People, Ideas & Objects Response to a Request for Proposal, Part I

 Abstract

People, Ideas & Objects, our user community, their service provider organizations and Oracle Cloud ERP are based on providing the dynamic, innovative, accountable and profitable oil & gas producer with the most profitable means of oil & gas operations in North America. Our approach is business oriented to focus the industry on generating real profitability to ensure that society is provided with abundant, affordable and reliable energy to fuel their economy. The most powerful economy known to man. Our value proposition is derived from the disintermediation of the hierarchy. To fully adopt and integrate the industry standard Joint Operating Committee, the legal, financial, operational decision making, cultural, communication, strategic and innovation framework of the industry. Sound economic principles such as specialization and the division of labor and Professor Paul Romer's "New Growth Theory" regarding non-rival goods to establish our Cloud Administration & Accounting for Oil & Gas capability. Eliminating the need for each individual producer to build the same non-competitive capabilities of administrative and accounting expertise on an unshared and unshareable basis. Implementation of our decentralized production model as part of our business model ensures that "real" profitability will be earned everywhere and always. There are many other attributes of our value proposition such as innovation that can not be readily quantified and qualified. However, all of these are focused on generating value for all concerned. Where profitability in the primary industry of oil & gas is necessary to ensure that a healthy and prosperous, overall greater oil & gas economy is maintained and sustained for the long term. 

There is no other source of financial resources to do so. Governments only spend money that is taxed from earnings and profits. Investors only allocate their investments from other profitable areas of the economy. Oil & gas producers participating in a primary industry must stand on their own and provide for themselves, the service industry and all the subsidiary industries that are dedicated exclusively to their success. They must provide value for their investors and bankers, their employees and ensure that a healthy prosperous industry is handed down to others. Profits are the only means in which anyone and anything can be sustained on this basis for the long term. To do so takes effort, skill, courage and perseverance. None of these attributes can be pointed to in the current officers and directors of the producers, who coincidentally hold all the authority and responsibility to ensure profitability and accountability are attained, and are the only group who've obtained any personal value from this industry for many decades. These are disconcerting and difficult words aimed directly at those who make the decisions as to which ERP system to use. However, the destruction and damage they've authored is a fundamental betrayal to all those who have worked to build the industry constructively. It is only the officers and directors that have the authority and responsibility necessary to make the changes and avoid a further catastrophe by choosing to implement People, Ideas & Objects, our user community and service providers Cloud Administration & Accounting for Oil & Gas service..

To resolve the current difficulties that plague the North American oil & gas industry demands that we organize an approach to how it’ll be resolved. That is the work that People, Ideas & Objects et al propose to do with input from the oil & gas, service and all the tertiary industries involved in the greater oil & gas economy. Readers will note our contradiction in that statement and the belittlement of SAP by commenting that their approach is "blind sleepwalking agents of whomever will feed them." Our approach follows the industry culture contained in the Joint Operating Committee and five other organizational constructs, the overall vision of the Preliminary Specification, our user community vision providing them with the authority and responsibility to implement it with the assistance they require from industry. SAP is following the officers and directors. Industry culture is defined in the Preliminary Specifications six organization constructs consisting of the Joint Operating Committee, Innovation, Markets, Intellectual Property, Information Technology and Specialization and the Division of Labor. The Markets being driven as an organizational construct on the basis of price.

This new oil & gas organizational structure will be the derivative software product of People, Ideas & Objects Preliminary Specification and the services of our user communities and their service providers. What we describe as a rebuild of the industry on a brick by brick and stick by stick basis. We aren't trashing the industry to the dustbin of history. Unfortunately the officers and directors of the producer firms have already done so. Software is what defines and supports the organization in society today. Serendipity, spontaneous order, disintermediation and creative destruction have been hamstrung by the fact that software also constrains an organization in proverbial cement based on its current process management definition. To make any organizational or process change has to be orchestrated through the software first in order to have the change take effect. Otherwise the organization will quickly regress back to the processes existing in the organization's software definition. This is the consequence of our dependence on Information Technology and is what we’ve called a modern day software bug. One that has cost the industry its prosperity as officers and directors took this knowledge, never changed the organizations ERP software and therefore secured their methods of personal aggrandizement. 

