The Work Order

 First of all collectively People, Ideas & Objects have been the most consequential project I could ever consider that I was involved in. It is everything I would ever want to be involved in and I would never have given up a day of the time that I’ve spent on it. I see that I began writing the Preliminary Specification on this blog on August 11, 2011 and finished on August 9, 2012. All but a few of those days were posts of the Preliminary Specification and I was posting every day of the week throughout that year. I recall my concern was being late in terms of completing our product and getting it to market. A decade later it seems a misguided sense of urgency, not rushed, however the focus and need to have the product completed is evident in the product today. I was in the middle of a comprehensive solution that may be confusing to some and although it might be clear to me, the product needs to be polished. Although I’ve undertaken the task of editing the Preliminary Specification I now see the necessity is urgent, but not with my over the top sense of urgency. Today we have the completion of the Work Order page of the wiki. In terms of how we organize ourselves for a new approach to the difficulties we’re experiencing in oil & gas, we need to introduce new processes that capture new dynamics within the producer firms and industry. The Work Order is one of those new approaches. The following text was added as a preamble to the page and there was extensive editing of the document.

In oil & gas there are two methods in which to capture costs. The first is the AFE for capital, and the second is the Lease for revenue and operating expenses. These have been the standard methods used throughout the industry for many decades and have served the industry well, particularly from the point of view of distributing the costs and revenues to other working interest partners. We are introducing a new document to augment the AFE and Lease and enhance the ability to control costs in the industry. It is what People, Ideas & Objects are calling the Work Order. It has two distinct roles and serves to capture costs in ways that are not being captured today. The overall objective is to enable innovation throughout the industry, the producer firms and Joint Operating Committees on the distinct science and technology of oil and gas exploration and production. 

The Work Order is an implementation of our Accounting Voucher. A feature that we introduced as a separate module in the Preliminary Specification and a reflection of the capabilities of the Vouchers template characteristic. The Work Order is designed to capture costs in the producer firms, Joint Operating Committees or other organizational structures that may or may not have a defined structure in terms of a formal agreement supporting the project or Joint Operating Committee. Where costs and or revenues could be assigned and authorized in the Work Order as the document that forms the necessary details supporting these ad hoc organizations. These are not generally material costs however involve other complicating factors. This is not a license to spend funds in unauthorized areas. It is a feature of the Preliminary Specification that enables the innovativeness to expand by allowing informal collaborative research and development work to be conducted throughout the industry on the basis of its sciences and applied sciences. A means to benefit those participants in the research and development project. 

Today these types of costs are found outside the scope of the authority and responsibility of the management of the producers. Producers are currently constrained by the AFE and Lease as methods to capture costs. These costs are therefore accountability and accounting nightmares that have proven to be more onerous to those that have attempted to benefit from conducting this type of research and development or even ventured to suggest them. The accounting for them is usually manual in nature as necessary in order to capture the unique understanding of each effort and reflect it appropriately from a business perspective. 

Examples of these costs may include a geologic study of the producer shale gas characteristics of the Permian vs those in Pennsylvania's Marcellus formations. Or the effectiveness of fracing on a longitudinal vs latitudinal orientation of the multi-lateral section of shale gas wells. I made the last one up but the need for these types of studies would be undefinable to any one specific property. They are necessary in order to advance the industries underlying science and technology, costly for one producer to undertake and of limited value to the one producer that undertakes them. If costs can be mitigated through a shared model the results become more valuable, and it is this distribution of the knowledge that is the basis of what we learned in our research from Professor Giovanni Dosi’s “Sources, Procedures, and Microeconomic Effects of Innovation.” that would be of benefit to any of the producers who participated in the study. Contributions from the producers could include financial or technical resources, computer simulations and other data, assets or value that a producer could contribute to the study. All participating producers would be entitled to the findings if their contributions were deemed to be equitable and other criteria of how long the study would take etc being defined. From this a group of producers would gain a better understanding of whatever they were studying, and it is best to recall that innovation isn’t always as a result of these successes but also the failures that prove what the science is not. 

The other method in which the Work Order is employed is in the process necessary for a dynamic, innovative industry to broaden the science and applied science resource availability through specialization and division of labor of the earth science and engineering capabilities of each producer firm and industry. What People, Ideas & Objects have defined as one of the producers distinct competitive advantages. The other being their land and asset base. 

In order to unleash the unshared and unshareable aspects of these critical, competitive and soon to be constrained resources to the broader market based on their specialization through the elimination of today’s operator role in the Joint Operating Committee and introducing the Preliminary Specifications pooling concept. The “pooling concept” in which those with the required specializations are available from the participating producer firms making up the properties Joint Operating Committee, or the market of earth science and engineering capabilities that are available to fill the needed role demanded of the property. The pooling concept is designed to introduce an advanced and advancing specialization and division of labor to these resources. And to release what we’ve described as the hoarding of these resources in each producer firm. The need to have just-in-time capabilities available to meet the demands of the producer's operated properties requires that a surplus capacity of engineers and earth scientists be available to deal with the cyclical nature of the internal demand for these resources. This hoarding is consuming large amounts of these resources in terms of the overall population of industry. 

To make my point clearer, let's break down a process that may be provided as a better service in terms of the type of earth science or engineering resources that could be reorganized on the basis of specialization. Ideally, when drilling a well having good well control is necessary. This can be achieved when the well is drilled on a known seismic line that reflects the targeted zones geological features. It can then be compared with a variety of well logs for similar wells in the area that are produced from the target zone or drilled there. At this point the sea levels could be determined and the target depth of the well established. This could be done in the future by an outside service that specializes in a variety of these different processes of analyzing the logs, using the seismic to choose the well location and picking the tops. Machine learning, artificial intelligence and human determination in the selection of the tops could all be managed by these technical specialists with quicker turnaround, at much lower cost and with higher quality. Releasing vast numbers of technical resources that are burdened by these tasks in each producer today. The service provider's results are available for the producer to verify. Much of this is done in software today, however by the producer firm with the resources of the firm being dedicated to it in an unshared, unshareable and unspecialized manner that is costing the industry and producers due to the inefficient use of the engineering and geological resources being consumed within each producer. With less specialized equipment and constantly switching between tasks unnecessarily and inefficiently. These technical tasks within the producer firm are valuable to establish well control. In turn the engineering and earth science resources of the producers would be focused on the higher level, value generating methods of dealing with the firms and Joint Operating Committee assets. While the service provider specializes in highly sophisticated ways to ensure their service delivery is of the highest quality, lower cost, precision and effectiveness. 

The other example of the Work Order is the one we identified in Organizational Constructs that changed the start-up and small oil and gas producers competitive advantages to Intellectual Property, earth science & engineering capabilities and land & asset base. Essentially the other side of the transaction of the prior example. Where the ability to generate initial revenues using the Work Order from the services provided of marketing the start-ups Intellectual Property and their unique earth science and engineering capabilities to other producers and Joint Operating Committees. These revenues would help to offset the difficulties of the start-up oil & gas process and defer much of the overhead burden that exists today. Moving the success or failure of the start-up oil & gas firm from its ability to access capital to a dependence on the quality of its technical capabilities. It won't be an industry based on who you’ll know in the future, but what you know, and what value you bring. These will be the determining factors of success and failure in the future oil & gas industry. 

Facilitating these changes is the Work Order and this is our solution to the constraint of these resources in the foreseeable future. What is agreed throughout industry is an issue as a result of the lack of replacements and the retirement of the braintrust of the industry. What we know is that the North American economy is the most powerful economy in the world and will continue to be so. For the oil and gas industry to attain and maintain profitable energy independence will demand much more of this existing scientific and technological resource base that may be static in terms of its population for some time. This shortage may be further aggravated as we also know that each barrel of oil produced will continue to be progressively more difficult from an earth science and engineering point of view. Our Work Orders resolution of this shortage is to turn to specialization and division of labor principles to leverage more throughput from the same resource base. These are some of the details of our Work Order.

