Showing posts with label Leadership. Show all posts
Showing posts with label Leadership. Show all posts

Thursday, December 09, 2021

Leadership Capitulation, Part V

 What right do we have to steal oil and gas production from future generations? We have an obligation to our future selves to ensure that we use these resources responsibly. By producing them profitably, everywhere and always, and handing down a profitable, prosperous and viable industry similar to the one which was handed to us and destroyed by these bureaucrats. Why is it that a handful of bureaucrats have chosen they can ignore these needs to personally benefit instead and so willingly cause so much damage and destruction? To the point where they claim they can’t make money in oil & gas and therefore clean energy is the future. Would profitable oil and gas exploration and production everywhere and always lead to higher energy costs for the consumer? Possibly, which was the caution bureaucrats stated was their concern that renewable energy may become competitive price wise. In theory then, to avoid the chance that renewable energy became viable they financially crippled oil and gas? And now in the ultimate hypocrisy, after decades of feigning the boogeyman of renewable energy, it is they who are the ones that are diverting the oil and gas revenues to fund their clean energy investments. Is there any clearer separation that oil & gas and clean energy are two separate and distinct industries than these words of the past bureaucrats? Investors who financed the development of oil and gas are not going to have the revenues from those investments now diverted to another industry in an unauthorized and unaccountable manner. This story hasn’t been written yet, as the investors will begin with chapter 1 very soon. Diverting revenues of a primary industry is the ultimate betrayal of all those who participated in establishing them. If there will be higher commodity prices they’ll be taken into consideration by consumers to make the more effective decisions as to how they’ll use them. Oil and gas’ value proposition is at a minimum leveraged to the point of 10,000 man hours per barrel of oil equivalent. At $72.38 / bbl that means the energy cost per man hour is $0.00723 / hour. If the U.S. consumes 35 mmboe / day, oil and gas provides the labor equivalent of 43.75 billion eight hour man days, at $0.0578 per day for each one of those many billions, each and every day. If bureaucrats are unable to make money in a business with that value proposition, are we not witnessing the pinnacle of incompetence and corruption ever known? They should immediately step aside. People, Ideas & Objects, our user community and service providers know that we can, and we know how, to make money in this business.

Here’s my version of the history of how the bureaucrats have so financially damaged the industry and left it destitute. Where all the value that had been built up by prior generations, and all the incremental investment made in the past four decades has been mismanaged and destroyed by the bureaucratic methods we’ve discussed here at People, Ideas & Objects. These are just the highlights of course, there were many other missteps along the way. 

First it was their investors that “betrayed” the bureaucrats by cutting access to “their” never ending supply of cash which had become the only source of incremental value for the industry. This set the industry on a different trajectory where layoffs were necessary and changes to the way the firm managed its cash, in other words who supplied it. With the follow-on consequences of people looking to other industries for employment, clearing out the engineering and geology faculties in universities and generally giving up on the “boom / bust cycle.” Putting families and mortgages at risk was no longer considered a quality of life attribute. Therefore banks became the means in which to make up for any cash shortfall. The innovation of including the amount of remaining leverage on the lines of credit into working capital calculations made everything appear operational once again. That is until the banks began to tighten, unnecessarily bureaucrats say, with their six month reviews that eventually revealed they were in the same category as the investors. Nonetheless bureaucrats were well along in their “muddle along” strategy that involves them waiting out the investor and now their bankers inevitable return. Possibly stating “They’d be back soon, as they’ve always done.” What to do in the meantime with so much field work to be done and no capital. Other than to proceed with their “capital discipline” and pay the service industry when that investor and bank money arrives after they see the brilliance of what’s done. These actions devastated the service industry's financial core, crippling its capacities and capabilities, trust and faith in the producers. It was this past year it could be heard bureaucrats saying “That worked well for us but there’s no chance of it working now as the people in the service industry have become so difficult to deal with.” Production then became the way to go for that hard earned cash. The difficulty was and always will be to make sure the commodity prices remain in positive territory. And now with hedging contracts creating large offsets that are eating any cash like nothing bureaucrats have ever seen before. It’s time to have the working interest partners in the Joint Operating Committees give up their net profit proceeds from their shares of the properties bureaucrats operate for them. That’ll keep them afloat in terms of cash for the next few months, until the investors and bankers come begging to get back in. 

Who’s going to step up and save this industry? No one. There’s nothing to save as there’s no value left when the industry consumes cash in the process of production. The industry itself is going to have to resolve this themselves. Bureaucrats doing nothing but begging, borrowing and stealing are not attractive in terms of what the business community expects. Implement the Preliminary Specification. Rebuild the oil and gas industry on the basis of profitable North American production everywhere and always. Financially perform for a decade and maybe someone will show some interest. It is the height of laziness and sloth that the bureaucrats are still waiting for new investors and bankers to return with cash to their chronic mismanagement and lack of performance. Particularly when bureaucrats have done nothing regarding the issues these people raised as early as 2015. There’s nothing being offered and therefore no one’s interested. Especially when those involved are mostly interested in maintaining the status quo of controlling the oil and gas revenues for their own personal benefit, gave up on oil and gas as they declared they couldn’t make money, moved on to the clean energy business, feign they have no understanding what the issues are and have not performed for four decades in the two most critical commodities needed by the most powerful economy known to man. The Preliminary Specifications business model makes the industry perform financially.

I’m certainly on record by attacking with severe allegations I’ve made regarding bureaucrats, their lack of performance and inaction. There’s never been any deception on either side of our relationship with what each other is looking for from each other. The annihilation and obliteration of the other. To state People, Ideas & Objects case diplomatically, it is to disintermediate the industry. Calling them out is what I will continue to do for as long as they exist. I can’t accept the level of destruction and damage that has been realized in the North American oil and gas industry. It is the source of our substantial value proposition. It has passed well beyond the point of acceptability and the inability of the self interested parties to do anything about it is astonishing. It is only they who have the accountability, authority and responsibility to make the changes to resolve these issues and they who cease to defy the common sense and logic of the difficulties they’re creating for everyone but themselves. That I’m able to maintain the level of civility that I have is a miracle to me. That my readers have to look through my habit is appreciated and I know there is an understanding of these efforts. We’ve come a long way and the days of the bureaucrats continuing are fading quickly. Words that I’ve stated on many occasions but the scale of their difficulties is truly impressive. If we should hope to see the necessary organizational changes conducted by bureaucrats we understand their culture stands in their way. They know the end of the road is their destination and they’re just riding it out as long as they can personally benefit from it. They’ll take credit for the things of which they’ve had no involvement in and promote it as their own ideas and efforts. Such as this jewel I saw here late last week. 

