Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.
Joel A. Barker
Budget Discussion
We begin with a discussion regarding the justification for People, Ideas & Objects, our budget for the Preliminary Specifications development and its unique configuration. We are presented with many issues and opportunities that are unique and fall under the category of a once in a lifetime characteristic. Our budget demands that we secure full funding prior to any further development being undertaken. These are detailed here or referenced to the text in the Preliminary Specification.
Budgetary Justification
Disintermediation
All industries are being subjected to the process of disintermediation. The introduction of new business models that use advanced technology and most specifically the Internet as a means to organize production. Many industries have had the process successfully begin and these continue to iterate on the initial models to unleash tremendous value and prosperity for all concerned. By eliminating the bureaucracy and red tape from industries, consumers are able to have greater choice, lower prices, better quality and services with little to none of the personal effort necessary to acquire the products and services in the previous business model. Investors are reaping billions and trillions of dollars in value as a result of the creative destruction that disintermediation causes and is made possible by new and innovative ideas. Although disintermediation has been predominantly conducted in consumer industries it is now moving into the enterprise.
This decades-old process has established a method of resistance that those who subscribe to the old business models can use to fight this transformation for longer periods of time. This is the situation that People, Ideas & Objects has been faced with by an obstinate bureaucracy who have a vested interest in the ways and means of their operations. At the expense of the financial, operational and political frameworks and overall health of the industry. They have no interest in disintermediation and we’ve found them to be resourceful and resilient in terms of their resistance. If only they would show such resolve towards their business.
One of the arguments that have been successfully put across about People, Ideas & Objects Preliminary Specification, our user community and their service providers. Is the scope & scale of our undertaking is too large, broad and grandiose to be successful. What we can definitively assert at this point is that their bureaucratic methods have proven to be not viable. We have all the evidence needed to prove our claim of their failed methods. We have also suggested the scope & scale of the Preliminary Specifications undertaking is far easier than what each individual producer will have to provide in order to attain the same accountability as defined by their investors. Tier 1 ERP systems will be difficult to implement either way and we will not stand as the viable scapegoat for the bureaucrats' continued inaction on this front. There are always more than two trillion reasons not to do something. Action is required. Nonetheless in comparison they will need to undertake the same work that we are, granted with much less of the difficulties that scale brings about, with their much more limited budget and resources. I prefer our chances of success in this regard. We will be more successful and will do so with far lower individual producer costs when the one time industry wide cost of our development is shared across each producer.
We also have in Oracle Corporation a technology provider that is more than capable of delivering the solution defined as the Preliminary Specification for the North American producers. Granted in 2012 when the Preliminary Specification was published nothing of the scope and scale had been suggested before or ever attempted in any industry. Today, Oracle Cloud ERP is the outcome of up to $50 billion in investments by Oracle in bringing their software and systems to market. These systems began as blank sheets of paper and were developed to meet 21st century organizational needs. They’re the ERP market leader and unquestionably the preferred choice, Oracle has dedicated themselves to this market space. In terms of the scope and scale issue. I’m pleased to have been joined by other industry initiatives that share the same concerns in their industry and have conceived of such value generating benefits of disintermediation on the scale that is even substantially larger than what we proposed for North American oil & gas.
It is with this in mind that I am pleased to post here a June 14, 2022 video from Larry Ellison Founder, Chairman and CTO of Oracle Corporation regarding their efforts in the Healthcare industry. This is truly impressive and is consistent with the different perspective that technology allows us to break down new approaches and release new value. We’ve stated in many areas of this Preliminary Specification that producers accounting is focused on the “corporation” as a result of a number of conflicting objectives over the past decades. The oil & gas business is best defined as the partnership that represents the oil & gas property, it's the one aspect that everyone intuitively knows and understands about oil & gas. It's the focus that was lost and is now being recaptured in the Preliminary Specification. In the Oracle Healthcare initiative it is the patient that’s the focus, not the hospital or doctor or some other aspect of health. This is all explained in the following video.