Our next page will be our User Community Vision.

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

Miles to go Before I Sleep...

 I’m pleased to have completed the review of the Organizational Constructs page of the Preliminary Specification. Being the high level architecture of our offering. We are unaware of any other ERP systems offering that has adopted and codified the societal principles that have moved western economies forward and embedded them in their software. We believe these will be beneficial to oil & gas when People, Ideas & Objects, our user community and their service provider organizations are operational in the oil & gas marketplace. All five of these constructs are solid in terms of their determination of a structure and understanding that people throughout the oil and gas industry are able to relate to. That the Preliminary Specification they will use will be consistent with their understanding of the means of society in general. A high level alignment which is the much sought after wholly grail of ERP software.

The first Organizational Construct is specialization and the division of labor. In terms of generating value, these are the only means western economies have been able to build value for the past 246 years. Turning the administrative and accounting capabilities and capacities into industry based variable costs, variable based on profitable production, which will enable these non competitive attributes of the producers to achieve four critical features over today’s business model.

• The reorganization of the producers accounting and administrative resources into our user communities service provider organizations brings about the ability for producers to determine which properties are profitable, shut-in the unprofitable ones and therefore maximize their corporate profitability.
• Variable overhead costs are covered by profitable production. Overhead therefore is recovered in the current period and a “cash float” to pay these recurring costs will be created.
• An industry based capacity and capability replaces the individual producer based capabilities that are individually replicated throughout each of the producer firms on an unshared and unshareable basis. Therefore reducing the overall costs of North American oil & gas exploration and production overhead.
• The structure of People, Ideas & Objects software development capabilities, our user community and their service provider organizations provide producers with an iterative and incremental means to enhance specialization and division of labor consistently over the long term. Providing greater industry throughput from the same resource. 

Intellectual Property is the second Organizational Construct of the Preliminary Specification. It provides a legal framework that exists in North America that enables the rapid and efficient development of the science and technology basis of the oil and gas industry. The brilliance of this American system is the root cause of their economic dominance. Using that, which is the law, seeks to educate, inform, allow others to stand on the shoulders of giants, to protect their work while they do the difficult tasks of developing the much needed solutions to the difficult issues we face today and reduces the unnecessary costs of innovation by eliminating the “me too” and the repeated mistakes that are made when innovation is disorganized and unfocused. 

Tying into the industry culture of the Joint Operating Committee as one of seven of its frameworks enables an alignment between all aspects of the oil and gas exploration and production process. This is our third Organizational Construct. Creating a dynamic, innovative, accountable and profitable oil and gas producer and industry when the hierarchies compliance and governance frameworks are moved into alignment with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. The results are an organizational speed, innovativeness, accountability and profitability over today's base case. 

The fourth Organizational Construct that we’re incorporating into the Preliminary Specification is markets with the three specific markets that are dominant in the oil and gas industry. These are the Petroleum Lease, Financial and Resource Marketplace modules. Each seeks to provide a simulation of the market that exists in the industry with the facilities of a fully enabled ERP system supporting the activities and actions of the producer firm and Joint Operating Committee. When we’re moving from a centralized to a decentralized method of organization through enhanced use of the Internet. The dependence on the firm shifts from its internal use to a much greater use of markets. To enable this market facility within the Preliminary Specification is a capability that will enhance the producer firm, Joint Operating Committees and industry. 

The last Organizational Construct of course is the Information Technologies themselves. People, Ideas & Objects are not offering the latest version of a new wizbang technology. We are focused on the business value of the oil and gas industry. And enabling that through the now mature technologies that have developed in the IT market space. The value we generate from It is substantial and is noted here as a full Organizational Construct not only as a stand alone benefit but also as an enabler of the other four Organizational Constructs. The specific value from the IT Organizational Construct that we’ll bring about is as follows. The first is expanding the Cloud Computing paradigm to say that what it is that we are doing throughout our offering is precisely the same. Bringing about an administrative and accounting capacity and capability that involves a high capital cost in terms of establishing the capability, with substantial technical difficulty and bringing this down to a low variable cost. We could call what it is that we are doing “Cloud Administration and Accounting for Oil & Gas.” Extending this shared and shareable cost model throughout oil and gas administration and accounting to include even many elements of the CFO position. 

From our point of view these are the approaches that we need to take to begin dealing with the serious nature of the difficulties in oil and gas. This is the type of approach that will yield the lower cost and higher quality innovative and profitable producers everywhere and always that were looking for. And more than that, it will set a foundation for continued performance improvement. Although the alternative “muddle through” certainly has that special ring to it, doesn't it? 

I want to regress here for a minute and point out that People, Ideas & Objects have moved on from our position of where we were just a few weeks ago. We were actively engaged with the bureaucrats in an effort to encourage them to do the right thing in building the Preliminary Specification by funding the project. This is no longer the case. We’ve stated we don’t know who will ultimately be responsible for the funding of these developments, however we’ve proven the bureaucrats will not be motivated to do it. I now want to clarify how I see the situation that the bureaucrats have. 

Accountability is something that I don’t believe can be avoided, only deferred from the current period. The ability of the bureaucrats to skirt their responsibilities has been deft and wise from their point of view and to their personal financial benefit, however they’ll need to account for it nonetheless. Although they did not respond to the past seven years' call by their investors for an account of their actions, today’s high commodity prices don’t make any difference to this situation other than the stakes are higher and the issue more protracted in terms of the amount of money that’s on the table. Actions may be taken imminently. Making this a dangerous time for our very good friends. We are declaring that we are now unavailable for them and they will need to deal with the situation with whatever resources they have at their disposal. This was their choice and they’ll have to live with those consequences. If they are truly unaware of the situation that is one thing. That they have no solution to the issue after seven years is the other, and I don’t see their solution of destroying the industry further these past years as necessarily what was expected of them either. 

We are configuring an industry of successful producer and service industry organizations based on the issues that have caused the systemic failures that will also dictate future difficulties. These Organizational Constructs enable the producer firm to enhance their profitability everywhere and always, reduce their overhead costs in structural and permanent means to build real value for the producer firms and generate the cash resources they need to finance the future capital expenditures that no one denies will be required. Non participating producer boards of directors have told their shareholders they’ve opted out of an investment being made in their organizations profitability and performance? They’re in the clean energy business. Since directors didn't like our changes then their future will have been written through non participation. 

Our next page of the Preliminary Specification review will be the Work Order.

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

A Tuneup For Its 10th Birthday

 As People, Ideas & Objects have expressed throughout our history. Our concern was that the value in the oil & gas industry was being eroded away due to the lack of “real” profitability being earned throughout the industry. That this would ultimately lead, we believed, to a diminished capacity being realized in the producer's ability to function from a capabilities perspective. Leading to producers being unable to meet their primary objective of providing an abundant level of affordable oil & gas to consumers. The most powerful economy will also be the largest consumer of energy. North American society and standards of living would be severely diminished in terms of its opportunities if energy wasn’t readily available. A risk that is evident to most people today. This is People, Ideas & Objects, our user community and their service providers legacy and we’re proud of the work that we’ve done in working to mitigate this outcome. 

As with all things oil & gas there is a boom and bust cycle that is prevalent in the market as a result of the bureaucrats inability to appreciate their role in creating it and their lack of a response to eliminate it. What they’ve described as their “muddle through” strategy has been successful for five of the past thirty six years and we should have no doubt that it will be successful for up to another five years out of the next thirty six. 2022 appears to be the beginning of a potentially good year, the first in over a decade; however, the cycles of boom / bust are much more violent, rapid and short term on the boom side in comparison to the protracted periods of bust. The propensity and capacity to mess things up is undiminished as is my faith in these bureaucrats' capabilities to do so. These are not issues however as the bureaucrats are paid throughout the cycle and we’ll no doubt see the phenomenal innovativeness that we’ve always seen from them in the past in their form of innovative executive compensation. 

