These Are Not the Leaders We're Looking For, Part I

 People, Ideas & Objects highlight the urgent need for officers and directors to make decisive actions regarding their roles in their oil & gas producer firms. This week, we announced the second phase of our campaign, focusing primarily on the removal of these officers and directors. Their actions have demonstrated a lack of qualification and capability to meet their positional demands, necessitating conduct we deem appropriate. 

Officers and directors must implement mechanisms that establish the industry on a foundation of preservation, performance, and profitability. This means prioritizing 'real' profitable production, strictly interpreted, across all operations. Which involves funding the development and implementation of the People, Ideas & Objects Preliminary Specification through our Profitable Production Rights. Subsequently, they should resign their positions. That was easy to write, we’ll see how effective it is in terms of follow through.

The justification for doing so is the compelling case that officers and directors (in)actions have incurred an intentional tort in the form of willful misconduct. If they were to resolve the issue by putting in place the means to resolve the issues, then the classification of an unintentional tort may apply. The difference between these two definitions is that one is covered by their officers and directors liability insurance and the other may not. 

Continuation of their role in the corporation is questionable when they were unable to comprehend the significance of their actions. Or maybe the significance of their actions is the question. To buy gas from the Gulf of Mexico LNG providers and in turn sell it in the Japanese or Netherlands markets can be done, as I understand, with activity in the futures markets. Hedging put and call options on the producer's production was all the rage a few years ago. Therefore the knowledge and ability were within their domain. It's unclear why the industry failed to capitalize on the proceeds from these LNG shipments. Misunderstanding “free on board” is a bit of a stretch for anyone to accept that the entire industry didn’t understand this most basic business concept. Or is the case of a producer selling their production into the Gulf of Mexico while global natural gas prices soar. And then leaving it to “others” to transport and market the gas into foreign markets would be easier and no less suspicious of them.

Officers and directors have a duty of care; their primary responsibility is their fiduciary duty to the corporation's interests. Mistakes can happen and they are covered by insurance for such instances. However, as I’ve provided a solution to the issues that are preeminent in the market today. Whose issues generated $4 trillion in lost revenue during the same period. Investors of these corporations were dissatisfied with the performance of the producers. Nothing was done by officers and directors. This leaves the industry ill prepared, with few resources, no capital structures and one option in the form of the Preliminary Specification. Continued misconduct and inaction by officers and directors risk escalating the situation from a disaster to a catastrophe. 

How are those that are responsible able to account for a $4 trillion revenue loss under these conditions? How is it that a culture of “muddle through” was ever acceptable to them? Do we allow this to continue?

These are the disqualifying facts of the history of the oil & gas producers in the 21st century. Seeking to maintain their positions has been their primary occupation by issuing successive press releases. None of what had been stated by them at any time has turned out to be valid and they’ve refused to accept the input of others. They have flipped and flopped in and out of oil & gas, declared the shale frontier uncommercial and reported specious profitability through the simple act of spending money. 

What qualifies as profitable in oil & gas in nothing more than the ability to spend money. When little of the capital, in a capital intensive industry, is passed to the consumers. Investors have to support the spending. Deceived by specious financial statements alleging profitability, which are marginally less than the gross profit. Throughout the period of time in which I criticized the industries actions. (December 2005 to February 2024.) Not one single change in any accounting practice, attitude or operation has occurred except for on February 21, 2024. That was the day that press releases were issued stating that natural gas production would be curtailed. 

The current organizational structure and industry culture lack any redeeming qualities, necessitating a comprehensive rebuild. People, Ideas & Objects suggest it needs to be rebuilt under the vision of the Preliminary Specification. It is not on the basis that we would need to tear it down to do so. The state of affairs in oil & gas is more or less destitute in my opinion. Given this need for rebuilding, the question arises: who can be trusted to undertake it? 

Announcing Phase II of Our Campaign

 People, Ideas & Objects' Declaration of Victory last Wednesday was timely and appropriate. However, I am fully aware of the potential challenges that may now begin in earnest. Experience has taught us that it is sometimes prudent to view oil and gas officers and directors primarily as advocates of public relations. Issuing press releases to a receptive media one day does not resolve the actual, chronic issue of systemic overproduction. As we have observed, it took 38 years for them to acknowledge that overproduction was a problem; it might take equally long for them to realize the necessity of implementing a solution. Oracle Cloud Infrastructure, People, Ideas & Objects, our user community and their service providers configured as our Cloud Administration & Accounting for Oil & Gas would be our recommendation to producers.

Major Announcement: Sale of 100,000 Profitable Production Rights

Today, we are excited to announce the sale of 100,000 Profitable Production Rights. This initiative is not a market offering and is exempt from regulatory scrutiny. Instead, it represents the licensing of exclusive access rights to our Cloud Administration & Accounting for the Oil & Gas sector, a licensed product anchored in the Intellectual Property of People, Ideas & Objects.

With the established pricing model, we anticipate these Profitable Production Rights will generate $100 million once we've established the necessary technical, legal and organizational frameworks. To facilitate the creation of this infrastructure, we are offering these rights at a 90% discount, aiming to raise $10 million in initial revenue. This strategic pricing is designed to fund the development of the requisite Profitable Production Rights technical, legal, and organizational infrastructure. Interested parties are encouraged to contact People, Ideas & Objects directly.

Campaign Success and Future Direction

The initial phase of our campaign, spanning from October 11, 2023, to February 16, 2024, achieved notable success across two primary objectives. First, producers have acknowledged the necessity of focusing exclusively on profitable production, a principle we've long advocated for, as highlighted in recent discussions. This shift comes in the wake of recognizing a staggering $4 trillion in wasted resources from 764 TCF of gas. Secondly, we are initiating the second phase of our campaign today, which will extend through the end of May 2024. This phase will intensify focus on the significant financial and operational missteps by industry officers and directors, particularly regarding the willful misconduct in resource destruction and the neglect of proven strategies.

Historical Context and Industry Dynamics

• In 2015, investor confidence waned, with many withdrawing further funding from oil & gas producers due to unsatisfactory performance and historical disappointments.
• People, Ideas & Objects published the Preliminary Specification in August 2012, offering solutions to the industry's prevailing challenges, which remain relevant today.
• On July 4, 2019, we released “Profitable, North American Energy Independence -- Through the Commercialization of Shale,” further advocating for the Preliminary Specification, which was unfortunately disregarded by industry leadership.
• The necessity to shut-in production became undeniable in April 2020 when oil prices plummeted to negative $37.64, refuting claims that such measures would lead to substantial formation damage.
• In 2022, a shift in narrative emerged as officers and directors declared shale unviable for commercial success, pivoting towards clean energy initiatives with purported shareholder support.
• By 2023, shale re-emerged as a strategic focus, albeit with a new consolidation theme, signaling a recalibration of industry priorities.

This sequence of events underscores a pattern of mismanagement and strategic misdirection by industry leaders. Culminating in significant financial losses and a questioning of their suitability for a leadership role. This second phase of our campaign aims to highlight these issues, advocating for a reevaluation of leadership strategies and a return to proven, profitable practices. 

Taking action is essential. The issuance of press releases concerning production cuts significantly influenced the price of natural gas on the day of announcement. However, this effect diminished by Thursday and Friday. The reputation of officers and directors for making statements without subsequent action is well-documented and arguably anticipated. It underscores the urgent need for tangible action, specifically through the implementation of the Preliminary Specification. Alternatively, a consistent, daily series of press releases could serve to sustain the illusion of ongoing activity.

Reviewed & Revised Profitable Production Rights, Part III

 New Growth Theory

Among the seven Organizational Constructs outlined in the Preliminary Specification, New Growth Theory plays a pivotal role. It aims to lower the overhead costs linked to oil and gas exploration and production by facilitating the sharing of administration and accounting services. This initiative is executed through People, Ideas & Objects, alongside our user community and service providers, via Cloud Administration & Accounting for Oil & Gas. The development of this software and service is financed through the proceeds from the Profitable Production Rights.

Professor Paul Romer's theory of non-rival goods extends and enhances the value derived from Adam Smith's principles of specialization and division of labor. People, Ideas & Objects is committed to abolishing the outdated and inefficient practice of each producer independently developing their administrative and accounting capabilities. Instead, we advocate for the adoption of Cloud Administration & Accounting for Oil & Gas, which provides a shared, variable-cost, industry-wide administrative and accounting infrastructure. Persisting in duplicative administrative and accounting efforts across producers is illogical in the 21st century, especially within an industry burdened by significant overhead costs like oil and gas.

Because the economics of ideas are so different from the economics of markets. We’re going to have to develop a richer understanding of non-market institutions, science like institutions, this is going to be a new endeavor for economics.

Budget

Our campaign in late 2023 and early 2024 to highlight the damage and destruction in the natural gas marketplace achieved remarkable success. We have now established as an industry fact that over 17 years, $4 trillion in natural gas revenues went unrealized due to the willful misconduct of certain officers and directors. This figure surpasses our initial value proposition estimates, which supported the potential for $5.7 trillion in incremental profits over a 25-year period for the oil and gas sectors combined. We extend our gratitude to these officers and directors for their unwitting contribution to our campaign.