Oracle Live: The Future of Healthcare | FULL SHOW
Industry Accountability
Today’s systemic lack of transparency and accountability throughout the North American oil & gas industry, the lack of any tier 1 ERP systems being deployed are the natural growth from the seeds of the “successful results” of what Alberta producers orchestrated in October 1997. (And yes we’re aware of many large SAP deployments. We believe SAP sells ERP systems in oil & gas and SAP does not have an oil & gas solution.) Oil & gas ERP providers have survived under a deliberate effort by producer bureaucrats to starve them for decades of the financial resources they need. Would producer bureaucrats have failed if they had appropriate tier 1 ERP systems and were held accountable? Today the financial consequences being experienced by the producers are a result of the specious financial statements they’ve produced. It has been through their questionable interpretation of the 1970s SEC regulation of Full Cost accounting that have caused the financial accounting of producers to morph from its purpose of measuring and recording performance to recording value in the form of “building balance sheets” and “putting cash in the ground.” When asset valuations are high and overstated, there is a commensurate overvaluation and overstatement of profitability. When profits are high investors rush in to capture those profits with the subsequent capital investment causing overproduction of the commodities of oil & gas, systemically exceeding market demand. When oil & gas commodities are price makers in terms of their economic characteristics, overproduction causes prices to collapse as has been experienced multiple times in the past decades. Motivating producer bureaucrats to game their financial statements even further in order to attain the necessary additional capital from investors to keep the doors open. After more than forty years this circus had carried on too long for the industry to be sustainable without the annual investor infusion of cash. Enter the 2015 investors strike.
Conversely People, Ideas & Objects have asserted, and the history of these producers show a legacy of defined specious accounting, financial accountability and obscured transparency on a deliberate basis. With the experience of my first market failure in 1997 which was due to our then software products emphasis on producers accountability in paying Alberta royalties to ensure they realized the lowest possible royalty costs, based on an accurate and full accounting. Exercising a strong knowledge base of what the regulations were and ensuring the producers were paying the lowest possible royalties was not the approach they chose to pursue in terms of paying Alberta royalties. This market failure is what led to the firm's collapse in October 1997 when producers convinced the Alberta government the system they proposed was flawed and wouldn’t work. The regulations for these changes were announced in 1991 and were the precursor to myself getting into the business and promoting Oracle to join me. The new royalty regulations came into effect in 1994. Investments were made by all of the ERP systems providers throughout this time without any financial support of the producers to fund these incremental development costs. And unilaterally producers determined that they did not want to participate in October 1997 which the government accepted and announcements were made to change their royalty regulations, trashing our software investments in newly redundant requirements. All the other tier 1 ERP providers subsequently left the market in 2000 and 2005 due to this lack of participation by producer firms. Leaving no investments whatsoever in oil & gas ERP systems that I’m aware of outside of my activities with People, Ideas & Objects which began in August 2003.
Even though today investors are demanding producers upgrade to tier 1 ERP systems, there has been no evidence of action and we can safely assume there will continue to be resistance that is consistent with this history. Producer bureaucrats “believe” investors will eventually “come around” and end their strike. What People, Ideas & Objects is selling is a tier 1 ERP system based on Oracle Cloud ERP to enhance producers accountability and transparency. A level of accountability that is deemed to be the necessary minimum requirement of a successful business. Which is absent, and the cause of that is therefore subject to interpretation as to the motivation why oil & gas bureaucrats have sought the permanent obfuscation of the producers actual performance. It is however easily documented that the only prosperous group throughout these past three decades and more, are the officers and directors of the producer firms.
The bureaucratic culture that exists today is obstinate and unworkable. Investors have concluded the same with their strike beginning in 2015. That bureaucrats have ignored these demands of their investors is telling. There is no greater action an investor can take than to suspend support. It is traditionally a terminal act unless there is immediate remedial action taken to deal with the issues. Even then it is difficult to determine the success of an outcome of this action. The refusal to deal with this or any of the specific terms of concern of their investors in the past seven years is telling. Yet, we are led to believe at the same time it is these same investors who are demanding producers move into clean energy. A business that in the past bureaucrats explained was the reason and justification for low oil & gas prices. They needed to ensure that no alternative energy sources became competitive. Notice how quickly producer bureaucrats jumped at the alleged demand of their investors in 2021 to move to clean energy, yet are silent on 2015 demands for accountability and profitability. It is these same producer bureaucrats who in unauthorized fashion will now move oil & gas revenues from past investments and investors into a business that competes? There is no greater violation of their fiduciary duty by a firm’s management than to conduct this type of action. Clean energy has never supported commercial operations, is not viable from a physics perspective and has been kept alive as a result of government support and looming threats from teenagers and uneducated congresswomen. An industry with its own questionable record of accountability, and any failure will be met with the morally righteous argument that “we’re just not there yet, but we’re still trying.”