The question that may be answered in 2022 is how extensive the financial damage is that the producer firms have realized? Are the capacity and capabilities in the service industry resolvable in the short term? These and similar questions that have been unaddressed in the market are far more extensive than what’s realized today. And we understand that most people are concerned. “Muddle through” may be the only position to take as the ability to address their issues in superficial ways, in the very short term and with their limited resources will make their transition to clean energy appear to be the more viable strategy from a bureaucratic compensation and active management presentation. To suggest they don’t understand the issue reflects they have no plans or understanding on how to deal with these problems. When the leadership of the industry is this stale, uninvolved, focused on clean energy, uncaring and possibly unaware I don’t hold out much hope of these larger issues being resolved. 

These boom time era’s, where cash is filling the bureaucrats pockets, puts People, Ideas & Objects on our back heals again while the boom works its way into its ultimate disposition. I personally look forward to August 2022 when we’ll celebrate the decade of the Preliminary Specifications existence. Where we see the quality of that work being more relevant today than at any time during this past decade. It is therefore incumbent upon me to undertake a review of the Preliminary Specification to see how much of the clarity and meaning can be enhanced through application of some editing. 

If there has been a miscommunication on my behalf it is that I’ve been too focused on the chronic overproduction of oil & gas issue as it’s the cause of the disaster we’re experiencing. The title of this blog is innovation in oil & gas and that is also the basis of the structure of the industry we are proposing is necessary. It’s one thing to be profitable, but it is also necessary to ensure that the consumers are provided with an abundant source of affordable energy. These two opposing ideas are the dichotomy of the Preliminary Specification, the oil & gas producers and what is resolved in our solution and necessary in a science and technology based industry. Some may find it convenient that I can hammer bureaucrats for any reason as a result and I’ll certainly be doing more of this. Review of the Preliminary Specification shows that innovation isn’t a happenstance occurrence in organizations. Innovation is a purpose built feature of organizations and industries that demand specific elements be available and are required to fulfill these opposing objectives of the producer firms. Providing oil and gas producers with the most profitable means of oil and gas production, by establishing a dynamic, innovative, accountable and profitable producer and industry. If you believe that today’s producer firms will be able to innovatively resolve the problems they face then you may be mistaken. They’ve at best ignored the opportunity to enhance their innovativeness and profitability for the past ten years and did nothing but try to silence People, Ideas & Objects. They’ve ignored their investors since 2015. And worst of all they’ve ignored the needs of their business for the past four decades. 

We know from past experiences with the bureaucrats that they are always on their best behavior during these boom times. For the first couple of weeks anyways. These are the times when they’re waiting to ensure the ground they're standing on is firm enough for them to return to their most natural pose in terms of how they deal with things. 

Someone needs to make the decision to live with the consequences of “muddle through” or change it to what we have developed here at People, Ideas & Objects. My case has been made and we await the appropriate decision. The Preliminary Specification will be a decade old in August and I’m now reviewing and editing it for the purposes of clarity and any enhancements we may be able to make. Although 99% of the editing will be for clarity purposes, I will be attempting to enhance the area of where accountability is raised as I believe that area has fallen further in terms of what bureaucrats have done, there has also been a significant amount of change in the world of business since 2012 and although the oil and gas producers are still in the 1950s and 1960s organizationally that doesn’t mean we have to stay in the teens. I don’t see much occurring here either, as the precedent of using disintermediation was well established, little has changed in that arena and the Information Technologies were certainly mature at the time we originally published. I hope to be surprised and since we’ll have the time I’ll use it in the most effective way I can think of using it.

My intent is to continue with this editing until August and I’ve begun with the Organizational Constructs page, have a look. As I update them I’ll post the results when completed and any major changes, of which I doubt. There will be some research involved however more just to catch up then any new areas. Ideally September of 2022 would be a great time to start with this project however that possibility is slipping from our fingertips as we speak. Possibly the best news that I can say at this time is that postings during this period will be lighter and sporadic in terms of timing, I’ll always keep them sporadic in terms of content however. 

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

Change it, or Sustain it?

 It is here in the early spring of 2022 we find ourselves in the situation that People, Ideas & Objects have sought to avoid. Bold and pious claims however, our history is before you in this blog's consistency, dedication and concern for just this issue. Bureaucratic inaction has created a stalemate that is forcing oil & gas to make a decision, will we accept the status quo, or change it? Are we now at the point of that “jarring gong” as so eloquently spoken of by Winston Churchill?

Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong - these are the features which constitute the endless repetition of history.

Or as Thomas Paine stated in his pamphlet entitled “Common Sense” which was widely distributed and established much of the logic behind the need to develop the U.S. Constitution.

As Britain hath not manifested the least inclination towards a compromise, we may be assured that no terms can be obtained worthy the acceptance of the continent, or any ways equal to the expense of blood and treasure we have been already put to.

There has been no willingness to act, no compromise on the principles of the bureaucracy since the beginning of this issue as I documented in the prior post. The scale of damage and destruction has been tremendous. Over the course of these four decades how many trillions of dollars were lost, careers lost unnecessarily and the many businesses that would otherwise have been successful. From John Stuart Mill, On Liberty.

A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury.

The facts are in and they are devastating. Today’s service industry's inability to respond to the producer's demand to drill is understood in the following graph provided by @SoberLook. 1600 drilling rigs were active in mid 2014. By early 2016 there were 400. That was more or less seven years ago. Then a resurgence of drilling occurred to almost 1100 rigs in 2018. Showing signs of life in oil & gas however this we’ve learned subsequently was a false signal. We recall the expectation was that this activity would be paid for by producers on an 18 month basis. Producers were financing their field activity on the good graces of the service industries ability to grant them credit. “It was the only source of capital though!” After the destruction in the service industry, realizing finally there was no means of capital to support their organizations, producers began producing more to generate the necessary cash to pay the bills. Pushing the oil price to almost negative $40. Only to have the rig activity collapse to what appears to be 200 rigs in the third quarter of 2020. Expressing to any investors, entrepreneurs and people working in the service industry that they were the marks in the scam. We can reasonably ask today, maybe these rigs weren’t cut up for scrap metal due to the need for cash as much as they were cut up due to their rusting away? How could producers treat an industry that they’re solely dependent upon in this way? After seven years the expectations are that the producer bureaucrats are fine, where are the drilling rigs? How could anyone look at just this treatment of the service industry and state that the producer bureaucrats had any thought that ever occurred to them outside of their own skin? If the service industry fills the viable scapegoat role in the future oil and gas producer bureaucrats mind, then they’ll be happy with just that. 

Who could blame the service industry for being in the condition that it’s in. Drilling rigs are only part of that industry however they’re the leading indicator. If there’s been a seven year decline in drilling activity we know it has not been exclusively to that area of the industry. Therefore there is now a seven year lag time in terms of the producer firms responding to today’s market for more energy while the producers rebuild the capacities and capabilities to deal with today's demand. They’ll be needing many more excuses, people to blame and viable scapegoats. How this is ultimately resolved is with producer cash. They broke it, they get to fix it, there’s no one else and those are the rules. Oil & gas is a primary industry and were generating revenues throughout this period and as a result did not suffer other than at their own hands as a result of their obstinate and self centered deviance. Yet we see a lack of understanding and appreciation of the difficulties of others, much as what was expressed to the producers' investors demand for earnings since they began of their strike in 2015. And just as Britain showed no compromise towards America in their negotiations with the King. Thomas Paine reflects accurately in this next quote what our positions today need to be with our good friends the bureaucrats. 

But the most powerful of all arguments, is, that nothing but independence, i.e. a continental form of government, can keep the peace of the continent and preserve it inviolate from civil wars. I dread the event of a reconciliation with Britain now, as it is more than probable, that it will followed by a revolt somewhere or other, the consequences of which may be far more fatal than all the malice of Britain. 

