Where's the Problem? Part IV

 On Monday we reviewed the first major process of innovation in the Preliminary Specification. It consisted of the producer's deployment of its capabilities and capacities in an environment where the demand for the technical resources were projected to outstrip supply. The development of Intellectual Property in the hands of those individual technical resources. Providing these technical resources with the motivation to develop the underlying science, applied science and their technologies of oil and gas. And to play on the sciences and technologies interaction and inter development. The second major process of innovation in the Preliminary Specification is the topic of discussion today. 

These individual technical resources are not an island upon themselves. Just as producers have tried to wall in the capabilities and capacities of the entire administrative, accounting, regulatory, engineering and geological domain completely within their four walls. This brings about a limited application of the science and technology of exploration and production. These domains have far exceeded the capacity of one individual or one producer many decades ago. A more holistic approach is going to be necessary for the development of these sciences and technologies if we are to expand the capacity and capabilities of the always profitable everywhere North American deliverability, and achieve energy independence for the lowest possible cost for the consumers. To continue to think otherwise is ludicrous, but then we have the destruction we have today. 

Specialization and the division of labor is the means in which to resolve these issues and expand our horizons across the 21st century. Without the ERP software such as the Preliminary Specification to define and support the organizations within the North American petroleum marketplace, this will never occur. In addition, without the software development capabilities of People, Ideas & Objects and our user community being established as a permanent facility in the North American market, we are only solving the issues of the day. Subjecting ourselves to the inability to act in a constructive manner to the future changes and their demands in the oil and gas industry. The Organizational Constructs of the Preliminary Specification play an important role in enabling these to be maintained and to follow the principles that have been established in the U.S. Constitution, the capitalist system and are the reason the U.S. is the dominant economy. Bureaucracies didn’t make it on that list.

Therefore in terms of the second major process of innovation that is established in the Preliminary Specification we need to ensure that the industry as a whole provides an environment that fosters an open and collaborative marketplace where ideas dominate. Where ideas are what get the competitive juices flowing to push the sciences and technologies forward. The key to this is the establishment of a new document process within the modules of our software that we call the Work Order. We have noted that there are two major processes that are managed by the Work Order and discussed one of them at length in the Organizational Constructs wiki page. In summary it seeks to enable the ability to charge these technical resources time to the various overhead accounts, AFE’s, leases etc. It works across the industry, therefore establishing the second source of revenue for the small and start-up producers to begin their firm and allow the engineers and geologists a means to capture their time and efforts through an efficient and effective interface to the industries Joint Operating Committees. It will have the appropriate billing and management facilities to control costs or conversely manage revenues. A sizable feature set more than what is available today. The second set of features of the Work Order is where we’ll be able to establish the foundation of the industry to expand on the science and technology of oil and gas and enable the Organizational Constructs to contribute innovatively to benefit from them. 

Professor Giovanni Dosi said it best in his paper “Sources, Procedures, and Microeconomic Effects of Innovation.” Journal of Economic Literature Vol. 26, No. 3 (Sep., 1988), pp. 1120-1171 (52 pages). I am including some relevant quotes of Professor Dosi’s with limited commentary to acquire a sense of the understanding of what is needed within the greater oil and gas industry in order to facilitate the developments of the sciences and technologies of engineering and geology. 

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation.

• The search, development and adoption of new processes and products in market economies are the outcome of the interaction between:
• Capabilities and stimuli generated with each firm and within the industry of which they complete.
• Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc.
• Additional issues include the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulation, tax codes, patent and trademark laws and public procurement.)

However, even in the case of “normal” technical search (as opposed to the “extraordinary” exploration associated with the quest for new paradigms) strong uncertainty is present. Even when the fundamental knowledge base and the expected directions of advance are fairly well known, it is still often the case that one must first engage in exploratory research, development, and design before knowing what the outcome will be (what the properties of a new chemical compound will be, what an effective design will look like, etc.) and what some manageable results will cost, or, indeed, whether very useful results will emerge. 

In general, each organizational arrangement of a firm embodies procedures for resource allocation to particular activities (in our case, innovative activities), and for the efficient use of these resources in the search for new products, new processes, and procedures for improvements in existing routines; however, the specific nature of these procedures differs across firms and sectors. For example, the typical degrees of commitment of resources vary by industry and so do the rates at which learning occurs. I now turn to the interpretation of these phenomena.

general scientific knowledge yields a widening pool of potential technological paradigms,

• The nature and interests of the bridging institutions between pure research and economic applications. (p. 1136)
• Institutional factors that drive the technology or science, such as (the military) (p. 1137)
• The selection criteria of markets and or techno-economic requirements of early users. (p. 1137) (NASA, Pentagon, the FDA and Nuclear Reactors for the Navy.)
• Trial and error mechanisms of exploration of the new technologies often associated with Schumpterian entrepreneurship. (p.1137)

With respect to the engineers and geologists Intellectual Property and its development. There is this interesting aspect noted in Professor Dosi’s research. He notes that Levin states that the control of complementary technologies becomes a “rent-earning firm-specific asset.” Dosi states 

in general, it must be noticed that the partly tacit nature of innovative knowledge and its characteristics of partial private appropriability makes imitation a creative process, which involves search, which is not wholly distinct from the search for new development, and which is economically expensive - sometimes even more expensive than the original innovation, and applies to both patented and non-patented innovations. (p. 1140)

And finally in terms of the relevant quotes from the paper.

Market structure and technological performance are endogenously generated by three underlying sets of determinants.”

• The structure of demand.
• The nature and strength of opportunities for technological advancement. 
• The ability of firms to appropriate the returns from private investment in research and development.

I recommend everyone download Professor Dosi’s document (paywall) it is a tragically difficult document to read as it is comprehensive and thorough. Professor Dosi is well established in the innovation field and has contributed greatly. 

The Work Order of the Preliminary Specification in this second role of expanding the industry base of knowledge and understanding is an important element of the future. The Work Order feature that I’m highlighting is the ability to create ad-hoc working groups for research and study between producers with / without having any prior established relationship, agreement, interactions or transactions in the past. Unlike an AFE or lease that are derived from the Joint Operating Committees working interest distribution. These working groups may be established with others outside of the producer's usual domain of partners, service industry representatives, universities and other institutions that have resources of interest that are available to be committed to a working group for the purposes of what Dr. Dosi has described. These working groups are able to be accommodated in the current ERP systems through the normal process of accounting, however, are a logistical and financial nightmare due to the structure that the producers are operational under. These working groups may have contributions in the form of cash, intellectual resources, Intellectual Property and other resources beyond the normal understanding of a business relationship in oil and gas. Therefore they have been avoided as they’re too difficult to administer and those that initiate them are usually holding the line with mitigating the difficulties and misinterpretation of what was happening and who was obligated for what in order to earn which. The sense of collaboration and pursuit of the science and technology that was evident in these working groups in the 1960s is no longer present today. As they are more or less unused and unusable. 

The issue therefore is the point of where we’re at where we need to be in terms of the science and technology of oil and gas. It is clear these need to be reestablished to sponsor an overall direction and collaborative leadership position within the industry in terms of its innovation, research and development. And to do so, not with the level of participation that was done in the 1960s, but a quantum, exponential and logarithmic scale larger than what could be conceived of by the producer firms today. The Work Order system is the means in which to do so. It provides the interface necessary to capture the structure of the understanding of the purpose of the working group, the contribution of the participants and the distribution of any findings. Usually in the form of ownership of the Intellectual Property, which expresses the desire and motivation to have these working groups and to participate freely. Everyone sitting alone in their office downtown or at home isn’t going to do anything spectacular in terms of bringing about profitable, energy independence on the continent at the lowest possible cost to the consumers for the remainder of this century, and to do so for at least that long. 

