelligence acts unprompted.

In Synallagi, this distinction is decisive. The objective is not merely to place smarter tools in the hands of users. The objective is to construct an institutional environment in which action can be initiated, coordinated, and completed within defined authority, without waiting for continuous human prompting. In that sense, unprompted action is not an incidental feature of the system. It is one of the governing design principles of Synallagi. Markets as an Organizational Construct of Synallagi will ensure producers will be dynamic, innovative, accountable and profitable. That is what we are designing in the rebuilt culture of reserves preservation, performance and profitability. 

21st Century Marketplace Vision - Our User Community - Part XIII

 hebia.ai Seven Pillars of Institutional Intelligence (Part I)

As Artificial Intelligence moves from individual productivity tool to institutional operating force, the central issue is no longer whether it can improve output. It can. The more consequential issue is whether firms possess the structure, discipline, and governing architecture necessary to coordinate that output into coherent institutional performance. This is the issue addressed by hebia.ai founder and Chief Executive Officer George Sivulka in a speech describing the firm’s offering and approach. It is also an issue directly relevant to Synallagi, whose architecture is concerned not with isolated gains in productivity, but with the coordination of work, authority, accountability, and value creation across oil and gas. The academic research in this paper's Appendix III is retrospective and hebia.ai analysis is prospective.

The following observations arise from notes and text taken from that speech. Quotations are presented in indented italics.

One, Coordination

Individual Artificial Intelligence creates chaos.

Institutional Artificial Intelligence creates coordination.

hebia.ai describes this framework as its Seven Pillars of Institutional Intelligence. The point is particularly relevant in the context of Synallagi, which defines oil and gas culture through its Seven Organizational Constructs. Among those seven are Information Technology and Intellectual Property, each of which stands as a distinct construct in its own right. Artificial Intelligence is properly understood as a subset of Information Technology. In that respect, Mr. Sivulka’s remarks are useful because they sharpen our understanding of how institutional coordination is either strengthened or undermined through the design and use of technology.

What he describes is directly relevant to those working in industry today. It is also consistent with what we see on the ground. Artificial Intelligence is increasing the productivity of individuals, while at the same time chipping away at the coherence of firms by bypassing established process discipline and organizational structure. As Mr. Sivulka states:

Individual Artificial Intelligence output circumvents the formal organizational chart and thereby compromises its efficiency.

That observation is of considerable importance. Coordination is critical not only for human participants, but also for Artificial Intelligence agents. Institutional intelligence, if it is to become operationally meaningful, will give rise to what may be described as an agentic management industry focused on defining roles, responsibilities, authorities, and methods of communication for both people and agents alike.

Unfortunately, oil and gas is not yet in a position where institutional coordination through Artificial Intelligence can achieve what is required. First, it cannot yet reliably resist the circumvention caused by individual use of Artificial Intelligence. Second, producers do not possess an Enterprise Resource Planning foundation that offers a coherent alternative. As we have noted repeatedly, officers and directors have deliberately built an unaccountable accounting, Enterprise Resource Planning, and reporting foundation across the industry. They did so by allocating only a fraction of the minimum resources required to develop the capacities and capabilities necessary to account properly for oil and gas activity. The likely result is an industry populated by individuals who are increasingly productive in isolation, yet organizationally uncoordinated and operationally inefficient.

More and more, it is becoming accepted that internal remedial efforts aimed at correcting these cultural and organizational failures are the wrong approach. People, Ideas & Objects has therefore been structured on the basis of a wholesale, industry-wide rip-and-replace implementation methodology. In our view, that is by far the most efficient and effective path available.

We continue to see the industry’s leadership as embodied in its officers and directors. It is that leadership group which has caused the broad damage that has destroyed the industry’s value. We now see signs not of correction, but of capitulation: responsibilities are being abandoned, core issues remain unresolved, and attention appears to be shifting away from North American shale toward the bright lights of Argentina, Libya, and Iraq. That pattern reflects the same familiar herd mentality, or institutional imperative that has repeatedly displaced disciplined judgment.

Synallagi addresses this issue through a different institutional design. It uses Intellectual Property as a coordinating mechanism within the Targeting Framework and within the transaction management architecture of Autonomous Asynchronous Transaction Orchestration. This paper, which focuses on our user community, together with our next paper, which will address their service provider organizations, deals with the implementation of that Targeting Framework. It is within that framework that Artificial Intelligence is used to administer the Autonomous Asynchronous Transaction Orchestration of the marketplace.