And for us that form of “continental government” is a decentralized, disintermediated oil & gas  industry based upon the vision of the Preliminary Specification. Otherwise the question of where these bureaucrats are leading us can only be predicated by their history. As we’ve been aware these past decades we are unaware of any plan or direction of the oil and gas producers. They will “muddle through” as always. The consequence of this strategy demands that significant remedial action be taken by the producers in terms of rebuilding the capacity and capabilities of the greater oil and gas economy of North America. That Joe Biden inhibits them from this task is evidence of their continued direction of muddling through and viable scapegoating. Admitting to their current seven year lag time would be too honest.

The inability to act and respond to the demands of the market, which I would include their inability to listen to their investors, is the most remarkable characteristic of our good friends. They are set in their ways and know better than all others. To get where we are today demands they destroy everything that was built in the past, all of the subsequent investor stock issuances and all the revenues generated so that they can…? This is unknown and unknowable. The first question we may ask will it be a future where they’re accountable for their actions? And do so through the tier 1 ERP systems that investors demand are a requirement for their return? Will they respond to what is necessary to earn “real” profits? A point they do not understand, do not know how to do and will not listen to criticism of the quality of what they’ve reported or the implications of their ways. And most importantly, as Milton Friedman states.

The social responsibility of business is to make profits. 

The lack of real profitability in the oil and gas producers has been responsible for the lack of a prosperous and viable industry today. When people are asked to suffer through the boom and bust as if it’s a normal part of the business cycle then the bureaucrats come to rely upon that as their reasoning for their bad management and will never be motivated to change. All the while alternatives to the means of “muddle through” in the form of the Preliminary Specification which sets the foundation of a dynamic, innovative, accountable and profitable oil and gas producer and industry. Something we have nothing of today as a result of the lack of profits in the producers for so many decades. Relying on investors for a never ending supply of cash is like communism, it works until you run out of other people’s money. Operating an industry based on spending is a world less complex and difficult than an industry that demands profitability everywhere and always. And that is what is demanded in the Preliminary Specification and the primary reason that People, Ideas & Objects are so vilified.

One of the important lessons that we can learn today is that we now know the past inactions and behaviors of the producer bureaucrats. Even when they were in desperate difficulties themselves they did not listen to anyone, they did nothing. Therefore we can ask today what action and behavior should we expect when the business is reasonably healthy? Will the cash being received today be managed appropriately? There were commitments made for the loyalties that bureaucrats realized during their darkest days, and payback to those people are now due. And these commitments will be handsomely and willingly paid with all the other grift. 

Our choice is to sustain this failed industry or change it. I don’t know who’s decision this is to make, but it needs to be made. If this is acceptable action and behavior to others then we need to stand behind the bureaucrats' history and support it. There is this ugly quote in The Genealogy of Morals from Friedrich Nietzsche.

It is possible to conceive of a society blessed with so great a consciousness of its own power as to indulge in the most aristocratic luxury of letting its wrong-doers go scot-free. 

If it is not acceptable then someone needs to show the time has come and fund the development of the Preliminary Specification. If they too have determined it’s unsustainable then it must be changed. Putting off this difficult business of dealing with the bureaucrats has come to the point for someone needing to make this decision. They’ve earned our distrust as we watched them continue to destroy in such obvious ways. We’ve seen no leadership but more than that we've seen no commentary coming out of the producers. Their ability to articulate the role that producers should be fulfilling in the marketplace of supplying abundant, affordable energy to the consumers. And the importance of oil & gas has never occurred and is desperately needed from producers today. Tragically we've got elected government officials taking up the role of representing the industry and the direction that is needed. Therefore what's happening is the future is a complete capitulation of all leadership, accountability and responsibility by producer bureaucrats. This may have been their objective all along we’ll never know. If this is the future then we need to either accept it, or reject it now while it still remains an option. The forces of disintermediation have affected many industries already. And it is possible that all industries will eventually be disintermediated at some point. If it is the choice of the oil & gas industry to stand alone against this disintermediation by People, Ideas & Objects et al then that is what we need to deal with and accept. I am unaware of any other options for oil and gas. And this last quote from Winston S. Churchill, Volume 2: Young Statesman, 1901 - 1904. In his authorized biography written by Randolph Churchill and Martin Gilbert.

Are we to put aside great projects because they are debatable, or close the Empire to avoid friction in the House of Commons? Free criticism is the breath of our Constitution. To shrink from great tasks or newer enterprises because of the greater burden they impose upon representatives, and representative institutions, means simply shrinking from growth, and from the responsibilities of growth. 

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

People, Ideas & Objects et al's Marshall Plan, Part VII

 Leadership is one of those aspects in life that you know when you see it. You need to trust and expect the leadership of any organization will do as it states and that it will avoid the pitfalls that life can throw at it. As difficult as it is to define, delivering the necessary leadership that is needed as we proceed during times such as we find ourselves in becomes paramount. Today we find that the speed, volume and complexity of our lives demand that leadership provide the understanding and direction necessary. Leadership is no longer expected just at the top either, its demands that it come from all areas of the organization on all aspects of what the organization is involved in. 

Issue

Leadership in the North American oil and gas industry is non-existent. Constrained by the bureaucracy and granted only to those who have the authorization and responsibility. Any natural leadership that resides in the organization is limited to their job description and the consequences of stepping outside of their well defined domain is forbidden and the consequences are well known. The archaic and mechanical process of being granted ad-hoc authority is difficult with this process familiar to all who have attempted that gauntlet before. No doubt some may have succeeded in doing so, however the process is designed to discourage initiative and is highly successful in that objective. The leadership with the authority and responsibility chose to blame and scapegoat others, and the natural leadership within the organization is stifled. 

Regulation of the corporation twists those with the authority and responsibility of any opportunity into a legal and political pretzel that turns men into mice in remarkably short periods of time. This is where we find ourselves in 2022. It’s primarily Joe Biden’s fault because he’s responsible for all the oil and gas production that was ever produced before. The question therefore that needs to be asked is this the failure of the hierarchical means of corporate organization? Has the failure to respond in today's fast paced world defined an environment that bureaucrats can no longer deal with or effectively participate in?

What I would call the excessive time in which the answer to this question has been deferred has been several decades. The passage of this time has eroded the integrity of those with the authority and responsibility to manage these organizations. It has led to the overall lack of trust in these organizations in terms of their words and actions on a wholesale basis to all of its constituents. First it was the investors, bankers, the people in oil and gas felt betrayed too, the service industry and those involved in the greater oil and gas economy. Not to stop at that achievement, there seems to be an effective campaign to eliminate any trust that governments and consumers have in North American producers to do just their basic job of providing the market with product. Such is the scope and scale of the damage and destruction that I see in the North American oil and gas industry. 

Our “Marshall Plans” Response

My readers know that I am good with the broad statements that support my cause. I however choose to back these claims with evidence as to the issue of how and when the industry became so distorted and what efforts have been taken to resolve them.