Please review our page 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. 

Where's the Problem? Part III

 Related to the innovation that we discussed in last Thursday’s post. There’s an issue in the industry that has actually been clearly identified by producers over the past decade. It’s not that they’ve sought to resolve it in any way. They’ve actually made it much worse and still failed to address it. Yet I think if we asked anyone in industry about the looming shortage of engineers and geologists they would all know and understand the protracted mess we’re in with respect to the critical shortages of these key resources. University faculties for engineering and geology, related to oil and gas, are all but empty thanks to the chronic, boom / bust induced layoffs in those disciplines. And the retirement of the brain trust is ongoing. 

The Preliminary Specification uses five Organizational Constructs consisting of the Joint Operating Committee, Specialization and the Division of Labor, Intellectual Property, Information Technology and Markets to organize the industry and producer firm to enable them to operate in the 21st century. By using the Joint Operating Committee we move the compliance and governance frameworks into alignment with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the industry. To these constructs and frameworks we could add accurate and timely accounting, business and common sense, logic in addition to a myriad of others but I’d only be piling on. When there’s issues to resolve the first step in resolving them is to organize and that is what the Preliminary Specification seeks to do. But there’s more. Since January 2014 People, Ideas & Objects have dedicated our primary focus to building our key competitive advantage of our user community. To have quality, usable ERP software it must be driven by a high level of user involvement. Seven years of community effort, based on the structure we’ve given that community, has mitigated much of the time required in organizing these critical resources to develop quality software. Now we’re adding the customers necessary to fuel these developments' financial needs.

Secondly software and more specifically ERP software is the only means in which to organize continental and global markets. Serendipity and spontaneous order are redundant in the 21st century as software defines and supports organizations. Unfortunately without a software development capability such as what People, Ideas & Objects and our user community propose, software will only constrain organizations in proverbial cement. Organizational change can only be orchestrated through changes in the software first. Without a permanent and dedicated ERP software development capability and capacity, oil and gas will be repeatedly faced with the type of critical issues such as what its current unchanging environment provides. The type of situation we’ve labeled a modern day software bug. We’re in a critical situation in oil and gas. As we’ve detailed in the September 2021 section of our Implementation / Budgets wiki page. It’s no longer good enough to just own the oil and gas asset anymore. Producers will also have to have access to the ERP software that makes the oil and gas asset profitable. That is the Preliminary Specification and we are seeking from our customers, the future oil and gas producers and others, the financial resources necessary to build this software and community. In exchange we are granting the access rights to the software being developed and associated communities in order to earn the substantial value proposition between our vision and the status quo. 

The issue of the shortages of engineers and geologists is resolved in the Preliminary Specification in the following manner. Looking at the producers designation as operator is a requirement that demands producers have the requisite engineering and geological expertise, skills, capacities and capabilities necessary to deal just-in-time with the inventory of properties they own. In order to achieve these capabilities and capacities a producer, as operator, needs to have a surplus capacity of these resources available for the many times when their throughput demands them. In addition, as these sciences and technologies expand their specializations the associated division of labor increases. We believe the demand for more resources within each producer in order to cover off the diverse specialized needs of all of the operated processes of production and exploration will become problematic. People, Ideas & Objects feel that the operatorship role will demand an ever increasing surplus capacity of these resources be available, are not shared or shareable outside of the producer firm, other than through their Joint Operating Committees, and therefore we estimate these to be operational at 75% in terms of their utilization rate across the industry. Furthermore as specialization and the division of labor begin to expand further as it is the most viable solution to the shortfall in these resources. The industry's current organizational configurations operational utilization rate will drop due to the greater diversity of these resources demanded through specialization. We also believe the population shortage of these key resources, this diversity of their demands from specialization and their low utilization rate will quickly escalate as issues to cause each and every producer seeking these capabilities to move outside of the commercial realm. Today we believe that in addition to the wall of fixed overhead that each small and startup producer is faced with overcoming. What we have listed as their primary challenge. The dearth of these technical resources available to the junior sector, their costs and the diverse nature even today put these resources beyond the scope of the small and startup producers. These two issues are what we believe to be the primary and secondary reasons these small producers are currently travelling down the road to extinction. 

This is either the downfall of specialization and the division of labor or the hoarding of resources by the producers which has occurred in order to achieve the just in time, robust capability needed by each and every one of the operating producers. The upside of specialization is it has been the sole reason for the creation of any and all value experienced in the world since the late 1700’s. Deployment of these technical resources in a hierarchical strata within the producer organization, as it was so effectively done in the 1950’s may have ceased to function. The Internet and other Information Technologies such as ERP software are available to expand the role of specialization and better deploy these resources in markets, but also to substantially increase their productivity as we’ve defined our solution in the Preliminary Specification with our user community. Making up for any shortfall from their looming shortages from the universities and retirements. How effective can specialization and the division of labor be? Adam Smith who developed the theory in the late 1700’s researched their effect on the productivity output of a pin factory. As a result of breaking down the process of manufacturing of pins he was able to yield a 240 fold increase in the factory's output. The elimination of the current and anticipated surplus capacities in the producers, and the manner in which People, Ideas & Objects have employed innovation in the Preliminary Specification to reduce the redundancy of attempting the same failed “innovative” experiments at each location each and every year, or having the current producers designated innovative staff consumed with how better to be building balance sheets. To name just a few of the methods we’ve employed. These are three elements that make up some of how we’ve proposed to resolve these issues.

Therefore in conclusion, over these past two posts that summarize the first major process of innovation in the Preliminary Specification. We see that our focus on profitability will enable producer firms to turn to innovative solutions to their unprofitable, and looming unprofitable properties. Profitability being a real issue to People, Ideas & Objects we have incurred the persecution for such thinking in oil and gas, but survived. Elimination of the redundancy of the copycat providers that are fed the Intellectual Property from other vendors by the producers has done nothing but caused what can only be called an absolutely regressive status quo. Only the Haliburtons and Schlumberger's were able to prosper, all others were serially abused and its good luck now finding the field capacity and capability for the future. Even those two mentioned have left the North American market. Such is the damage that is experienced throughout. Intellectual Property provides the organizational construct in which to reestablish the appropriate means to rebuild the key resources of the engineers and geological capacity and capabilities in oil and gas but also in the service industry. IP will focus, advance and eliminate the redundancy that is inherent and encouraged in the current producer administrations. It just so happens that it’s also the law and the power that a primary industry has abused with its bureaucrats dictating to its critical resources to take it my way or the highway, is over. The world of oil and gas will be dominated by the prosperous, brain busted innovators who will command premiums for their service with no fear of being pirated by lackeys at the old producer firms. They’ll be welcomed by the dynamic, innovative, accountable and profitable producers being rebuilt. We’re all in this together and producer profitability is what’s going to be necessary to pay competitive dividends, service debt and rebuild all of these industries in the greater oil and gas economy with the faith and trust that’s been… Well no one has come up with a word that’s adequate for the depth of destruction we’ve all experienced. 

