Showing posts with label Artificial Intelligence. Show all posts
Showing posts with label Artificial Intelligence. Show all posts

Monday, June 09, 2025

AI, The Fourth Industrial Revolution, Part III

Rebuilding Oil & Gas for the Fourth Industrial Revolution

Reconstructing the oil and gas industry with a culture of reserves preservation, performance, and profitability demands a comprehensive approach. People, Ideas & Objects’ Preliminary Specification leverages seven Organizational Constructs to define, support, and guide this transformation, creating dynamic, innovative, accountable, and profitable producers and a revitalized industry. Information Technology, including Artificial Intelligence (AI), is one of these constructs.

Our expectation is these tools will assist society in maintaining North American political and economic prosperity for the long term. It is the most powerful economy which consumes the most energy. It’s difficult to see how society's leadership would be established without independence in its sources of energy. We are the largest consumer of energy and we are the most efficient energy consumer. Contributing up to 25,000 man hours of labor in each barrel of oil equivalent. And now untold leverage of the continents established cultural strengths through Artificial Intelligence. 

Lessons from past Industrial Revolutions—shrinking timeframes, productivity booms, labor shifts, new markets, and social challenges—suggest AI’s Fourth Industrial Revolution could be faster and more disruptive than its predecessors. Its ability to automate complex tasks and process vast data could unlock unprecedented value, but only if society adapts to its challenges. Focusing on AI’s potential for system-level insights, as in neuroscience, highlights a key opportunity: AI could redefine how we create knowledge and value, but humans must guide the paradigm shift, just as they did with steam, electricity, and IT.
The structural conflicts in oil and gas, driven by misaligned business models, mirror issues in politics, academia, and healthcare. These conflicts, often obscured by society’s wealth, become glaring when their destructive impact stalls progress. Current officers and directors, prioritizing personal gain, resist reform. People, Ideas & Objects urges them to choose to lead, follow, or step aside.

As we noted in a prior blog post covering Ark Investments Podcast of Dr Jin Huang Li of Stanford University. Dr. Li noted, institutional inertia and incentives can stifle holistic approaches. Academia rewards published papers on narrow topics, not risky, interdisciplinary leaps. If we’re to fully harness AI for system-level breakthroughs, we might need new structures-funding models, collaborative networks, or even AI-assisted research platforms-that encourage big-picture thinking. Is this where AI forces us to rethink not just tech but how we organize knowledge and innovation?

David Hume’s quote about ”no amount of reasoning will generate an idea” can’t be verbatim attributed to him. However it’s believed to be derivative of his quote. 
All the perceptions of the human mind resolve themselves into two distinct kinds, which I shall call IMPRESSIONSand IDEAS. The difference betwixt these consists in the degrees of force and liveliness, with which they strike upon the mind. (A Treatise of Human Nature Book I, Part I, Section I)
The Preliminary Specification empowers oil and gas leaders to harness AI, redefining the industry for a prosperous, energy-independent future.

People, Ideas & Objects User Community. Our Priority and Key Competitive Advantage

I’m delighted with the competitive advantages that define People, Ideas & Objects, centered on our user community, Intellectual Property, and research. These elements showcase our strategic clarity and expertise. While our software code is a vital part of our Intellectual Property, we intentionally maintain no in-house commercial software development capabilities. By partnering with Oracle Consulting Services, we’ll accelerate development and deliver superior-quality products. With AI now enhancing software development tools, we avoid redundant investments in building these capabilities internally, ensuring efficiency and focus.

Our user community’s structure is designed to empower its members to achieve our shared goal: providing North American oil and gas producers with the most profitable means of operations. Three innovative components enable this. First, only our user community members are licensed to create derivative works from the Intellectual Property of the Preliminary Specification. Second, our contracted and licensed developers are exclusively guided by the user community’s input on what to build, how, and why, ensuring focus and alignment. Third, the user community controls its own budgets, ensuring accountability and preventing reliance on “blind sleepwalking agents of whomever will feed them” driven by external agendas.

On April 7, 2025, we released a paper titled “Hyper Specialization in Today’s AI & IP-Enabled Workforce, exploring the powerful synergy of AI, Intellectual Property, and our user community.” This paper outlines how these elements converge to create substantial value for the oil and gas industry. It details how our user community, with their service providers, will leverage strategic competitive advantages to rebuild the industry’s culture around reserves preservation, performance, and profitability.

Our User Community, Leading Oil & Gas’ Artificial Intelligence Development and Implementation, a.k.a. The Fourth Industrial Revolution 

This well “reasoned” heading resonates with the vision I’ve always held of our user communities role for development and implementation of the Preliminary Specification and for the long term. 