• Late 1970s SEC changes to adopt Full Cost accounting and Ceiling Test regulations. 
• Leading to accounting distortions that caused overcapitalization and its inverse of equal amounts of over reported profits, creating overinvestment and finally chronic overproduction or as we define it, unprofitable production. 
• Profits were always reported yet producers became wholly dependent on investors annual investments to just pay the bills.
• This led to the creation of the term “market rebalancing” and its foolishness of deliberately deprecating productive capacity as we experienced in 1986 when oil prices collapsed to $10 and all subsequent collapses in the commodity market price. 
• Arguments to blame OPEC as the responsible party, yet their production remained profitable in the real sense at $10. Subsequent repeated price collapses in the oil markets have occurred since that time. Natural gas has shown the same characteristic price collapses, primarily due to shale. Yet OPEC does not participate in this continent's natural gas markets. 
• People, Ideas & Objects published the Preliminary Specification in 2012 to deal with this chronic overproduction by ensuring all production is produced profitably, in the real sense, everywhere and always. 
• Initiative is wholly rejected by producers as “collusion” and “unworkable.” Specious arguments that we refuted as self serving and a continuation of the excuses, blaming and viable scapegoating by producer bureaucrats.
• July 4, 2019 People, Ideas & Objects publishes a White Paper entitled “Profitable North American Energy Independence -- Through the Commercialization of Shale.” Promoting the Preliminary Specification as the solution to industries chronic overproduction. 
• The White Paper achieves a wide distribution, yet met with the same rejection and resistance from producers as the Preliminary Specification did before. Excuses such as they “can’t shut-in production without damage to the formation. Is operationally difficult and requires significant costs to restart the well.” Are repeated throughout the industry for months.
• April 20, 2020, nine months after the publication of our White Paper the price of oil dropped to almost negative $40 due to chronic overproduction and collapsing demand due to virus related lockdowns. 
• Refineries stop accepting deliveries forcing producers to shut-in production. 25% of world oil production is consequently shut-in. Subsequently all production is resumed without any formation damage being realized by producers. Damaged formations due to shut-in production in response to our White Paper was a lie, of which they knew the truth all the time. 
• Decline in North American production is due to natural decline and the inability of producers to function in the field with the decline in the service industries capacity.
• 2021 “Shale is not and probably never will be commercial.” 
• Are the words spoken by the majority of the producers. Sales of premier shale properties to get out of shale begin. 
• 2021 “Clean energy is the future.” Shale property sales proceeds are diverted to clean energy investments. Unauthorized and unapproved changes to the corporate direction of the organizations, producers declare they are focusing on clean energy. 
• Taking with them the oil and gas revenues to do so. Exxon feigns a boardroom battle over some board seats to make the transition appear shareholder driven and “real.”
• For decades producers claimed they needed to make sure that oil and gas prices remained competitive so that alternative energy could never get a foothold. 
• Now it is the bureaucrats who are taking the cash and oil & gas revenues to fund their unaccountable activities in an industry that has never performed even with government subsidies. 
• Choosing an alternative direction shows they’ve lost the focus and drive to remediate and rehabilitate the oil and gas industry.
• 2022 Lockdowns are lifted and consumption is resumed leading to price increases at the pump. Consumers are concerned about their energy supply and producers tell them they “shouldn’t look to them for their oil and gas needs.”
• 2022 Joe Biden becomes the viable scapegoat that is causing producers not to be able to increase production. Imputing that Joe Biden has been the one responsible for all the oil and gas production we’ve ever seen before. 
• Although bureaucrats have regaled us with their spectacular innovative ways, we may have to suspend their innovativeness hypothesis to the specious category where most of their statements reside. 

The financial statements that were produced by producers during the “building balance sheet” and “putting cash in the ground” days have been proven to be of little value when they can’t support profitable operations in an industry that can’t support operations or its customers. This is the legacy of the bureaucracy, and here we’re satisfied in knowing that they’re doing well personally and they thank you for asking. 

We’ll never be able to trust these people again to do what we know needs to be done. It is to build the North American oil and gas industry to the prosperous, productive, energy independent and profitable one we need to provide us with the abundant and affordable energy necessary to secure our energy needs. The most powerful economy will be the economy that consumes the most energy. To take this sad, dilapidated state of affairs in oil and gas and achieve what is necessary is a task of monumental proportions and we have no opportunity for failure. Organizing ourselves based on a different approach of how the industry needs to operate in order to achieve these objectives is now required. I’m suggesting the Preliminary Specification, our user community and their service provider organizations are the means in which to do so. ERP Software such as the Preliminary Specification are the way that organizations are supported and defined in society today. To do otherwise is impossible in a specialized, global market where the scope of operations is the entire North American continent. Expectations and actions arising from somewhere else haven't happened. The time to evaluate options is limited to the time that we have available; however one cares to define that. The need for energy may have become clear to consumers. And if not, we are certainly headed towards a period where their awareness will be heightened. 

People, Ideas & Objects et al are certain that producer bureaucrats are not motivated to deal with the issues that they’ve created. They had every opportunity to do so and did nothing. It is suggested here too that they are conflicted by using oil and gas revenues to fund a competitive industry to oil and gas. More of their efforts have been sought to eliminate People, Ideas & Objects and if I were to give them the benefit of the doubt, maybe they just don’t understand what’s going on. Either way there is no prosperous future with the existing leadership. The question therefore is who will make the decisions that are necessary to deal with this industry and set it on its appropriate path?

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

People, Ideas & Objects et al's Marshall Plan, Part VI

 It was all so easy before, you just picked up the phone or clicked on the InterWebs and that was that. If it’s good to live in interesting times, then I can’t think of many other times in history that have been more interesting than now.

Issue

The fragility of our global economy is being discovered each and every day as we proceed through the 2020s. Although we appeared to transition through the virus with relative ease from an economic point of view. That is to state here in North America it was not that severe of a recession. The consequences of the shutdown are now beginning to become apparent to most people. Scaling down an economy is the easy part, resuming the performance that was achieved in previous years seems to be creating extreme difficulties that are showing a high level of persistence. Many of these issues were evident prior to the virus however they were being dealt with by various work arounds and were being dealt with in a reasonable, manageable way. Now with this economic resurgence, an additional load of seemingly complex issues, the totality of our problems are growing exponentially and are creating, predominantly as I see them, material human resource shortfalls that are complex, interrelated and challenging in terms of their resolution. 

This shortage of resources is somewhat acute in the oil & gas and service industries due to the bureaucratic mismanagement that has occurred in the prior four decades. Shutdown of the service industries field level of drilling activity during 2015 to less than 25% of what it was at the beginning of that year. And since that time the bureaucratic throttle junkies have ramped it up and down repeatedly is not conducive to the health and prosperity of that industry. Cutting head office staff has also occurred during this period and people were forced to find work in other industries in order to put food on the table. The resolution to this of course is for producers to recommit and double down on their transitions to clean energy? Leaving those that left these industries with that longing to want to move back? What we’re able to assume is that wherever they are and whatever they’re doing they're busy and well entrenched in their new careers in their new industries with good prospects due to the shortages of human resources. 

The virus was the first disruption that upset the apple cart. What we’ve learned is that the global supply chain we all knew and understood very well was not that well understood after all. It has a fragility that is very difficult to predict overall and specifically. An issue in Los Angeles has follow-on consequences in areas and in unrelated matters across the globe, which ping pongs around to other industries for as long as anyone cares to research. Each setting off their own unique difficulty such as the originating Los Angeles issue. How and where this stops the difficulties we’re experiencing is unknown, and it is unknowable if it will stop or just degrade further? This has taught us an important lesson. That we are wholly dependent upon and require a reliable global system that is needed to support our existence. The reliability and ease of which we were lulled into assuming it was persistent and durable is possibly in need of some work. 

The second issue we’re now facing is the consequence of the war. We’ve had war before but never in a global system such as we have today with European, global nuclear powers involved. This war is for lack of a better argument, over oil and gas supply. Russians have it and Europe foolishly depends upon it. Are the lessons that we learned as a result of the virus’ implications on our global supply chain the same lessons that we should apply here? 

Let's put another log on the fire with the fact that oil and gas provides somewhere between 10,000 and 25,000 man hours of mechanical leverage per barrel of oil equivalent. In an era of shale resource abundance in North America we have nothing to concern ourselves with, right? Other than an industry leadership who really doesn't seem to know these things and admits they can’t produce shale commercially. They’re onto new horizons in other industries too, and they have the oil and gas revenues with them. We should always try to remember that they’re fine and they thank us for asking. 

Our “Marshall Plans” Response

People, Ideas & Objects believe society is at a crossroads. Information Technology has invaded all aspects of our lives and the level of productivity it has actually contributed is relatively minimal. This is due to the lack of maturity in the underlying technologies that have developed over the past half century. The introduction of the Internet has had the most dramatic effect on people’s exposure to day-to-day use of these technologies. And a demand for robustness and maturity in the underlying technologies. We achieved this some time earlier this century and have been benefiting from them, predominantly through smart phone technology and cloud computing. The areas where these technologies have been most effective are in removing redundant costs out of supply chains and increasing demand for goods and services on a global basis and scale. 