Producer bureaucrats, once again the officers and directors, inability to account for past failures is systemic and chronic. When difficulties are determined it is usually on to the “next great thing” from the prior “next great thing” as it didn’t turn out and was determined to be uncommercial, therefore it was time to cut and run. Oddly, each iteration of the “next great thing” always appeared to be the advancement of the science of oil & gas and high levels of technical difficulty. Not remedial commercial operations such as what today’s low cost, unexciting conventional oil & gas would be. The business wouldn’t be any fun otherwise.
Recently we heard that shale would never be commercial and that supported the move to clean energy, “the next great thing.” There never has been any attempt to be accountable at any time for their past activities or investments, or to remediate the investments into profitable operations. Shale failed just as all the prior “next great things.” Making outlandish claims such as these about shale inspires those in the field and universities to recommit to the oil & gas business? No, they understand producer bureaucrats' minds have moved on to clean energy. Therefore, for others outside the industry looking to work to make the industry better, to take the chances that are necessary to make oil & gas a profitable business, they’ll sit this one out. It’s not foolishness that drives the bureaucrats, it's a far more sinister motive.
There is a point to this trip down lovers lane with the bureaucrats to ask. Which tier 1 ERP vendor would now be willing to subject their system and its reputation to this systemic, unaccountable nature of oil & gas? If the oil & gas industry is only interested in obfuscation, why would any ERP provider subject their products' reputation of tier 1 level of accountability to support oil & gas? As we’ve documented in our White Paper they haven’t and won’t with those last few that were providing services leaving in 2000 and 2005. Which ultimately fulfilled the bureaucrats' unspoken objective. The protracted battle that I’ve waged against these officers and directors is documented throughout this blog and is reflected in the producers decades of inactions. They inform those of our position with regard to the unacceptability of what has gone on, who is responsible for this horrendous failure and the definition of the cultural change necessary through People, Ideas & Objects budget for development of the Preliminary Specification. Bureaucrats interest in the deployment of People, Ideas & Objects would be suicidal for them to contemplate due to the high level of accountability Oracle and ourselves will impose. And do so on behalf of the oil & gas investors, which is why they’re asking. What alternative tier 1 ERP vendor would step up to make that difference? Where will other ERP providers make their difference from this status quo outside of our Intellectual Property and how will they survive financially when they too have built their tier 1 ERP solutions on enhanced accountability? Can they make a product viable in oil & gas or are they better off keeping their reputations whole and pursuing other industries? The fact of the matter is the industry has failed and how will their product make the difference at this eleventh hour.
To throw one more straw on the camel’s back. The overproduction of commodities that are economic price makers is not rocket science. The basic principles are taught in introductory university courses and the general understanding is available to anyone capable of reading and writing. We know for example that the Great Depression was caused as a result of overproduction. We know that in July 1986 oil prices collapsed as the world was awash in oil as a result of its abundance. As to who was responsible, I have articles from the Calgary Herald dated July 26, 1986 quoting OPEC officials of their desire to deal with the issue in collaboration with North American producers. Never happened. People, Ideas & Objects published our Preliminary Specification in August 2012 to deal with the system of North American oil & gas overproduction destroying the financial, operational and political frameworks of the North American producers. July 4, 2019 People, Ideas & Objects published our White Paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale” to a broad industry audience. Not one phone call from any producer expressing any interest. Ultimately we heard their response in April 2020, nine months later, in the form of negative $40 oil prices. This precipitated the declaration that shale was not commercial and the move to clean energy. Granted this is not a disaster for the oil and gas industry. It’s a disaster for civilization as in 2022 energy becomes the political football that arises from a lack of financial wherewithal to support the capacities and capabilities needed to support the demands of the market. The concern that is expressed in the Preliminary Specification and throughout this blog which began in 2005. And People, Ideas & Objects recognize the assertion by some bureaucrats that the Great Depression may have come about by other causes.
Our Value Proposition
There is no greater investment that could be made than the Preliminary Specification in 2022. We provide the oil & gas producers with the most profitable means of oil & gas operations, everywhere and always. The best discussion of our value proposition is the last section of the Preamble of this wiki.
What Can a Producer Do Today?