As background to this jewel, it is within the Preliminary Specification that People, Ideas & Objects, our user community and their service provider organizations enable the producers and industry to obtain North American energy independence and profitable operations everywhere and always. We do this through the mechanisms that provide for “production discipline.” The two key components of this discipline is the capability gained from the comprehensive reorganization, systems development and processes to produce financial statements at the Joint Operating Committee or property level. A capability that can not be conducted anywhere in North America with the systems that exist today. A capability that converts all of the producer's costs to variable costs. Variable based on production. Therefore if a property begins losing money as defined by its specific financial statements, it can be shut-in and worked on from an innovative point of view to return it to profitable operations. Generating a null operation while shut-in with no profit but also no loss. It’s this ability to only produce profitable properties that provides the motivation, or production discipline, for the producers to ensure they no longer dilute their corporate earnings with any losses from losing properties. Maximizing their profitability under any production level of their production profile. Enabling them to perform in the capital markets. The complexity in which we’ve been able to achieve this change is complex and difficult, it is a foundation of the Preliminary Specification, our user community and their service provider organizations. And is unattainable today anywhere in the North American oil and gas industry without the People, Ideas & Objects et al.

In an article from World Oil entitled “Shale drillers’ newfound commitment to production discipline appears to be paying off as crude plunges toward a bear market.” Producers have discovered production discipline? People, Ideas & Objects would ask what is their motivation for doing so? Or is it just their poor cash management over these past decades, the lack of funds and of financial support causing them to appear that production discipline is under way? Unable to finance any field activity due to the lack of field capacity and capabilities in the service industry, the lack of staff in that industry and internally, with the fact everyone knows their game of never paying and that they have no money. That doesn’t stop them from making the claim of their “newfound commitment to production discipline” though. Recall their history of excuses, blaming and viable scapegoats. It appears to me that there must be a demand that this issue be addressed by the bureaucrats from someone they need something from? Someone like an investor maybe? In the same article they assert that production discipline is built to last and the 2022 drilling budget will be as the quote from some “investor” claims. 

“The latest market pullback comes at a fortuitous moment with respect to 2022 E&P drilling plans,” said Michael Roomberg, who helps manage $3 billion at Miller Howard Investments Inc. The slump “will likely give pause” to any explorer considering boosting production, which will keep returns robust, he said.

It's always something they’re forced to do. Spun as a feature, not a bug, with the promise of new found greatness down the road and riches for all. Promise the world, with no intent to fulfill the promise and no means to do so at some future undefined and unknown date. To claim production discipline legitimately would demand bureaucrats build the Preliminary Specification. And people wonder why it is that I’m so disrespectful when bureaucrats don’t even put the effort in to be honest. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. We know we can, and we know how, to make money in this business. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined gettr and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

Tuesday, December 07, 2021

Leadership Capitulation, Part IV

 In business nothing positive ever comes about from everyone thinking in the same direction. The harmony and passivity of today’s bureaucracy throughout that peer group is a classic example of the theory of groupthink. And the reason oil and gas has quietly sailed over the oceans edge. Without the conflict and contradiction that I indicate in the user community vision being used as analytical tools to get to the truth of the facts. We will only be replicating prior or creating new failures of possibly greater disastrous results and consequences. People, Ideas & Objects are not creating a hostile environment in the user community. On the contrary, we’re building a collaborative environment with the appropriate tension that avoids the groupthink pitfalls that are created when everyone goes along to get along. With the toolkit of conflict and contradiction there is also the need for cooperation. That someone has raised a point with a different perspective does not make what you're suggesting wrong or inappropriate. Your perspective may need defending and the need to understand the other perspective is a necessity. There may be a hybrid of the two that can be reached and seen by all as the optimal solution. Or there could be another method. Innovation and progress are not linear. The search for the optimal method based on the Preliminary Specifications vision is the journey we’re pursuing. 

When the CEO’s learn they’re profitable in everything they spend they’re like surgeons taking on the god complex. Their commands to the CFO these past decades have been to pay the bills, raise the money and file the reports. There’s no other role asserted, there’s none appreciated and there’s no other role culturally acceptable, it's bookkeeping. The evidence of this is everywhere and those that feign financial control of the industry have themselves subscribed to the talking points of “building balance sheets” and “putting cash in the ground.” It is these officers and directors that lost the script many decades ago and we need to restart and rebuild the industry without them as soon as possible. What risk is there in doing that? What damage would ensue and where would that leave us? The CFO quite simply should have been saying, “No, we’re not going to do that.” and asserted the appropriate business environment through to the producer firms officers and board of directors of the necessary decisions. If the CFO’s recommendations were consistently not accepted then as professionals with a personal risk and obligation to the shareholders themselves they would have needed to resign with the understanding they were unable to do their job. Publicly mouthing the “building of balance sheets” and “putting cash in the ground” or going along to get along should never have been the role they adopted. 

The conflict that exists between the corporation and Joint Operating Committees in oil and gas has been generated as a result of the CFO’s being unable to stand up for the appropriate financial and systems requirements. The derogatory attitude and manner of consideration that accounting just needs to pay the bills is the final manifestation of the chronic weakness in these CFO’s. The ability to spend the financial resources on the appropriate tier 1 ERP systems and enhance the quality of accounting is a direct result. Taking cash to enhance the quality of accounting only diverts money from the drilling budget. People, Ideas & Objects have detailed the nature of the industry's home grown solutions and lack of tier 1 ERP providers in the industry. How it’s accounting and systems are purposely and deliberately deceptive. The specific investor demand for the past number of years to increase the producers accountability through implementation of tier 1 ERP systems, such as People, Ideas & Objects use of Oracle ERP Cloud, has been summarily ignored. Accounting is also treated derogatorily because of this lack of respect fostered by the CFO, accounting measures performance and needs to be communicated to the operational decision makers accurately and timely to inform them of that performance. This has not been done in the past four decades as the producers' systems have been incapable of providing them with any useful and usable information. The CEO’s who understand little of accounting are told they’re profitable at the corporate level and that is all they need to know to continue with the methods of what they deem to be a successful operation. That profit can vary is foreign to them and they believe it to be a factual number not subject to interpretation. 

There is no doubt in my mind that these bureaucrats will continue with their methods of personal financial betterment and destruction of the industry for as long as they’re allowed to when they “know” they’re profitable and successful. What future do bureaucrats promise and how do they propose it comes about? Investors will not be funding the next 25 years of capital expenditures and there doesn’t seem to be any acceptance of that fact, understanding of why that’s the case and what bureaucrats need to do to resolve it. This dumbfounded posture of theirs, after six years of their investors cutting their financial support would be amusing if it wasn’t so tragic. Granting them the benefit of the doubt would see consideration that they’re unaware there’s an issue. 