Developing this engineering and geological Intellectual Property, making it available within the greater oil and gas market for those to discover is one of the steps of this first major process of innovation in the Preliminary Specification. This IP is then available for others to see and understand how their ideas may fit in to solve other problems which generates more IP, products, services and subsequently profitable oil and gas production. This IP is listed in the Preliminary Specifications Research & Capabilities module which is then focused by classification and categorization into the Knowledge & Learning module. In other words, it's a marketing forum for their ideas and services as well as means for producers to learn what is available. It’s within our Resource Marketplace module that enables our new producers to find these ideas at their beginning and encourage them to develop with some of those primary industry revenue streams they’ll earn as a result of the efforts of all these people throughout the greater oil and gas economy. Why will producers be spending on service industry development? The simple answer is there’s no one else that’s going to. Prior investors in the service industry have vivid memories of investing millions of dollars in drilling rigs that were subsequently cut up for scrap metal to pay the back taxes and overheads to survive. It will be the only means for producers to rebuild the capacity and capabilities the previous administration frittered and wasted thinking it was nothing, had nothing to do with them and wasn’t their problem.

Please review our Wiki page 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. 

Where's the Problem? Part II

 First off, this blog post is number 3,000. Secondly, you all have my humble apologies.

Declaring some team as the innovative leaders of the producer firm is usually how the bureaucracy has dedicated themselves to innovation. Having the “team” resume their regular duties once the press release, or dog and pony show is completed. At best these “team” members which emulate the Former Soviet Union's propaganda committee, will gather once a month for advanced naval gazing sessions of their innovativeness. Although the situation is not the same, the two are oddly consistent in terms of their performance and productivity.

People, Ideas & Objects undertook the necessary research into how innovation is conducted and developed, implemented and managed in technology and science oriented businesses and industries. This was done through a comprehensive review of primary research on the subject. With a dedicated focus on two specific Professors Giovanni Dosi and Richard N. Langlois. What we learned is that innovation is a defined and replicable process that is instilled within the organization. It is either purpose built, as in the most obvious case of Apple, or it is culturally missing both organizationally and industry wide. In a global business environment where competition is no longer across the street and the consequence of it usually arrives in your market seemingly overnight. Or made apparent through the demands of the capital markets, with its speed of decision making and wealth of global options. Where the long standing reputations and cultures of a firm’s performance are what stand out and are what exist for eternity in an Internet connected, global rumour mill. 

Idle navel gazing is unproductive as most everyone can comprehend. In Tuesday’s post we discussed how the Preliminary Specifications detailed, actual, factual accounting identifies which properties are not producing profitably. How a team of engineers and geologists could be deployed to triage what might be possible to remedy the situation at that specific property and enable the changes necessary for profitability to return. Deployed on a real, live issue is where innovation is needed. Dreaming up solutions with no understanding of what the issues are, other than how to build the balance sheet faster might be what navel gazing is defined as. Profitability is the only business issue of concern anywhere and always. In the Preliminary Specification profitability drives the organization and innovation is its defined organizational solution. 

One of the five Organizational Constructs of the Preliminary Specification is Intellectual Property. The point of today’s discussion is on the IP of the engineering and geological science and technologies of oil and gas. These are now being documented and the copyright is being earned by the individual engineers and geologists that are joining our initiative to rebuild the oil and gas industry on an innovative and profitable footing. They will be the ones that are forming the technical expertise in the industry from the point of view of their application of engineering and geology as a service they’ll provide in combination with the Intellectual Property they’re now developing. (See also the discussion on Specialization and the Division of Labor.)The Knowledge & Learning module of the Preliminary Specification enables these triage teams to know and understand the state of the art in oil and gas. The engineers and geologists would be able to maintain their Intellectual Property in the Research & Capabilities module which then populates the Knowledge & Learning module by geographical, geological, operational and other criteria for the Joint Operating Committees that are associated with those designated characteristics and classifications. Providing the engineer or geologist with a means of marketing and distribution of their newly published, probably published somewhere else first, and well earned Intellectual Property. Where they will be able to use that published explicit knowledge in combination with their tacit knowledge as a service to build their consulting revenues we’ve discussed in the Intellectual Property section of the Organizational Constructs page of our Wiki. IP based on some unique understanding of why that formation or that method of completion has behaved in that matter over the course of its productive life, and the innovative solutions they’ve developed. Solving real life problems that are derived from the lack of profitability. Not necessarily developing new earth shattering, pun intended, shale technology but focusing on the critical science and technological details of the entire oil and gas industry.

As a result of People, Ideas & Objects, our user community and their service provider organizations proving there has been a deliberate lack of profitability, accountability and speed in today’s North American oil and gas producer. And there has been no action to resolve it. We are relegated to rebuilding the industry brick by brick and stick by stick in the vision of the Preliminary Specification and as we’ve defined in the recent series “Oddly Enough, That’s Not Much Different Than the Old Plan.” To make these changes in the institutions that exist would be difficult at any point in time. When these organizations are faced with existential crises such as they are today, then they have the opportunity to do so. No changes will be made under the current administration, we’ve now proven they’re too conflicted and self interested to make the appropriate choices. Therefore it will actually be a simpler process of organizing in our new environment without having to deal with the constraints and compromises of the past cultural influences being considered. We will be able to rebuild much quicker in the vision that has been laid out and gain an efficiency and effectiveness above what a compromised solution would have offered. We are liberated and unconstrained.

The above detailed process of the IP of engineering and geology deployment is part of one of the two processes of innovation provided in the Preliminary Specification. By using Intellectual Property to appropriately manage the development of the science and technology of engineering and geology we are using the tools that were set out in the U.S. Constitution and the primary reason the U.S. is the most dominant economy in the world. Producers today have sought to consistently wash the IP of any vendor across the industry in an attempt to foster copycat styled competition in a vain attempt to achieve cost control. This is contrary to what the law requires, or in other words illegal. And it has stifled the innovation in the industry as there is nothing in it for anyone to bust their brain when the industry just abuses the results. The copycat competition fostered in their environment has ended as Intellectual Property is now recognized as its dominant position in business. Oil and gas will be based on its science and technology of engineering and geology by those who advance it. Copyright provides the monopoly power to express the ideas that are discovered. Therefore limiting the duplication of innovations in the industry and focusing the market on those that have the ideas. Today, in order to adopt these copycat competitive policies, producers had to ensure that none of this explicit engineering or geological knowledge was published. It had to be freely available to anyone and everyone in all of the producer firms. It is therefore undocumented and available for anyone to pick up, publish and begin advancing it by beginning to build their IP and service organization or oil and gas producer around. In today’s business environment there is quickly becoming the understanding that it is a software world. Such as what People, Ideas & Objects et al claim that it’s not good enough to just own the oil and gas asset. You’ll also need access to the software that makes the oil and gas asset profitable. 

Software is derived from Intellectual Property. It is therefore an Intellectual Property world and those that are eligible to earn it and claim it are those that are respected. Trolls, pirates and others are sent back to the fourth century. If you are actively seeking to destroy another firm's well established Intellectual Property by copying it, then you are effectively destroying all Intellectual Property. And you will be going against all those that are now basing their organizations on IP, and that is no longer and will never be acceptable again. You will be making yourself a pariah. The fact that oil and gas has not documented their IP is an opportunity. You wouldn’t be copying any other published works. And the process of having it documented and published by those who will earn the rights should be seen as necessary in order to turn things around in this industry. You’ll not be a pariah, but will be conducting a valuable service that should have been completed long ago. Even if there were published works they would form the foundation of the industry that is readily available and can be seen by those with new and innovative ideas that are outside the domain of the status quo. Expanding the understanding of the industry with the opportunity to publish their new ideas and establish new service organizations or producers around that idea. An endless cycle of rapid and iterative innovation where technologies expand the sciences and in turn expand the technologies… 

Please note that this treatment is different from what was one of the compromises that were contemplated in the Preliminary Specification. Initially, and as the Research & Capabilities and Knowledge & Learning modules are written, they denote that it is a producer based development of engineering and geological based capacity and capabilities. This is no longer the case and is as I’ve defined here today. The earth science and engineering capabilities and capacities of the new oil and gas industry we’re building here are discussed in the IP section of the Organizational Constructs page of our Wiki. We’ll be discussing these points further in our next post. 