Fast forward to the third quarter of 2022 and People, Ideas & Objects believe this same logic is being used again. Oil & Gas investors are demanding producers move to tier 1 ERP systems to enhance their profitability and accountability, of which we qualify with Oracle Cloud ERP. Will producer officers and directors be using this logic to select SAP with their vision of clean energy and pliable "blind sleepwalking agents of whomever will feed them" approach to marketing in order to secure the sale? We believe this would have a detrimental effect on People, Ideas & Objects by eliminating the Preliminary Specification as an active software offering for at least a generation. SAP would have to deliberately avoid our Intellectual Property and that would be considered a feature, not a bug by these officers and directors. Providing them with another viable scapegoat as to why they can not provide the style of accountability or performance being asked of them. Lastly it would ensure the industry maintains the status quo strategy of "muddle along."

Regarding the difficulties we find ourselves with respect to energy. I feel we do not have a handle on the situation and control is out of reach of these current organizations officers and directors. Where we are at is maybe best explained in the Winston Churchill quote, 

Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

Background

As pertinent background information, I began this adventure in 1991, I spent the first year promoting Oracle to join in our development of client server systems for Canadian oil & gas. This initiative failed in February 1997 as a result of my firm's inability to secure any commitment from oil & gas producers. Or in retrospect, I believe now that producers rejected the system due to the high level of accountability being introduced. Oracle subsequently tried on their own with Oracle Energy and found the same outcome, no participation from the producers for the same reasons, and left in 2000. There is an inherent level of commitment evident in Oracle's near decade long actions regarding oil & gas ERP systems that is not evident in SAP’s. A 22 page white paper and three day conference are superficial in comparison to the Preliminary Specifications 330 thousand word, viable business model and an active user community that began its development in 2014. Accountable ERP systems have been deliberately avoided for at least the three decades of my involvement and those who offered such products have not benefited due to their specific pursuit of enhanced producer performance, accountability and integrity.

Oracle’s market capitalization is now $206 billion and is the premier ERP provider in the world according to Gartner, SAP’s is $109 billion. I do not recall SAP’s efforts to build an oil & gas solution in the manner that Oracle or IBM have. Together Oracle and People, Ideas & Objects can build the Preliminary Specification to solve these critical issues for the oil & gas industry. And do so by first avoiding the issue of these officers and directors of the North American based producer firms and their desire to maintain their systemic lack of accountability. 

Looking at the decision to purchase and implement an ERP system. It’s expensive, it’s time consuming, it affects the management of the firm and tightens the compliance and governance of their actions. It holds the officers and directors accountable for their actions and decisions. Accounting is about the reporting of performance and as I’ve documented throughout these writings the oil & gas producer officers and directors have morphed the purpose of their accounting to recording value as they’ve chirped in their “building balance sheets” and "putting cash in the ground" mantra. People, Ideas & Objects believe that a capital intensive industry's products would contain high levels of capital costs. Which, if industry would adopt our methods by implementing the Preliminary  Specification, would allow producers to perform and compete for capital on North American capital markets. The ERP decision is made at the board of directors level based on the officers recommendations. Due to the high cost, time and disruption that occurs in the producer firms that undertake ERP implementations, this level of the organization's involvement is mandatory to make the decision. Once the decision is made it would not even be considered again for at least seven years and only if management were dissatisfied. 