The phenomenon of disintermediation is resisted on a wholesale basis in terms of its adoption by industries. Disintermediation was easy to eliminate the record store, recording studio, producer, agent and distributor from the supply chain. Putting the artist in direct contact with the consumer. Where are Nokia and Motorola today? Disintermediation is violent and obstructive to the common cause of hierarchies derived from prior centuries paper based architectures whose efficiencies are incapable of responding to markets. Is this the reason for the flat-footed, blinking response of our good friends the bureaucrats to the difficulties they now realize they’re in. Difficulties that began in the 1970s and those at which I began seeking to resolve in the early 1990s and did, finally, in 2012? 

Supply chain disruptions are nothing more than the inability to get the people organized and to the location that they need to be when they’re needed to be there. The consumption of more oil and gas is very efficient in getting people to wherever they want to be and need to be. It is very effective in producing substantially more effort than what the human population could produce in a year, each and every day. Yet all of this is disorganized and inefficient in order for bureaucrats to maintain the power and control they’ve all known, loved and admired. To give that up is never going to happen. The fact the forces of disintermediation exist now, 20 years after Steve Jobs commercially reorganized the music industry, is disappointing to me. It shows that bureaucrats have studied and learned the disintermediation phenomenon and determined its weak spots and where they could put their sticks in the spokes of the wheels to slow it or stop it from eliminating them. If I could make the assumption that People, Ideas & Objects, our user community and their service provider organizations were the most effective means of disintermediating oil and gas. The bureaucrats' resistance to it has been remarkable and highly effective. Bureaucrats have learned how to fight these forces after decades of learning. 

What is People, Ideas & Objects Preliminary Specifications resolution for oil and gas specifically. What we address throughout our 13 modules is the focus on the one certain method of resolving the overall human resource shortfall issue. This is a particularly acute issue as the industry is a science and technology based industry and the lack of new engineers and geologists into the industry has been too low to replace the retiring brain trust of the business. “Muddle through” is the approach of how the bureaucrats are addressing it, however they’re leaving material shortfalls unaddressed. What we proposed in the Preliminary Specification as the solution for the issues in terms of the human resource shortfall difficulties. Is to use specialization and the division of labor as the means in which to increase the throughput of the industry from the same resource base. 

Specialization and the division of labor are one of the five organizational constructs that we have used and included as foundations in the Preliminary Specification. All economic value that has been generated since 1776 has been a result of reorganizations using specialization and the division of labor. What Adam Smith proved with the manufacture of pins was that the breaking down of the process of making pins yielded untold increases in output. What he was able to do was increase the pin makers productivity by 240 fold through the application of specialization and the division of labor. What performance increases would result from application of specialization and the division of labor in exploration and production? I don’t know, what I do know is that we published the Preliminary Specification in August 2012 and therefore this concept has been in the hands of the bureaucrats since then. Some might argue that it would have possibly been known centuries before that. Yet, nothing has been done to address the issue, resolve their difficulties or make any changes to it as their solution. Applying this knowledge to the “crisis” we find ourselves in today with the supply chain and war issues. I have to ask how much of these oil and gas issues are necessary and how much could have been avoided if we dealt with the existing and perpetual bureaucratic sloth that caused it, and refuses to do anything about it? 

Our user community will be responsible for defining the individual processes our ERP software will define and support in the administrative and accounting fields of the oil and gas industry. It is here that they will maintain that process they’re most familiar with, have access to the developers for any changes, own and operate the service provider organization that will deliver the software solution (explicit knowledge) and their services (tacit knowledge) to the industry. With the breakdown of the administrative and accounting processes in this manner we are reorganizing the industry to benefit from specialization and the division of labor in these two fields. These administrative and accounting processes have in time achieved their own significant output gains. And if these gains were equal to what was achieved in Adam Smith's pin factory, there implies a future infinite level of improvement in the fact that a 240 fold increase had been attained. Not all of the gains we’re seeking to achieve in the Preliminary Specification are purely performance related criteria. There is also a quality that needs to be improved and the question of “what more can be done” needs to be answered. 

It is in this process of reorganization that People, Ideas & Objects et al turn all of the producers' costs to variable costs, based on production. If a property is unprofitable based on the standard, objective accounting produced from the Preliminary Specification et al, then the producer will want to optimize their corporate profitability by shutting down that property and ensure their losing properties are not diluting their profitable ones. Put the unprofitable property in their inventory of shut-in properties where they can determine the innovative changes necessary to return it to profitable operations. Although bureaucrats will say today that of course they’re doing this. It’s only humiliating to them that they hadn’t been over the past four decades, and I can assure you still don’t today. They can’t. A number of questions to ask a producer who may claim this might include what’s the difference in actual overhead cost of a property between natural gas and oil. Natural gas takes much more administration and accounting to conduct. Actual and not overhead allowances. Second, review their specific properties financial statements to see if they include any capital cost in the determination of their “profit.” They can not do either of these, because the cost in terms of recording detailed actual overhead to the property would be more money than any of their properties generate in terms of revenues due to their method of accounting. The same would be the case for depletion, which is done at year end on the producers global reserves. Taking a depletion calculation to determine the cost of capital once each year, that is a global representation of all the properties would have a reasonably high level of probability of corporate profitability. And that does not include any of our other arguments in the bureaucrats' specious recording of their cost of capital. What bureaucrats fail to understand is that these profits are not “real” which a proper accounting would reflect an inadequate performance. The devil is in the details which is what scares them the most. It is these changes that are part of the Preliminary Specification, and can only be achieved by the methods defined in the reorganization to our user community and their service providers for the administrative and accounting of the oil and gas industry. Enabling the most profitable means of oil and gas operations, everywhere and always. 

I am unaware of the performance of the recording artists income as a result of the changes that were made to disintermediate that industry. I would assume they’re making more money, the excess or bureaucratic costs have been removed, the distribution of those revenues are more equitable in terms of where the music talent resides, the consumers are satisfied with the quality and quantity of their music purchases and in many ways are pleased they won’t be needing to purchase it again when the 8-Track format becomes fashionable again. 

We sit on a mountain top in a range of mountains that are much higher than the one we’re on. The bureaucrats have a number of boulders they’re kicking off this mountain with nothing better to do and with consequences that they don’t much care about. We could just straddle that ridge and begin climbing what appears to be the highest mountain in the range. Instead we’re involved with the bureaucrats and their self-destructive and childish actions. And I think to myself that maybe one day I’ll be able to say what it is I’m really thinking. 

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

People, Ideas & Objects Marshall Plans, Part V

 This post demands that I put my dual lined, tin foil hat on in order to speak in a manner that is truly off the wall. You don’t have to be crazy to do this job, but I do find it to be a distinct competitive advantage. Nonetheless I feel this is a discussion we should consider, even at this obscure and indefinable time, and it should be considered by those who are of the higher pay grades than we are. The other point I wanted to make before we get into today’s issue is that the bureaucrats from my experience of offering the Preliminary Specification to the market have been brilliant, dedicated, united and committed to the battle and the war against this initiative. They are an impressive, creative and resourceful adversary and we have been mindful of this in all of our writings and interactions. My writing is adversarial in terms of the tone that I take with the bureaucrats in order that I can define the line in which the differences exist between theirs and our proposed solution in the form of the Preliminary Specification. These writings seek to entertain our readers and increase the contrast of our two differing points of view. Besides, I find it more enjoyable. We should never make the mistake that they will be out of the fight, that they won’t avoid direct participation in the development of the Preliminary Specification. As individuals they are formidable and I would look forward to having many on the payroll at People, Ideas & Objects. I have never subscribed to the organizationally destructive concept of nepotism or hiring yes men, and I expect push back from all those that are involved. Our job is a difficult one and if we’re looking for more friends then this is probably not the place for you. We can push back on the performance of the bureaucrats, and always will, that doesn’t mean that we don’t respect them, or that they’ll cease to push back and probably more vigorously. 

