Why "Just" a Preliminary Specification

 We noted earlier the seven year long cash crisis in oil & gas which has precipitated a cannibalization of producer business processes. Layoffs occurring in both the oil & gas producers and the service industry start at the beginning of the businesses development process and therefore seek not to disrupt current production. However, seven years of officer and director inactivity, has now cut into the capabilities and capacities of these industries. There’s been a proliferation of new processes as noted in this World Oil article. This noted trend won’t end here either, the move to the Internet of Things will open new opportunities for capabilities that would have seemed impossible and unimaginable seven years ago. Such as last week's Elon Musk SpacEx / TMobile announcement. Which will soon enable the access and control of oil & gas remote facilities. 

The first advantage of having a Preliminary Specification is that we can set the direction we’re headed with a vision and viable business model, but not lock that into the 2012 environment that existed at the time the specification was initially published. And this is why People, Ideas & Objects, our user community, their service provider organizations and Oracle Cloud ERP are configured to provide the industry with a permanent software development capability for oil & gas through our Cloud Administration & Accounting for Oil & Gas service to ensure a dynamic, innovative, accountable and profitable industry.

Within producer firms today, officers and directors have had expectations that investors would provide the financial resources to “build balance sheets.” Similar assumptions were made with respect to business in general, the service industry and other vendors providing producers with market solutions which would spontaneously appear on command. As a participant in the ERP market space I am witness to these assumptions and methods used throughout the producer population. It was incumbent upon producer firms to ensure that any competitive advantage that a supplier had, would be extracted and distributed to their competitors in order to sponsor price competition in that product or service. This is a well known fact and is now one of the impediments to the need of the industry to stand on its own two feet, innovate and why it can’t, won’t and will not be able to under the current administration. We’ve seen the game played out too many times to know the outcome. It is this reason that People, Ideas & Objects are dependent on Intellectual Property to safeguard and protect our efforts against this behavior in the short to long run. 

The long and short of it is that nothing will be done while this culture exists. It must be ripped and replaced by a culture that has the following characteristics. 

• It needs to respect the participation of others in order to secure a dynamic, innovative, accountable and profitable oil & gas economy. 
• Everyone in the industry now knows and understands why “real” profitability in the industry is such a critical necessity, everywhere and always. 
• Provide generic, aggregate producer information to vendors in terms of the anticipated capital expenditures by region, product or service classification as detailed in producer reserves reports. 
• It needs to pay its suppliers as if they were business partners and not extend accounts payable schedules to the ridiculous levels we’ve seen recently. 

These are just a few of the functions of the Preliminary Specification as it stands today. I could go on but the point is that it's all just basic business in the form of a basic business culture! The one thing that everyone would point to as being the producer's responsibility and undertaking. The current culture has fostered a behavior where officers and directors sit atop a primary industry and hand out the pennies to those that will beg the loudest and provide the greatest (personal) favors. A culture which has developed where “power tends to corrupt and absolute power corrupts absolutely.”

Coil tubing providers and Packers Plus are good examples of another phenomenon in their struggle for acceptance by producers. Being denied entry into the industry for decades due to their ground breaking technologies. The lack of funding to ensure that no ERP developments are made. The protracted argument with People, Ideas & Objects over the ideas contained here. Which began with enhanced profitability and accountability which were argued against consistently that profits didn’t matter. That is why there was nothing beyond a Preliminary Specification developed. Therefore, Intellectual Property was all that was needed to seize the higher ground from those who thought profits were irrelevant. Imagine an industry that utters the words “profits don’t matter!” In ERP you only get what you pay for and producers have paid for nothing and therefore achieved their objective of abysmal accountability ensuring their unprofitability. 

There is now no capacity and capabilities in the ERP tier 1 marketplace and producers are left with two development choices that provide for their investors' demands, SAP or People, Ideas & Objects et al. Only we have an oil & gas vision, an understanding, a plan and a Preliminary Specification and most important of all, our eight years of development of our user community based on a compelling and powerful user community vision. A product offering that may be terminated in the next quarter through producers “compliance” to their investors' demands for a tier 1 ERP provider by selecting SAP. Eliminating People, Ideas & Objects and our user community from the market due to our pursuit of accountability and profitability for producer firms.