I became aware of a specific ask for a tier 1 ERP implementation by investors a few years ago and am unaware of how long it has been since it was first requested. What we do know is that unlike the move to clean energy which was implemented the night the investors allegedly asked, and in what I’ve described was an unauthorized manner, we are unaware of any producer investing in ERP systems. This is wholly consistent with the refusal to provide competitive investment performance through appropriate profitability for the past number of decades. On the one hand moving into unrelated, uncompetitive industries that have no record of performance or value generation, no history of success and massive government involvement is done immediately. The producers, officers and directors will be able to justify these actions with the simple viable scapegoat that they’re “saving the planet,” and the reason they’re not profitable is “they haven’t figured it out yet” for their continuing poor performance. Focusing on oil & gas and enhancing its performance doesn’t intrigue them for some reason, they've abandoned shale as “non commercial” less than 2 years ago. Alternatively enhancing the level of accountability of their actions by implementing the August 2012 publication of the Preliminary Specification, our user community and their service provider organizations is obviously never going to happen if SAP meets the tier 1 ERP requirement demanded by their investors and selected by the producer officers and directors. 

I’ll emphasize the year I started this was 1991, 1992 with Oracle and both ours and their initiatives failed due to the inability of producers to get involved? Yes, that’s a question. This isn’t an issue of the investors that began in 2020 or whenever they first requested the ERP system upgrade to tier 1. This is a culture, a behavior and an infestation across the North American producer population of officers and directors designed to maintain their enhanced personal financial compensation. It is a necessity that producer firms implement the Preliminary Specification in order to wrest control from the hands of a small cadre of officers and directors that have found the source of their personal wealth is through a deliberate, destructive and dangerous level of unaccountability. One that has caused enormous risk to now be realized in societies inability to source profitable energy independence from secure, reliable and affordable oil & gas and about to become permanent if they implement SAP’s ERP software. 

I would like to take a moment to speak about those ERP providers that are in the market throughout this time and the stellar efforts they’ve done. It's one thing to avoid the tier 1 ERP providers and maintain the history as I’ve briefly described here. There are a number of ERP providers that cater exclusively to oil & gas that have been in the business for many years and decades. They too have experienced the abuse of the producer officers and directors who seek deceptive levels of accountability. To suggest these ERP providers have been put on a shoestring diet would be unfair and more appropriate to describe it as a second hand shoestring diet. Never paying for the application itself was a common tactic, only signing a service contract. Never sponsoring any changes to the systems they used. Producer officers and directors have the systems they want providing them with the obscurity they desire, why would they change that? Ensuring that their accounting and ERP systems were always inadequate. And I say that with all due respect to my competitors who have done the impossible in the most hostile of business environments. And should they have provided the accountability necessary, they too would have joined People, Ideas & Objects on the outside looking in.

Let me suggest a hypothesis that builds upon the situation that we have today. If oil & gas producers had the appropriate tier 1 ERP providers in place for the past decades of this history. Would the industry have fallen into the financial, operational and political crisis that we see the greater North American oil & gas economy has become today? Is it the lack of effective ERP systems, including SAP, that have reported inappropriate results of producer firms that enabled the industry to fall into the disaster and destruction that it currently is? I’ll reiterate that the lack of effective ERP systems is the deliberate and desired outcome of the producers' officers and directors actions over the course of these many decades. 

The questions producer officers and directors should be asking themselves. Will consumers demonstrate the same tolerance, patience and perseverance that both their oil & gas investors and People, Ideas & Objects have displayed these past years? Or will they want answers sooner and hold producers accountable for their energy demands and whatever else may be on their minds? Will they demand more than “muddle through” as an answer, and who will they turn to to heat their homes and earn their living? Having a permanent, entrenched and SAP supported, unaccountable organization is a greater concern for the consumers than the oil & gas investor. Investors could always sell their interests. I would advise these officers and directors to rethink their approach and ask themselves, just because they can continue with their unaccountable ways, does that mean they should? No one questions that the oil & gas reserves are in place as a result of the shale formations. No one questions the oil & gas producers capacity to spend investor money to increase deliverability. What’s different today is that investors aren’t volunteering for the “dupe” role anymore. And producers have never been able to earn “real” profits. History may not repeat itself. Will it be a case of oil & gas everywhere, and not a drop to burn?