On February 21, 2024, the Wall Street Journal reported that producers:

1023 ET – Short-covering pushes U.S. natural gas futures sharply higher after 

Chesapeake Energy

says it plans to cut production this year in response to current market conditions. The reaction looks overdone, but “we are keeping a close eye on matching or similar production-reduction comments from the other majors,” says Gary Cunningham of Tradition Energy. “If those come in the next week or so we could see summer push towards $3 and winter make a drive for $4.” The front month March contract is up 11% at $1.753/mmBtu, with double-digit gains also for subsequent months. (anthony.harrup@wsj.com)

Few industry participants would dispute that the direct costs associated with People, Ideas & Objects would be in the vicinity of $12.79 billion USD. The status quo finds it particularly challenging to acknowledge the costs for Intellectual Property royalties, earnings, and the valuation of Flexible Profitable Production Rights as outlined in the Preliminary Specification. The expenses tied to this initiative are minor compared to the now-validated, undervalued potential the Preliminary Specification is poised to unlock. Our Request for Proposal (RFP) section delves into the rationale behind the budget for People, Ideas & Objects, offering a detailed comparison between the prospective value the Preliminary Specification promises and the existing plans enacted by the officers and directors.

Promotion of Profitable Production Rights

People, Ideas & Objects has reintroduced Profitable Production Rights to fund the development of the Preliminary Specification and establish our user community. On February 26, 2024, we will announce a development aimed at initiating this process. The oil and gas industry faces a critical juncture; it has lost essential capacities and capabilities, rendering it unable to maintain its production profile. This situation has been aggravated by the attrition of long lead times necessary for drilling and completing wells, a process traditionally spanning ten years but now severely atrophied.

Particularly troubling is the industry's reliance on shale, which, due to its high cost and steep decline curve, has left us exceedingly vulnerable to an unprecedented industry-wide decline. The short-term inability to address this production shortfall signals a potential, catastrophic failure, compounded by our documented $4 trillion revenue shortfall created by existing officers and directors through complacency and a lack of proactive leadership.

Addressing this crisis requires an all-hands-on-deck approach, transcending the complacency that has circumvented industry motivation for action. The severe problem of declining production capabilities, exacerbated by industries overexposure to shale, demands immediate attention. Those in positions of authority and responsibility, who have historically preferred to "muddle through" using capital-intensive industry cash flows to offset their hefty compensation, must now face the urgency of the situation. The business discussion cannot end with executive compensation while ignoring these looming catastrophes. A concerted effort involving revised industry leaders, policymakers, and innovators is essential to forge a sustainable path forward for the oil and gas industry.

Conclusion

Status quo producers have lost sight of their purpose. They have failed, will not succeed, and have proven culturally incapable of earning "real" profitability. They have no desire to change or succeed. As time passes, the difficulties in the industry will become more apparent. The choice of alternative organizational opportunities for the greater oil & gas economy is limited to one choice offered by Oracle, People, Ideas & Objects, our user community and their service provider organizations in the form of our Cloud Administration & Accounting for Oil & Gas application. The time to consider these issues has passed. As part of the Intellectual Property available to develop any alternatives, it will be necessary to consider what solutions have already been developed and avoid what exists in our Preliminary Specification. Then undertake the difficult ten year process of researching a solution to achieve the industry needs.

In light of the trillions of dollars of damage and destruction caused by producer officers and directors throughout the greater oil & gas economy. People, Ideas & Objects provide extensive value propositions, developed new business models that bring new value as a result of disintermediation. The cultural methods we implement in the Preliminary Specification to achieve these advantages are described in our seven Organizational Constructs. We are building the future oil & gas industry on these cultural foundations.

As a result of our budget, the producers' officers and directors have maintained their distance from this project. Because of the scope and scale of these issues and this project, these costs must be recognized. Our next phase of development will not be built on one individual's success. As a result, it will be based on a comprehensive sense of urgency necessary to address these issues in the industry. In addition, the revenue potential and characteristics of Profitable Production Rights should reflect a negotiated share of the BOE's value proposition. And determined by the individual rights owner. We will be offering standard documents to aid their process.

The purchase price of these rights is $1,000 U.S. per North American BOE. In addition, the potential revenues and characteristics of that right reflect a negotiable share of the Profitable Production Rights with those who own the oil & gas production. The proceeds are used to build the Preliminary Specification. Fulfilling the need for People, Ideas & Objects revenues from oil & gas production, albeit indirectly in this case. By operating Cloud Administration & Accounting for Oil & Gas software and services, the Profitable Production Right will reflect the intrinsic value of oil & gas production's ability to organize profitably. It is a perpetual right and exists beyond today's oil & gas producers. Although our costs are large they pale in comparison to the significance of the damage done by these officers and directors. This damage is accelerating, has not been identified or approached and continues. Therefore anyone and everyone can share in the effort, the success and the reward of resolving this industry catastrophe to prevent what could become a societal catastrophe.

The status quo in the oil and gas industry is no longer sustainable. Producers have lost sight of their purpose, trapped in a cycle of unprofitability and culturally resistant to change. As challenges mount, the need for alternative organizational strategies becomes undeniable. People, Ideas & Objects, in partnership with Oracle and our vibrant user community, introduces a revolutionary solution: Cloud Administration & Accounting for Oil & Gas. This product represents the only viable alternative to reinvigorate the industry with real profitability and sustainable practices.

Our approach, delineated in the Preliminary Specification through seven Organizational Constructs, offers a blueprint for disintermediation and cultural transformation. These constructs provide a foundation for developing new business models that promise significant value by addressing the billions in damages caused by current leadership practices.

Recognizing the project's scope and the pressing need for industry-wide collaboration, we propose Profitable Production Rights. Priced at $1,000 U.S. per North American BOE, these rights not only fund the development of our solutions but also allow stakeholders to directly participate in and benefit from the industry's transformation. This model represents a perpetual investment in the future of oil and gas, transcending today's challenges.

As we stand at the precipice of what could become a societal catastrophe, it is imperative that we all contribute to a solution. The Profitable Production Rights offer a pathway to rebuild the industry on principles of profitability, sustainability, and collective effort. Our invitation extends to everyone to join this vital endeavor, shaping an industry capable of meeting the demands of the future while rectifying the mistakes of the past.

The Battle

For over four decades, North America's oil and gas industry has seen billions of barrels of oil and trillions of cubic feet of gas extracted and reported on balance sheets, with unclear benefits to society at large. While the purpose behind these actions may not be fully understood, the necessity for transparency and a reevaluation of strategies is undeniable. Alarmingly, the prosperity generated has largely been confined to the industry's officers and directors, posing a significant risk to societal well-being. People, Ideas & Objects recently documented over $4 trillion in revenue losses were realized in the July 2007 to current period. And did so unnecessarily. With disgruntled shareholders actions since 2015 designed to focus on these issues. And a solution in the form of the Preliminary Specification since August 2012. Willful misconduct are the personal issues in which individual officers and directors need to address.

As these leaders transitioned towards clean energy, taking the industry's revenues with them, questions arose about the legality of this shift. It highlights an urgent need for a system that genuinely aligns with oil & gas profitable oil & gas practices. Enter Profitable Production Rights: a concept designed to steer the industry towards a culture of preservation, performance, and profitability, prioritizing the most profitable means of oil & gas operations.

The Preliminary Specifications seven Organizational Constructs lay the groundwork for this transformation, offering a comprehensive and intuitive cultural framework. This environment invites all concerned stakeholders to engage, innovate, and thrive, marking a pivotal step towards creating a dynamic, innovative, accountable, profitable and prosperous oil and gas sector.

Smell's Like Victory to Me

The oil & gas industry has long been marred by systemic issues, leading to unprecedented losses—764 trillion cubic feet (TCF) of natural gas undervalued for a staggering $4 trillion loss between 2007 and 2024 stemming from their distorted price structure. This chronic overproduction, tracing back to the significant oil price decline of July 1986, has not only impacted North American producers but the economy at large. Nearly four decades later, the consequences of these (in)actions are undeniable, yet it took the risk of personal liability for officers and directors to spur a reevaluation of their strategies. 

How long will it take them for the next issue to be resolved? What is their credibility? Who do you trust?

From today’s Wall Street Journal here and here.

Reviewed and Revised Profitable Production Rights, Part II

 Issues Involved in Profitable Production Rights Licenses

An Inconsistent Software Architecture to What’s Approved

People, Ideas & Objects now hold commercial rights to Paul Cox’s Intellectual Property, marking a significant issue for the traditional officers and directors in the oil & gas sector. Historically, these stakeholders have neither accepted nor recognized IP, fearing that doing so would conflict with their established protocols and operational methods. Intellectual Property safeguards the software within Cloud Administration & Accounting for Oil & Gas, securing its value proposition and, consequently, its asset value. This protection enables us to generate development and maintenance revenue by creating Profitable Production Rights License products, thus preserving their inherent value.

People, Ideas & Objects and the status quo aim to secure commercially what rightfully belongs to People, Ideas & Objects' value as represented in the Intellectual Property developed in the Preliminary Specification and beyond. We leverage this value to drive productive change in the industry and challenge the status quo. The traditional powers seek to halt this progress to preserve their dominance for another generation, hourly compensating those who contribute to their cause, thereby keeping a critical aspect of the industry's future under their control. We have chosen a different path to ensure the health and prosperity of the oil & gas industry.