What will be the state of affairs in oil & gas when SAP is in need of replacement in 10,15, 20 or 32 years? Who will be the one to stand up then? I can assure you their IP will need to be spectacular, it’ll have to be in order to avoid the Preliminary Specifications and its derivative works! Will whomever that is focus on accountability, profitability and energy independence in the North American oil & gas? Or follow SAP’s lead by providing producer officers and directors with exactly what they want, unacceptable levels of accountability. Producers can make their own ERP selection decisions and I’m pleased with my actions over these years in taking the fight to them. I’ll leave you with these quotes from Joseph Schumpeter and Milton Friedman about the importance of “just” a Preliminary Specification. 

The first thing to go is the traditional conception of the modus operandi of competition … in capitalist reality as distinguished from its textbook picture, it is not that type of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization … which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives … It is hardly necessary to point out that competition of the kind we now have in mind acts not only when in being but also when it is merely an ever-present threat. It disciplines before it attacks. The businessman feels himself to be in a competitive situation even if he is alone in his field. 

Joseph A. Schumpeter (1942), Capitalism, Socialism, and Democracy: 84–85.

And

Can capitalism survive? No. I do not think it can … its very success undermines the social institutions which protect it, and “inevitably” creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent. 

Joseph A. Schumpeter (1942), Capitalism, Socialism, and Democracy: 61.

Milton Friedman said it as well.

Only a crisis - actual or perceived - produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

I’ll be resuming the process of rewriting / updating / revising / editing or whatever it is I’m doing with our Preliminary Specification after September 12, 2022 intermixed with more of this RFP related discussion. You can find the text of these past five posts on the wiki under RFP Proposal sub-page Discussion. And pinned to the top of @piobiz Twitter feed. 

Intellectual Property

 Intellectual Property, research and our user community are the three competitive advantages that People, Ideas & Objects have defined and based our offering upon. It is this configuration that is designed for the speed of development and implementation of our software, our quality and our ability to continuously improve and enhance with our software development, user community and their service provider organizations. Intellectual Property is the basis of how this community evolves and resolves the issues and opportunities of the North American oil & gas producers. Providing for a dynamic, innovative, accountable and profitable means of oil & gas operations everywhere and always. Setting the foundation for profitable, North American energy independence. This is the strategic position we’ve taken in this market. We have defined and resolved the oil & gas industry issues and opportunities in the Preliminary Specification to capture a substantial 25 year, $25.7 to $45.7 trillion value proposition due to our focus on profitability. Where we recently identified $660 billion in incremental value was available to investors in the short term. The Preliminary Specification is focused around the use of the Joint Operating Committee as the key organizational construct of the industry. The legal, financial, operational decision making, cultural, communication, strategic and innovation framework of the oil & gas industry. When we move the compliance and governance framework into alignment with the seven frameworks of the Joint Operating Committee, we achieve organizational speed, innovativeness and profitability in the producer firms.

The commercialization of this Intellectual Property has been contracted to People, Ideas & Objects. It is focused on profitability and accountability in oil & gas and resolves the issues that are present in the industry today, and with this IP supporting our user community through our user community license, enables our software and supporting service providers to continually adapt to the needs in oil & gas. This has created substantial conflict between our firm and the producer officers and directors. We feel our conflict with the producers has expanded to include their investors and bankers, service industry, staff of the producers and the energy consumer are all disappointed and frustrated with producers performance. Disappointed in terms of the inability to source adequate supplies of energy, the cost of energy supply and the lack of North American energy independence that was in hand only a short time ago. The handful of people who personally prospered financially at the expense of all these others are now identified as the individuals who did nothing but “muddle through.” Who had the responsibility and authority to ensure these things don’t happen but didn’t care and refused to consider the criticism of People, Ideas & Objects and the solution we offered. A solution they know is appropriate however eliminates their ability to personally prosper financially.

Investors have stated they expect to see tier 1 ERP systems implemented within the industry in order to alleviate their concerns regarding the lack of profitability and accountability. We suspect producer officers and directors are therefore orchestrating in the short term a move to meet these investor demands with an implementation of SAP systems that are unprepared and inconsistent with industry needs. SAP, lacking in an oil & gas vision and specification of “what, how and why,” is being selected for its ability to be configured based on these officers and directors current methods for poor accountability as we’ve noted in our writings. SAP is holding their 11th annual oil & gas conference on September 12, 2022. Highlights of their oil & gas materials include.

• Companies will work together in meeting production, profitability, and safety targets (possibly as “pay for outcome.”)
• Ultimately, they are shifting to core profitable and sustainable value pools and minimizing their exposure to the market volatility.