Based on their actions towards People, Ideas & Objects I can assure readers there’s no reason for giving them the benefit of the doubt. If bureaucrats wanted to have ample amounts of money to spend what would be the most effective method they could take to do so. “Building balance sheets” and “putting cash in the ground” as ludicrous as that sounds, is their contrived opportunity to gain access to vast amounts of capital. Under the pretense that everything a bureaucrat spends in the form of capital, overhead and interest is a capital cost that will stay on the balance sheet in property, plant and equipment for what seems an eternity. The offset for these excessively large capital asset balances is the imputed justification for high levels of equity capital that bureaucrats could raise in the capital markets. And in turn, this capital structure would provide higher levels of leverage. The sophistication of their three card monte worked until investors realized the game was fixed. Without investors' direct support the lack of real profitability shows no value is or has been generated, losses have eroded the capital structure and the short term assets have evaporated and are disproportionate. Now, producers stand with an asset that is incapable of generating any value and demands cash in order to produce. The producer's leverage is skewed by this inappropriate behavior and the past 20 years of low interest rates. With looming higher interest rates thrown on the pile of unresolved critical issues. With no plan or strategy other than “muddle through” it’s not that anyone ever questioned the motivation behind these bureaucrats' behavior. 

The Preliminary Specification sees that a capital intensive industry would contain a large component of capital in the costs of the commodities sold to consumers. Just as a labor intensive industry product would have a large component of labor costs passed to the consumer. Moving these costs to the consumer is inconsistent with the “building of balance sheets” and “putting cash in the ground” for the reasons noted. People, Ideas & Objects, our user community and their service provider organizations believe it is the commodities ultimate consumer that will be funding the next 25 years of capital demanded by oil and gas producers by cycling the invested cash through the producer in a manner that enables producers to perform in the capital markets. This would bring about a competitiveness in the industry where the producer with the proportionally lowest level of property, plant and equipment would be the most effective and competitive. And in turn would have the lower cost of capital associated with their organization. Therefore, since the Preliminary Specification has been available since August 2012, why it has not been developed by bureaucrats is not as much of a mystery when it is ourselves, the non-bureaucrats, who have misunderstood that the oil and gas revenues are, have been and will always be for the bureaucrats to do as they please. A review of their history solves this mystery and to have them continue to lead these organizations is contrary to common sense and logic. 2021 should be the end of them.

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here

Friday, December 03, 2021

Leadership Capitulation, Part III

 People, Ideas & Objects took preemptive action to offset the clean energy discussion that was beginning in oil and gas in our July 2019 white paper “Profitable North American Energy Independence -- Through the Commercialization of Shale.” In our paper we included a review of The Manhattan Institutes March 2019 Mark P. Mills' paper entitled “The ‘New Energy Economy:’ An Exercise in Magical Thinking.” In our White Paper's section “An Inconvenient Set of Facts'' we highlighted Mr. Mills' evidence that the physics of wind and solar were incapable of carrying the freight that oil and gas does today. With 69% of the energy provided by oil and gas and only 12% by all sources of renewable energy the 57% differential reflects a misguided ambition. For 2020 the consumption by energy source is presented in this EIA chart that breaks down the overall and renewable energy sources share. We see that combined wind and solar energy consumption are currently at 4.44% of the total energy the U.S. consumed. This is achieved after the landscape has been overtaken by these facilities, nothing but government financial support and the monotonous leadership provided by misguided teenagers. Nuclear power continues to provide 9% of U.S. capacity, yet has been stagnant in terms of investment and support over the same period of time. Oddly enough we still source almost half of the renewable energy contribution (2.16%) from the burning of wood. 

These are some of the quotes from Mr. Mills' paper that document the constraints which physics impose on the ability of clean energy to ever do the job. 

Scientists have yet to discover, and entrepreneurs have yet to invent anything as remarkable as hydrocarbons in terms of the combination of low-cost, high-energy density, stability, safety, and portability. In practical terms, this means that spending $1 million on utility-scale wind turbines, or solar panels will each, over 30 years of operation, produce about 50 million kilowatt-hours (kWh)—while an equivalent $1 million spent on a shale rig produces enough natural gas over 30 years to generate over 300 million kWh.

Solar technologies have improved greatly and will continue to become cheaper and more efficient. But the era of 10-fold gains is over. The physics boundary for silicon photovoltaic (PV) cells, the Shockley-Queisser Limit, is a maximum conversion of 34% of photons into electrons; the best commercial PV technology today exceeds 26%. Wind power technology has also improved greatly, but here, too, no 10-fold gains are left. The physics boundary for a wind turbine, the Betz Limit, is a maximum capture of 60% of kinetic energy in moving air; commercial turbines today exceed 40%.

The annual output of Tesla’s Gigafactory, the world’s largest battery factory, could store three minutes’ worth of annual U.S. electricity demand. It would require 1,000 years of production to make enough batteries for two days’ worth of U.S. electricity demand. Meanwhile, 50–100 pounds of materials are mined, moved, and processed for every pound of battery produced. P. 4

Today’s reality: hydrocarbons—oil, natural gas, and coal—supply 84% of global energy, a share that has decreased only modestly from 87% two decades ago (Figure 1). Over those two decades, total world energy use rose by 50%, an amount equal to adding two entire United States’ worth of demand.

The small percentage-point decline in the hydrocarbon share of world energy use required over $2 trillion in cumulative global spending on alternatives over that period.​ Popular visuals of fields festooned with wind-mills and rooftops laden with solar cells don’t change the fact that these two energy sources today provide less than 2% of the global energy supply and 3% of the U.S. energy supply.

To completely replace hydrocarbons over the next 20 years, global renewable energy production would have to increase by at least 90-fold. ​For context: it took a half-century for global oil and gas production to expand by 10-fold.  ​It is a fantasy to think, costs aside, that any new form of energy infrastructure could now expand nine times more than that in under half the time. P. 6

If the initial goals were more modest—say, to replace hydrocarbons only in the U.S. and only those used in electricity generation—the project would require an industrial effort greater than a World War II–level of mobilization.​ ​A transition to 100% non-hydrocarbon electricity by 2050 would require a U.S. grid construction program 14-fold bigger than the grid build-out rate that has taken place over the past half-century. Then, to finish the transformation, this Promethean effort would need to be more than doubled to tackle nonelectric sectors, where 70% of U.S. hydrocarbons are consumed. And all that would affect a mere 16% of world energy use, America’s share. P. 7

Availability is the single most critical feature of any energy infrastructure, followed by price, followed by the eternal search for decreasing costs without affecting availability.

It costs less than $1 a barrel to store oil or natural gas (in oil-energy equivalent terms) for a couple of months. Storing coal is even cheaper. Thus, unsurprisingly, the U.S., on average, has about one to two months’ worth of national demand in storage for each kind of hydrocarbon at any given time.

Meanwhile, with batteries, it costs roughly $200 to store the energy equivalent of one barrel of oil. Thus, instead of months, barely two hours of national electricity demand can be stored in the combined total of all the utility-scale batteries on the grid plus all the batteries in the 1 million electric cars that exist today in America.

For wind/solar, the features that dominate cost of availability are inverted, compared with hydrocarbons. While solar arrays and wind turbines do wear out and require maintenance as well, the physics and thus additional costs of that wear-and-tear are less challenging than with combustion turbines. But the complex and comparatively unstable electrochemistry of batteries makes for an inherently more expensive and less efficient way to store energy and ensure its availability.