In this vein, People, Ideas & Objects poses critical questions: Will a dynamic and innovative oil & gas industry emerge without the contributions of those individuals dedicated to solving complex scientific and business challenges? Moreover, will these problem-solvers commit their time, resources, and effort without the safeguards provided by Intellectual Property Laws? These questions underscore the indispensable nature of IP protection in motivating innovators to push the boundaries of what is possible in the oil & gas sector.

This software infrastructure is a primary concern for the Profitable Production Rights Licensee, aiming to secure leverage for their value proposition. It is entirely derived from People, Ideas & Objects and its licensed Intellectual Property. Intellectual Property is a key construct among the seven Organizational Constructs outlined in the Preliminary Specifications. We invite readers to review this section to grasp IP's significance in our community and the broader oil & gas industry.

The prevailing mindset among producers' officers and directors, and the broader commercial marketplace, is that commercial software applications like the Preliminary Specification should be accessible via published Application Programming Interfaces (APIs). The preference for open-source software, due to its expansive community and low cost, allows for creative and innovative enhancements to software through these APIs. This approach seems to offer an improved method of software delivery. However, it's crucial to understand the underlying motivations for this architecture choice and to compare it with People, Ideas & Objects’ strategy of using private APIs for proprietary software, which is accessible only within our licensed domain.

Publicly publishing an API as desired by the status quo would breach the terms of our user community provisions. Our licensing agreement grants users the rights to uphold, secure, and create derivative works. Consequently, publishing an API would enable producer firms to access software code without compensation, undermining the value proposition of the underlying Intellectual Property. This issue came to the forefront on May 6, 2021, when the United States Supreme Court ruled in favor of Google against Oracle, regarding the unauthorized use of the Java Programming Language. The Court determined that using a published API constituted “fair use” and did not violate Oracle’s copyright.

Despite this, producers are still willing to pay for software development conducted by "blind sleepwalking agents," as long as it serves their interests. This situation highlights the contrasting motivations and arguments surrounding this legal nuance. People, Ideas & Objects and the status quo aim to secure commercially what rightfully belongs to People, Ideas & Objects' value as represented in the Intellectual Property developed in the Preliminary Specification and beyond. We leverage this value to drive productive change in the industry and challenge the status quo. The traditional powers seek to halt this progress to preserve their dominance for another generation, compensating those who contribute to their cause, thereby keeping a critical aspect of the industry's future under their control. We have chosen a different path to ensure the health and prosperity of the oil & gas industry.

People, Ideas & Objects ask what benefit will oil & gas producers gain from the ownership of ERP softwares Intellectual Property? Their distinct competitive advantages fall under their land & asset base and their earth science & engineering capacities & capabilities. It is the application and coordination of these towards their asset base that will generate the value and profitability for the producer firm. ERP Intellectual Property will continue to be distractions if producer officers and directors continue to seek them. At the same time IP is critical to the structure and means of an effective ERP marketplace.

Potential Profitable Production Rights Licensees should note that my holdings are evenly distributed between Intellectual Property royalties, People, Ideas & Objects earnings, and fees from producers through the Flexible Profitable Production Rights Licenses I possess. I’m all in to ensure I benefit from a profitable and prosperous North American oil & gas industry as a result. 

Vaporware

Absolutely, and we embrace this label with pride. Our approach has avoided locking ourselves into rigid solutions that might later require expensive software redevelopments. This strategy has allowed us to remain agile and financially autonomous, focusing squarely on the pressing matters at hand. As the oil & gas ERP provider that has faced financial neglect, criticism, and outright vilification, People, Ideas & Objects stands resilient. Despite the heavy criticism from entrenched interests within the industry, we continue to present the sole viable solution to the existential and organizational challenges facing the sector.

Embracing the concept of vaporware to its fullest, we've focused primarily on nurturing our user community since 2014, a meticulous and time-intensive endeavor. The Preliminary Specification, published in 2012, serves as a blueprint for our community, enabling them to grasp the future dynamics of oil & gas operations and contribute their expertise to this vision. This initiative empowers them to actively participate in shaping the industry's evolution. With the exclusive license provided to our user community, they have the unique opportunity to:

• Craft derivative works based on our Intellectual Property exclusively.
• Provide essential feedback to our software developers at People, Ideas & Objects.
• Exercise discretionary control over their budgets.

We safeguard the outcomes of our user community's efforts, protecting them from the scrutiny and jealousy of the industry's traditional power brokers. This protective measure ensures that our contributors can continue to thrive in their roles without risking their positions. They engage in shaping both the future and the revisitation of past practices, doing so both overtly yet inconspicuously.

Upon the completion of our user communities in-depth analysis and enhancement of the Preliminary Specification, we will be positioned to finalize a system architecture and operational framework. This groundwork will enable us to implement cutting-edge, dynamic, and accountable oil & gas operations, setting new standards for dynamic, innovative, accountable and profitable oil & gas producers in the industry.

Scope and Scale

The Preliminary Specification introduces an unprecedented scope within the ERP environment, driven not by mere ambition but by the profound challenges and the unwavering stance of industry leaders over decades. The oil & gas sector, essential to our advanced standard of living, faces potential risks. Yet, the ability of producers' officers and directors to address these challenges dynamically, innovatively, accountably, and profitably seems limited by a pervasive culture of complacency.

The challenges posed by the Preliminary Specification are unique, yet the essence of what we offer does not deviate from what producers must inevitably create themselves. Every producer faces the burden of development costs tied to their Intellectual Property, which must not infringe upon the IP of People, Ideas & Objects. This situation raises a significant issue: the lack of a clear vision and understanding to tackle long standing problems like Production Discipline, unresolved for more than four decades.

Oracle's current initiative to overhaul the U.S. healthcare system by shifting the focus from facilities to patient-centric care presents a parallel in ambition. Their approach, aiming to unify patients' medical histories across different healthcare providers, surpasses the scale of our efforts in complexity and scope. This comparison highlights how isolated systems fail to meet contemporary needs for integrated care.

The question arises: Are the initiatives of People, Ideas & Objects and Oracle merely experimental phases for ERP systems, or are they essential responses to the growing demands for enhanced capacity, capability, and organizational performance within their respective sectors? The necessity of such transformations for societal advancement is undeniable. The success or failure of these ambitious projects will ultimately provide the answers. Given the absence of viable alternatives to the Preliminary Specification, the pressing time constraints, and the urgency of our mission, the success of People, Ideas & Objects is imperative. Resolving these industry-wide challenges requires a collective effort, underscoring the importance of every stakeholders contribution to achieving this goal.

Assuming Oil & Gas Disintermediation is Necessary

Disintermediation is essential across all industries. The future viability of structured hierarchies is in question, as their current functionality fails to meet the efficiency and commercial performance society demands. The internet has catalyzed various organizational models that introduce innovative approaches to value generation, surpassing the capabilities of traditional structures.

The need for disintermediation within the oil & gas industry is a point of contention. People, Ideas & Objects posit that the existing framework has fundamentally failed, a perspective not universally recognized but gaining traction due to the growing concern over the industry's tendency to overlook or inadequately address business challenges.

A hallmark of disintermediation is the clash between defenders of the status quo and advocates for change. In North America, the oil & gas industry's resistance has been so staunch that it detrimentally impacts all facets of the sector and its ancillary industries.

Viewing the situation optimistically, People, Ideas & Objects see disintermediation not merely as a necessity but as an opportunity. The extensive damage inflicted requires substantial corrective measures to rejuvenate the service industry's capacities and capabilities and to revitalize exploration and production competencies within the producing entities. Restoring trust, faith, and integrity among producers is crucial to re-engaging the investment community with the industry. Ensuring that the sector adopts the most profitable means of oil & gas operations is paramount, along with guaranteeing that consumers have access to energy that is affordable, abundant, and reliable. Therefore, the question arises: Why should the industry revert to outdated methods when modern, proven tools and strategies from other sectors can lead to success?

Value Proposition

Our extensive value proposition hinges on a critical premise, leveraged by both categories of Profitable Production Rights Licenses. The historical dependence of producer companies on external capital and the consequent erosion of value over the past four decades have rendered these entities neither profitable nor commercially viable. A well-established principle emerges: over-reported assets lead to inflated profitability figures, triggering excessive investment and, consequently, overproduction. In the realm of oil & gas commodities, adhering to price maker principles is crucial. Decades of overproduction have severely undermined the prosperity of all stakeholders in the oil & gas sector.

This situation reveals an insidious problem eroding industry performance over time. Profitability and financial performance, taken for granted and unquestioned, become ostensibly easy targets. However, over time, organizational performance degrades to a point of complete reliance on external capital for basic operations. The oil & gas industry's culture of unwavering persistence against change has become its Achilles' heel, rendering the sector economically not viable as its present value dips into the negative.

This predicament appears terminal. A market economy cannot thrive with a counterproductive culture; such a culture must be dismantled to prioritize performance as the benchmark for success. Unfortunately, the energy required to dismantle this bureaucratic culture is immense. Luckily, People, Ideas & Objects is poised to reconstruct the industry based on the performance-oriented culture outlined in the Preliminary Specification, ensuring the most profitable oil & gas operations universally.