I’ve proposed a solution to the chronic lack of profitability in the industry and its associated issues of specious accounting. In late August 2021 People, Ideas & Objects put producers on record that they can’t, won’t and will not ever address their lack of accountability. Leading to the question of whether all of these issues were by design or incompetence. I feel this has now sealed theirs and our futures. The opportunity People, Ideas & Objects sees is that all of us can channel all of these people and Organizational Constructs into innovation, productivity, performance and profitability throughout the North American oil and gas industry. Tapping into their inherent motivations to capture a dynamic, innovative, accountable and profitable oil and gas producer and industry, focused on providing the most profitable means of oil and gas operations, everywhere and always. To enable a continued expansion of the deliverability and reserves to ensure North American energy independence for the lowest cost available to consumers. 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. 

Where's the Problem? Part I

 We’re starting off with a new journey here at People, Ideas & Objects with our user community and their service provider organizations. Opening the door to more participants in the industry to be included in the transformation of the old oil and gas industry into the new one built on the vision of the Preliminary Specification. With the size of the Internet we have the room to accommodate everyone. I thought that it would be worthwhile to start here with a quote from St. Augustine. 

Hope has two beautiful daughters; their names are Anger and Courage. Anger at the way things are, and Courage to see that they do not remain as they are. 

Some may state that I’ve had the anger down, which is true, but all of this damage and destruction should be seen as unnecessary. The Preliminary Specification is a radical, surgical reconfiguration of the industry to address it’s performance, profitability, innovativeness, accountability and speed issues, to highlight just some of the larger ones. Where are these issues and whatever could the problem be? And now we’re bringing up speed? When did speed become an issue on People, Ideas & Objects list of objectives? Good question, but it always has. Recall the many times that I’ve stated… 

We provide this by moving the compliance and governance frameworks of the hierarchy into alignment with the seven frameworks of the Joint Operating Committee. Enabling a greater speed, accountability and innovativeness of the producer.

The argument regarding speed may not have been discussed directly as clearly as the profitability or accountability has. I would assert that it is part of dynamism. The issue is of significant scope and scale as speed remains unaddressed in the current environment. It is a result of the lack of accountability mostly, but also the “belief” through specious accounting that building balance sheets is the sole purpose of executive management. When you’re not accountable for incinerating investor money it’s easy to keep the party humming for another quarter. Holding someone to account for the real loss of money is moot when the next truck with new investor cash is in the loading dock. 

Speed comes into play when the continuation of overinvestment as represented by that additional cash coming in from investors eventually leads to overproduction, or unprofitable production as we describe it, that destroys even the specious earnings these producers have reported for four decades. But this process takes time to take effect, think in terms of a few years for it to play out. This is followed by the invocation of the highly effective blaming, excuses and viable scapegoat generating machine that has the effect of taking a few more years before the religion of “capital discipline” is restored and field drilling activity is cut. Think of capital discipline as the brain surgeon who’s favorite tool is a hammer. It is the deliberate destruction of productive capacity of the producer firm, while the market "rebalances." In the course of the point of initial overproduction of a commodity dependent on the economic characteristics of a price maker. This causes the commodity price to drop below the marginal price instantly. And it has historically taken the speed of the industry to cycle through this entire process anywhere from 3 to 7 years. With shale producers looking to establish some solid records in the commodities recovery speed. I have argued that oil and gas will require deliberate efforts to remediate the markets back to normalcy. So yes speed has always been an issue, however the point of the exercise is that the producers would always display their bravery and courage to muddle through, once again. 

Since the commodity responds to any overproduction in real time this response by producers is inadequate and the cause of the 5 reasonable years of performance out of the past 35 in terms of their famed boom / bust cycle. Their accounting methods circuitously avoid the ability to recognize this or adhere to the requirements of basic business principles as those have all been worked out of their “build bigger, better, beautiful balance sheets” business model. Their inability to respond to their shareholders demands for accountability, an issue that People, Ideas & Objects proved on August 31, 2021, is what will be their defining criteria until such time as they are physically removed. Which is the job that the People, Ideas & Objects, our user community and their service providers, engineers, geologists and our customers are undertaking today. 

With the Preliminary Specification each property or Joint Operating Committee is furnished with complete financial statements each month. These will include the actual overhead incurred as we’re eliminating the charging of any overhead allowances. The monthly accrual of depletion will also be conducted for each producer in the property based on a reasonable, and competitive basis for producers to compete for capital in the North American capital markets. Therefore each property will be evaluated monthly as to its profitability / loss and if it is losing money it will be shut-in to provide real value in the business model that we’re pursuing. Incurring what we call a null operation, no profit but also no loss, the producer firm therefore achieves their highest profitability on their overall production profile based on the commodity prices on offer. The reserves will be saved for a time when they can be produced profitably. The reserves are not incurring production and storage costs for the excess production the markets don’t need. And the reserves are not incurring the cumulative and recurring costs of the losses if the property continued its unprofitable operations. But the best part is, the commodity prices would find their marginal price which would define the critical point where production should / should not occur. And the commodity market's response would be instant.

With the Preliminary Specification the organizational speed in which this occurs would be within the following few months that the property slipped below the null threshold. Accruals are done on the production process that will define the possibility of a loss in the subsequent month and this could be the opportunity, should there appear to be a loss, to deploy engineers and geologists to quickly review the property to see if there was anything they could do to immediately remediate the property and move it decidedly back to profitability before it was shut-in. Otherwise once the fact of the loss was verified the property would be shut-in to ensure that the maximum profitability was achieved by all of the producers involved in that Joint Operating Committee. The overall time for this being approximately three to four months contrasts to the three to seven years, and maybe upwards of several decades in the shale era that “capital discipline” provides. I am unaware and it is unknown at this point what this cycle time for clean energy will be. People, Ideas & Objects abbreviated process has the added feature of ensuring profitability in the producer is maximized at all times based on the realized commodity prices. Invoking a market or production discipline over the process that is missing and the main cause of the financial destruction we’ve witnessed today. Alternatively we can wait until oil prices reach negative $40.00 and refinery's make the decision to have producers shut-in production by force.

Once the process of shutting in the property has been completed, possibly as a last act of the engineers who were on the initial team sent in to try and quickly turn things around. A second team is sent in to do a deeper analysis of the issue and opportunities of what could be done. Looking to build the appropriate programs and raise the appropriate AFE’s for any field work that could or should be done to enhance deliverability, reserves or cut costs. This could be a key part of the overall process of innovation that is an inherent part of the Preliminary Specification. And although we haven’t been speaking directly about innovativeness, innovation is part of the genetic makeup of the Preliminary Specification and is defined within two major processes of the system, but also enabled throughout the industry. Our recent discussion of Organizational Constructs includes Intellectual Property of the industry as an organizing principle. How they ensure a rapid development of science and technology with the added feature of eliminating the useless nature of redundancies through repeated duplication.

I’ve proposed a solution to the chronic lack of profitability in the industry and its associated issues of specious accounting. In late August 2021 People, Ideas & Objects put producers on record that they can’t, won’t and will not ever address their lack of accountability. Leading to the question of whether all of these issues were by design or incompetence. I feel this has now sealed theirs and our futures. The opportunity People, Ideas & Objects sees is that all of us can channel all of these people and Organizational Constructs into innovation, productivity, performance and profitability throughout the North American oil and gas industry. Tapping into their inherent motivations to capture a dynamic, innovative, accountable and profitable oil and gas producer and industry, focused on providing the most profitable means of oil and gas operations, everywhere and always. To enable a continued expansion of the deliverability and reserves to ensure North American energy independence for the lowest cost available to consumers. 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. 