And this YouTube video

I see these as one of three possible alternatives that SAP is promoting. 

• It may be an extension of their Performance Management feature set that has been available in the marketplace for many years. Indicating no change in the status quo of the prospective SAP users or oil & gas investors.
• To suggest that SAP is offering a solution to the oil & gas industry that caters to the definition and needs of the officers and directors, as People, Ideas & Objects allege, as the reason for this potential selection process proceeding. They are in fact offering themselves and will become blind sleepwalking agents of whomever will feed them. However, SAP also needs to walk both sides of the streets in this transaction. If they’re not promoting and providing a methodology of enhanced profitability then I would see that as problematic for many reasons. Knowing producer bureaucrats as I do, SAP would only be setting themselves up as a future viable scapegoat of the producers' officers and directors as to why they subsequently failed, post SAP integration. For example, the viable scapegoat of “SAP did not implement appropriate profitability and accountability methods, they failed.” (By mentioning this alternative one can see how much I’ve personally enjoyed the interactions and the experience I've gained from the officers and directors of these producer firms.)
• Or, someone has devised a method of oil & gas profitability that “borrows” heavily from the Intellectual Property being commercialized by People, Ideas & Objects. Under the name of “pay for outcome” or “sustainable value pools” and “minimizing their exposure to the market volatility.” 

Regarding the last option, as a software company People, Ideas & Objects would never violate any Intellectual Property of any other software or service oriented company. When the dependence of software firms revenue streams is on the pristine nature of the Intellectual Property under use is above reproach and of a historical legacy that is evident throughout, as an example, the writings of our blog and wiki. We know that those that are dependent upon IP for their revenue streams are of the same mindset. 

I am also of the belief that the officers and directors of the producer firms are wise to the needs of innovation and development in the software field and the need to rely on IP as the basis of how that arises. That producers would evaluate software offerings on the basis of the origins and pedigree of the IP that is proposed to be used in their organization to ensure that it does not infringe upon others Intellectual Property and therefore be able to continually use those products through their appropriate life cycles. Ensuring that their reputation of being upstanding, law abiding citizens that would never take others property would not even need to be mentioned here.

Investors Will Decide

 People, Ideas & Objects have identified a threat that we feel is terminal to our existence as an operational software organization. This threat is the officers and directors of the producer firms looking to seal their methods of performance and accountability by implementing an SAP configuration that is of their design. Which is their right to do and a specific demand of their investors to implement a tier 1 ERP system. Bold and audacious for me to suggest that an independent decision of a firm would not be what they’re entitled to do. Simply when the method of performance and accountability of these officers and directors has led to the comprehensive damage and destruction we see today and which I detailed two days ago. No one outside of the rarified air of the producer firms officers and directors have benefited as a result of any of the activity in oil & gas these past decades. These firms have been structured to “appear” healthy in order to facilitate the enhanced and innovative personal compensation these individuals enjoy. Therefore the broader threat of this continued non performant, “muddle through” process of “putting cash in the ground” and “building balance sheets” would continue as soon as the producers complied with investors demand for a tier 1 ERP system by selecting SAP for the next generation, and People, Ideas & Objects fades into the distance as an operational software organization. 

The fundamental new impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

Joseph A. Schumpeter (1942) Capitalism, Socialism and Democracy: 82 - 84

And

According to Schumpeter, this disruptive process of creative destruction is the foundation of the economic progress of society through time. Thus, Schumpeter provides a road map to the policy environment conducive to economic development—jurisdictions that allow the process of creative destruction to unfold, rather than those that put up barriers to protect the status quo, are the ones that grow faster and have stronger economic progress and development.

— The Essential Joseph Schumpeter (Essential Scholars) by Russell S. Sobel, Jason Clemens

Producers methods of management have refused to consider any change such as the Preliminary Specification, our user community and their service provider organizations. People, Ideas & Objects et al's focus is on providing the dynamic, innovative, accountable and profitable oil & gas producers with the most profitable means of oil & gas operations. It’s not enough to just own the oil & gas asset anymore, it's also necessary to have access to the software that makes the oil & gas asset profitable. On a comparative basis our vision, methods and Preliminary Specification detail the value proposition of “what, how and why” we provide these values in detail. Throughout our history I’ve had many failures in my attempts to provide ERP systems to producers. I’ve recently realized that these failures, as were the failures experienced by Oracle in 2000 and IBM in 2005, were market failures due to the inability to attract any support from producers. The common denominator to all my and other vendors' market failures was our focus on enhancing the accountability in producer firms. Additionally, the history of abuse by the producer firms towards their existing ERP providers has been beyond what could ever be considered incidental or inconsequential to today’s oil & gas industries' damage and destruction, or the actions to now select SAP and seal this industry in perpetual bureaucratic malaise. On the contrary they were and are deliberate.