The industry's pervasive "muddle through" approach, stemming from the assumption that commodity markets will absorb any level of production, sees producers operate at full capacity. However, the Preliminary Specifications decentralized production model and price maker strategy face criticism as potential collusion. Unlike this perception, price makers curtail unprofitable production until it becomes viable, considering oil & gas commodities as price makers to regulate supply by introducing only profitable production to the market.

Directors and officers often mistakenly believe the market will magically balance any volume they produce. This misconception has led to dramatic price declines, including several collapses since 1986 and the unprecedented negative oil price of $37.64 in April 2020. Markets operate on the principle that price conveys information, suggesting production is only justifiable if it yields profit; otherwise, it results in value destruction. This fundamental misunderstanding by oil & gas officers and directors—that they are mere spectators in the market—leads them to persist with production at 100% capacity regardless of market conditions, embodying a culture of loss acceptance.

Profitable Production Rights Licenses capitalize on the disparity between these industry paradigms to offer People, Ideas & Objects compelling value proposition. Predicted to be worth $25.7 - $45.7 trillion over the next 25 years, these licenses could unlock $5.7 trillion in incremental profitability. Contrary to claims that $20 to $40 trillion is needed in capital investment to rejuvenate the industry's capacity and infrastructure. In the Preliminary Specification, this amount is not necessary, since capital costs are recognized competitively with all other industries in North America. Internally generated cash is reinvested to be recovered repeatedly. As a result, it will be invested again and again competitively with what other industries in North America achieve. The costs of a capital-intensive industry such as oil & gas are primarily capital-related and therefore will be the predominant cost passed on to consumers. In contrast to officers and directors strutting down main street comparing their well-built balance sheets and "putting more cash in the ground," the Preliminary Specification puts cash to work, quickly and repeatedly.

Disintermediation, by any standard, holds promise. Despite 19 years of advocating through this blog, the choice of industry leaders to neglect available value in favor of maintaining destructive practices is unsurprising. The value unlocked through disintermediation in various sectors is well-documented, echoing Adam Smith's findings on the impact of specialization and division of labor, which have significantly increased industry throughput. Today, the benefits of specialization and labor division are universally acknowledged as fundamental to our economy's value generation. Yet, ERP software has often cemented organizations in static models, satisfying only those content with the status quo. People, Ideas & Objects advocate for the creation of our permanent software development capabilities to eradicate what we perceive as a contemporary software flaw.

Reviewed & Revised Profitable Production Rights, Part I

 We have concluded our campaign aimed at bringing to light the adverse consequences inflicted upon the oil & gas sector due to the Willful Misconduct of its officers and directors. We extend our gratitude for their cooperation, which has contributed to a significant shift in the natural gas price structure from 24.82 times the oil price on October 11, 2023, to a record high of 49.41 times at last Friday’s close.

Initially, our assertions regarding the industry's damage and destruction, alongside the critical issue of profitability, were met with skepticism. Many producers dismissed the importance of profits, emphasizing cash flow instead. However, investor intervention helped validate our concerns, underscoring the reality that profitability is indeed crucial. Our value proposition, estimating impacts between $25.7 to $45.7 trillion over the next 25 years, has ultimately underscored the necessity for industry leaders to heed the insights offered by People, Ideas & Objects.

In the aftermath of our campaign, we no longer face challenges in highlighting the issues our Preliminary Specification addresses, nor in garnering consensus regarding our value proposition. The credibility of officers and directors who previously dismissed or were oblivious to these flawed business practices has diminished. Their past reluctance to acknowledge or address these issues reveals a level of responsibility they cannot afford to ignore again. We believe there is an urgent need for these leaders to tackle these challenges head-on. To them, People, Ideas & Objects offers its best wishes for swift and effective resolution.

Introduction

People, Ideas & Objects is revitalizing the oil & gas industry by reintroducing a modified Profitable Production Rights Licensing method. This approach not only funds the development of the Preliminary Specification and nurtures our user community but also grants licensees the dual opportunity to engage in the North American oil & gas sector and its ERP software markets. In today's era, every business is becoming a software business, making participation in our ecosystem essential. I’ll restate here why participation in People, Ideas & Objects et al is valuable in the 21st century. It’s no longer enough to just own the oil & gas asset, it’s also necessary to have access to the ERP software and services of People, Ideas & Objects et al’s Cloud Administration & Accounting for Oil & Gas that makes the oil & gas assets profitable.

The transition of producer officers and directors towards clean energy and consolidation, coupled with their historical dismissal of shale's commercial viability, highlights a disregard for the oil & gas sector they once managed. This has led to a culture resistant to change, lacking in accountability and transparency, and neglectful of real profitability. Our 2023 / 2024 focus on the LNG issue has illuminated over $4 trillion in lost revenue since July 2007, a testament to the officers and directors willful misconduct.

The North American producer is portrayed as a failing organization, risking societal jeopardy with its inability to sustain shale production. The industry's operational, financial, and political challenges call for innovation and entrepreneurship—qualities the status quo lacks. As Edmund Burke suggests, technology represents a dynamic counterforce to stagnation and tyranny, offering a path towards innovation and change.

Despite the transformative potential of shale technologies since the 2008 financial crisis, the industry has failed to capitalize on this value. The status quo has led to distorted business practices and value destruction, underscoring the necessity for a new approach. People, Ideas & Objects stands as the sole alternative to outdated methods, offering a solution that ensures dynamic, innovative, accountable and profitable North American energy independence.

Our Profitable Production Rights Licensing provides the keys to accessing a new model of oil & gas organization—one that prioritizes dynamic, innovative, accountable and profitable oil & gas production, everywhere and always. As the industry faces its future, the choice between embracing this new path or clinging to the status quo will determine its trajectory. People, Ideas & Objects invites everyone to join us in building a future where oil & gas remains a cornerstone of North America's economic prosperity.

Licensing

Profitable Production Rights License

In terms of implementation, our objective is to encode each Profitable Production Rights License onto a dedicated blockchain, specifically secured through Oracle Cloud Infrastructure and the Oracle Autonomous Database. This capability is made possible by the recent introduction of the Oracle Blockchain Table. Within the context of the Preliminary Specification, this Oracle database will oversee the administration of Profitable Production Rights Licenses, effectively managing the contracts of rights holders. Consequently, this enables contracted licensees to access People, Ideas & Objects software and services, while also overseeing and managing their revenue and expenses.

Should any assignments, sub-leases, or transfers of the Profitable Production Rights License occur, these actions will not alter or remove the original purchaser's transaction in the database. Instead, they will generate an additional block on the chain or a new row within the Oracle Blockchain database instance. Profitable Production Rights Licenses are organized via their serial numbers to collate all related transactions, assignments, current ownership details, and the licensing of production rights to the respective producing Joint Operating Committee.

The licensee of the Profitable Production Right will maintain ownership and control over the encryption key necessary to access the record database. This database archives the production contracts executed with producers, who are invoiced based on the terms of the Profitable Production Rights Licensees' contracts. The licensing structure grants exclusive access rights, positioning it as a unique solution for organizing North American oil & gas exploration, production, administration, and accounting in a profitable manner.

Oracle's Blockchain Tables are specifically designed as append-only tables to support centralized blockchain applications. Within this framework, peers are identified as database users who rely on the database's integrity to preserve a tamper-resistant ledger. This ledger, implemented via a blockchain table, is both defined and managed by the application, allowing existing applications to safeguard against fraud without the need for a new infrastructure or programming paradigm. Although the transaction throughput for a blockchain table is lower than that of a standard table, its performance is notably superior to that of a decentralized blockchain system.

It is essential to acknowledge that Oracle's Blockchain Database does not represent a pure blockchain implementation, as it does not distribute its blockchain across servers for validation in the case of suspicious transactions. Instead, its design prioritizes higher transactional performance, a critical requirement for our applications. Managed by the Oracle Autonomous Database, it serves as a crucial component of our Cloud Administration & Accounting for the Oil & Gas Software & Service, ensuring data immutability—a fundamental blockchain feature. This system guarantees that Profitable Production Rights Licensees have secure rights, necessitating that North American oil & gas producers obtain sufficient licenses to access our Cloud Administration & Accounting Software & Services for the entirety of their production profile. People, Ideas & Objects is confident that this solution will provide an unmatched competitive advantage in profitably organizing producers.

Flexible Profitable Production Rights License

Oil & gas production inherently comes with its unpredictability. This is particularly true for fields experiencing decline, with shale regions showing notable variability. The global market demand has witnessed significant fluctuations, as evidenced by a 25% decrease in worldwide consumption during the COVID pandemic. Although such a steep decline might be rare, it establishes a critical baseline for analysis. This situation is further complicated by the decentralized production models and the price maker strategy introduced by the Preliminary Specification, potentially leading to greater and less predictable variations in a producer's production volumes.

Addressing these challenges necessitates a robust mechanism to manage the financial implications of production variability, especially considering the fixed overhead costs associated with Profitable Production Rights Licenses—predominantly those related to Oracle software licenses for Cloud Administration & Accounting for Oil & Gas software and services.

To mitigate these challenges, People, Ideas & Objects have introduced two distinct categories of Profitable Production Rights. The first category has already been described as the Profitable Production Rights. The second, the Flexible Profitable Production Rights License, is designed to account for up to 25% of the total production profile of the continent or the subscriber base of People, Ideas & Objects, whichever is lower. This allocation is intended to buffer against up to 25% of production variability across all operations. Each producing property is automatically allocated 25% of the Flexible Profitable Production Rights License to compensate for any potential production decline, thereby indemnifying Profitable Production Rights License owners against the financial risks posed by variable production volumes of a Joint Operating Committee production.