Oddly Enough, That's Not Much Different Than the Old Plan, Part IV

 With this plan of People, Ideas & Objects, we have a vision of how the new oil and gas industry will be rebuilt. There is much to be done for everyone who has an interest in the oil and gas industry and knows the critical role it plays in society. How the lack of profitability at the producer level devastates all those associated with it. And how truly damaged the North American industry is. Let's begin with two quotes that I find put in context the point where individuals, who see things this way, should look at this once in a lifetime opportunity. 

Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world. 

Joel A. Barker

If your life's work can be accomplished in your lifetime, you're not thinking big enough.

Wes Jackson

It is here that I mention that the monetization of the rights to access People, Ideas & Objects software are considered our revenues for a variety of reasons. We are not offering an investment, we’re offering a software service. People, Ideas & Objects do not have the wherewithal to be offering an investment with the regulatory requirements that are needed for that. This is also not part of our future, desire or need. The right to access the software is the same process that is conducted when purchasing any software anywhere including on the Apple App Store or Google Play. Those that purchase our production rights are our customers.

We began asking some of the difficult questions around how our revenue model was going to operate with this new plan. Let’s start today’s discussion of who we see as the customers that would be interested in developing the Preliminary Specification and in turn gaining the rights to realize the upside of our value proposition in a dynamic, innovative, accountable and profitable industry. Where the new producers' administrative and accounting, production and exploration are all managed through People, Ideas & Objects, our user community and service providers software and services we’re building. If we included the population of those people who work in oil & gas and associated industries we would be accessing a valuable group of customers that know the in’s and out’s of the industry and are able to effectively deal with its issues and opportunities. If we include our user community and their service provider organizations then we would have that same positive influence. And they would have in addition to their part-time revenues as a user community member, their service provider organization as their primary operation of day to day activities and the opportunity to realize the upside of our value proposition. For the industry, all these people would make up a highly motivated group who were fully vested in the future success of oil and gas. 

In addition to our potential customers from throughout the oil and gas industry I believe we have some appeal to the disenchanted oil and gas investors who have left or will be leaving the industry. For them to realize the upside of our value proposition is something that they feel they should have realized for the past four decades. For investors to leave an industry is the ultimate message of displeasure which they began expressing in 2015. Contrary to what the old producers state today about them, they’ll not be returning when nothing has been done to correct the chronic lack of profitability, specious accounting and serious lack of accountability. When they see a solution where these problems are rectified, particularly in the disintermediated and creative destruction world that now exists, they'll return. 

For our customers to have the production rights that we’re granting. Which leverages our claim that it’s not enough to own the oil and gas asset anymore, you’ll also need access to the software that makes the oil and gas asset profitable. Which consist of simply the exclusive right to access the software of the Preliminary Specification from People, Ideas & Objects and the service provider organizations that manage it. Gives them the exclusive right to earn the upside of the value proposition that we’ve defined across the North American industry. Our customers would therefore earn profitable operations on the oil and gas assets they own. If they participated in the development of the Preliminary Specification and acquired rights to access the software without any asset ownership this would still entitle them to earn some of the value associated with the value proposition. Such as a right of access fee. 

This discussion brings up the topic of the overall size of our budget which is significant. Mostly due to the profits and royalties that I’ve defined for myself. These are based on the value proposition that the Preliminary Specification provides over the base case. Although this would be lower than those times such as last April when oil was negative $40. There is a history of the high value of the differential that was accepted by the bureaucrats. The cyclical nature of the “muddle through” strategy has prospered in my estimation for a total of 5 years over the past 35. 1986 being the beginning of when I’ve been able to document that overproduction by our good friends became a global issue in the oil markets. Although current commodity prices have put a bounce in the existing producers' step, the number of times we’ve been here before is in the dozens that have cumulatively made up all of those 5 good years. A failing behavior that is unaddressed and unresolved yet remains to be promoted as the key "muddle through" strategy across the industry. The consolidation exercise will end in tears as the “big is better” mantra discovers “the bigger they are the harder they’ll fall.” The customers we’re addressing here are usually the ones who realize the consequences of the producers past chronic inaction. I’ve proposed a solution that addresses these inherent behaviors, the motivations, the issues and organizations that are necessary to eliminate these difficulties.

Our solution, the Preliminary Specification deals specifically with the chronic lack of profitability in the industry and its associated issues of specious accounting. In late August 2021 People, Ideas & Objects we’re able to record that the producer bureaucrats can’t, won’t and will not ever address their lack of accountability. Leading to the question of whether all of these issues were by design or incompetence. I feel this has now sealed theirs and our futures. The opportunity People, Ideas & Objects sees is that all of us can channel all of these people and Organizational Constructs into innovation, productivity, performance and profitability throughout the North American oil and gas industry. Tapping into their inherent motivations to capture a dynamic, innovative, accountable and profitable oil and gas producer and industry, focused on providing the most profitable means of oil and gas operations, everywhere and always. To enable a continued expansion of the deliverability and reserves to ensure North American energy independence for the lowest cost energy is abundantly available to consumers. 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. 

Oddly Enough, That's Not Much Different Than the Old Plan, Part III

 Today we’re going to be discussing the value that the oil and gas customers will gain as a result of their direct financing of the development and implementation of the Preliminary Specification. The three key attributes that are highlighted to begin this discussion are as follows. It is clear throughout this blog and our wiki that there is a high level of motivation for our user community members to be pushing forward at all times based on their distinct competitive advantages. These are in no particular order, quality, specialization and the division of labor, automation, innovation, leadership, issue recognition and resolution, creativity, collaboration, research, ideas, design, planning, thinking, design, negotiating, compromising, financing, observation, judgement and reasoning. To name just a few of their highlights. These also apply to their service provider organizations that are developed to deliver their tacit knowledge as a service in combination with the People, Ideas & Objects software delivery of the explicit knowledge. Second is the engineering and geological capabilities and capacities to deliver the exploration and production operations that in combination with People, Ideas & Objects et al round out the comprehensive needs of an oil and gas organization. Customers would only need to sprinkle in a little leadership here and there. And thirdly, the Organizational Constructs we’ve captured and are an inherent part of the Preliminary Specification. 

As you can see we’ve made some changes to People, Ideas & Objects. Cleaned the place up and moved some of the furniture around. Same people, same furniture, yet it’s a whole new operation! Another thing we’ve done is we’ve changed our funding paradigm. Dealing with the bureaucrats was not something that we could rely on. How could we ensure that their motivation was the same as what we were pursuing? Our concern was they would set the development in motion and then cancel the funding to it, causing a fatal blow to our effort, or any effort to challenge their administration. With the alignment of the motivations of People, Ideas & Objects et al, the engineers, geologists and customers funding these developments, we don’t have these motivational concerns. Each of these individual groups has their own intrinsic motivation to ensure these developments are successful and fully implemented as soon as possible. Why then would we hold out any delay of these efforts being undertaken until our budget was fully funded? We wouldn’t, and therefore we’re not. And as a result we’re proceeding on a pay as you go basis under this revised plan. We look forward to dealing with people who are motivated as equally as People, Ideas & Objects et al are, throughout this initiative. 

Secondly, recapitalization of the industry will be conducted by the customers organizing themselves with the support of those engineers, geologists we discussed and People, Ideas & Objects to purchase the assets from the market of the cash starved bureaucrats. We should note that the prices paid for those assets would not be what the bureaucrats have been swishing amongst each other at hyper inflated asset prices. Alternatively, customers could offer Judges in bankruptcy proceedings with alternative means of profitable organization of the assets as opposed to the current failed management plans. Those are just two routes in which the assets of the industry may be transferred, at fire sale prices, to the new and rebuilt oil and gas industry. 