Although there are many other areas where People, Ideas & Objects can provide incremental value to the oil & gas producers there are over five thousand reasons to each of our points that the bureaucrats will not proceed. A thorough reading of the Preliminary Specification will provide for a description of how we increase that value. The three listed here in this budget justification should be ample in light of the state of affairs in oil & gas. The two main issues regarding this budget are its size and its use of Intellectual Property. In terms of both of these issues we recommended the following approaches to be taken by each producer to help mitigate these issues within their own organizations.
The budget scope and scale are substantial and necessary. I analyzed and defined the issue many decades ago, prepared the Preliminary Specification in excess of a decade ago, it is the solution to what ails the industry, it is that definition that indicates we have a handle on the issues and opportunities in the industry. That our implementation covers this scope and scale with the means to make it real also reflects that we understand the difficulty in doing what we propose. I personally have been the principal in both Genesys Software Corporation and People, Ideas & Objects. The triggering event for me to build these systems was the need for oil & gas producers to just shut-in some production and discontinue overwhelming the markets to the point where the price collapsed as they initially did in July 1986. The difficulty then as it is now is they can’t, it’s impossible and hence the need for new systems such as the Preliminary Specification to deal with it. After 31 years of attempting to bring a solution to this issue, and now as of 2022 we are prepared and ready to undertake this task as soon as our budget's funding is secured. With oil & gas prices where they are, what's the hold up? The oil & gas bureaucrats.
We understand the producers point of view and appreciate that none of the overproduction is a result of them, they’ve been profitable. Which we’ve addressed elsewhere. The issue may be their working interest partners though. At their other properties that are causing the overproduction. It would also be highly beneficial to have a producer's working interest partners on the Preliminary Specification in order for both parties to realize the full benefits. This will also help to mitigate the costs of the budget when every producer puts their proportionate share of the costs in.
It is however important to note that it’s not just about the money. That only secures the buy-in from the producers. If we don’t succeed I’ll take the blame if that is what the bureaucrats want. However, what else will they have at that point? Handing the money over is the beginning of the process and the hard work is going to have to come from the producers themselves. Telling the People, Ideas & Objects user community members the issues they have. You should note our user community members will be disinclined to listen to the solutions these bureaucrats have in mind.
In regards to the Intellectual Property of the Preliminary Specification and elsewhere. We provide the dynamic, innovative, accountable and profitable oil & gas producer with the most profitable means of oil & gas operations, everywhere and always. Such that in the 21st century it's no longer good enough to own the oil & gas asset. You also need to have access to the software that makes the oil & gas asset profitable. These are the new rules of the road. We need this IP in order to organize ourselves as we have in the user community charter of the user community vision of this wiki. We need this IP to ensure that we’re able to secure the funding from the producers before developments are undertaken, not after. We need this IP to ensure that once built, the producers don’t decide to encourage others to copy our software and violate our rights to create unnecessary price competition. We need this IP to ensure that our competitive advantage is not on the basis of price, as the price of our offering in terms of our valuation of providing the most profitable means of oil & gas operations is negligible and immaterial. We need our IP in order to establish our competitive advantages on the basis of what the oil & gas producers and greater oil & gas economy needs in the 21st century. Such as automation of the process, division of labor, specialization, creativity, innovation, collaboration, research, thinking, issue identification and resolution, leadership, ideas, design, planning, negotiating, compromising, financing, observation, reasoning, judgment, spontaneity, using conflict and contradiction in analysis and deploying both the explicit and tacit knowledge of doing so.
There is no reason that the producers need to have the Intellectual Property of the Preliminary Specification as theirs. It is not part of their distinct competitive advantage of their land and asset base, or their earth science and engineering capacities and capabilities. Just as the drill bit manufacturing process and mining of steel are of any concern of the producers. Specialization and the division of labor demands that organizations focus on what they do well. We need to own the IP in order to do our job well. And producers should focus on their competitive advantages in order to do well too.
I am the beneficial owner of the Intellectual Property that makes up this body of knowledge. These are not my concerns and I only point to our IP and the reason it is fully respected by all other software companies. You don’t get far as a pirate in this business anymore. Our IP will also be adhered to by those boards of directors who are respectful of the laws, such as the U.S. Constitution, to ensure they’re not in any breach. Whether that includes producer boards is to be determined.
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 & gas industry with the most profitable means of oil & 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. Please join our community on Twitter @piobiz. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.