Since hydrocarbons are so easily stored, idle conventional power plants can be dispatched—ramped up and down—to follow cyclical demand for electricity. Wind turbines and solar arrays cannot be dispatched when there’s no wind or sun. As a matter of geophysics, both wind-powered and sunlight-energized machines produce energy, averaged over a year, about 25%–30% of the time, often less. Conventional power plants, however, have very high “availability,” in the 80%–95% range, and often higher.

A wind/solar grid would need to be sized to meet both peak demand and to have enough extra capacity beyond peak needs in order to produce and store additional electricity when sun and wind are available. This means, on average, that a pure wind/solar system would necessarily have to be about threefold the capacity of a hydrocarbon grid: i.e., one needs to build 3 kW of wind/solar equipment for every 1 kW of combustion equipment eliminated. That directly translates into a threefold cost disadvantage, even if the per-kWH costs were all the same. p. 8

Such a ban is not easy to imagine. Optimists forecast that the number of EVs in the world will rise from today’s nearly 4 million to 400 million in two decades. A world with 400 million EVs by 2040 would decrease global oil demand by barely 6%. This sounds counterintuitive, but the numbers are straightforward. There are about 1 billion automobiles today, and they use about 30% of the world’s oil. (Heavy trucks,aviation, petrochemicals, heat, etc. use the rest.) By 2040, there would be an estimated 2 billion cars in the world. Four hundred million EVs would amount to 20% of all the cars on the road—which would thus replace about 6% of petroleum demand. P. 13

An ant-size engine—which has been built—produces roughly 100,000 times less power than a Prius. An ant-size solar PV array (also feasible) produces a thousand- fold less energy than an ant’s biological muscles. The energy equivalent of the aviation fuel actually used by an aircraft flying to Asia would take $60 million worth of Tesla-type batteries weighing five times more than that aircraft. p. 13

Finally, when it comes to limits, it is relevant to note that the technologies that unlocked shale oil and gas are still in the early days of engineering development, unlike the older technologies of wind, solar, and batteries. Tenfold gains are still possible in terms of how much energy can be extracted by a rig from shale rock before approaching physics limits.​ That fact helps explain why shale oil and gas have added 2,000% more to U.S. energy production over the past decade than have wind and solar combined. p. 16

The inexorable march of technological progress for things that use energy creates the seductive idea that something radically new is also inevitable in ways to produce energy. But sometimes, the old or established technology is the optimal solution and nearly immune to disruption. We still use stone, bricks, and concrete, all of which date to antiquity. We do so because they're optimal, not “old.” So are the wheel, water pipes, electric wires ... the list is long. Hydrocarbons are, so far, optimal ways to power most of what society needs and wants.

More than a decade ago, Google focused its vaunted engineering talent on a project called “RE<C,” seeking to develop renewable energy cheaper than coal. After the project was canceled in 2014, Google’s lead engineers wrote: “Incremental improvements to existing [energy] technologies aren’t enough; we need some-thing truly disruptive. ... We don’t have the answers.”​ Those engineers rediscovered the kinds of physics and scale realities highlighted in this paper.

Hydrocarbons—oil, natural gas, and coal—are the world’s principal energy resource today and will continue to be so in the foreseeable future. Wind turbines, solar arrays, and batteries, meanwhile, constitute a small source of energy, and physics dictates that they will remain so. Meanwhile, there is simply no possibility that the world is undergoing—or can undergo—a near-term transition to a “new energy economy.” P. 18

Certainly not as catchy as will all be dead in 12 years, but physics was never a popular subject. What’s clearly needed in the clean energy business is an army of bureaucrats who have the competitive advantage of spending. A 20 fold increase in production from shale in comparison to what clean energy achieved in the same period is the factor that sticks out the most for me. Even in the hands of the bureaucrats, shale was far more productive in terms of delivering the needed energy. However, they couldn’t make any money at it and they’ll certainly never be doing so in clean energy with these constraints. 

This must be why bureaucrats make the big bucks. Making tough decisions in difficult times. Figuring out how to do things that others think are impossible. Or, what is it that they’re doing? What is it that they’re thinking? Is this why they need to have the oil and gas revenues to support these activities? How are clean energy investments performing?

With the declaration that producers are unable to make money in any aspect of oil or gas exploration or production. What promise is there that these same people will be able to make money in clean energy? When 69% of the most powerful economy that man has ever known is supported by oil and gas. And those involved in that business can’t make it a viable business there has to be a significant issue involved. There’s a disconnect between the demand in the marketplace and those that are providing the product from a business point of view. That disconnect is with the leadership of the industry and their lack of understanding of business, full stop. The question therefore is what is it that should be done. They declared oil and gas was not viable and moved on to what they perceive to be greener pastures. Taking the proceeds of oil and gas inappropriately and in unauthorized fashion to fund their adventures. Do we now let them return and give them another shot at it and maybe they’ll get it right this time? A new opportunity to do what they should have known better throughout these past four decades. A time in which their own shareholders were withholding financial support because they were dissatisfied with the performance? Or are they so committed to their green agenda that nothing will pry them away from their task at hand? I naturally feel we’re better off without them and it's about time we cleaned the place up. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here

Wednesday, December 01, 2021

Leadership Capitulation, Part II

 Today we have a specific example of the bureaucratic interpretation of innovation, action and the general direction of where I think we may be headed. The company is BP and the example is highlighted in this McKinsey article. For whatever reason the management of BP felt the need to address the performance of their organization and introduced some changes in an attempt to enhance their performance. This is my critique of these changes, why they’re unable to satisfy their needs, why the performance criteria are not appropriate and why the result is not acceptable. But then you’d expect nothing less of me would you. 

There is a poor analogy that can be made that has relevance here. An architect is designing a large building that is dramatic and pushes the envelope in terms of its new initiatives. Hence the costs have become something of an issue in having it built. Let’s assume for purposes of this analogy that building regulations are not as strict as they are and the architect therefore specifies substantially lower grade building materials in order to compensate for any cost overruns in the design. These lead to nothing but difficulties in the day to day issues that are being experienced by those that are involved in the building and implementation of the design of the architecture. And subsequently with the maintenance costs that are far greater than what they should be due to the poor materials used. These issues are raised with the building's managers throughout the life of the building, are cost based and therefore are focused on demanding better performance and effort be made by all concerned or they’d be terminated. What are the people who are involved in the day to day to do to resolve the issues that were created in the conceptual model? These are the permanent problems that can’t be resolved and to have the consequences of these poor decisions pushed down on to the people who are doing the day to day, who are powerless, as is anyone, to remediate the problem now, is patently unreasonable and misguided. It’s this analogy that I want to highlight in this discussion and will come too towards the end of the post. 