What we do know today is it’s a new world. One where ideas are the predominant foundation of the industry. Acquisition by the customers of these industry assets would be a great place to start this thinking and apply game theory, strategic and tactical approaches to how those oil and gas assets are moved out of the cash dependent and desperate old producers into their newly formed dynamic, innovative, accountable and profitable oil and gas producers. In the short term they could own the property as a participant in the Joint Operating Committee as a non-operator. Customers may provide subsequent assistance to the banks to provide them with better management of the assets by having the bank reassign them to their more prosperous and viable candidates? Just a thought to get everyone doing some “outside of the box” style of thinking. After all, we'd be doing the existing producers a favor. They’ve all renounced dirty oil & gas and have moved on to clean energy don’t you know.

The issue regarding ideas is the ability to access them legally. Copyright demands their publication in order to maintain the right to express those ideas. People, Ideas & Objects hold the commercial license to develop the software and related services of the Preliminary Specification that I’ve researched and written. Access therefore is controlled through rights and privileges that are granted by the holder of the Intellectual Property. It is here that we find the source of the funding of the development of the Preliminary Specification. We spoke of the motivations of those associated with these new development plans. 

Let me now suggest that there will be derivative rights granted to those customers that are funding the development of the Preliminary Specification. Licenses will be granted to those customers who are financial supporters of People, Ideas & Objects budget. No non-licensed producers will be granted access to the operational software or to our user communities service provider organizations. Granting what we believe to be a significant competitive advantage to those customers who contribute to the success of this overall eco-system and the rebuilding of the oil and gas industry. Enabling what we believe to be an opportunity to realize the acquisition of the full asset base of the North American production profile. And in turn therefore, ultimately earning the entire value proposition of People, Ideas & Objects that has been discussed here before, the one that we’ve valued at between $25.7 and $45.7 trillion dollars over the next 25 years, to flow to them exclusively and for their benefit. With well in excess of $1 trillion dollars in market capitalization in the existing producers, investors do have the wherewithal and the motivation to support our budget and participate as our customers. People, Ideas & Objects therefore look forward to dealing with people, for the first time, that actually have cash!

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 and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with. I believe it must be done as preparation for the future. But also 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.

The question therefore, is this an appealing offer to the investment community? How should we structure the granting of production rights and importantly what level of interest would there be? People, Ideas & Objects are granting these production rights as a revenue generating operation. Do the bureaucrats with their unaccountability and unprofitable operations offer a viable opportunity or alternative? Begging, badgering and blaming in the same way the homeless do on the street. Recall when they begged the U.S. government to step in to save them in April 2020 because they ran their oil prices to negative $40. Maybe I was supposed to forget about that, or at least have the courtesy not to write about it. This is what I like about this business. Creative destruction and disintermediation are about change. The change today is the source of revenue in People, Ideas & Objects revenue model.

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. 

Oddly Enough, That's Not Much Different Than the Old Plan, Part II

 I want to thank the oil and gas producers for their conscientious efforts this year in focusing on increasing their share prices. This has been of great benefit to People, Ideas & Objects and it would be inconsiderate of me not to take the time to say thank you and that I appreciate their work. Where do I start? The standard of performance that you've set for yourselves will be challenging and I certainly wish you the best of luck in meeting those expectations. These higher share prices will signal an opportune time for investors to get out with some of their investment. Funds they could in turn use to finance the rebuilding of the new oil and gas industry we’re starting at People, Ideas & Objects, our user community and their service provider organizations. And there’s more. As we mentioned on Wednesday, disintermediation through the industries engineering and geological resources to establish the foundation of Intellectual Property of engineering and geological explicit knowledge. Therefore People, Ideas & Objects et al provide the administrative and accounting capacities and capabilities. Defining and supporting a dynamic, innovative, accountable and profitable producer and industry. And whereas the engineering and geological resources ensure the exploration and production capacities and capabilities are provided to ensure a dynamic, innovative and performance oriented producer firm and industry are established, defined and supported within our ERP software and their services. 

What’s in it if the oil and gas investors, should they decide to rebuild the industry with us in this manner? Many primary reasons and a couple thousand secondary ones. The first is our value proposition. There are significant costs associated with oil and gas exploration and production that have not been covered by the appropriate revenues over the past four decades. These costs were in turn offset by the excessive level and the high volume of equity issuances made through the capital markets. That was pre 2015 however, and not much has happened since then. Creating the current cash drainage and working capital crisis. The Preliminary Specification rectifies this and ensures that all production is produced profitably everywhere and always. This would create for the investors a valuable and lucrative value proposition that would attach to their, and only their production. We’ll be discussing this attribute further.

What we’re therefore offering is the opportunity for the oil and gas investor to rebuild the industry based on the vision of the Preliminary Specification. With an issue of this magnitude, the first step to its resolution is to organize. To organize anything on a continental system such as the North American oil and gas industry can not and will not be resolved through serendipity or spontaneous order. It must be purpose built within its ERP software first, such as the Preliminary Specification, or there is no conceivable way that the current industry will ever be challenged in its methods and means of management. This last point was proven unequivocally on August 31, 2021 through the complacency in which the officers and directors have approached this issue and its resolution. Refusing to account for any performance or their activities, or generate real profitability. 

Possibly the largest future issue the industry faces is the motivation issue. Currently there is no one in the industry for any reason other than themselves personally with any concern for the firm or its consequences. When the leadership has taken the steps that they have there is nothing left for anyone else to do. There are no resources dedicated to any initiative that is inconsistent with their personal requirements. The denial of People, Ideas & Objects is evidence of that. It may have been prudent for them to have kept their ERP choices open, yet that was not considered. Don’t get me wrong there are many people that are dedicated to the oil and gas industry, are motivated to do the right things, however are unable to do so with the leadership compromising any of their initiatives. Will the officers and directors consolidated mega-corp business model fail? Ultimately yes. Although it is a capital intensive business and the return of capital makes up the majority of its cash flow, it’s performance is substandard. Living off cash flow has proven to be a slow drain of the working capital of all producers, regardless of the commodity prices over the past four decades. Therefore it will inevitably come down to the same issue that has been resolved in the Preliminary Specification, but unaddressed today. The issue of production discipline and a fair and equitable means of allocating who produces. The Preliminary Specification uses profitability as the determinant of producibility, if it’s profitable based on a standard, objective accounting at the Joint Operating Committee or property level, then it produces. The current system of production discipline being practiced is a free-for-all with no discipline other than what is best described as “fools rush in.” When your product is subject to the market characteristics of a price maker this is a fatal approach. The devastated financial status of the industry is that it’s been destroyed. Providing producers with the motivation to continue to “rush in” to get what they can. 

Why is the motivation in the People, Ideas & Objects Preliminary Specifications vision of the rebuilt oil and gas industry different? I’m afraid that’s not a simple answer. My best expression of it would be in the following paper. Free at the link on Google Scholar. Cortright, Joseph (2001). “New Growth Theory, Technology and Learning: A Practitioner's Guide.” Reviews of Economic Development Literature and Practice (No. 4, 2001.) It does an excellent job of summarizing the issues and opportunities. I read an article in 2009 that is no longer available on Reason Magazine where Professor Paul Romer was discussing “New Growth Theory.” And his summary had brought it down to the three things it involved “people, ideas and things,” as opposed to old growth theory involving transportation, finance and communication. I changed things to Objects as we are object based software developers and this is how we perceive the situation in oil and gas today. Interestingly it was in 2018 that Professor Paul Romer shared the Nobel Prize in Economics with William Nordhaus for their contributions to new growth theory. From the paper referenced aboves Abstract.