In writing this I fully understand the implications of doing so. Making this a self fulfilling prophecy is not what I’m intending to do. I am attempting to show the jeopardy we may realize as a result of cementing the established bureaucracy in a term that will last at least the seven years in which SAP will be current, with much longer term consequences. Who will step up after that to assert themselves if People, Ideas & Objects fails in the market, yet the IP of the Preliminary Specification will need to be accounted for in any future solution? And even if there was someone who felt they could provide a better solution, would they be leading their product forward with enhanced performance and accountability in the manner that both Oracle and People, Ideas & Objects were ostracized and vilified for in the past and today?

I also want to clarify, it should not be misunderstood that I’m conceding the point. After 31 years, that’s not even on the table. What I am stating is that the stakes for all concerned will be growing exponentially more difficult in what appears to me to be this next phase of our journey. More difficult for all those associated with People, Ideas & Objects but also for all those who are dependent upon the North American producers in some form. We are heading to what appears to me to be a “quick decision” being made by the producers to adopt SAP based on satisfying their “investors input” much in the manner they adopted investors' clean energy demands. We should ask these producers if those investors that demanded the transition to clean energy ponied up and actively supported these activities. After a year or more I thought there would have been evidence of that by now. That although SAP satisfies the investors general requirement of a tier 1 ERP system. It’s a decision that is made in the best interest of the officers and directors continued, deliberate and destructive lack of profitability and accountability and as with so much of their activities is specious. SAP will also be the least costly in the short term, however far more consequential to the outcome of the industries profitability, accountability and prosperity. To suggest that People, Ideas & Objects may benefit from the decision made from the producer firms is an argument that doesn’t comprehend the value that’s been destroyed by this deliberate bureaucratic sloth and doesn’t understand the relationship People, Ideas & Objects have with producer officers and directors.

Why "Just" a Preliminary Specification

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

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

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

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

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

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

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

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

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

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

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

And

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

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

Milton Friedman said it as well.

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

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

Intellectual Property

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

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

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

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

And this YouTube video

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

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

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

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

Investors Will Decide

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

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

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

And

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

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

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

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

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

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

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

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

Radical Surgery vs. Bandaid Approach

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

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

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

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

Culture Shock

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

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

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

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

A Fundamental Betrayal

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

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

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

No!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our Preliminary Specifications 10th Year, Part III

 Although the demand for natural gas in the summer of 2022 is high due to the heat wave in the southern states. Deliverability remains at record volumes and inventories are building in North America to the point where the prospect of freezing in the dark in northern states and provinces will not be an issue this winter. However pricing of natural gas will reflect some of the dynamics occurring in the global markets as a result of the European situation. This applies to both the oil & gas commodities markets. Europe will be struggling in terms of securing its energy for the winter. Their natural gas supply has been curtailed and we see their inventories deteriorating rapidly. (See the graph of European inventory projections under a variety of scenarios.) Recall last year, natural gas prices reacted strongly to the demand in the European market at that time, yet the inventory levels were still within the historical average. Whether that was a feature of demand destruction or LNG being diverted to Europe is unknown. Whatever mitigated their inventory drawdown in late January and February of 2022 is assumed to continue to be in play throughout this year. Therefore the situation in Europe will be difficult. What follows in terms of consequences for North America will be high prices as our inventory levels are potentially put in jeopardy for the long term. The question I would ask is, are we a year behind the events that are occurring in Europe? Much of the U.S. LNG deliveries to China are being diverted to Europe. Russia will no doubt fill the needs of China through the pipeline they commissioned a few years ago, which is now operating at only 20% and is massive in terms of its throughput. Shifting the prior European gas as best they can. LNG has not only made natural gas a commodity priced on a global basis this winter, it appears to be taking on characteristics of a fungible commodity. 