There is in the software development world a new and innovative form of organizational method that has come to take the world by storm. By that I mean it’s now become a catch phrase that’s used to sell an idea of a progressive and dynamic means in which people can work together. This is called the agile methodology and in its basic conceptual form it’s a good model. There are now two versions of agile as I see it. The management version and the version that is used by the people working in the agile groups, neither contain any similarities to the conceptual model. Managements are selling it as a means to recruit, to be with it and appear to be up to speed on the latest talking points and buzzwords. And as always will “talk the talk” with little forethought or understanding. The people who work in the agile method understand that it means self-organizing teams. What I see is unaccountability running amok in the organizations that have adopted agile as the next great thing. Conceptually dispatching legions of staff to attack a problem in whatever way the team may feel is appropriate will never solve anything. Don’t get me wrong, I am not a proponent of the waterfall software development approach, I would prefer agile any day in a properly constructed environment. First you have to have a vision of what it is they’re going to be building. A reference point that is standard across the entire organization. And most importantly the influence of a user community to guide the software development to develop what it is that they want and need. Groups of developers in self-organizing teams set upon a task to build the undefined x is anarchy. And that is what agile has come to mean by those that appeal to it the most. To be using agile as a one size fits all organizational solution to resolve any and all problems in any business at any time is exactly what it sounds like. A distortion of the concept.

These are the key points that I’ve taken from the McKinsey article entitled “An Agility Pioneer in the Energy Industry.” 

bp has recognized the need for bold action. At the start of 2020, new CEO Bernard Looney announced an updated purpose for the company: to reimagine energy for people and the planet and to be a net-zero company by 2050 or sooner (see sidebar, “bp’s new purpose”). To achieve these goals, bp would have to shift from a traditional business model to a much more focused and integrated organization. Bernard described this radical shift as “reinventing bp.”

Well no actually. BP was rebranded as “Beyond Petroleum” in 1997 by then CEO Lord John Browne onwards. From Wikipedia.

From 1997, Browne sought to re-brand BP.[4] The company linked itself in its corporate communications with green issues by the overt link of its BP initials with the phrase "Beyond Petroleum". Browne stated that the right to self-determination was crucial for people everywhere, and that he saw his company's mission as to find ways to meet current needs without excessive harm to the environment, while developing future, more sustainable sources of energy. He promised that BP would reduce its own CO2 emissions by 10% by 2010, a target which was achieved nine years ahead of schedule.

What we see here is the public relations expectations that memories are generational. Or doing the same thing over and over again is a sign of something or other. Nonetheless has BP, or is it bp, found an issue or challenge they’re concerned about? We’ll deal with the manner in which their concern is being addressed at the end of this post. 

Energy companies are facing major challenges. The COVID-19 pandemic has significantly shifted energy-demand curves, cost management needs to be resilient to commodity price cycles, and technological advancements are reshaping the industry. In addition, a finite global carbon budget and an impending energy transition present the biggest challenges yet for the industry. Energy companies need to respond quickly; survival will require a transformation, not incremental change.

One of my criticisms of the bureaucracy is that they incorporate the cost control business model. It continues in this definition of the issue with the statement that “cost management needs to be resilient to commodity price cycles.” No, this is not what needs to be done. The management needs to begin to look at the business holistically. It is not just costs but a business with revenues, customers, partners, suppliers and believe it or not profits. A greater oil and gas economy is what is defined and supported through the production of oil and gas. If nothing but costs are ever looked at, this is the perspective that the building manager is taking in trying to take the day to day costs out of the high maintenance cost building. It is the same thing here with trying to take the costs out of the greater oil and gas economy without addressing the larger issues that are being imposed. And just out of curiosity if Lord Browne undertook this same initiative in 1997, what have the results of that been and why do it again?

The company already had a head start: bp started the transformation journey in its upstream business in 2016, founded on agile ways of working and accompanied by investments in digital technology and by ways of working that could spur ongoing growth and innovation. The “Reinvent bp” program in 2020 amplified this experience to redesign Production & Operations (P&O) around an agile operating model with mission-driven, cross-disciplinary teams. These teams—or squads—are laser-focused on value, pursuing high-priority initiatives to optimize current assets and harness future opportunities.

 Well there we have it. The “transformation journey,” “founded on agile ways of working,” “investments in digital technology,” “ongoing growth and innovation,” “mission-driven, cross-disciplinary teams” and “focused on value, pursuing high priority initiatives to optimize and harness.” There we have the majority of the buzzwords that make the management of BP, or is it bp, the best that it can be. How could anyone criticize this? Well I’ll chime in here and say they’ve forgotten to allow the staff to bring their pets to work. 

Bp is stating they already have over 700 units of independent agile groups working. And these units may have over 14,000 people assigned to them by the end of this year. It is these unstructured, unconstrained yet fully responsible and accountable for their actions “squads” that should be the most frightening. What we know is that activity for the sake of activity is not action. Critically this is not how innovation works or how to implement it within organizations. These points are generally well understood in senior management and are on the list of things not to do, ever. You need to have all of the innovation being conducted separately from operations as it’s proposed to be done in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. The impact of changes made here or there can have consequences. These need to be understood before they’re implemented. The business is holistic and not just a cost centre. The question that should be answered first and foremost is, will it be profitable and build value. Secondly the ability for producers to innovate demands the involvement of the service industry. Which is a costly proposition if bp is going to be doing the same innovative discovery 700 individual times which is what this structure creates. It will also provide them with that same innovative discovery each and every other year from then on. Learning and relearning over and over again whether they were ever successful or not. This last point sets this entire article into the fake news category. When innovations come about on their first try or first iteration we see that they’re either not innovations, bp’s story is bunk, and quickly realize that the six people interviewed in the McKinsey article are all from bp's senior management. 

My point is that innovative ideas are usually right upon the first iteration about 1% of the time. A very large number of them fail outright. Without the time and effort necessary to prove the concept and its implementation they’re not worth anything. These therefore have to be organizationally constrained and controlled as is done in the Preliminary Specification. Having unconstrained, unstructured and disorganized people running around innovating, because they can, is a recipe for organizational disaster and runaway, unconstrained costs. Which may be the point that bp is attempting to prove. After all, I’m not speaking Martian here. This entire article is ripe with things that you would not do in an organization. Agile has been effective in some software developments but is being interpreted as a revisit of kindergarten in many implementations. It will never be a one size fits all organizational method. As this series denotes, I am chronicling the capitulation of leadership in the industry. Bp at the beginning of the article admits of upstream performance related issues. Instead of addressing those and architecting the appropriate solution at the appropriate levels it appears to me they are passing the issue down to those on the ground. Giving them the unfettered authority and responsibility to tweak the valves and potentially but unknowingly gumming up the works. And when all hell breaks loose, which the bureaucrats are fully well aware of, authored, are solely responsible and accountable for. The wholesale destruction that is already baked in and will be occuring in the very near future. They’ll have their “agile methodology” and their staff as the excuse to blame as their viable scapegoat for the failure they’ve orchestrated these past four decades in oil and gas. 