In scenarios of extreme production declines, as observed in the past decade, or when production is halted due to unprofitability—a situation expected to represent a small fraction of North America's total output—the Flexible Profitable Production Rights License comes into play. It covers the revenue loss for any shut-in production, assuming the property is being reworked to resume production, aligning with the core objectives of the Preliminary Specification. Should production become indefinitely suspended or abandoned, Profitable Production Rights Licensees are freed to seek new production opportunities. In such cases, revenue impacts would be borne by Flexible Profitable Production Rights Licensees, not the standard Profitable Production Rights Licensees.

The pricing strategy for the Flexible Profitable Production Rights License does not undervalue it compared to the standard Profitable Production Rights License. By People, Ideas & Objects acquiring all Flexible Profitable Production Rights Licenses this will redistribute the margins generated through People, Ideas & Objects to those shut-in areas. Therefore allocating 25% of the overall production profile in consideration for 100% of the Flexible Profitable Production Rights Licenses. Thereby purchasing the Flexible Profitable Production Rights in exchange for 36% of the budgeted earnings of People, Ideas & Objects. Holding all Flexible Profitable Production Rights Licenses is expected to strengthen our negotiating position when leasing these licenses to producer firms that require coverage for a quarter of their total production. Negotiations for Flexible Profitable Production Rights will begin once all Profitable Production Rights have been fully allocated to each Joint Operating Committee.

Therefore to summarize the configuration of Profitable and Flexible Profitable Production Rights.

The strategy outlined for the Flexible Profitable Production Rights License within the context of People, Ideas & Objects involves a nuanced approach to pricing and redistribution of value within the oil & gas sector, specifically targeting areas of production that are currently shut-in or underutilized. This approach does not undervalue the Flexible Profitable Production Rights License in comparison to the standard Profitable Production Rights License. Instead, it aims to leverage these flexible rights to enhance the overall production profile and financial health of the involved entities, particularly Profitable Production Rights Licensees through strategic negotiations and allocations.

1. Acquisition of All Flexible Profitable Production Rights Licenses by People, Ideas & Objects: By acquiring all Flexible Profitable Production Rights Licenses, People, Ideas & Objects positions itself as a central figure in the redistribution of margins to shut-in areas. This action underlines the intent to revitalize these areas by ensuring that they can contribute to and benefit from the broader production and profit mechanisms within the industry.

2. Redistribution Mechanism: Allocating 25% of the overall production profile in exchange for 100% of the Flexible Profitable Production Rights Licenses signifies a strategic redistribution of resources and opportunities. It effectively means that a quarter of the total production capacity is considered in the valuation and acquisition of these flexible rights, aiming to balance the scales between different production potentials and needs within the industry.

3. Financial Arrangements: The decision to exchange these rights for 36% of the budgeted earnings of People, Ideas & Objects highlights a significant investment in the potential of these shut-in areas. It reflects a confidence that the activation and utilization of these areas will not only be profitable but also contribute substantially to the overall earnings and operational success of People, Ideas & Objects.

4. Strengthening Negotiation Positions: Holding all Flexible Profitable Production Rights Licenses enhances People, Ideas & Objects ability to negotiate with producer firms that need to cover a significant portion of their production. This strategic position allows People, Ideas & Objects to dictate terms that are favorable and ensure that the licensing of these rights contributes positively to its objectives and the wider industry's health.

5. Allocation and Negotiation Process: The strategy indicates a phased approach, beginning with the full allocation of Profitable Production Rights to each Joint Operating Committee before initiating negotiations for Flexible Profitable Production Rights. This sequence ensures that the foundational elements of production rights and responsibilities are established, allowing for a more focused and effective negotiation on the flexible aspects.

What do Flexible and Profitable Production Rights Licensees earn?

The narrative provided outlines an innovative approach introduced by People, Ideas & Objects aimed at transforming the operational and financial frameworks within the oil & gas industry. This transformation pivots around the concept of Profitable Production Rights Licenses, which serve as the cornerstone of People, Ideas & Objects strategy to overhaul how the industry functions, particularly in addressing the inefficiencies and value destruction perpetuated by current management practices.

This strategy is the exclusive access granted to licensees of Flexible and Profitable Production Rights to the Cloud Administration & Accounting for Oil & Gas Software & Services. This exclusivity is pivotal, ensuring that the revolutionary services developed under the Preliminary Specification are reserved for those holding the appropriate licenses. It's a model that not only underscores the value of these licenses but also sets a clear boundary for access to innovative operational capabilities. Each license is designed to enable the profitable processing of one barrel of oil equivalent (BOE) per day, marking a significant step towards more efficient and profitable operations.

An interesting aspect of this strategy is the anticipation of a development phase, a period characterized by the absence of financial transactions, both in terms of revenues and expenses, for the licensees. Despite this, licensees are encouraged to engage with producers early on to secure production rights, laying the groundwork for operations ahead of the commercial launch of Cloud Administration & Accounting for Oil & Gas Software & Services. This proactive approach is indicative of the strategic foresight embedded in People, Ideas & Objects model.

The revenue model proposed is another key element, with Profitable Production Rights Licensees generating income by levying fees on producers for the processing of their BOE through the platform. The flexibility granted to rights holders in structuring these fees allows for diverse and potentially innovative business models to emerge, tailored to the specific dynamics of the engagements between licensees and producers.

People, Ideas & Objects critique of current industry practices forms a critical backdrop to its strategy. The critique is sharp and comprehensive, pointing to a systemic failure to create value, manage capital structures effectively, and compete for capital since the initial oil price collapse of 1986. Through this lens, People, Ideas & Objects highlights the vast potential for transformation in the industry, underscored by the identification of a $4 trillion revenue loss in the natural gas sector from July 2007 to the end of 2023—a stark reminder of the opportunities missed under current operational paradigms. And a source of value in the Profitable Production Rights Holders offering to producer firms.

In response to these challenges, People, Ideas & Objects presents its value proposition as a beacon of change. By leveraging the Preliminary Specification, People, Ideas & Objects envisions an industry that is not only more dynamic, innovative, and accountable but also significantly more profitable. This vision extends across the full spectrum of oil & gas operations, from exploration and production to administration and accounting, offering a comprehensive blueprint for transforming all producers from the startup to integrated multinationals.

In essence, People, Ideas & Objects strategy represents a bold step forward in reimagining the oil & gas industry. By placing Profitable Production Rights Licenses at the core of its approach, People, Ideas & Objects aims to catalyze a shift towards preservation, performance and profitable operations. This strategy challenges the status quo, proposing a future where the industry not only recovers from its historical inefficiencies but also positions itself as a competitive and financially robust sector, capable of attracting and managing capital with unprecedented efficacy.

What do Flexible and Profitable Production Rights Licenses earn?

The innovative approach introduced by People, Ideas & Objects through the Profitable Production Right License represents a significant shift in the oil & gas industry's operational and financial paradigms. The essence of this shift lies in leveraging advanced technological solutions and strategic pricing models to enhance profitability and operational efficiency. This model meticulously balances the integration of technological advancements with pragmatic financial strategies, aiming to redefine the industry's standards for profit generation and resource management.

The core of the revenue generation mechanism under the Profitable Production Right License is a sophisticated negotiation process. This process aims to establish a share of the present value of the differential, which effectively compares the value proposition offered by People, Ideas & Objects and its associated technological and service advancements against the industry's status quo. The outcome of these negotiations, which will be uniquely tailored to each agreement between the Profitable Production Right Licensee and the producer firm, determines the revenue potentials. Such contracts are managed using the Oracle Blockchain database, ensuring transparency and efficiency in handling each specific barrel of oil equivalent (BOE).

A proposed revenue model suggests linking the licensees' earnings to a percentage of the oil & gas commodity price, with a discussion range between 5% and 10%. This range is designed to capture a significant portion of the pretax profitability of commercial operations, ensuring that producer operations remain profitable under the Preliminary Specification. The rationale is to establish commodity prices that are not only marginal but are elevated to a level that secures profitability. This approach addresses a long-standing indifference from current producers towards optimizing profitability, thus presenting a cost that future producers would consider essential for determining their profitability.

The pricing structure of the Profitable Production Right License, set at $1,000 U.S. per BOE, is reflective of the current North American production profile and accounts for the inclusivity of heavy oil production within the People, Ideas & Objects budget. The model acknowledges the unique operational dynamics of heavy oil producers, including their existing ERP systems, while still positioning them as direct beneficiaries of the price maker strategy advocated by People, Ideas & Objects.

Addressing the operational costs associated with the Preliminary Specification, the long-term maintenance of software development and community support is deemed non-material relative to the gross revenues of producers. An analysis comparing the development costs of the Preliminary Specification against the gross revenues of producers in 2021 illustrates that the operational and incremental software development costs post-commercial release are sustainable, amounting to a modest percentage of a single year's oil & gas revenues.