In addition to the alternative of People, Ideas & Objects there are other forces that have been obstructed and completely eliminated through these officers and directors actions. These include disintermediation, decentralization, creative destruction, spontaneous order and serendipity. What’s been learned is what I described in May 2004. That software defines and supports the organization, but also constrains it. Stating this in support of implementing the ideas of the Preliminary Specification and its permanent ERP software development capability. However, the interpretation was that if the software was never changed, their ability to maintain their unaccountable ways would continue unobstructed. However they’ve failed to consider the consequences of their lack of accountability and profitability on the long term health of the industry and continued while systemically destroying the industry and all that are associated with it. 

Today the game has changed for these officers and directors. There is a direct and specific ask from the investors for the change in the ERP systems that are used. There are cash rewards around the corner for them that make the past look… Through consolidation and the elimination of the startup, small and junior sectors of the industry their administrations will remain unchallenged for a generation, at a minimum. The declaration of new business ventures focused on clean energy has provided them with a clean slate of possibilities in terms of future obtuse accountability. If only they could secure the software that meets theirs and their investors needs, which is where SAP fulfills their dichotomy. They would then be able to continue in any chosen direction of their choosing.

Time is now the resource that is at a premium. What is necessary for the oil & gas investor is to be specific as to what is an acceptable solution for tier 1 ERP solutions. Which can only be the successful implementation of People, Ideas & Objects, our user community and their service provider organizations Preliminary Specification with Oracle Cloud ERP as the oil & gas’ solution. No alternative will be acceptable. 

Alternatively, if these decisions are made to implement SAP then the consequences will be realized by others. The consequences will be a continuation of the status quo level of unacceptable performance, accountability and behavior that has been displayed here for decades. If anyone believes that the officers and directors' reformed behavior of the past year will be permanent then they should ask themselves, why have they not implemented any solution to these issues since People, Ideas & Objects began pointing them out? Cash being paid out of oil & gas companies for any reason that is discretionary will be stopped and that cash will resume its direct path back into their more “traditional” pockets. The quantitative analysis of the difference between the value proposition being offered through the Preliminary Specification is easily understood when we look at the industry today. And ask, what quantity of financial resources will be necessary to bring the existing infrastructure up to the needs of a profitable, energy independent North American oil & gas industry? Consumers have been warned to be advised! A despicable response.

People, Ideas & Objects see the issues that are clearly in front of us. We were fortunate enough to have foreseen them and prepared the Preliminary Specification to address them with a viable, workable business model. What was forward thinking only a few years ago is now timely. The pace of change in industry demands that the associated component of our offering be available, our user community and software development capability as an industry wide, permanent ERP capacity and capability. Operationally we do not understand how the bureaucratic performance and accountability that we’ve seen over the past decades with the industry standard strategy of “muddle through” will provide any value for anyone outside of the officers and directors in the status quo configuration. With the issues and opportunities around the replacement, refurbishment and expansion of the infrastructure necessary to achieve profitable energy independence in North America. What we see as SAP’s stated product vision of a clean energy transition and compliant implementation are failures made to order. Failures for all concerned except that fortunate small cadre of officers and directors of the producer firms which have had the requisite authority and responsibility to do otherwise. 

Radical Surgery vs. Bandaid Approach

 I trust my interpretation and perspective on oil & gas and its resolution is not being misconstrued. It would be foolish and naive for anyone to believe that human nature of self interested individuals would go so far as to define a scheme such as what I’ve accused producer officers and directors of. That’s not what’s at issue, in my opinion. What is at issue is the unchecked pursuit of self interest by the officers and directors has traveled too far along the scale of what is acceptable. And this is measured by myself in the form of a status quo pursuit of a highly damaging and destructive method of management whose consequences are too broad and advanced to continue. It is the damage itself that I find unacceptable and only point to the fact that the officers and directors are the only ones that have financially benefited. Not that I have any misguided belief that this was some anomaly of human nature of how people behave. The structure of the user community and service providers, indeed the entire sub-industry as I call this environment necessary to resolve this issue, is structured around self interest as the motivation to get things done. The key difference is our motivation is contingent on providing the most profitable means of oil & gas operations and to do so successfully. The risks associated with this damage are too extreme to allow it to continue. Each barrel of oil contains the equivalent of 10 to 25 thousand man hours of mechanical labor. An amount of labor that is 22 to 55 times the size of today's total population. An irreplaceable resource that powers our economy, our way of life and indeed our civilization. It is my opinion that some things are better left within a range of acceptable standards and tolerable levels. 