Issue

The first layer of our tin foil hat is deployed to allow the understanding that our budget is needed to ensure that our user community is protected from career risk in committing their time and energy to the development of the Preliminary Specification. Users are able to do so and complete the tasks at hand and to do so without the unnecessary interference from the noise that they’ll be bombarded with. What we also know is that there will be no way in which we’ll be able to proceed on the basis of trust that industry will be providing the financial resources to complete this task on a pay as you go basis. Cutting us off financially midstream would be the end of the project's life and it would terminate any similar initiative from being considered in the future. Which only meets the needs of the bureaucrats. These are the requirements that we are living with. We “can not become blind sleepwalking agents of whomever will feed us.” We must complete this task on the basis of what is required of the task. 

Now for the second layer of the hat. We need to make the assumption for the purposes of this discussion that the financial resources to complete the Preliminary Specification have been secured. Based on the history between us and the bureaucrats we know that this transaction will not have been supported by them. What, how and why the transaction occurred is pure speculation at this point and not part of this discussion. What we can be assured of is that it will create an environment that is different than what has been experienced before. This period will not be the time when we will be able to look back upon, in the future, and think that it was a time of wine and roses. It will be the polar opposite and it will seem at times that the entire world has aligned against this initiative. And in contrast what will be difficult to understand is the unsolicited support and sympathy the bureaucrats will be receiving. 

Our Marshall Plan

I’m not attempting to create a hostile environment. Far from it. Disintermediation pits two separate groups of people against one another in a battle for the right to manage an industry. Many industries have gone through the process, and bureaucrats have learned very well from that history how best to interrupt the process. All industries will eventually be subject to the same forces and we’re probably half way through the reorganization of most industries. What was best described in prior generations as creative destruction, and accepted as such, is now opposed with rigor and turf wars. I’m speculating on what I believe will be the case for those that are involved in this initiative as we go forward. If this environment doesn’t suit you then we can not provide a more hospitable environment at this time. This will require hard work from everyone involved. Those that aspire to work hard need not apply. In our prior post we discussed the dynamic consequences of what occurred as a result of actions taken during WWII. Not to suggest our developments are of the same level of conflict but possibly an example that has significant learning value for us. 

In my dual lined world I think there’s something that we can do today that begins to deal with this environment and mitigates at least the effectiveness of the bureaucrats fighting against us. If we leave it to them to continue to define and execute the battle in the manner that they have over the past few decades, I’m not certain that we would be able to succeed in this overall change. Even though the demand for these changes in oil and gas have now progressed to the point where there is serious risk and jeopardy being realized on a societal level. If left to their own devices bureaucrats will be able to muddle through with the benefits of the resources of a primary industry, a continued lack of focus with their way of life secured and prosperous. We know what they’d do. Our expectations are therefore in line with the realities of what will probably be the case when we commence the development of the Preliminary Specification. However, if we’re able to guide the focus of the bureaucrats during this time on more productive, supportive and constructive tasks. Then maybe we’ll have a chance of at least coming out at the end without being too badly dismembered from the battle.

I’ve been candid that we have an abundance of work ahead of us in terms of delivering products to the market. Organizing an initiative of this size is not going to be done by one individual with their own resources. At 5,000 man years budgeted, we don’t even have the financial resources to do the detailed planning necessary to determine how many years that the overall project is going to take. Such is the nature of our battle and the bureaucrats' success. The state of affairs of the industry are at issue. Outside of the past few decades of specifically identifying the senior management of the producers of the responsibilities for the damage and destruction we are now seeing, I am the only one that is harping about their performance outside of the silent majority of investors and bankers. Yet everyone knows who in reality is at fault and responsible, bureaucrats have been able to blame, excuse and scapegoat everyone and everything else. One of the scenarios that we could see is they “cut and run” leaving the fault of the problem on our doorstep. Supporting the saying be careful what you wish for. That is not our job and is never going to be our responsibility and they would only be continuing in their “muddling along” and “doing nothing” methods of damage and destruction. The point is look how successful they’ve been!

Bureaucrats would therefore need to sustain the oil and gas industry as is until the Preliminary Specification is released commercially, the user community has established their service provider organizations to support the software and those that are ready and willing to operate a profitable industry are available otherwise. If we don’t identify this issue and the role that we expect them to have, their only pursuit will be to eliminate us through continued obstruction. The pressure would be on us to move mountains and deliver products sooner than possible so that industry could “get back to work.” And the bureaucrats will sit back and enjoy themselves as they have for these past many decades and do essentially nothing but promote their cause and gain significant public support for it. 

Whether we would be able to manage the situation as described is in the dual tinfoil hat arena. What I can do is prepare the ground for those in the user community who will be subject to this potential scenario should this come about. They will be the front lines of this initiative in terms of working with the producer firms in order to ensure the industries needs are being realized and included. This is the environment People, Ideas & Objects are experiencing today, it is the environment that we expect we’ll be entering once we’re fully funded and the expectation that things will be easy is anything but reality. The reality will be difficult for those that are involved in this initiative and we need to prepare ourselves for this, what I would call, inevitability. We can do so with the understanding that we are not responsible for what the producers have done in the past. We are not responsible for the damage that has been realized. And we are not responsible for any of their alleged failures the oil and gas producers continue to experience. We are working on providing a software and service solution. And that is the scope of what we are responsible for and will succeed in building our solution as described in the Preliminary Specification and provide a platform for industry to resolve these issues with the requisite flexibility and focus on profitability. We’re not going to be obstructed or distracted in our task by those who have caused these difficulties and only look to blame others for the damage and destruction they have authored. 

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

People, Ideas & Objects et al's Marshall Plan, Part IV

 Design, and implementation of the design, of the Preliminary Specification by our user community is an important attribute of what the community will be producing. I can not stress this enough. The need to fully comprehend the opportunity that stands before us and to rebuild the industry in new and innovative ways will be dependent upon the thoroughness and creativity of our user community members to solve the difficulties they’ll be facing. The comprehensive nature of the oil and gas industry and the specifics of accounting and administration has to be captured by the entire population of our user community. The specifics involved is well beyond the scope of what one individual can fully comprehend. The need to approach the specifics of the design is at the beginning of development. It is the best method of reducing costs when issues are easily fixed, possible, probable and iterative. Time spent in the product design stage will be critical to both its accuracy, the overall reduction in cost but also increase its quality. The publication of the Preliminary Specification almost a decade ago has helped people to see the dynamic nature of its implications. Finding out half way through the development process that the design was incorrect for some reason is not adequate for any development purposes. And certainly not for the purposes of rebuilding the oil and gas industry. Since the user community has had this model in their minds, the Preliminary Specification has been creating cognitive dissonance in identifying the need for change, where those changes need to be undertaken and how these changes need to be made.

Issue

Specious profitability has been the reason for the demise of the oil and gas producers over the past four decades. North American producers have failed in their primary task of providing their customers with safe, secure, abundant and affordable energy. This is a recent development and one we may expect to persist for the long term. Even in an environment of never before realized reserve abundance. Their incompetence is a deemed competitive advantage. Producers persisted in misdiagnosing and ignoring the fact they were not profitable for decades. Will they be able to continue without action on providing adequate supply, and for how long? The uncaring and inactive attitude is best represented in this recent statement by Occidental CEO Vicki Hollub. And in this article. 

The challenge is pretty significant here to get back to growth in the Permian, and that’s the only basin that’s going to grow U.S. oil production,” Ms. Hollub said at the CERAWeek by S&P Global energy conference in Houston earlier this month.

We should realize that North America from an energy supply point of view is all alone now. This issue is ours and ours alone. The alternative may be available and may be costly, mostly from the point of view of having our economy allocating energy and therefore diminishing its overall economic performance. This might be overstating the issue and inflammatory on my behalf. “I’m just selling my own product in a nightmare scenario.” Or, it could be that oil and natural gas on a single barrel of oil equivalent offsets at a minimum 10,000 man hours, and some believe it to be 25,000 man hours of mechanical leverage. However the number of man hours each barrel produces, without it we’re unable to sustain the modern economy that we enjoy today. And what if we only lost 20% of our supply? Would that be acceptable or better? Is energy the new conflict currency?