What we’re about to face in the winter of 2023 could potentially be disastrous in both oil & gas commodities. The fact of the matter is that it's no one's fault. Assessing blame and pointing fingers from now on will be futile and counterproductive. At the same time it’s the producers responsibility to act. If consumers find producers to be “muddling through” with their “alleged” profitability through the roof, it will not go well for the producer population. What I see in terms of dealing with this potential issue, as is consistent with the “muddle through” philosophy, is nothing. If in the midst of this we see handsome stock options and bonuses declared for our good friends the maggots, celebrating the good job they’ve done, a unanimous declaration of victory that which bonuses would reflect, would ostracize them from polite society.

Then if we consider on the other hand what it is that producer firms can do… What if the service industry is in the condition that I’ve alleged through my writings these past years. There is a culture and history that producers have used and abused the service industry in both the boom and bust cycle. What motivation will lead an oil rig investor to invest in a new drilling rig when the last one they invested in was cut up for scrap metal because the producer wouldn’t pay their drilling invoice for another 15 months. Halliburton, Schlumberger and Baker Hughes are pursuing global deals as their priority. What will make them focus back on North America? Speaking of priorities the movement of field equipment and operators from all the shale formations to the Permian is occurring as we speak. Indicating that these overall service industry shortages may cause deliverability problems soon.

In terms of the engineering talent that was employed in oil & gas and was sent packing when the producer consolidated, rationalized, downsized or accommodated the virus / bust cycle. Producers turned their back on these people, what will motivate them to return to oil & gas now that the one good year out of six happens to need them. Will they just drop the new industry that adopted them after they were orphaned? This could apply to much of the talent throughout the oil & gas producer staff and particularly those in the field for the service industry. There’s a problem of monumental proportions that will demand hard work of the type they don’t do in their newly chosen industry after they were forced out and had to look for new careers. 

Many are stating that the investors will have to get involved. Why? They didn’t sell out, they only stopped investing more. Producers are “profitable,” at least from the maggots perspective, and their cash balances should provide for the ability to do anything they need! This assumes their finances are in order and they can employ some kind of miracle rehabilitation of the damage they’ve caused to their firms. However, once again why would the producers investors put more money in? 

Thankfully they’re the dynamic, innovative, accountable and profitable oil & gas producers that they are. Sorry that’s not the culture of the industry. They’ll claim that but we all know different. They’re wholly incapable of acting. “Muddle through” is not a slogan, it's a culture that CEOs and Chairman preach in the morning and evening to their people all the way down to the receptionist, mail clerk and switchboard operator. Readers appreciate my creative license. This centralized, soviet style organization will watch out their windows as the days pass for the order to come down telling them to act. The fact of the matter is if you can take ownership of the problem, then you have the capability to solve the problem. Therefore the question has to be what is the status of the maggots ownership of this problem? How will they solve the problems that have manifested themselves over the past four decades during the next six months or sooner?

The world is a dangerous place to live not because of the people who are evil but because of the people who don’t do anything about it. 

Albert Einstein 

What the maggots will be learning in this process is that consumers will not concern themselves about the prices they’ll have to pay. They’ll be concerned about the availability of the commodities they need. They’ll be concerned about why their country is no longer energy independent. And they’ll be concerned that their oil & gas industry has become so incapable. 

When it comes to deterring the difficult issues in the oil & gas industry, People, ideas & Objects have demonstrated their will in terms of the commitment and perseverance to take the fight to these bureaucrats. We have also demonstrated the requisite capabilities in terms of identifying the issues and offering solutions to those issues. Solutions that are now desperately needed and unfortunately the industry is in its eleventh hour and have no alternatives. We are ready, willing and capable of solving these issues in the mid-term. We have sought to mitigate the time required to deliver our product to the market and to do so successfully. With our user community and their service provider organizations configured on the basis of the ERP software defined in the Preliminary Specification we have taken ownership of this issue. Accordingly we’ll have the capability to resolve it. Being a proponent of the DFQ let me ask, would the producer firms be able to take ownership of the problem by adopting the Preliminary Specification?