The issues that oil & gas producers are dealing with today are of the standard fare business issues that occur when overcapitalization of this scale has been undertaken. It’s no mystery that we’ve traveled down this road. The officers and directors would have been aware of this too, their problem is that they’re culpable and liable even if they weren’t aware. As they were well aware of People, Ideas & Objects et al’s solution which we’ve been offering in the form of the Preliminary Specification for the past decade, and a specific request of a few years ago from their investors to upgrade to tier 1 ERP systems. A history that reflects a risk that any further loss of faith (consumers) in their administration would be costly. An administration that today has that deer in the headlights look, incapable of any action, heading into the most difficult energy season mankind has ever known and singing the praises of solar and wind. Ours is not the solution to this difficulty in the short term and that is the reason we began this process so long ago. We can now only rebuild the industry from what is left.

Therefore the question becomes what is the resolution. Do we resolve this through radical surgery to try and save the patient? Or will a bandage and a slap on the back do? What’s the diagnosis, is there an issue? Everyone has their own opinion and People, Ideas & Objects et al’s is as follows. The ultimate sign of failure is 2015s refusal by the investors to support the industry participants' capital structures. Banks are of a similar thinking. Inability to conduct the appropriate level of business activity and diminishing capabilities. This is in the field through the service industry and through the internal recruitment of critical earth science and engineering professionals. Maintaining production deliverability in this constrained environment is the next “potential” shoe to drop. As bad as each of these issues, the one that is the root cause of all of them is the obstinate, persistent and failing strategy of “muddle through.” Nothing was done to deal with these when it was timely. 

My prior post detailed how I believed the industry had failed. Today this discussion will seek to understand why I feel a wholesale rebuild of the brick by brick and stick by stick character is necessary.

Culture Shock

• Clean energy is not the message to be sending throughout the oil & gas and service industries. How can we leave oil & gas in the hands of those who don’t believe in its future, who have not safeguarded their investors' assets and diverted their funds to unrelated industries that are commercially unproven and done so in unauthorized fashion?
• Faith, trust and good will has been destroyed throughout the greater oil & gas economy. The need for producers to actively participate in rebuilding these is a necessity. 
• A culture that is unaware of the need to earn profits, but also how and why. A culture that is only capable of spending money and can not achieve the higher level performance trajectory necessary to qualify as profitable operations. A culture that is fundamentally unaware of the difference or the point of this argument. 
• A culture that assumed “investors” supplied for all that was needed. One that asked for more money from investors while at the same time, when asked about the money raised two years ago, stated “that’s history and just accounting!” And “profits don’t matter.”
• What happens when the industry sees an initiative such as People, Ideas & Objects snuffed out for political reasons? Who will step up with any initiative on behalf of the greater oil & gas economy when the culture of “muddle through” is seen as permanent and intractable? This is not what an innovative industry needs.

These are just the highlights that come to mind at the moment. I like to think of myself as rational. Only a fool would go into a situation such as this and attempt to resolve the issues that this culture produces and undertake to make changes within it. This culture would consume anyone who tried. It would be an attempted mosquito bite where the demise of the mosquito was certain. 

In our prior post we detailed how layoffs have cannibalized the internal processes from year 1,2,3… 7 of the producers due to the 2015 investor strike and coincidental seven year cash crisis. The same applies to the service industry. Therefore these processes need to be rebuilt. Providing the opportunity to do so without this culture attached in any way. One that starts with year 1 of the process from the vision of the Preliminary Specifications objective of providing the most profitable means of oil & gas operations everywhere and always. Rebuilding the industry and infrastructure on the basis of a dynamic, innovative, accountable and profitable producer, industry and service industry, brick by brick and stick by stick. In essence the way I look at what the industry consists of today isn’t worth keeping. Our opportunity exists in the fact that we don’t have to scrap it. The officers and directors have scrapped it for us. They can rebuild it with SAP’s blind, sleepwalking agents and their vision of clean energy. Or investors can be specific about their demand for tier 1 ERP systems and make the choice for the oil & gas industry by choosing People, Ideas & Objects, our user community, their service provider organizations and Oracle Cloud ERP. 