They’ll also have their absolute proof they’ll need to prove that the Preliminary Specification would never work. This being the parting shot for the bureaucrats to make their exit as life for them has become incomprehensibly untenable and they knew all along that People, Ideas & Objects, our user community and service providers would be a failure. And they were therefore right not to choose it. What we’re reading in this article has zero similarity to the Preliminary Specification, our user community and service providers. Ours is constructive, focused on profitability, theirs is clearly destructive. Lastly if our suspicions are correct regarding the bloating of accounts payable and to a lesser extent accounts receivable being symptomatic of the producers cannibalizing their partners net cash proceeds from their properties. In order to pay the massive losses on their profit hedging, as we call them. They are actively breaking down the legal framework of the industry and trust between the producers themselves. So yes its their staff’s incompetence that caused the destruction to bp and the Preliminary Specification would never have resolved that. For bureaucrats to be getting out now is maybe their best opportunity and don’t be surprised if we see this. It’s my opinion that producer bureaucrats contriving situations such as what McKinsey has documented in this article is shameful. We’ve established their pedigree of bureaucratic excuses, blaming and viable scapegoats being generated over the last decade. Never had they been designed so sinisterly and tragically against the people who have little choice or say in the matter. The destruction of the financial, operational and political frameworks was complete long ago. They’re actively looking to break down the legal framework of the partnerships that are a foundational concept of the industry and how it manages risk. Eroding the trust between parties and driving the final possibly fatal blow into any remaining trust they may have had with the people who continued to believe in them. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here

Monday, November 29, 2021

Leadership Capitulation, Part I

 We’re now past Thanksgiving and into the holiday season. That is for the bureaucrats, those we’ve identified as the officers and directors of the producer firms. This is the time when nothing to the power of two is undertaken. Unlike the time where nothing is ever done while they're in attendance. Returning in mid-January to what will be a litany of creative excuses and new viable scapegoats they’ll put forward. I thought I’d ask some questions for bureaucrats to contemplate and consider while they're off the office couch and on the recliner at their villa. Questions that are focused on the business of the oil and gas industry. Giving them time to research and understand the subtleties of these questions. Other than that, on behalf of all those that have experienced some form of financial, career or business destruction at the hands of these fools, we wish them a miserable Holiday Season for what they’ve showered across the oil and gas economy. 

Comfortable isn’t the word for how these people have lived. Spending money as the sole, distinct competitive advantage is taxing, almost as taxing as preparing specious financial statements or putting investors cash in the bank. Operating a profitable business from the “real” perspective” is a different level of effort and understanding than what these bureaucrats are capable of. They’ve had the Preliminary Specification in front of them since August 2012 and I’ve never received a call from them to discuss the finer details of it or to express an interest in it. Don’t get me wrong, I get lots of calls from bureaucrats. And they’re very active with respect to making sure People, Ideas & Objects, our user community and service providers never succeed. Maybe that’s where all their time is consumed and therefore they have no time for the oil and gas business? What does the future hold for the bureaucratic world of oil and gas?

Let's start out with some questions regarding the global oil markets. How come OPEC+ are not concerned with a potential rise of North American producers' production profile? They’re fully aware of North America’s historical and chronic overproduction, or unprofitable production as we call it. How come OPEC+ is not concerned with the threat that the U.S. might withhold military support if they don’t act in their best interests by raising production as requested? Do they now hold an equally valid threat that any lack of U.S. military support would just precipitate their move to Russian or Chinese military support? Therefore who’s more dependent on whom? The point that OPEC+ understands is that North American producers have never been profitable in the real sense. Don’t know how to be profitable. Don’t have a culture that understands or supports profitability. And do not have the financial resources, framework or capital structure to do anything about their business as it stands today. These bureaucrats have sailed off to clean energy and consistently resisted the calls to act by their investors for the past six years. They’re persistent and obstinate about doing nothing to deal with their lack of performance in comparison to what the competitive capital markets provide. What they've done is allowed People, Ideas & Objects to define why it’s necessary for producers to achieve real profitability everywhere and always. Everyone in oil and gas, the service and tertiary industries are fully aware of what the need for real producer profitability is and why it’s a necessary ingredient for a prosperous North America oil and gas economy. 

Without profits eventually everything just grinds to nothing. Careers are destroyed with the inability to advance in the industry other than through the bureaucratic arts. The excitement of doing things and being part of the team that did that is gone as each year you're faced with doing more with less budget and the ever increasing reality of being downsized. Businesses throughout this economy look to scavenge money and deal with angry investors who are displeased with the performance being displayed. Nothing is happening and nothing can happen because the money that is needed is not being earned to make it happen. Everything just slowly dies off, or in the very good years at best levels off. And this is the case with the greater oil and gas economy in North America. Not because oil and gas has lost its value to society but because industry leadership has lost its way as to its focus and objectives. “Building balance sheets” and “putting cash in the ground” is still not accepted as good corporate governance or objectives that are worthy for any organization to be involved in. If you were in business and your competition started mouthing these objectives you’d just snicker and forget about that wasted space. Which is where oil and gas is today. 

Leadership capitulation is a twisted opportunity being sought by our good friends the bureaucrats. I’ve mentioned many times that historically when leadership finds themselves in times of untenable situations they’ll just exit enmass and move on to other industries. The first time this happened was during the great depression. Oil and gas bureaucrats have now done this with the special twist that they think they’re taking the producer firms oil and gas revenues with them. They stated unequivocally that they could not make money in shale. Just as they couldn’t make any money in any of the other types of oil and gas businesses that they had previously rushed into and overinvested in. Conventional, heavy oil, offshore etc were all summarily written off to pursue shale as the shiny bright object that would make everyone so much money. Except there was no plan or understanding of how the business would work beyond the “building of balance sheets” and “putting cash in the ground.” Oil and gas was never able to make any money under their administration as even they admitted this past year. Therefore it was on to clean energy without any plans or strategies, any cash, competitive advantages, history, capacities or capabilities. But trust them that’s where the money is. The fact that no one outside of massive government subsidies has been able to generate any sustainable economic activity is not lost on them. The one thing they do think they have is the oil and gas revenues that investors had invested in good faith in the oil and gas business. Bureaucrats believe the fruits of those investments will be redirected to “support” these new clean businesses is not, trust me, ever going to happen. 

It is my opinion that in this process of moving to clean energy they’ve tendered their resignations in the oil and gas upstream. They no longer have their hearts and minds in the oil and gas business and therefore they’re on to their clean energy frontiers. And the oil and gas revenues will be staying with the producer firm that they’re no longer part of. If they believe in clean energy then they’ll be better off solving the difficult technical challenges of making it a commercial enterprise. If they’re feeling the sting of an empty stomach, angry spouses and bankers and a bank account that drains exponentially faster than it ever grew. These are the things that focus the minds of the entrepreneur that allow them to undertake the miracles they have to create every hour of every day. Our good friends, the bureaucrats will never even create one miracle if they have oil and gas revenues that permit their lifestyle to continue in the comfort they used to know.