The financial strategy extends to encompassing the overhead costs within a manageable framework for both Flexible and Profitable Production Rights License owners, translating into an all-in cost that reflects these long-term support and development costs. This model ensures that the Profitable Production Rights Licenses do not adversely impact the service providers' fee structures or billing practices, yet indirectly influences the producers' access to service providers through the softwares access rights.

The foundational principle of the Profitable Production Right License is its role as a contract granting producers access to a suite of organizational capabilities aimed at securing profitable production. This right, inherently reconfigurable, detaches the risks typically associated with oil & gas property ownership, providing a transferable, assignable, and leasable avenue for operational flexibility.

Today’s producers' tactical management approach includes everything that comes into their minds. In the past few years we’ve seen $25 million in executive bonuses paid by Chesapeake the week prior to its bankruptcy declaration. It appears that bankruptcy is the means to deal with shareholders who have become too dissatisfied with management performance and is how producers can reshuffle the deck as it were. Profitable Production Rights Licenses circumvent these actions by having a clause that terminates the Profitable Production Rights License upon bankruptcy. Therefore freeing up the rights and maintaining value in the hands of the rights owner. Endorsing the purpose of Profitable Production Rights by separating ownership of oil & gas production from the right to process that production. This is done through organizations represented by Cloud Administration & Accounting for Oil & Gas. The Licensees could then engage bankruptcy trustees to reinstate the Profitable Production Rights License. This would be on terms that maintain independent ownership of the Profitable Production Rights License separate and distinct from the means of production.

Who and why would anyone be interested in purchasing these Profitable Production Rights Licenses?

Answering the who and why anyone would be interested in acquiring Profitable Production Rights outlines a comprehensive strategy aimed at revolutionizing the oil & gas industry. Through the development of People, Ideas & Objects Preliminary Specification, and building of the Cloud Administration & Accounting for Oil & Gas software and services. This approach is designed to address the industry's long standing challenges with preservation, performance and profitability. Marking a decisive shift from traditional practices that have proven ineffective and unpopular among investors and stakeholders. Here’s a breakdown of the key elements and their significance:

Strategy for Industry Transformation

Introduction of Profitable Production Rights License: A core component of the strategy is to incentivize various stakeholders within the industry to adopt new practices that ensure profitability and sustainability. This involves shifting from traditional methods of operation to more innovative and accountable approaches, facilitated by the Profitable Production Rights License. This license serves not only as a revenue generation tool for People, Ideas & Objects but also as a catalyst for industry-wide change.

Target Audiences:

Investors: Highlighting the disillusionment of investors with past industry practices, the strategy aims to re-engage them by offering a stake in a transformed, dynamic, and profitable industry.

Oil & Gas Employees: Acknowledging the risks faced by individuals in supporting industry transformation, the strategy emphasizes confidentiality and the promise of a safer, more rewarding future.

Service Industry Representatives: By addressing the boom/bust cycle and advocating for a more stable and trustworthy relationship between producers and the service industry, the strategy aims to rebuild trust and ensure mutual profitability.

Producers (North American and Worldwide): Encouraging direct investment in Profitable Production Rights Licenses or engagement through lease agreements, this approach seeks to secure production rights and promote a performance-based culture across the global industry.

Our user community and their service provider organizations: Their participation in these software developments proves their motivation for profitability everywhere and always. A Profitable Production Rights License would provide them with an incremental value-add from what they seek to produce for the industry. Securing additional motivation to provide the most profitable means of oil & gas operations, everywhere and always. Our user community and service provider organizations are derived from the general oil & gas community. Having direct participation in the production process is attractive to these people.

Key Benefits and Outcomes

Disintermediation through Information Technology: Leveraging IT to streamline operations, reduce inefficiencies, and foster a more direct connection between production and profit.

Organizational Constructs to support a Cultural Shift: Proposing a reimagined structure for the industry that emphasizes dynamic, innovative, accountable, and profitable producers. Advocating for a wholesale cultural change within the industry to embrace new ways of working that prioritize profitability and sustainability.

Collaborative Effort: Recognizing the need for a collective industry effort to overcome the challenges and risks associated with transitioning to new operational models.

Conclusion

The strategy outlined is ambitious and seeks to address the multifaceted challenges facing the oil & gas industry by fundamentally rethinking how it operates. By focusing on innovation, accountability, and sustainability, and by engaging a broad spectrum of stakeholders through the Profitable Production Rights License, the approach aims to transform the industry into a more profitable, sustainable, and innovative sector. This transformation is not only necessary for the industry's survival but also for its ability to compete and thrive in a global market that increasingly values these attributes.

Disappointment, but no Surprise

 Launching a campaign to highlight the lack of production discipline in natural gas pricing couldn't have been more timely, given the recent fluctuations observed over the past few months. Prices have dramatically dropped from $3.34 (24.83 to 1) on October 11, 2023—the day the LNG issue was introduced on this blog—to $1.611 at market close today. The U.S. Energy Information Agency recently reported that natural gas storage volumes have exceeded their five-year average, yet there seems to be no acknowledgment of the problem among producer officers and directors, nor any recognition of the legitimacy of People, Ideas & Objects' Preliminary Specification as a viable solution.

On February 9, 2024, I highlighted on X that producers are now facing operational challenges due to their previous overexpansion of natural gas storage capacity—a decision made during a phase of myopic focus. After realizing these facilities were not profitable, they sold them off, losing control over natural gas storage, which has now become a significant barrier to addressing the pricing structure issues. 

As the producers' deadline expires today, stating that natural gas is trading at 50 to 1 might be seen as a minor detail. However, this structural pricing issue, rooted in decisions made since the mid-1980s, has caused market distortions that will require years of concerted effort to correct. Producers must begin to educate consumers about the real cost of energy. Today's utility bills, with natural gas cheaper than in the 1980s, are inflated with administrative, transportation, distribution fees, and various creatively labeled charges. Utilities may not be held accountable, but producers bear the brunt of consumer dissatisfaction, often resulting in a lack of transparent action from producer officers and directors.

The path forward for producers in the coming months remains unclear. People, Ideas & Objects also face challenges, compelled to pursue a difficult route. The failure to meet our deadline has taught us that no alternative exists but to follow through with our Profitable Production Rights plan, regardless of the obstacles. Previous attempts to find easier solutions have consistently failed. This failure, amidst a backdrop of a 50 to 1 natural gas price becoming the norm, underscores a profound misunderstanding of the opposition we face.

Hours, not Days

People, Ideas & Objects have set a precedent, demonstrating that producer officers and directors may deliberate on an innovative idea for a product or service for upwards of 33 years, effectively squandering trillions of dollars of other people's resources. When confronted with undeniable evidence of their inaction, they seem to require guidance to make the correct decisions. As of now, the decision to pick up our option on February 16, 2024, remains uncertain, with no communication received thus far.

The broader oil & gas economy in North America bears the scars of the missing $4 trillion we have documented. Shareholders, having been ignored, express their displeasure. While it's true that dividends are being distributed, this action hardly compensates for the substantial returns that should have been provided over decades or the capital raised through dubious earnings reports. The devastation inflicted on the service industry by officers and directors cannot be overlooked. The lack of a forward-looking plan or strategy leaves the industry ill-equipped for the challenges ahead, devoid of necessary resources.

The oil & gas industry's future hinges on its ability to innovate and meet the energy independence demands of the continent. Unfortunately, innovation has been stifled, historically thriving in the service sector but rarely within producer firms themselves. Innovators who dedicated their lives to bringing ideas to market find their efforts nullified as their intellectual property is co-opted and shared among competitors by the very officers and directors meant to lead.

A point arrives when it must be declared that enough is enough. The industry cannot sustain itself under this failed leadership. If, after midnight on February 16, 2024, producer officers and directors have failed to act on our option, it will be clear to all stakeholders that their conduct amounts to more than negligence; it is willful misconduct. What other conclusion can be drawn?

Software Can Fix That

 In an intriguing observation by Victor Davis Hanson, a Stanford PhD and Fellow at the Hoover Institute, he notes on his podcast, "The Victor Davis Hanson Show," around the 49:11 mark of “Looking for the Next President” episode. Discussing how societies historically have faltered when knowledge fails to be transmitted from one generation to the next. Citing examples from Rome, Byzantium, the Greek city-states, to contemporary South Africa and Zimbabwe, he underscores the essential role of knowledge in maintaining societal infrastructure and functionality, including crucial engineering knowledge for water treatment and electrical systems.

This reflection has a poignant relevance to the oil & gas industry, especially highlighted by the surprising lack of basic business understanding among producer officers and directors regarding LNG movement out of the Gulf of Mexico. The missed opportunities for capturing export prices in Asia and Europe, due to unfamiliarity with "Free on Board" and “Net Back Pricing” terminology, exemplify the critical need for generational knowledge transfer within the business sector as well.

The current generation entering the workforce, shaped by today’s education system, often exhibits a mindset focused solely on their immediate roles, missing the broader business understanding passed down from previous generations. This attitude risks losing invaluable business knowledge, such as Free on Board and Net Back Pricing, which are essential for the oil & gas industry's agenda.

To address this challenge, embedding persistent business methods and knowledge within the ERP software used in the industry is what People, Ideas & Objects have proposed. ERP software, by its nature, defines and supports organizational operations, encompassing current and potential future activities. Incorporating a defined software development capability, as People, Ideas & Objects has done, ensures that valuable historical business practices are preserved and integrated into future operations without losing sight of past wisdom. This approach not only secures the continuity of essential business knowledge but also fosters an environment where innovation is built upon the solid foundation of historical understanding.