We however operate in the domain of the administrative and accounting disciplines of the North American producer population. We have no understanding, resources and no capabilities to offer outside the domain of the administrative and accounting realm. What is necessary is the inclusion of all aspects of the industry, of which we have no focus or desire to be involved in as it is outside of our understanding. These too are critical issues. The question is what will the maggots do about this winter when the difficulties become acute. What is clear is that there’s no common interest between the maggots and the other constituents in the greater oil & gas economy. There are elements of faith and trust between the oil & gas producers and its consumers. However the leadership in these other areas outside of administration and accounting is not evident to me at this time and must also be involved.

What should be obvious, and should not have to be stated, is that whatever is stated by producers today will need to be brought forward in the time frame that is meaningful to the consumer. Actions will need to be undertaken successfully based on any claims that are made. Producers need to understand that consumers now understand the issues that People, Ideas & Objects have been working to remediate with our Preliminary Specification, our user community and their service provider organizations. Consumers have seen the cliff they’ve unfortunately been placed at and are not going to accept any excuses, blaming or viable scapegoats as remedies. Action is being demanded and if it isn’t provided in a timely manner through the consumers expectation of legitimate energy independence this winter then I don’t understand what can be stated at this time to better represent the difficulty maggots have created for themselves. 

It’s as if all that has been stated either correctly or incorrectly by the producer firms exists as bedrock, public domain assumptions. The litany of reasons that producers will be held to account by consumers will be the tragedy that maggots will forever regret. Here is just a small sample. 

• We’re profitable at $30 stated the producers, so what’s the issue now asks the consumer?
• Shale is prolific, so what’s the issue now?
• The United States is energy independent, so what’s the issue now?
• We’re innovative, so what’s the issue now?
• Clean energy is our future, what were you thinking?

And so on. Calling the local painter to find out how to get out of accidentally painting yourself into a corner won’t provide any answers. Finding someone outside of People, Ideas & Objects et al to rescue you will be futile, trust me on that. If this seems too onerous to contemplate, then the easy way out will be for them to explain to all concerned why the situation has gotten so out of hand and how did they let it get there? Specifically, what was the motivation behind what will appear to everyone the damage and destruction caused by them? Why have they done what they’ve done? Was it just for their own personal benefit?

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.

Our Preliminary Specifications 10th Year, Part II

 What outcome could a rational bureaucrat expect if they chose to participate in the development of the Preliminary Specification? As we noted in our prior post, the alignment of interests against these bureaucrats is comprehensive and complete, only their direct reports will be feigning any support. There’s nothing to be gained and everything to be lost for them to engage with People, Ideas & Objects on the development of the Preliminary Specification. Therefore engaging in a scorched earth policy that ensures they are the ones that secure possession of everything including the candle sticks is the only rational policy objective that will motivate, appeal or make any logical sense to them. The alignment of the bureaucratic cultural mindset across the North American producer population was noted in the prior post to be in perfect harmony throughout. As an extension of this alliance that does not fight and fritters away the value that had been accumulated over the many generations before them. Bureaucrats will not fight against the aggressive posture and allegations that People, Ideas & Objects have asserted and it is reasonable to assume that much like cats, they can’t herd themselves in this direction. Leaving me with the opportunity to rename these producer bureaucrats with the more appropriate term of maggot’s. As we know maggots infest, don’t fight and leave nothing but the carcass. 

This leaves People, Ideas & Objects, our user community and their service provider organizations, the service industry, staff of the producers, investors, bankers and most particularly the consumers, what we collectively consider our customer base, with an interesting dilemma. In Winston Churchill’s “The Second World War,” Volume 6 entitled “Triumph and Tragedy” we find the relevant quote to our situation in the fall of Poland. 

After pointing out that the German plan to set up defence points would result in the gradual destruction of the city, the broadcast ended by reminding the inhabitants that “all is lost that is not saved by active effort,” and “by direct active struggle in the streets, houses, etc., of Warsaw the moment of final liberation will be hastened and the lives of our brethren saved.”