The lunacy of the bureaucrats is best described in this action of moving on to the next bright shiny object. Something they’ve done for the past four decades. These movements were all precipitated by the need for “more” of whatever was selling on the street. In the direct question category we have the following. Why did bureaucrats always walk away from their non-performing assets, move on to the “new frontier” and never seek to rehabilitate the financial performance of those assets that were not performing? How would a conventional oil and gas property be performing today? With much lower capital costs, expended decades ago there would be few capital costs left to deplete. The production doesn’t decline as quickly as shale and although lower in terms of production, may continue for many decades. The cost to maintain it is miniscule. Is it these properties that are taxing producer cash accounts? Is it these properties that are heavily leveraged? Is it these properties that are unprofitable in the “real” sense of profitability? Why is it that bureaucrats never undertake to do the hard work of figuring out how to make money? Instead, it’s on to clean energy and the oil and gas business, including shale, is finished, they said. Even though the commodity sold presents a life and death struggle if consumers were forced to go without! What business are they in? The most valuable commodity to the North American economy and they have not made any money at it, admit they can’t make any money at it and have decided to saunter off the stage! These are the people who have proven track records? These are the people we want to run the producers? Would anyone find this culture of failure acceptable? In April of 2020 when oil prices fell to negative $40 levels there was no clearer indication of the need for remedial action to fix the chronic overproduction that has been evident each and every year from at least July 1986. It’s important to note that the Preliminary Specification has been available to resolve these cultural and overproduction issues since August 2012 and I can assure you they were all well aware of it. Why was and has nothing been done? If leadership capitulation and the taking of oil and gas revenues to move to a business with a history of zero performance is their idea of how to operate the North American based oil and gas economy, is that considered a good idea? 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here

Thursday, September 24, 2015

Leadership From the User Community, Part IV

Independence is one of the attributes of the user community members that gives them the ability to maintain their leadership position. They are not dependent upon anyone in terms of what and how they do their jobs in this new oil and gas industry. They have the oil and gas producers as their clients. And they are committed to providing them with the most profitable means of oil and gas operations. How they are able to provide these services is upto the innovations and creative capabilities of the individuals that will be members of the user community. Ownership of the service provider that provides the software and service for that specific process will be theirs. This will generate the revenues from the producer firms that enable them to maintain that independence. They will also have a much smaller source of revenue directly from People, Ideas & Objects for any of the work that is done with our software developers.

This independence is necessary to enable them to fully explore the capabilities of their team. How to organize their offering in terms of automation, innovation, specialization and the division of labor to ensure the producers are given the appropriate service necessary to meet our profitability focus. And this will be a competitive environment with the other service providers and members of the user community. However not a competitive environment in the traditional manner that is used by the producers today. There will be no “me too” types of service providers enabled in the marketplace. Once the user community member is granted a license for the service to be offered to the industry, that will be an exclusive license and there will be no direct competition created for that specific process. Some exceptions in the production accounting areas will apply for geographic purposes, etc. The competitiveness comes about between the service providers and user community members by way of the manner in which specialization and the division of labor are used and implemented. How automation and innovations are accelerated and iterated upon throughout the community. These will be the competitive foundations that focus the user community and service providers.

The perspective of what a service provider involves themselves in terms of the oil and gas producers administrative and accounting domain will be rather limited in comparison to the work that is done today. The “jack of all trades, and master of none” demands of the current positions in all of the producers administrative and accounting fields will be gone. People will become very specialized in the types of work that they do. Understanding every aspect of the process and its implications. Applying this specialization across the entire industries data set, which would be your client base. This will bring about new and interesting perspectives on the work that is done. Thinking about the process and how to improve it constantly will be in the mind of the user community representatives. Their team will be comprised of various people who have different skill sets and are specialized in their own ways. It will be more about the science and art of process management than administrative and accounting in oil and gas.

So when we discuss change within the industry. We can see this involves change in everything and everyone. The business of oil and gas has been operated in the manner that it has since the 1950’s. Computers have been used to accelerate manual processes. Not the most efficient uses of computers, or of people. We need to focus on the things that people do well, the leadership, problem solving, decision making, creative, collaboration, research, generation of ideas, design, planning, thinking, innovating and negotiating. What we need the computers to do is what they are designed for. And that is the storing of data and process management. This is how we need to restructure the oil and gas industry and the leadership of the user community will be how we get there.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Wednesday, September 23, 2015

Leadership From the User Community, Part III

The capacity to deal with change at any level is what the user community provides over the status quo bureaucracy. This is the key differentiation between the two systems of organizations and the reason why we must move to the Preliminary Specification. The capacity to deal with the changes in the underlying oil and gas business has to be matched by the organizations that define and support the producers. What we have currently is a fundamental change in the business. Where shale has brought about a level of abundance in the commodities. And the business organizations are incapable of dealing with the situation. The old will die off, or we can be proactive and make the changes necessary and not have to experience the negative general effects of an energy shortage in society.

The President of Shell was interviewed by the BBC last week and commented that the oil prices have declined over 50% with as little as 1 or 2% over production. Welcome to the new oil and gas industry. This is basic economics which is usually learned in your first business economics course. The elasticity of supply and demand are unique to each product. An oversupply of Ford F150 trucks will not have any effect on their price. Supply and demand are considered inelastic. Whereas oil and gas are elastic and are subject to wide swings in prices as a result of small changes in supply or demand. What we need to do is to find the right prices necessary to fuel a profitable industry, which the Preliminary Specification decentralized production model provides. What is going to happen due to the bureaucracies inaction is that the industry is going to atrophy and supply will drop 2% below demand and the commodities prices will reach the moon. Not good for anyone, but the bureaucrats will be happy.

Is it appropriate that we have an industry as fundamentally important as energy is to the world economy. Being unnecessarily subject to the principles of economics that we learned hundreds of years ago? Are we incapable of accepting ideas that challenge the vested interests and bureaucrats who chose to do nothing and just accept our situation as the way things are? I believe there is a better way and that is the method that we have been discussing with the user community in the leadership position in terms of providing the necessary changes in the industry. Then when the business does change, in whatever permutation or combination that it does, the leaders within the user community will be able to make the changes necessary in the organization to accommodate the needed changes in the underlying business.

It is the toolkit that is provided through People, Ideas & Objects that makes the user community capable of implementing the changes that are needed. With the full power of the Intellectual Property under their control they can make whatever changes are necessary to their process or functions through their work in the community and with the People, Ideas & Objects software development team. How do the bureaucrats make changes in the organization to accommodate changes in the business? Who has the authority to make the changes in the software today? This power and control over the Intellectual Property is the dynamic solution to the current muddle along strategy.