Considering Tomorrow's Deadline

 As of February 19, 2024, our deadline may have passed without any action taken by the producers' officers and directors to address their overproduction issues. These issues have led to a loss of over $4 trillion in natural gas revenues since July 2007. Does this inaction transition from negligence to willful misconduct, thereby opening the door to accusations of deliberate wrongdoing?

I am not a lawyer and I am not offering legal advice. I seek to provide a solution to what I believe are existential issues to the oil & gas industry.

In the context of oil and gas, particularly as discussed on platforms like 'Innovation in Oil and Gas' and 'The Preliminary Specification', understanding the distinction between negligence and willful misconduct is crucial. Negligence refers to the failure to take proper care in doing something, which in this case would be the management's inability to address overproduction. Willful misconduct, on the other hand, implies a conscious or intentional failure to perform a duty or a reckless disregard of the consequences of actions taken or not taken.

The transition from negligence to willful misconduct hinges on demonstrating a deliberate or recklessly indifferent attitude towards the necessity to manage production in line with economic and environmental sustainability. Such a transition is not just a matter of passing time but requires evidence that the officers and directors were aware of the consequences of their inaction and chose to proceed or fail to act despite this knowledge.

In the specific domain of oil and gas, where strategic decisions have profound implications not just economically but also environmentally, the principles outlined in 'The Preliminary Specification' emphasize the importance of proactive and responsible management. Highlighting the $4 trillion loss in natural gas revenues underscores the significant impact of such decisions and reinforces the argument for accountability at the executive level.

Update to Operations Management Module

 The following text has been added to the Operations Management module. Under the heading Swarm, and subheading Cloud Administration & Accounting for Oil & Gas it now reads.

Swarm

Cloud Administration & Accounting for Oil & Gas 

Upon completion of the development of the Preliminary Specification, we will deploy our Cloud Administration & Accounting for Oil & Gas Software & Service. The configuration of the necessary network will be a significant component of our Cloud offering. Our Security & Access Control module aligns with People, Ideas & Objects' objective of delivering the right information to the right individuals at the right time and on the right device, regardless of their location. Since the Material Balance Report and the Operations Management module rely on data provided through the IoT via Swarm, it is crucial to ensure seamless connectivity.

To fulfill our value proposition, we have the capability to establish a dedicated Swarm-based network exclusively for Cloud Administration & Accounting for Oil & Gas Software & Service. Swarm has included this option in their offering, enabling us to construct, launch, and deploy a global IoT network tailored to our requirements for a fee of $25 million. Considering the significance of safeguarding the data and information of North American producers, this investment represents a small sum for such critical infrastructure in terms of security and reliability.

A Fable

 The perception that I’ve always approached the work that I do here at People, Ideas & Objects is controversial and ripe with conflict against the officers and directors. I’ve identified them as the ones that have the authority, responsibility, are allegedly accountable and have control of the resources necessary to eliminate the issues we are faced with. However they have taken our position and seen it as a threat to their bureaucratic ways through the now classic disintermediation. Now that we are hours and minutes away from our deadline passing. I believe it will be difficult for the officers and directors to justify they are negligent and not willful of misconduct. Letting the one solution pass through their fingers, again, is difficult to justify why they would allow that. There appears to be, and possibly there is now evidence that, something larger is in play with them. 

There is a fable that I think puts their situation into context for me. One that maybe shows my actions as being more productive and healthier to their well being than what is assumed and believed. There is still time to meet the deadline, however, there is also the fact that all of this has been known by them for quite some time.

A baby bird, not yet ready for the harsh realities outside, finds itself caught in an unexpected snowstorm after its first flight from the nest. Overwhelmed and unprepared, the bird falls to the ground, its life threatened by the freezing cold. In this dire moment, a cow passes by and, in an act less elegant but life-saving, defecates on the bird. Buried in the pile, the bird quickly warms up, saved from the brink of death by this unlikely act. Feeling revived and grateful, the bird begins to chirp joyfully, drawing the attention of a crow. The crow, hearing the bird's chirps, quickly finds and eats the bird.

The moral of this story serves as a poignant reminder: the one who puts you in a difficult situation isn't necessarily your enemy, and the one who rescues you isn't automatically your friend. Furthermore, it underscores the importance of being cautious with whom you reveal your vulnerabilities or successes, as not everyone who appears to help has your best interests at heart.

Officers and Directors Ambitions?

 Late Sunday, it occurred to me that the officers and directors might be aiming for a breakthrough in the natural gas price structure, targeting a 50 to 1 ratio. Remarkably, by midweek, they've nearly achieved this, reaching a ratio of 48.19—a record in itself and representing an 87.55% erosion in the price vs the traditional heating value of natural gas. I must admit, their ability to come so close to this target in merely two and a half days is impressive. A hat tip is certainly due to the officers and directors for their 'stellar' work.

However, I might be misinterpreting their focus and perhaps overlooking a more grandiose ambition. In September 2023, the industry faced a staggering $46.4 billion in natural gas revenue losses under the then-highest average monthly price structure of 33.32 to 1. It seems $46.4 billion in losses for a single month didn't meet their expectations, hinting at even loftier goals for February 2024.

Regrettably, I find myself in the position of dampening the producers' high-flying ambitions. With oil prices at $87.09 in September 2023 compared to today's $77.05, achieving a 50 to 1 ratio under current conditions would result in total losses around $43.9 billion—falling short of their potential target. They've reached a juncture where the law of diminishing returns kicks in, suggesting a need to moderate their aspirations to a 50 to 1 ratio. Officers and directors, you're so close to this dubious milestone—perseverance is key, but perhaps it's time to reconsider the real costs of such 'achievements.’

People, Ideas & Objects deadline expires in two days and for all concerned, I have not received any contact or information from these ambitious officers and directors. Soon we’ll be able to say definitively it was officers and directors negligence or willful misconduct.

Trillions and Trillions

 People, Ideas & Objects offers a solution to the persistent issue of lack of production discipline, which has led to significant financial losses and broader economic devastation in the oil & gas sector. This problem can be traced back to a combination of accounting and organizational challenges that originated in the late 1970s, culminating in the first of many oil price collapses in July 1986. Since then, the industry has witnessed at least 12 other price collapses, alongside generally depressed prices that have materially impacted the sector over the years.

Throughout this period, North American producers have consistently failed to achieve what could objectively be considered profitable production. The prevailing accounting practices in the North American oil & gas industry are geared more towards valuation than performance, fostering a culture that is distorted and non-performant. This entrenched culture has shown a lack of capacity to grasp the nuances of People, Ideas & Objects' arguments, as outlined in the Preliminary Specification. A clear example of this is the recent missed opportunity to leverage the development of LNG export markets for enhanced natural gas pricing.

In 1985, Canada's natural gas production market and prices were deregulated. At that time, the regulated nominal price was over $3.75, which equates to approximately $7.30 in 2014 terms, considering inflation. Adjusting for inflation to today's value, the 1985 gas price would be around $9.26. This historical context highlights the profitability disconnect in today's market, where natural gas is sold at $1.61, benefiting producer officers and directors strategy of “muddle through” at the expense of the resource's true value. (Graph provided https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2015/market-snapshot-30th-anniversary-deregulation-canadas-natural-gas-prices.html)

During the same period, Alberta's natural gas industry was undergoing significant changes, not only due to deregulation but also from the necessity to build the infrastructure required to gather and commercialize natural gas. Previously, producers often flared natural gas, deeming it not worth the investment to capture. This practice, both environmentally harmful and economically wasteful, ceased around the time of deregulation. Consequently, there has been a longstanding neglect towards developing a natural gas market that truly captures and reflects the value of the resource.

Since May 1991, I have been advocating for change, marking more or less thirty-three years of persistent effort. Over these years, it's reasonable to estimate that the North American oil & gas industry has foregone several dozen trillion dollars in potential revenues due to persistent inefficiencies and a failure to adapt. Interestingly, this colossal loss seems to have had little impact on the comfort and positions of the industry's officers and directors, except for the inconvenience of having to contend with my calls for reform. 

This situation underscores a profound disconnect between the industry's leadership and the urgent need for systemic change. While the financial losses are staggering, they have not sufficiently motivated those in power to reconsider their approaches or engage with innovative solutions that could revitalize the industry. Instead, the status quo is preserved, safeguarding the interests of a select few at the expense of broader economic and environmental well-being.

It's Personal

 As we enter February 2024, the looming deadline of the 16th should now be coming into sharper focus for North American oil & gas producers. Historically, producers have managed to evade action by claiming 'they have it under control' whenever confronted with the necessity of production discipline. Such assurances have been frequently given, yet we've chronicled a plethora of excuses, blame-shifting, and what we term 'viable scapegoats' utilized by producers over the years. It would be easy to conclude that, in their view, officers and directors are never at fault.

However, the current situation, with its deadline of February 16th, introduces a distinct challenge unlike any they have previously encountered. The unique aspect of this scenario lies in the fact that the repercussions of continued inaction will directly impact the personal financial resources of the officers and directors. Whether this constitutes Willful Misconduct, Negligence, or something in-between is beyond my expertise to judge, as I am not a lawyer. My role is to offer solutions and highlight the issues and their significant impacts, such as the known $4 trillion loss in natural gas revenue they've contributed to.