Who now has the authority to ensure that all is not lost by ensuring the active effort is made to save this industry, or would they be saving our economy, our standard of living or civilization? People, ideas & objects  have identified the issue and its solution in the form of a viable, workable business model. In combination with our user community and their service provider organizations we’ll be providing the ERP systems, administration and accounting on the basis of the Preliminary Specification in what we’re calling Cloud Administration & Accounting for Oil & Gas. However there is so much more that needs to be done outside of the domain of People, Ideas & Objects et al efforts. Time is of the essence, where is this leadership and sense of urgency? 

My day to day discussions with those in the oil & gas industry are remarkable for their consistency. The industry may be undergoing an existential crisis as I’ve described which contrasts the maggot's calm and reasoned approach to the situation in their simple utterance of “muddle through.” I would argue the destruction and frittering away of the value of an asset each month for decades may be described as an opportunity cost, and as a result would rightfully not be a concern of management, however that argument needs to be reevaluated by producers. This is evident in the fact that as the monthly losses are incurred at each and every property in North America, we are moving into the second decade of the Preliminary Specification. Of which I am able to report that I have had zero expression of interest in the development or interest in the remedial efforts necessary to establish the most profitable means of oil & gas operations, everywhere and always, by any and all of the North American producers. It is the fact that the Preliminary Specification disintermediates the maggot's from their lofty positions and power that is the issue to them. Enhanced profitability in the form of the Preliminary Specification as an ERP system, which is standard fare for any organization, is demanded by the investors to be from a tier 1 provider such as Oracle Cloud ERP, would attract interest from any common sense business person. Therein lies the conflict.

The methods used in the Preliminary Specification to develop the value needed in producer and industry organizations are the proven, time tested business methods other industries have benefited from. We first of all move the culture of the industry away from the corporate model managed by the bureaucrats to the Joint Operating Committee. The legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks of the industry. Increasing the organizational speed, accountability and profitability. Introduce and exploit the concept of Professor Paul Romer “New Growth Theory” in his paper “Endogenous Technical Change.” Where the accounting and administrative resources are built on an industry wide capacity and capability and made to be shared and shareable turning them variable, based on production. Reducing the costs of each producer having to replicate the same unshareable, uncompetitive capability and capacity. And in turn, expanding on the Cloud Computing efficiencies by providing our software and service as the Cloud Administration & Accounting for Oil & Gas. The third method we use is the introduction of high levels of business automation, and the capacity and capability to iterate upon these principles on an ongoing basis. Another method in which value is generated is through the use and exploitation of further and continuous specialization and the division of labor. The only proven method of generating value in organizations. All of the four methods mentioned to this point are unquantified in our value proposition as the impact is subject to too many variables to determine their monetary impact. There are many other methods contained within the Preliminary Specification that bring substantial value to all concerned and can’t be qualitatively or quantitatively identified either, such as the two major processes of innovation. It is reasonable however to assume that they’ll be foundational reasons why the North American consumer is provided with a profitable, independently sourced, abundant and affordable means of their oil & gas needs. Dare we ask what the maggot’s are offering?

One of the methods in which we’re able to build value and quantify the amount is through the decentralized production model of the Preliminary Specification. Ensuring that all production in North America is produced profitably at all times. Also known as running the industry as a business. This is done through the price maker strategy that is detailed in the Preamble of the Preliminary Specification. And can be quantified in the region of $5.7 trillion dollars over the next 25 years. The elimination of the producer's assumption that investors will pay for all the capital costs is replaced by the Preliminary Specifications ability to ensure profitable operations which imputes the internal generation of the cash necessary to fuel the needs of the capital expenditures in a capital intensive and mature industry. This displacement of funds over the next 25 years is valued by others as $20 to $40 trillion dollars. Once again the focus of turning a business focus to the business of oil & gas for the first time in a half century does generate value.