There is no one country, company or individual who “won” the Industrial Revolution. Everyone did. The same can be said for the Internet as it will be for Artificial Intelligence. In the Information Technology’s Industrial Revolution and as it will be again in the Artificial Intelligence Industrial Revolution, there are those who will choose not to participate. Primarily due to a lack of aptitude and change resistance. It is their choice and they are satisfied with that. 

For those with the aptitude, ability and desire to pursue the benefits of this fourth Industrial Revolution and apply their skills towards North American oil & gas. Where are they able to participate and what benefits will these changes provide for them? For accounting and administrative purposes our user community is their choice. 

On January 10, 2025 People, Ideas & Objects published a paper entitled “Catalysts for Cultural Change: The Leadership Role of People, Ideas & Objects User Community” and subtitled "Reconstructing Dynamic, Innovative, Accountable and Profitable Oil & Gas Producers.” This paper seeks to provide the potential user community member with a clear understanding of the role, the tasks and expectations, what compensation is earned and the phases of development among many other elements of the reconstruction and rebuilding of North American oil & gas producers. 

What has ailed the oil & gas industry is predominantly poor leadership. What will be needed to bring about a dynamic, innovative, accountable and profitable oil & gas industry is leadership. In accounting and administration our user community provides the leaders for this cultural transformation. And that is the comprehensive vision needed for the industry, and what our user community will provide. 

If this thinking is consistent with yours, then action is needed on your behalf. 

Thursday, May 30, 2024

People, Ideas & Objects Campaign Report, Part II

 We've been discussing the insurance policy that People, Ideas & Objects offer to those responsible in the industry—a contingency plan to establish an alternative means of organization and operation in case the current administration fails further. This failure has been ongoing for at least a decade. Progress is not linear, and unfortunately, neither is failure. While we stand on the shoulders of giants, we've neglected to advance further, leaving issues unresolved for too long. Future opportunities are now beyond our reach, necessitating a rebuilding of infrastructure capacities and capabilities as a priority.

People, Ideas & Objects have campaigned to persuade industry officers and directors to adopt the Preliminary Specification, aiming to reconfigure the oil & gas industry around a culture of preservation, performance, and profitability. However, producer officers and directors denied any need for such changes and proceeded with their own consolidation plans. We wish them well, understanding that they likely feel the same about People, Ideas & Objects. If nothing else, our Campaign Report Part I identified the issues, highlighted the inadequate approaches taken to resolve them, and exposed the fundamental lack of business understanding that caused these problems in the first place. This has been quite revealing regarding the quality of the current leadership in the oil & gas industry.

The Other Insurance

Our campaign has now firmly placed officers and directors on record regarding the industry's issues, their severity, the resolution we offer, and the time frame within which these problems must be addressed. The potential loss of revenues and assets, amounting to $40 billion per month or more, should be a significant motivator for them to act. Failure to act promptly exposes them to personal jeopardy, as their mismanagement could lead to shareholder litigation, putting their personal assets at risk to cover the shortfall investors should have realized. Regardless of whether officers and directors were previously aware of this risk, they are now legally held to the standard of awareness and should be fully aware of the situation following our campaign.

Consolidation, like most industry initiatives this century, is already showing signs of failure. One major issue that People, Ideas & Objects have highlighted is the extinguishing of motivation and initiative due to the current leadership. From producer investors to the service industry, nothing will happen while the current leadership continues. The failures of consolidation are evident in layoffs at Chesapeake, where people now recognize that the boom/bust cycle offers no stability for a future career. Nitro, a startup in the service industry, declared bankruptcy because it relied heavily on revenue from one producer that was consolidated and no longer available. Knowing of the prior treatment the service industry received from an unconsolidated industry, who will venture into a consolidated industry where each producer wields more power over the future of each field organization's prospects. This will further stunt the future industry development in terms of technical advancements and innovation.

Producers’ assertion that consolidation will solve the issues they created is invalid in the long run. The shift to declare shale uncommercial and move to clean energy lasted almost two years before they realized oil & gas revenues were essential. If they truly believed in clean energy, they should have quit their positions, started a new venture, and taken the necessary risks. Consolidation is reminiscent of the old Soviet Union, where motivation was driven by fear and intimidation. However, today's officers and directors lack the military or other means to instill the necessary fear to drive a productive oil & gas industry. Their alleged collusion has been discovered, tarnishing the industry's reputation for another generation.

Efforts to mitigate the damages caused by consolidation will fail, as everyone intuitively understands. Attempts to convince their Officers and Directors Liabilities Insurance providers will also fail, as these providers have no reason to cover them when they are likely to be found liable of willful misconduct. This liability is a result of their inactions, despite shareholder concerns since 2015. They never entertained People, Ideas & Objects as a solution, available since August 2012. This indicates they will ride the situation to its lowest point, extracting what they can before the collapse becomes too obvious. 