The significance of this point should not be understated. The challenge facing oil and gas is not whether individuals can become more productive through Artificial Intelligence. That is already occurring. The challenge is whether that productivity can be institutionally coordinated into a disciplined system of execution. Without that coordination, increased individual capability will simply intensify fragmentation, reduce accountability, and widen the gap between effort and performance. With it, however, Artificial Intelligence can become part of a governing structure that strengthens profitability, control, trust and execution across the industry.

That is where Synallagi differs. It does not treat Artificial Intelligence as an isolated tool. It places it within an institutional framework defined by Information Technology, governed through Intellectual Property, and executed through the Targeting Framework and Autonomous Asynchronous Transaction Orchestration. The work of our user community, and of their service provider organizations, is therefore not merely technical. It is organizational, cultural, and economic. Their role is to implement a structure through which Artificial Intelligence becomes a coordinated institutional capability rather than productive disorder.

Two Signal

Individual Artificial Intelligence creates noise.

Institutional Artificial Intelligence finds signal.

If coordination is the first institutional challenge created by Artificial Intelligence, signal is the second. The problem is no longer access to machine-generated output. That is now abundant. The problem is whether institutions possess the structure necessary to distinguish what is useful from what is merely voluminous. In that respect, the issue is not generation, but selection. Not speed, but judgment. Not output, but signal.

There are now many uses of Artificial Intelligence in commerce. Yet none of them are embedded within, and autonomously governed by, an Enterprise Resource Planning system in the manner required for disciplined industrial execution. Synallagi is designed to provide that missing structure. It establishes the automation and autonomous administration of transactions within the marketplace of North American oil and gas. In doing so, it removes much of the human role from routine transaction processing and relocates responsibility to the architecture, design, implementation, and accountability framework governing those transactions and their reporting environment. That environment is what we define as the Targeting Framework.

This point is becoming increasingly important because much of what Artificial Intelligence now produces is not signal, but noise. The volume of artificial output has grown so rapidly, and degraded so visibly in quality, that some organizations are now overcorrecting and seeking to prohibit Artificial Intelligence output altogether. That response is understandable, but wrong. The real issue for any serious institution is not whether to ban Artificial Intelligence, but how to generate, identify, and select the right thing within a controlled framework of execution.

Synallagi addresses that problem through what it defines as a Task and Transfer Network. This is a method of design analysis used to determine how transactions and process management should be organized. Its purpose is to identify the most efficient point at which responsibility for a task should transfer to a new role. That analysis is then used by our user community to define the processes they manage and to guide the design and development of the Synallagi software. The objective is to decompose industry work into the most efficient hyper-specialized division of labor possible. From that point forward, automation, and where appropriate Autonomous Asynchronous Transaction Orchestration, manages the transaction, the related processes within a Synallagi, the full set of transaction components.

This is the practical difference between generic Artificial Intelligence use and Synallagi’s institutional design. Synallagi is Artificial Intelligence-enabled transaction processing grounded in industrial design, architectural analysis and ERP. It is not the casual application of tools to isolated tasks. It is the structured redesign of transaction execution itself.

That distinction matters because people are not naturally motivated to remain involved in transaction processing at the level demanded today. They know there must be a better method. Increasingly, they turn to available Artificial Intelligence tools to improve their own productivity, often at the expense of organizational coherence and control. In other words, the institution loses signal precisely when the individual appears to gain efficiency.

The consequences for oil and gas are clear. Without institutional redesign, the producer firm, the Joint Operating Committee, and Markets will be overtaken by a level of transaction speed, volume, and complexity that exceeds ordinary human comprehension. Under those conditions, effort will continue to rise while control deteriorates. Synallagi is designed to prevent that outcome. Through the Task and Transfer Network, the Targeting Framework, and Autonomous Asynchronous Transaction Orchestration, it provides the means by which signal can be recovered from noise and operational control reclaimed from disorder.

That is the underlying point. The future challenge is not simply that more transactions will occur. It is that they will occur at a granularity, speed, volume, and level of interdependence that cannot be managed through conventional administrative methods. The role of our user community, and of their service provider organizations, is therefore not merely to automate existing work. It is to redesign that work so that Artificial Intelligence operates within a disciplined institutional framework capable of identifying signals, executing transactions, and preserving accountability across the marketplace.

Three, Bias. 