New Growth Theory emphasizes that economic growth results from the increasing returns associated with new knowledge. Knowledge has different properties than other economic goods (being non-rival, and partly excludable). The ability to grow the economy by increasing knowledge rather than labor or capital creates opportunities for nearly boundless growth. Markets fail to produce enough knowledge because innovators cannot capture all of the gains associated with creating new knowledge. And because knowledge can be infinitely reused at zero marginal cost, firms who use knowledge in production can earn quasi-monopoly profits. All forms of knowledge, from big science to better ways to sew a shirt exhibit these properties and contribute to growth. Economies with widespread increasing returns are unlikely to develop along a unique equilibrium path. Development may be a process of creative destruction, with a succession of monopolistically competitive technologies and firms. Markets alone may not converge on a single most efficient solution, and technological and regional development will tend to exhibit path dependence.

Oil and gas being a complex and difficult science and applied science based business, can not exist for long in the consolidated mega-corp environment with rapidly diminishing cash. And I’ll add engineering and geological talent that will be leaving soon. Society today needs ten ideas to generate an incremental dollar of value. That which could have been generated in the past with just one idea. And what more than one hundred ideas will be needed to build that same dollar of value in the future. Ours, from the point of view of People, Ideas & Objects, our user community and service providers, the geologists and engineers that we’ve discussed throughout here and the Organizational Constructs of the Preliminary Specification, will be motivated to apply this new growth theory for their own best interests. For both their financial interests, as new ideas have monetary value and the career value of their accomplishments. All for the benefit of profitable energy independence across the North American continent, everywhere and always. Post August 31, 2021 we need to ask what is the plan of the existing and consolidated mega-corp producers?

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. 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. 

Oddly Enough, That's Not Much Different Than the Old Plan, Part I

  Many might have seen the video of Marine Lieutenant Colonel Stuart Scheller regarding his take on the Afghanistan situation. 

A growing discontent and contempt for my perceived ineptitude at the foreign policy level. And I want to specifically ask some questions to some of my senior leaders. And I’ll say as a person who is not at 20 years, I feel like I have a lot to lose… What you believe in can only be defined by what you want to risk. So if I’m willing to risk my current battalion commander seat, my retirement, my family's stability to say some of the things that I want to say. I think it gives me some moral high ground, to demand the same honesty, integrity and accountability from my senior leaders. 

I too have been demanding accountability for the damage and destruction done overall to the greater oil and gas economy. For the past thirty years we have received no revenue but that has not deterred us from correcting what we fundamentally believe the oil and gas bureaucrats have been doing wrong. Twenty two of those years (1991 - 2013) were consumed in the process of identifying the necessary solution, the Preliminary Specification. I have repeatedly placed accountability in front of those with the responsibility and authority to set their record straight. And now, we have the decisions of the boards of directors and they have walked away as of August 31, 2021. 

Yes we have a new plan that’s very similar to the old plan, I’ll also mention this post with this Victor Davis Hanson quote.

Aggressors have contempt for stronger people. Who have the power but seem to be afraid, or don’t appear to want to do something. And that is a fundamental human question of the human condition I think, but it requires some knowledge of human nature. And I think it’s in some ways a pessimistic view rather than a sermon on the mount.

This is our situation and a good description of the relationship between People, Ideas & Objects and our good friends the bureaucrats. I certainly have been aggressive in my posture due to the nature of the relationship that we have, and the level of frustration at the unnecessary damage and destruction that has, is and will occur as a result of their lack of action. I’d argue that mine is not a pessimistic view but a moral point of view. I wasn’t going to be standing around in 2021 telling everyone I told you so. That is without a solution in hand. 

The process of putting the producers' boards of directors on record was necessary and now it’s been done, they’ve let the deadline pass, we have proof to our claims that profitability and now accountability are not, never have been and never will be in their interest. We can go peacefully along with the rest of our day. What it is they do and how they’ll do it is of no concern or consequence to us at this point. It’ll be entertaining, mind you, but we’ll not expect anything but a continuation of the status quo. And that is what many people want. The point to remember from now on is it’s no longer enough to own the oil and gas assets. Access to the People, Ideas & Objects software makes the assets profitable is what is necessary and what we’re focused on building. There is substantial value in our business model over the base case. But there's one more thing we need before we get to the financial resources. The question of where the financial resources come from to build this is answered in these next few posts.

First of all I’m fully committed to the Preliminary Specification and the organizational principles therein. Particularly the need for user community based, quality software development and the service provider organizations our user community will provide. I believe my current market failure is a result of one absolute, proven, unimpeachable fact that has been consistent throughout my thirty years in this business. Our focus on a dynamic, innovative, accountable and profitable oil and gas producer, as the necessary foundation of a successful oil and gas producer and the greater oil and gas economy is inconsistent with the producers corporate objectives. And as with the experience of the first market failure in 1997 which I detailed in a recent post, our emphasis on accountability was not what Alberta based oil and gas producers desired regarding Alberta royalties. Today’s systemic lack of transparency throughout the industry, the lack of any tier 1 ERP systems are the natural growth from the seeds of these “successful results” of what those Alberta producers realized in 1997. Even though investors are demanding producers upgrade to tier 1 ERP systems, there has been no evidence of action and we can safely assume there will continue to be no action on that front. What I’m doing at People, Ideas & Objects is selling a tier 1 ERP system to enhance producers accountability and transparency. Doing the same thing over and over proves that I am crazy. Or, a level of accountability that is deemed to be the necessary minimum requirement of a successful business accountability is missing. And the cause of that is therefore subject to interpretation as to the motivation why oil and gas bureaucrats seek this obfuscation of their performance.

I am the beneficial owner of the Intellectual Property that makes up this body of knowledge. If the oil and gas industry is as interested in obfuscation why would any ERP provider subject their products' reputation to support that. Which tier 1 ERP vendor would step up to make that difference? Where will other ERP providers make their difference outside of our IP and how will they survive financially when they too have built their tier 1 solutions on enhanced accountability? Can they make a product viable in oil and gas or are they better off pursuing other industries? These are not my concerns and I only point to the fact that what is our IP and the reason it is fully respected by all other software companies. You don’t get far as a pirate in this business anymore. Our IP will also be adhered to by those boards of directors who are respectful of the laws, such as the U.S. Constitution, to ensure they’re not in any breach. 

It’s not just the 35 years that this overproduction issue has been present with all of that time being wasted. It’s also the trillions of dollars of sunk costs that are being added to daily. Unlike my prior market failures, I feel liberated and unconstrained or maybe uncaged would be a better description. 

It’s at this time I want to draw a parallel to today and a well known disintermediation that occurred late in the last century. The software tool that enabled the breakdown of the music industry was the distributed file sharing capability of Napster. It enabled anyone to serve up any part of their harddrive to be a universally accessible virtual hard drive to the world. Without respect to any file privileges, paywall or Intellectual Property constraints. Users employed this for the ability to share and download copies of music, movies and other entertainment for free. Ripping a hole in the revenue stream of mostly the music industry. Napsters business model was unable to generate any revenue for itself and it only attracted costs in the form of litigation and other trouble. Let’s for the purpose of this discussion call this the market failure phase of the music industries disintermediation. Along came Steve Jobs who had disintermediated the computer industry and understood the process principles well. He organized a crippled music industry around the use of iTunes and the ability for people, who were not seeking free music, only to purchase just the music they wanted without having to purchase fifteen other songs they didn’t, and generated a healthy business for Apple. People, Ideas & Objects are now at that same point in time as the market failure of Napster. 