And 

These two graphs from the May 23, 2024, EIA Natural Gas Weekly Report raise the question of how correlated they are. We are definitely behind the curve in terms of the industry's deliverability, capacities and capabilities. Is the flattening of shale production suggesting producers are finally learning that shutting in production when prices are desperately low is the right action? I can assure you that any production that may have been recently shut-in was purely routine maintenance and has returned. Natural gas prices are not profitable in any sense of the term. Unprofitable production is the same as overproduction. Sustained oil & gas overproduction has gutted all the value from the industry, and it’s now incapable of maintaining its productive capacity.

Artificial Intelligence

The value of Artificial Intelligence (AI) is continually evolving. AI excels in performing specific tasks and assisting people with their work, and its potential will keep expanding. However, the oil and gas industry requires more than just personal task management and productivity enhancements typically associated with AI. In terms of productivity and scientific advancements, AI could become as revolutionary as the Internet. These are indeed transformative times.

People, Ideas & Objects hold distinct competitive advantages in Intellectual Property (IP), research, and our user community. We are discovering that AI significantly enhances the value of our IP. We've documented that IP will be crucial for individuals to remain employed in the near future. While skills and education are essential, they often fall under the category of tacit knowledge. IP of explicit knowledge, on the other hand, can be directly owned, licensed (as our user community members do), or through working for those who own or are licensed in some form of IP. Any of these three methods enable the leverage of IP through AI, making AI the ultimate "killer app."

Another perspective we hold is that AI is now the "app killer." Since the release of ChatGPT 4.0 last year, the number of apps I use has diminished significantly. When tasks can be accomplished more easily and effectively than the best app could previously manage, the need for those apps diminishes. Moreover, why subscribe to an app when AI does it better? With the release of ChatGPT 4.o, I've pleasantly retired Siri to history.

At this point, People, Ideas & Objects can assert that the most valuable asset is the underlying Intellectual Property (IP) of a solution. Unlike other assets, IP cannot be easily replaced by Artificial Intelligence providing a superior alternative. Software will continue to drive progress in every industry, whether dealing with tangible or intangible products. For People, Ideas & Objects, it's not the oil & gas asset itself that holds value today; it's the software that makes these assets profitable. Without robust IP to protect our applications from AI encroachment, we risk becoming obsolete, much like Siri has become.

People, Ideas & Objects focus on addressing business issues in oil and gas. We utilize Information Technology to resolve these issues by automating business processes and reorganizing both producer firms and the industry itself. While our efforts extend beyond AI, AI will have a significant impact within our Preliminary Specification, especially through our Artificial Intelligence module. This module consolidates the industry's AI efforts into developing business algorithms and creating a generic AI base across the industry. Producers can then leverage this AI base to advance their applications for their Joint Operating Committees or producer data within the Preliminary Specification. By using Professor Paul Romer's concept of non-rival goods, we can defer the heavy costs of each producer developing the AI infrastructure, competing for scarce resources, and failing to collaborate on a broad enough scale to maintain appropriate focus.

Currently, the business data within the industry is inconsistent and aggregated with workarounds like overhead allowances that estimate what might be correct. Comprehensive analysis and systems engineering are necessary to establish the industry's needs and build processes based on actual data elements. This foundational step is essential for the industry to make the data usable in the future. Our user community's role is to analyze, input, and maintain these requirements, providing producers with the tools they need. This establishes a permanent software development capability, starting with properly organizing and managing enterprise data. When data is conflicted, unstructured, and unreachable due to being recorded in multiple locations, AI will never help the producer organization derive any value from it.

Managing resources and processes to focus organizations on profitability and value is crucial. This involves stripping the producer firm down to its key competitive advantages—land & asset base, and earth science & engineering capacities and capabilities. Administrative and accounting resources are removed from the producer firms and reorganized into our user community-owned and operated service providers, who hyper-specialize in one process and apply it across the industry. Using hyper-specialization, division of labor, and automation in a shared infrastructure brings enhanced productivity, speed, standardized and objective accounting, turns all producer costs variable (including overhead costs), and focuses these on producer profitability. Only through a fundamental reorganization of the industry and producer firms can the current business issues be effectively addressed.

Conclusion to these Consequences

We often hear producers emphasize their reserves and their ambition to expand and "grow" them through consolidation. This reflects a myopic focus on reserves as the industry's holy grail. By now, it may seem redundant to state that these reserves are useless in their hands. If producers cannot extract them profitably—in the true sense of profitability—then those reserves are better left untouched. Extracting them at a financial loss is a misguided venture. For decades, these producers have persisted in their flawed methods, causing immeasurable losses and damage to the industry.

Their Officers and Directors Liability Insurance risks are substantial. They have not taken necessary steps to mitigate obvious issues, and the industry's landscape increasingly reflects the desolate nature of current administration by officers and directors. It appears they are willing to take this risk, and their chosen method of consolidation is beginning to show its fallout.