Individual Artificial Intelligence feeds bias.

Institutional Artificial Intelligence creates objectivity.

Coordination is the first institutional challenge and Signal being the second and Bias the third. This issue is central to the work of People, Ideas & Objects. Cognitive bias, motivational bias, audit, and the production of standard and objective reporting are not peripheral concerns. They are among the principal issues that must be addressed if oil & gas is to be rebuilt on a disciplined and profitable basis. Rather than devoting human effort to the repetitive processing of transactions, people need to redirect their time and energy toward the continual improvement of the methods by which these attributes are achieved, measured, and enforced.

What Synallagi must establish is a standard and objective basis of accounting across the industry. The importance of this objective is not always immediately obvious. One benefit is efficiency. Once market participants become familiar with a common standard for industry accounting input and reporting, the quality, speed, and comparability of decision-making will improve. That standard cannot be arbitrary. It must rest on an accurate understanding of industry activity as interpreted and structured by our user community.

The significance of this requirement extends well beyond administrative convenience. Producers will make decisions to produce or to shut-in production on the basis of profitability as determined by this accounting and our decentralized production model. They must therefore know that the accounting has been applied in an objective and standard manner, and that it has been applied consistently. If Synallagi is used consistently across the continent, then producers can rely upon the fact that their profitability is being evaluated on the same objective basis as everyone else.

This is where bias becomes a design issue rather than merely a behavioural one. Cognitive and motivational biases, among others, must be addressed during development and implementation so that undesirable characteristics are not designed into the system, amplified by it, and then normalized through repeated use. The point is straightforward. If this effort were initiated from the inherited structure of a single major producer’s Enterprise Resource Planning implementation, such as Exxon or Chevron, would anyone seriously dispute that a built-in bias would follow from that starting point? The answer is obvious. A system intended to govern an industry cannot begin from a narrow institutional bias and still claim to be objective.

For that reason, we have discussed on several occasions an enhanced role for public auditors in the development of Synallagi. Audit firms will be able to establish their own user community and service provider organizations for the implementation and management of audit controls, or for the creation of autonomous audit processes operating within Synallagi’s Enterprise Resource Planning environment. That is not a peripheral possibility. It is one of the ways objectivity can be institutionalized rather than merely asserted.

It is also here that George Sivulka raises a particularly relevant form of bias created by contemporary Artificial Intelligence tools. He notes that a new problem has emerged in place of the earlier debates over sociopolitical bias. The issue is now one of excessive agreement.

A new problem has taken its place. But this level of agreement, of over alignment, on everything has become comically bad. It's become a meme in its own right. Clauds, reflexive, you're absolutely right. Regardless of whether or not you are, in fact, absolutely right. This sounds harmless. It is not. The loudest AI advocates inside many organizations may soon be the historically worst performing employees. Think about why. Organizations' worst employees, who receive little to no positive reinforcement every day, will soon have AI agreeing with them. They will whisper to themselves, the smartest intelligence that has ever existed agrees with me. My manager is wrong. This is intoxicating. It's also organizationally toxic. This highlights something important. 

This highlights the deeper issue. Individual Artificial Intelligence productivity tools tend to reinforce the user. In reality, the most important thing to reinforce is the truth. Over long periods of time, organizations have evolved structures intended to counter exactly this problem. In oil and gas, the Joint Operating Committee has developed as one such structure. Its evolution reflects the ownership requirements of the partnership framework and the need to achieve financial consensus among the partners. People, Ideas & Objects regard that as the dominant culture of oil and gas, and it is one of the reasons the Joint Operating Committee remains the key Organizational Construct of Synallagi’s design.

Organizations rarely fail because people lack confidence. They fail because no one is willing or able to say no. Institutional AI must play that role. Thus, the most important agents inside organizations will not be yes men, but disciplined no men, that interrogate reasoning, surface risks, and enforce standards. Some of the most consequential future applications of AI will be built around institutional constraints. AI board members, AI auditors, AI third party testing, AI compliance, and many more. 

That is where Synallagi differs. It does not seek to use Artificial Intelligence to magnify subjective preferences or accelerate institutional drift. It is designed to embed objectivity within the structure of accounting, reporting, control, and transaction execution. The work of our user community, and of their service provider organizations, is therefore not merely to make work faster. It is to ensure that the standards governing work are objective, consistent, auditable, and resistant to the biases that individuals, firms, and software systems otherwise tend to reinforce.