The third tool that is unique to the People, Ideas & Objects user community is the fact that the service providers are owned and operated by the user community members. They are therefore the ones on the front line in the industry providing the software and services to the oil and gas producers. They are the ones who see and can understand the need for the changes in the IP and software first. What needs to be changed and how that change needs to be implemented most efficiently in the software and the service they provide. They will be the most effective and efficient in terms of ensuring that the oil and gas producers are provided with the most profitable means of oil and gas operations on every day the Preliminary Specification is operational. That is the difference between the old and new ways of doing things and why we need to change.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Tuesday, September 22, 2015

Leadership From the User Community, Part II

Last Friday’s post documented the background of how the leadership within the industry, in terms of how it approaches its opportunities and difficulties, will be handled by the user community of People, Ideas & Objects. Today we are going to expand on this by introducing an article that is written by Don Tapscott and addresses the point of where leadership comes from in the, dare I say it, new economy, or as he now calls it “democratic capitalism.” The article is entitled “Great Leaders Don’t Have Followers: They Collaborate.” He has been around for many decades discussing the impact of Information Technology on business. I find this article of his to be particularly on point in terms of where I see the user community providing the leadership in the oil and gas industry.

Leadership vs. management, what’s the difference?  And why do we need to change?

As Peter Drucker said years ago, stable times require excellence and good management. As we transition to a new age, our organizations need more; they need leadership. So managers shouldn’t just manage. Today they need to lead and think of themselves primarily as leaders rather than just managers. 

And how is that leadership configured? Who fulfills the leadership role in this new business environment?

My approach to leadership is collaborative. This approach is the antithesis of the old-style, brilliant visionary, take-charge, rally-the-troops type. In the past, Winston Churchill, Thomas Watson, and Lee Iacocca embodied the single dominant leader. Today, the leader is a collective, networked, virtual force and no longer necessarily embodied in a single individual.

1. Collaborative Leadership Means Leading for Learning

What we need in oil and gas is to have the capabilities of the user community employ new tools to deal with the changes that inevitably occur in oil and gas. These new tools include the power of the Intellectual Property that make up the Preliminary Specification and its derivative works. And the software development capabilities of the People, Ideas & Objects dedicated developers. The user community will also have in their toolkit control over the service providers who operate the administrative and accounting functions on behalf of the oil and gas producers. It is in this way the user community can achieve this collaborative leadership.

Increasingly, the only sustainable competitive advantage has become an organization’s ability to overcome what management author Peter Senge calls its “organizational learning disabilities,” and to grow and change with the times.
The days when a great leader at the top could learn for the entire organization are gone. As Senge points out, “in an increasingly dynamic, interdependent and unpredictable world, it is simply no longer possible for anyone to 'figure it all out at the top.'” For Senge, “leaders are designers, stewards, and teachers. They are responsible for building organizations where people continually expand their capacities to understand complexity, clarify vision, and improve shared mental models — that is, they are responsible for learning.”

2. Collaborative Leadership is Collective Leadership


There is too much for any one individual to take on in terms of the scope and scale of the difficulties and opportunities. Each member of the user community needs to be specialized in their domain of understanding. Responsible for one process and all that is associated with it. Providing leadership for that process throughout the industry with state of the art capabilities, understanding and knowledge.

The intellectual power generated through networking minds for collective vision will far surpass the intellectual prowess of even the smartest, loudest boss. Equally important, strategies developed collectively have an infinitely higher probability of actually being implemented. Collective thinking leads to collective action.

3. Collaborative Leadership Is Your Personal Opportunity


This is the basis of the user community offering at People, Ideas & Objects. The personal opportunity to participate directly in the new oil and gas industry as a member of the user community which includes your ownership in a related service provider. The G&A costs of the oil and gas producers are being shifted away from the internal resources of the producer to the service providers. A substantial revenue opportunity awaits these service providers. The user community also has the budgeted revenues that are paid by People, Ideas & Objects for their contributions towards their software development efforts.

One conclusion that can be drawn from this trend is that leadership for transformation is your opportunity, not just an opportunity for your CEO, or your boss, but your opportunity. Each of us has a choice to participate actively in transformation, to observe passively, or to resist. If you act, you can shape your future, even if you’re not a member of the senior management group.
At root, it’s a question of taking control of your destiny for a new age. No less a philosopher than rock singer Meatloaf has advice on why we need to take charge of our lives: “There is only one thing that will take away everything you’ve ever wanted — fear.” Mahatma Gandhi was even more specific when he said, “We must be the change we wish to see in the world.”
To generate powerful collective action, embrace collaborative leadership by understanding that it involves growing and learning along with others, your opinion will never be the only one that matters, and it’s your personal opportunity.

We need to set the industry on the basis on a new paradigm. One which provides the oil and gas producer with the most profitable means of oil and gas operations. It will be in this way the oil and gas industry will be able to fuel society for the remainder of this century. It's a great time to be in oil and gas.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Friday, September 18, 2015

Leadership From the User Community, Part I

Oil and gas prices are clearly responding to all of the initiatives that the bureaucrats put forward this past week, month, year. Is it just me or does this eerie quiet just about deafen you? What we do know is change is hard. And what we have learned since I published the Preliminary Research Report in May 2004 is that change can only be made by instituting the needed changes in the software that the organization uses, first. We are dependent as organizations on the software that defines and supports the organizational structure. Any attempts to change the way things are done, without first changing the software is going to fail. This is in that research report that I published in May 2004 that the bureaucrats have twisted the logic of, and used for their own benefit. What they concluded is that if they never changed the software then they would never be challenged for their positions in oil and gas. It would seem therefore that both of us are correct.

So much for the thought that maybe the bureaucrats will come around and conduct themselves constructively. I’ve seen too much of their behaviour in the past ten years to know that they have a comfortable life and are not interested in discussing it any further. Who it is that will ultimately step forward and fund our budget is unknown to me at this time. Passive investment is also the name of the game. If you're unhappy with the performance of the oil and gas stocks then you sell out of them. Still there are the institutional oil and gas investors who have built the industry. I’m sure they're as impressed as I am with the bureaucrats.

We have a situation where change is necessary in the oil and gas industry. If we had the Preliminary Specification operational in the industry, I think we would have a framework where the issues and opportunities of the day could be addressed. Key to those issues and opportunities being addressed are the software development capabilities of People, Ideas & Objects and, most importantly the user community. These tools can be used to define the changes that need to be made to the industry when and if the time comes. By having these tools, the oil and gas producers will not find themselves “muddling along” for decades while things eventually turn around.

Then we will have an industry with the appropriate posture no matter what the situation that comes about. Today we could provide the producers with the price maker strategy. Tomorrow who knows what situation will be created as a result of the innovations and creations that the earth science and engineering people come up with. It’s clear that the sciences have become more advanced than the business can handle. Shale as a technology is not commercially viable at this time, that is until a price maker strategy is put in place, therefore why is the business pursuing it in the manner that it is? Clearly things are not working the way they should.

The user community will be the key to the ability of the industry to address the issues and opportunities that are presented to it. They will be able to provide the leadership to address the requirements of the business. Tuesday we’ll have the second installment of this series and it will detail how the user community will fill that critical leadership role in the industry.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here