In contrast, while we do not solely rely on Information Technology to provide value, People, Ideas & Objects focus on business and organizational issues that can generate real value for producers and the industry. The IT infrastructure, possibly mirrored in the AI infrastructure, is mature. As the rest of the world accelerates in performance and quality, the oil and gas industry clings to its outdated practices. They insist on giving failed methods one more try, despite over four decades of evidence showing they do not work. People, Ideas & Objects provide for the most profitable means of oil & gas operations, everywhere and always. What does their lack of concern for profitability reflect?

Friday, January 12, 2024

A New Year

 People, Ideas & Objects had a good year in 2023, and since November, we documented approximately $4 trillion in lost natural gas revenues due to producer officers and directors' mismanagement. This validates the Preliminary Specification value proposition and proves our hypothesis, and is now the only method for North American producers to create future value. Their ability to close the price gap between North American and global natural gas prices hinges on the Preliminary Specifications decentralized production model's price maker strategy to enforce production discipline. Without it, they're producing gas at a loss for the century. From Henry Kissinger's 2022 book "Leadership: Six Studies in World Strategy."

Looking forward, the scope and scale of the difficulties and the amount of financial destruction being authored by North American producers continues. Recently Reuters Lee Cibis wrote.

Digitalization has the potential to unlock up to $2.6 trillion worth of revenue in the oil & gas sector by 2025. Upstream leaders and service providers alike need to keep up to date on the digital developments to seize this opportunity for increased production efficiencies and profits.  

Digitalization, trillions and profits are words that may cause Ms. Cibis difficulties, although I appreciate the company. Reuters calculations are going to be global for both oil & gas whereas ours focus on North America and natural gas for the period 2007 to present. 

Since we have revised the Preliminary Specification and we're now focused on the future we will blog less frequently in 2024 and we’ll be publishing more on X. Expect two blog posts weekly, Monday and Wednesday at 7:30 AM Eastern time. 

Our need for more time to enhance the firm's research capabilities causes our drop in publications. Last year, I investigated hyper specialization in service provider organizations and strategies to address related issues. We will accompany our recommendations with conclusions once the research is complete, expected in 2024. People, Ideas & Objects acknowledges our limited influence on the complexity of developing service providers. The market's invisible hand provides this, aligning with our philosophy. Our research aims to review and advise on service provider development only, leaving it to the market otherwise. Preparing and organizing our research, our third competitive advantage, requires time and precedes any output.

We found one issue: the vast number of research projects we need to undertake. We are evaluating tools and methods to manage the abundant information more efficiently and start adding value to the dynamic, innovative, accountable and profitable oil & gas producer—a task that will yield results in the future.

We discovered something valuable to enhance our user community vision. Examining ChatGPT 4.0 reveals a clear difference between two user classes. The Preliminary Specifications user community vision suggests the need for Intellectual Property (IP) rights to support gainful employment, obtained through education and experience, and one of three IP access levels. First, outright ownership of IP, such as copyrights, trademarks, patents, and trade secrets. Second, licensed access to others' IP via contracts. Third, employment with a firm owning or licensed to use IP. These tiers are prevalent across People, Ideas & Objects, our user community, and their service providers.

Custom instructions of Preliminary Specifications Intellectual Property enhances ChatGPT Large Language Model (LLM) for our user community and service providers, increasing the value of their work and the IP of People, Ideas & Objects. We plan to include not just the blog and wiki content but the entire user community's documentation in our software development. This will encompass developers' code and Oracle Cloud ERP tool documentation, enabling our community to iterate faster and quickly find answers to complex questions that might otherwise have been missed or neglected. ChatGPT and our LLM bring together the comprehensive details of this knowledge for our user community and service provider organizations. A fallout consequence of IP being a foundation of AI is that the focus will remain within the domain of concern. Limiting the distractions and unnecessary diversions. At the same time unlicensed access to this IP will fall under the copyright provisions. Fair use will allow ChatGPT to use however none of it will be publishable or otherwise usable of our user community.

ChatGPT’s progress promises many benefits in the future. Leveraging these technologies will benefit our user community. Moreover, I use over half a dozen apps that employ AI to gather vast information based on their features. The Preliminary Specification includes an Artificial Intelligence module designed to steer industry efforts towards productive AI. Focusing the resources of industry on one shared resource and spreading the costs per boe produced. Oracle's late 2022 automation initiative prompted our rewrite of the Preliminary Specification, followed by their significant Generative AI capabilities in 2023. We have integrated these into the Preliminary Specification. AI is here to stay, and its value will increase with use. It’s currently receiving a lot of attention, like the .com bubble, and may just be as consequential as the Internet.