The state of “muddle through” has damaged industry to a point that is far more advanced than the producers, officers and directors may realize. Assuming the Preliminary Specification proceeds. It won’t be as a result of their desire to select a tier 1 ERP provider, and it won’t be a result of which tier 1 ERP provider they’ve chosen. If I were a participant in this small cadre of oil & gas officers and directors that were in this situation. Where the culture of failure was this comprehensive and tragic. And they were being forced to change based on the elimination of their influence in said damage and destruction. I’d begin questioning what role they’d have in continuing, but most of all why should they continue and how best to leave the place in a position where it could be rebuilt. 

A Fundamental Betrayal

 This post is in response to an article that was posted by World Oil regarding comments by the CEO Ben Van Beurden of Shell Plc at a conference in Europe. He stated,

“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and as a very, very quick build out of alternatives,” Chief Executive Officer Ben Van Beurden told reporters at a conference in Stavanger, Norway. “That this is going to be somehow easy or over, I think is a fantasy we should put aside -- we should confront the reality.”

I responded to the World Oil article through Twitter with the following comment.

No!

Another viable scapegoat is unacceptable. The ultimate capitulation of accountability here. The individual with more authority and responsibility to have dealt with this long ago!  My pinned tweet above was refused by those in power. [Our July 2019 White Paper] Then in nine months they ran the price of oil to negative $40! Declared shale was a lost cause, sold it and focused on the ultimate unaccountability project in an unauthorized manner “clean energy.” 

Today’s failure started long ago and we published our solution in August 2012. #failure

First of all, this is not a betrayal by Shell Plc, its investors or employees at any time. This is a comprehensive failure by Ben Van Beurden and his cohort of officers and directors of their “muddle through” club. The fish stinks from the head down. The company has been led off the cliff and now he wants to use the convenient excuse that it's Putin’s fault and consumers should learn to go without. This is not the history and culture of Shell. The investors, employees and annuitants are a group of individuals who have built a company that is the highest standard of which most companies seek. They’ve been betrayed by these self-serving officers and directors who’ve used and abused the industry to the point where the consumer is told to go without?

In light of the history of People, Ideas & Objects since the August 2012 publication of our Preliminary Specification. The people that need to be going without are those that caused this damage and destruction. To blame this catastrophe on someone like Putin, who will only take advantage of any situation he can find, is ridiculous when it’s Ben Van Beurden and his cohort who gave him the gold plated offer to do so. 

Don’t let the door hit you on the way out, Ben.

How I See the Oil & Gas Industry Has and Will Fail

 I want to put in context what we’ll be seeing from People, Ideas & Objects in the next few months. Based on Our Response to an RFP we see a window of opportunity in which to assert our solution to the North American oil & gas producers. This is in direct response to what we feel is a contrived and wholesale industry transition to SAP that has producer officers and directors seeking to secure their methods of management permanently. Therefore we are looking forward to putting across our advantages in direct comparison to SAP and to make oil & gas investors aware that these actions are being undertaken and a $660 billion differential of our value proposition that would be immediately lost if SAP was selected. We believe the Preliminary Specification has a provable value proposition across the North American producer population with its focus on the most profitable and accountable means of oil & gas operations everywhere and always. Therefore you'll see a more frequent posting with shorter and more focused discussion around these topics. Direct comparisons between the two oil & gas ERP systems will be part of that discussion. 

I have a distinct and unique perspective of seeing the state of the North American producer population. Frequently summarizing it as a failed, damaged and destroyed industry. The elements of that failure and why I can’t see the current administration doing much in terms of its destroyed financial, operational and political frameworks. I fail to see how producers can continue on without specifically addressing these difficulties. This is not the foundation that can provide for what is demanded and expected of it. Another attribute of this perspective is that there’s no doubt as to where the fault lies in terms of the responsibility for the damage and destruction, the time frame that it has been in place and the resolution being the rebuilding of the industry under the vision of the Preliminary Specification, our user community and their service provider organizations. 