Our "Marshall Plan’s" Response

To be clear the design process will be based on the Preliminary Specifications business models, modules, markets and organizational constructs. It is a workable business model with the overall architecture and understanding of how these larger pieces fit together. The details of what is now needed will be determined by the user community. When determining how the system will implement this and that which is what is done today in the industry. Will it be needed in the future or is there a better way? What more could be done, and what would that look like ideally? Does that work, if not what would? This being a process done in a collaborative, iterative environment of like minds seeking out the conflicting attributes and contradictions in the design process. If anyone believed the user community members' job would be easy they’d been mistaken. They’ll also need to do this in an environment where they need to understand the technologies being implemented and what is possible there. When will the industry adopt the Internet of Things (IoT)? What would IoT require? Why not now? If not when? And if not, what can be done today to accommodate the integration tomorrow? How each of the user community members will need to establish a service provider offering in order to deliver that organizations tacit knowledge to support the software in order that they can integrate, implement and operate it on behalf of the industry. What will this involve? Are the tasks that are being done in the industry today in the administrative and accounting areas of the producer firms necessary? Or do they just scratch the surface?

For those who are wondering why am I discussing the product design phase? Well it needs to be done and hasn’t been done. The scope of knowledge contained in doing the work of all the administrative and accounting tasks in oil and gas is not contained in the mind of one person. Therefore the emphasis we’ve made on the development of our user community. Those that may have thought that the Preliminary Specification was running on my machine today need to get their head examined. Those in the know will wonder why we’re discussing product design when we haven’t completed the full development of the user community yet? And I would suggest that they’re right and that is why our user communities development is our focus and our priority. At this point I could probably blame our overall lack of progress on Joe Biden but I won’t.

An example of the design process was well described by Hoover Institute Senior Fellow Victor Davis Hanson’s “The Victor Davis Hanson Show” on his March 5, 2022 podcast at 22:08 entitled “Tanks in Ukraine and in History.” This describes the development of the design of the Sherman tank in WWII and the elements of thought that went into why it was designed the way that it was. At no point during the war would the Sherman tank be considered the best tank or the most powerful. That was determined for a variety of reasons not to be the objective. Hanson states at 45:28 

Remember, the way to understand tanks is very American. American’s were practical, they were pragmatic kids, they were taking apart Model “A’s” and Model “T’s” their entire lives. And the Sherman was designed to be simple, easily operated, easily maintained, easily fixed by people in the field. And you could have supply trucks with extra engines, extra transmissions. You didn’t have to have a German specialist from the factory, the Porsche factory, to instruct or put it on a train and send it back to Germany. Everybody understood the principles of transmissions and engines, and they fixed them, and it was reliable.”

The Sherman tank and Russian T-34 were however the victorious tanks and dismantled the German dominance in their tank technology through their sheer numbers manufactured. The Shermans designers were aware that the internal combustion engine (375 hp), although not as powerful as the German Tiger (700 hp) tanks diesel engine, offered two immediate advantages. The ability to share fuel with all other military equipment and the ready supply of American soldiers who were backyard mechanics well versed in keeping them running. Fuel and reliability were logistical difficulties that the Germans struggled with their tanks. The size of the Sherman tank (35 tons) was much smaller than the Tiger Tank (68 tons) as the ability to produce many and quickly was a necessity, and the ability to ship them to Europe was a major design criteria and with so much shipping being lost to U-boats. 

One of the first lessons the designers of the Sherman tank recognized was the lack of acknowledgement by both Germany and Japan of the concept of gigantism. Both Germany, with the Bismarck and Tirpitz, and Japan, with the Yamato and Musashi,  built massive Battleships that were ominous in their size in comparison to anything else. During the war, once the British became aware of the Bismarck’s location in the Atlantic, it fought with most of its premier class battleships, and lost many of them in pursuit of sinking the Bismarck. Ultimately the British succeeded and the Tirpitz was then mostly parked in dry-dock for the remainder of the war. The decision to build the Bismarck and Tirpitz was Hitlers and once realizing this error, chose then to develop his original alternative of 300 additional U-boats as quickly as possible. U-boats caused enormous damage and difficulty to the allied forces throughout the war. (From the start of the war to the end of 1943, 5,758 ships were sunk with 22.1 million tons of cargo.) These are what we can clearly see are the iterative consequences of war and its dynamic nature. 

Bureaucrats are at this time in their most dangerous environment and in greater jeopardy than ever before. There is more money on the table causing more attention to be placed on their untrustworthiness and they are not doing their job of supplying the market. The point of gigantism in the quote of the podcast, Hitler's decision to go with the Tirpitz and Bismarck was a failure, making the change to 300 U-boats was the consequence of acceptance of the failure, which made the life of the Allies far more difficult. Consequences are dynamic, this fight we’re in with the bureaucrats will be dynamic making things difficult to predict. The bureaucrats will not be giving up their war to avoid being disintermediated, I can assure everyone of that. They will be fighting harder, will engage PI&O, our user community or anyone else at every turn.

Our budget is a necessity for the user community's benefit alone. Their ability to complete their task and conduct the design as comprehensively as it demands will not be easy. User’s don’t need to be looking over their shoulder understanding the career jeopardy they’ve taken by “betraying the bureaucrats” as our good friends the bureaucrats will allege. Bureaucrats will be fighting in force as we described and all of the people associated with this initiative will need to have an assurance of protection from unnecessary risks in order to focus on these difficult tasks and know that they’re able to complete them. There will be no going back if they fail in their task, a failure in funding would not be a failure they would be responsible for. This for them is a business and they’re assessing it as such. Mitigating the business, technical and market risks appropriately. 

PI&O’s scope and scale has been well identified since we published our budget in the first quarter of 2014. It is expensive and this only justified the bureaucrats to fully disregard the Preliminary Specification. Ignoring the value proposition we were offering by showing the incremental profitability that was available as a result of managing the producers as businesses and eliminating bureaucratic incompetence and mistakes. Adding to that the incremental value that was available as a result of generating the cash necessary to fund the future capital expenditures in a capital intensive industry. These didn’t matter as the bureaucrats perused the Ferrari showroom. This has come to be their position today as they reap the benefits of their inaction, fueling their continued inaction. They laughed when we said profits, they said profits didn’t matter. They continued their inactivity when we indicated the capacity and capabilities of the industry were in jeopardy. And of course they don’t care that the lack of supply to an advanced economy is detrimental to the health of our advanced economy. Failing to provide the consumer with the product they're in business of providing. And evidently still don’t care. Or is it we should have believed them when they said they moved to the clean energy business. 

The question today therefore is not so much the cost of PI&O’s budget, we can justify it on the basis of our historical $25.7 to $45.7 trillion value proposition over the next 25 years for the two reason cited. Except it no longer can be quantified in terms of value anymore. What PI&O et al need to do is to add to this value over the next 25 years, the incremental value from the difference in the increased production volumes produced from the abundance of reserves we are endowed with as a result of the work we are doing over today’s base case. And, add to these 25 years the cost to our economy of deprecating its upside potential. What mechanical leverage could have done for us if we only had an abundant supply of available energy. It’s maybe easy to forget that at 10,000 man hours of labor / boe, the United States consumption of approximately 35mm boe of oil and gas per day provides the equivalent of 43.8 billion man days, or 120 million man years of mechanical leverage each and every day. The question is what happens if we don’t act at this point? Will we be able to live with ourselves wondering “what if we only?” Therefore from now on, instead of just quoting the piddly numbers of $25.7 to $45.7 trillion as our value proposition. We’re going to quote the famous saying “to infinity and beyond” or is that too much?  

On a more serious note I’ll end with this quote from Thucydides. 

It is a habit of mankind to entrust to careless hope what they long for, and to use sovereign reason to thrust aside what they do not desire.

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. 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? We know we can, and we know how to make money in this business. 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. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.