Yet, perhaps an implied admission of 'having it under control' by the officers and directors might indeed be the most fitting response. Could it signify an acknowledgment of their responsibility and a willingness to surrender their assets to their shareholders?

We elaborate on our February 16, 2024 Option in the 'This One's Nuclear, Part IV' blog post dated January 17, 2024.  

Our Value Proposition: Innovation

 People, Ideas & Objects et al need to worry about the startup to junior sector as much as any other classification within the industry. And we provide them with the most cost effective solution possible. This is purely because of the fact that the industry’s rebuilding will be done on an innovative basis. Innovation is the basis of the Preliminary Specification. It enables People, Ideas & Objects, our user community and their service providers to achieve our two opposing objectives of providing oil & gas producers with the most profitable means of oil & gas operations everywhere and always, and providing consumers with the lowest possible cost of an abundant and reliable domestic energy supply. With our decentralized production model and price maker strategy, we ensure that all production is profitable. Including Exxon's, Shell’s and that startup oil & gas firm that began this morning. And to do so innovatively to ensure that the ever escalating costs of oil & gas remain affordable to consumers. In addition, the commodities production profile and reserves continue to expand. Achieving profitable North American energy independence.

Enter two variables not available in prior decades and centuries. The cloud computing era coincides with the maturation of the overall technological infrastructure represented by the Internet. We are in the infancy of the Internet. Second, there is the "service" aspect of our user communities' service providers. We found that the level of innovation attributable to the small and medium sectors of an industry was as substantial as the larger sectors. Although the larger sectors contributed large amounts in terms of total expenditures, their impact was no greater than that of what the other sectors contributed. People, Ideas & Objects et al provides our solution for all sectors of the North American oil & gas industry and for all producers. Professor Giovanni Dosi was one of the key sources of research we used to determine the framework necessary for an innovative oil & gas industry. Innovation within a science and engineering-based business is therefore an inherent part of both profitable operations and consumer affordability. Professor Dosi’s paper “Sources, Procedures, and Microeconomic Effects of Innovation” September 1988, discusses and asks what are “the sources of innovations opportunities, what are the roles of markets in allocating resources to the exploration of these opportunities”?

People, Ideas & Objects research in oil & gas focused on these points: 

The main characteristics of the innovation process. 

• The factors that are conducive to or hinder the development of new processes of production and new products.
• The processes that determine the selection of particular innovations and their effects on industrial structures.  (p. 1121). 

According to Professor Dosi, there are two major issues that need to be addressed: 

• The first issue is the characterization in general of the innovative process.
• And second, the interpretation of the factors that account for observed differences in the modes of innovative search and in the rates of innovation between different sectors and firms, and over time. (p. 1121). 

Professor Dosi then states that: 

Typically, the search, development and adoption of new processes and products in market economies are the outcome of the interaction between:

• (a) Capabilities and stimuli generated with each firm and within the industry of which they compete. (p. 1121). 

The purpose of People, Ideas & Objects research in oil & gas focused on the organizational capability and capacities of the producer firm. Specifically in the earth science and engineering disciplines. It was also emphasized that innovations are based on both the firm and the industry. Coordination of the capabilities and stimuli of both the firm and the industry would therefore need to be advanced through changes in the organizational structure of both.

(b) Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers, and so on;  (p. 1121). 

Additional issues include 

(c) The conditions controlling occupational and geo-graphical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulations, tax codes, patent and trademark laws and public procurement.) (p. 1121) 

People, Ideas & Objects propose that innovation represents a critical Organizational Construct which compels organizations to either flounder or flourish. Innovation serves not only as an Organizational Construct in its own right but also, as we have defined in the context of the Joint Operating Committee, it is one of the seven key frameworks of this construct. From this perspective, innovation is seen as a defined and replicable process, which can be systematically established through thoughtful organizational design. Crucial to this design is the integration of ERP software, tailored to identify and support the specific needs of the organization and its industry. In the 21st century, innovative organizations are fundamentally reliant on such ERP software systems. The Preliminary Specification lays the groundwork for these innovative producers. It is up to the competitive nature of the officers and directors to harness their innovative potential, coordinating their earth science & engineering capacities and capabilities effectively.

Our second source of primary research material regarding innovation came from Professor Richard N. Langlois. Throughout our review of his work we determined the appropriate nature of the organizational design of the producer firm and the oil & gas industry itself. Selecting specific areas of the firm or market where the process and its management should be. Where capabilities should reside. By fully implementing the Internet and using Professor Langlois' research, which included Professor Carliss Baldwin's determination of where exactly that transfer between firm and market should occur. We designed the appropriate software tools, such as our task and transfer system. This will enable our user community to define which processes to undertake and manage in their service provider operations. Introducing enhanced efficiency in oil & gas administration and accounting. 

Building on other innovations that provide value generation such as cloud computing. People, Ideas & Objects, our user community and service provider organizations can accomplish this through the introduction of Cloud Administration & Accounting for Oil & Gas. A service that turns the fixed producer overhead into a variable industry-based overhead that can be provided to any producer no matter what their size or production profile. It is possible for producers to shut-in unprofitable production and produce only profitable properties, increasing shareholder value as a result. A substantial portion of our published value proposition of $25.7 to $45.7 trillion over the next 25 years is attributable to introducing this production discipline. This is to eliminate the known $4 trillion in damage and destruction caused by overproduction in natural gas since 2007.

The Preliminary Specification has captured this understanding of innovation and incorporated it within the culture of the industry we are rebuilding in these Organizational Constructs. It is also part of the Joint Operating Committees innovation framework. Each of the fourteen modules of the Preliminary Specification is materially affected when we identify the Joint Operating Committee as the key Organizational Construct. Which provided us with an opportunity to incorporate this understanding of innovation into the design and reorganization of the oil & gas producer firm and industry. These can be identified by several major processes of innovation within the Preliminary Specification. One of these ensures that failed innovations and experiments, and their underlying processes are not repeated in separate and distinct areas of the organization each year. Using the same failed “ideas” repeatedly is not innovation. Another major process of innovation is to enhance the scientific basis of producer firms and the industry as a whole. Moving forward on the basis that an idea that generates a dollar today will only produce ten cents tomorrow. We therefore must increase the volume of ideas generated and incorporated into our work processes to continue increasing our value. Various other innovation processes have been incorporated throughout the Preliminary Specification based on primary research conducted by Professors Giovanni Dosi and Richard N. Langlois. Enabling producers to earn the unquantifiable value that needs to occur throughout each producer firm and all tiers of the oil & gas industry in the decades to come. Value that will need to fund the innovation for tomorrow.

Oracle Cloud Infrastructure (OCI)

Continuing our discussion regarding the recent Oracle CloudWorld 2022 & 2023 conferences. Producers can generate incremental and continuing value from enhanced innovation through the development and implementation of the Preliminary Specification. Oracle’s products are the premier technologies in database systems development and their ERP systems are the base of the Preliminary Specification. Oracle is now partnering with service providers to enhance their products with a variety of services in order to bring about the innovation-based benefits we have discussed throughout the Preliminary Specification. Theirs will be in the domain of generic business processes such as banking etc, or the non-oil & gas specific processes that we handle through the 14 modules of the Preliminary Specification. 

Our proposed combination of Oracle Cloud ERP, People, Ideas & Objects, our user community and their service provider organizations are designed to deliver the foundation in which the producers, the oil & gas industry and all the tertiary industries can succeed in the 21st century. Without these facilities and capabilities the question we would ask is how will the industry “muddle through” so many of these issues and opportunities otherwise?

Since Oracle’s beginning they have pioneered the development of their technologies to be the premier tier 1 provider in all categories of their offerings. Oracle has been a critical and essential innovator in each of their products and markets. They continue today with products such as Oracle Cloud ERP and Oracle Cloud Infrastructure that continue that heritage. Recently with the Oracle CloudWorld 2022 conference we saw an innovative direction beginning with their development of service providers to augment their products. These enhanced products and services bring tremendous incremental value to oil & gas users. And are consistent with the work People, Ideas & Objects has undertaken on behalf of North American producers. 

Innovation throughout the business and industry specific process management, built upon the premier tier 1 Oracle products. This augments the dynamic, innovative, accountable and profitable nature of what is demanded of North American oil & gas producers. This is not a static environment. It will be through our user community and their service providers that producers will be able to interact with all aspects of business and industry specific process management. To make changes, innovate and develop these further which is an inherent part of People, Ideas & Objects and our user communities permanent software development capability. But there’s more.

A production configuration oriented toward this innovation Organizational Construct. With the Joint Operating Committee, that Organizational Construct holds innovation as one of its seven frameworks. Not only oil & gas producers, but the entire oil & gas industry and its tertiary industries and supporting institutions will be culturally aligned and oriented through Oracle Cloud ERP and People, Ideas & Objects Preliminary Specification towards innovation in the earth science and engineering disciplines. Providing the means to rebuild the industry in this configuration with software that defines and supports these objectives. Where the industry's approach to its next 25 years can be the most dynamic, innovative, accountable and profitable in its history. A future that is the most demanding, challenging and exciting in its history.