So where do we go and what do we do? The first step taken by Steve Jobs in rebuilding the music industry was to have iTunes recognize and reestablish the Intellectual Property and revenues of the music industry. Therefore we need to go back and read in our new page Organizational Constructs on our wiki. These specific topics are the Specialization & Division of Labor and Intellectual Property organizational constructs inherent in the Preliminary Specification. Specifically, we're beginning that same first step to instil the IP of the engineering and geological resources to document and earn for themselves the Intellectual Property of the exploration and production processes for their benefit and the future of the North American oil and gas industry. Then read the Resource Marketplace, Research & Capabilities and Knowledge & Learning modules as well as the Work Order section of the Partnership Accounting Module of the Preliminary Specification to understand how their IP is organized and monetized for its owners in our software. The capture of this Intellectual Property has never been conducted, is readily available, copyright only requires the act of publishing to earn it, and until such time as it has this secured the industry will have no foundation of understanding of its explicit knowledge or organization of its processes of innovation. It will be those engineers and geologists who capture this Intellectual Property that will have the rights to apply their tacit knowledge of how things are done with respect to the IP they’re able to capture in the market. And then… 

This will be a race to see who can create the most value and established pedigree. The only asset of value anywhere in the world for the remainder of time is Intellectual Property. Those industries that exist today, who remain exclusively dependent on hard assets will have difficulty performing without access to the software and Intellectual Property that are owned and operated by those that own and manage that IP and which makes the hard assets perform and be profitable. It’s not enough to own the oil and gas asset anymore, without access to the software that makes the oil and gas asset profitable. And here’s the point of all this discussion. The Preliminary Specification organizes the oil and gas industry, including the means for those engineers and geologists that will secure and own the IP of the exploration and production processes to employ it, develop it and generate their revenues in the process of making these hard assets perform. People, Ideas & Objects, our user community and their service providers handle the organizational, accountability and profitability, whereas those that take this opportunity will provide the dynamism, innovation and performance. Ladies and Gentlemen, start your blogs. You are the future of oil and gas. 

Well the old boiler plate text just doesn’t cut it does it. Let's try this for a start. 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. 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. 

Our All Reward With No Risk Offer, Part III

 Granting the benefit of the doubt to producer bureaucrats I would say the following. Plagued by indecisiveness and dictated to by the variability of commodity prices. Bureaucrats are standing alone with little to no support in terms of what and where to turn. What has worked in the past, the standard rule book per se, has ceased to be valid and everything they’ve tried has not been able to reinstate their traditional business model of bringing a difficult, rare and limited commodity to market in adequate volumes to meet consumers demands. The disruption they’re experiencing is predominantly due to the transition to an era of abundance through shale. An era that they’re unsuited and incapable to deal with from a business basis. On a broad spectrum of possibilities this may be one scenario of an extreme. On the other is the critical alternative that I’ve been putting across here for the past number of years for the variety of reasons that I’ve documented. Producer bureaucrats seemed to me to be motivated by the self-serving ways in which they prospered financially. One lesson that we can all learn today from Afghanistan is that failure and defeat are clearly recognized by everyone. The bureaucrats' contingency plans to avoid the fallout of failure need to be clearly articulated before the point that they’re desperately needed. This has not been done as there is no expectation that their bankruptcy business model will fail. The only question to ask therefore is this by design or happenstance that the industry finds itself in this position?

We’ve heard the producers' expressions of profitability this past year. It is these same expressions they’ve made for many decades. If these producers have been so profitable for so long, why are they, as a primary industry, in the situation that they’re currently in? Why are they dealing with investors and bankers who are disenchanted? No one believes what producers are saying anymore. Having people believe you isn’t the issue however, it’s that no one trusts them anymore. People feel they’ve been betrayed. That is the point of no return, and what I think applies here. Therefore the question that needs to be asked is what is the responsible thing for them to do, how are they going to be held accountable in the future and what action can define them otherwise and allow them to walk the streets without shame.

Mine is certainly a different point of view isn’t it? What I’m suggesting is that directors take action to control the cash flow of the producers for the benefit of the shareholders and begin managing the producers in a profitable manner. End this cycle of destruction through the funding and development of the Preliminary Specification. Enabling them to establish the means to organize the industry in a manner that is in the best interest of the shareholders. Does anyone now doubt the value and need for an organization to be pursuing the objective of “real” profitability everywhere and always? The core foundations of our capitalist system. Otherwise, we all face what I suggested at the end of our earnings review to be a secure, permanent, independent and unaccountable bureaucratic state. Perpetuated through repeated bankruptcies. And failing in every aspect of their responsibilities. 

I’ve sustained the People, Ideas & Objects initiative in an attempt to ensure that things could continue without a disruption in the capabilities and capacities of the industry. I don’t think that’s possible now. The consequences of the damages realized by bureaucrats willful inaction will be that consumers will once again have a dependence on foreign sources of oil for what I believe to be an unnecessary period of time, until the industry can be reconstituted. I entered this business in 1991 with the opportunity to bring the systems into place where the data was to be captured down to the well level. What would be necessary as a precursor to the adoption of the Joint Operating Committee. Even today this ability to determine profitability at the property level has not been attained. Reporting at the well level was one of the reporting requirements of the then Alberta government's Royalty Simplification initiative. An initiative that ended in my first market failure of attempting to bring a solution to this market. The initiative was contaminated due to the obstinance and desire for producers to be unaccountable to the Alberta government. 

There will be consequences if directors decide not to adopt the business models inherent in the Preliminary Specification in the direction being offered. Just as there have been consequences as a result of the impact of shale in natural gas in 2009, oil in 2013 and 2015 when their investors began leaving. Producers can not sustain a viable, healthy existence without change to their business model. Not going forward after August 31, 2021 will have been a willful decision based on the facts as presented. Facts based on the thirty five year existence of a critical, terminal issue that has been unaddressed and destroyed producers' performance in a now failed industry. Directors' decision not to proceed with the development of the Preliminary Specification will indicate they’ve decided against profitability everywhere and always in North America. Unless they have other plans, outside of consolidation, clean energy, or the space race they’ll need to define the direction they’re headed. What logic, common sense, where are the business principles being applied and what is the plan in this, the thirty sixth year we’re entering that this issue has dominated? Or do they just need more time?

I don’t think anyone would consider that after sixteen years of my public dissertation of this issue that it would have somehow gone unnoticed. I don’t think that after thirty years of bureaucratic abuse someone continues a futile effort without knowing where there’s smoke… I am persistent and obstinate, and for that I would have qualified as a bureaucrat, I just don’t qualify for any of the negative attributes. And don’t think that there’s just me out in the distant field screaming by myself. There are many of us who are now thinking this way and I’ve always resonated with the great unwashed, as the bureaucrats like to derogatorily call us. Access to the oil and gas revenues in a somewhat similar way that bureaucrats have been able to divert them for their cause are not going to be freely capitulated by the bureaucrats. We’ve now put it to the directors. And next Wednesday we’ll know for certain that our future is or isn’t destined through that method. (Hat tip, don’t put money on it happening.) People, Ideas & Objects et al will need to begin the process of how we’ll make the changes that are so desperately needed in the industry. Completely outside of the industry. After August 31, 2021 we’ll move on with those. There’s no one else in these firms for us to deal with now. We’ve exhausted the list and I’m betting they’ll all have said no. It’s not that we didn’t give them the time. It seems to me that we’re the last ones to leave.

The only solution as it stands today, from a creative destruction and disintermediation point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers 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. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. We’ve 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.