As far back as the 1980s producers have sought to record all of their costs as capital costs with minimal operating and overhead costs being realized in the current period. These have built excessively large asset balances that are reflected in equally excessive overreported profitability. This has attracted excessive amounts of investor capital which industry has relied upon to create a production profile that consists of systemic, unprofitable production. Which is ultimately expressed as overproduction, which has led to a systemic and highly detrimental, long term erosion of global commodity prices. Such as when Alberta based natural gas producers were paying customers to take product off their hands, just last week. All of this hidden through the handsomely built, bigger, better, beautiful, balance sheets bureaucrats boast about.

Producers stand with little of anything on their financial statements other than large volumes of property, plant and equipment and their supporting debts. Collectively these large balances across the industry do not generate, even at today's prices, the volume of revenues necessary to operate “real” profitable operations of a viable industry. It is reasonable to assume that oil & gas investors agree with that assessment as additional capital investment has been suspended since 2015. Since that time a mad scramble for cash has sought to make up for the cash deficiencies and remedy the capital needs of each year's capital budget. Each year becoming more desperate and destructive to the producers long term financial health and the integrity of their officers and directors. Producers have no capital structures, no support from the financial or banking communities, no trust with the service industry they’ve destroyed in this process, shortages of capacities and capabilities within that industry and short to long term staff shortages in their own industry. 

When an industry is faced with difficulties such as those being presented, the logical action is layoffs. And many have been conducted. The most important point to make here is the area where the layoffs occur. The first year's layoffs need to maintain the capabilities in the producer firm's processes. The long lead times of securing the land, drilling and equipping a property for production can take up to ten years. To ensure this continues you only cut at the first year of this process, the assumption being these resources can be reclaimed next year when things improve. And if the difficulties continue you’ll cut those that are involved in the second year of the process. The third and fourth and so on. After seven years of the investors' strike and critical cash shortage it is reasonable to assume that in addition to the financial difficulties, the operational capacities and capabilities have not been providing the appropriate pipeline of new opportunities for an effective operation. The cupboards are bare. Those that were needed in the first year processes may have been outside of the industry for the better part of six years and will be difficult to get back. This deprecation and destruction will not be evident on a financial statement but will begin to show when the need to resume operations is demanded of the organization. Extension of this thinking to the service industry makes it a particularly difficult aspect of the financial and operational difficulties producers face. And the loss of these resources is an unnecessary tragedy where the replacements will not be recruited from producers experienced best of breed forerunners. Then we need to add the dynamic of shale’s steep decline curves. Rebuilding oil & gas is not a luxury, it’s a necessity.

Politically the producer officers and directors have taken a back seat to managing the industry for the past number of decades and left it to others to define their role in society. Today they have no evident value in asserting any need and are therefore relegated to hiding under the desk politically to ensure no one sees who they are. Frequently pointing the finger at others to redirect the focus.

What’s surprising is that nothing’s been done about these difficulties. People, Ideas & Objects et al’s Preliminary Specification has been vilified and ostracized for our attempts to increase profitability and accountability to deal with these issues. We find it curious why the industry state of affairs remains and we’re the only group outside the investors that have expressed the appropriate concern. If it is as we suspect that SAP is being used to establish the existing permanent means of unprofitability and unaccountability that we documented in our RFP Response, then the possibility of People, Ideas & Objects survival over the next decade while SAP proves this hypothesis is very low. Is this what’s desired?

Some might say that the Preliminary Specification is too expensive and I can assure everyone that initially it is. Producers could have done something about that, however those opportunities are long past. Besides, our value proposition makes it the best investment producer officers and directors could make at this time, and maybe in their careers. A budget where oil & gas investors will be provided with an assurance that producers are committed to profitability and accountability and are seeing they’re dealt with. Looking at SAP in terms of its cost, and it may be initially less expensive, however there’ll be no returns in terms of the quantifiable or qualifiable profitability and accountability set out in their clean energy transition vision. On the contrary. It will be providing the producers officers and directors continued unaccountable and unprofitable cannibalization of the value generated by the oil & gas investors investment in oil & gas. Acting as their blind sleepwalking agents of whomever will feed them.

Time is now the resource that is at a premium. What is necessary for the oil & gas investor is to be specific as to what is an acceptable solution for tier 1 ERP solutions in oil & gas. Which can only be the successful implementation of People, Ideas & Objects, our user community and their service provider organizations Preliminary Specification with Oracle Cloud ERP as the oil & gas’ solution. No alternative will be acceptable.