It’s in the sense of value that we’re all now appreciating and understanding why profitability everywhere and always is so important to the oil & gas industry. Where is it that the money comes from that is necessary to ensure that the oil & gas investor is provided with a competitive return on investment in comparison to other industries in the North American marketplace? Does that money come from new investors in order to compensate older investors for being all around good people? Is this woke indoctrination what has guided the officers and directors of the producer firms for the better part of the past four and one half decades? How else could anyone ever explain the standard fare producer firm going to the capital market on an annual basis to raise their necessary capital budget? When the capitalization of costs of the producer firm includes literally everything they incur as a capital, the culture created is to reload the firm with cash, spend that cash, capitalize for eternity, repeat. When investors realized the nature of the producers' methods, they walked. Then there was suddenly no more cash for the service industry, no more cash for the producer firms staff and therefore layoffs and no more cash to keep the facade operating. Everything slowly ground down. Only the officers and directors / bureaucrats / maggot’s have made good on their time in the industry. This was done because “that is the way it’s done in oil & gas” or “that is the way they were trained.” Which in their mind relieves them of their culpability. If only one or more would jump off a bridge. 

Facts and evidence accumulated over the past decades shows the absolute failure of the maggot’s administration. What People, Ideas & Objects have done is prepare an alternative solution to this catastrophe and that has existed in the form of the Preliminary Specification for a decade. How is it that the maggot’s have been able to continue with their consumption of the value of the industry at the expense of all concerned. I think we addressed that in our prior post by noting that bankruptcy, serendipity, spontaneous order and creative destruction have been corrupted to support the maggot’s enterprise. It also appears to me that they’re entrenched and will not be leaving on their own. They will not suddenly gain the moral courage to do the right thing and set the industry back on its feet with the proper focus on a dynamic, innovative, accountable or profitable basis through development and implementation of the Preliminary Specification. Oil & gas prices are too healthy for them to walk away from their upcoming payday. They’ll be able to sprinkle cash about and make it look as if activity is evidence that the “good times” are here. It will be necessary to ask two questions though. Will it be profitable when the industry is culturally structured to be incapable of doing so? How much value is left to be exploited before the maggot’s hit bone and fly off?

I’ll leave this post with another quote from one of Winston Churchill’s “The Second World War” Volume 5, entitled “Closing the Ring” 

It is always prudent to be on record publicly as having given warning long before the event. This is more particularly true when its scale and gravity cannot be measured. 

And with that I’ll just say it’s a nice day here in early August of 2022. I wonder what it’ll be like this winter?

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.

Our Preliminary Specification 10th Year, Part I

 Today is the 10th anniversary of the Preliminary Specification. People, Ideas & Objects are pleased to be in the position we’re in as a result of our work in resolving the issues in the marketplace for the North American oil & gas producers. Our dealings with producers have been consistently difficult and are ripe with conflict and contradictions. Throughout our history we’ve experienced none of the rational behaviors that we would expect from our approach to providing the most profitable means of oil & gas operations everywhere and always. Why is this? What’s wrong with profitability? Why would you continue to produce a property unprofitably for years or even decades at a time? During this past decade, the developments of these producer firms has been to undertake the comprehensive destruction of their financial, operational and political foundations. They’re now incapable of meeting the needs of their shareholders and bankers, incapable of sourcing the manpower to deal with today’s market demands, seemingly unaware that tomorrow only brings greater challenges, and today’s energy consumers are looking to producers for more at a time when the producers' cupboards are bare. Whatever objective producer bureaucrats were pursuing it will cost society detrimentally and unfortunately put our way of life in jeopardy. I am at a loss to understand what their objective may have been. There was a solution to avoid all of this, and that alternative would have built substantial value for all concerned who have been fundamentally betrayed. Everyone in all corners of the greater oil & gas economy are able to now fully understand and appreciate the reasons why profits are a necessity. And today we can recognize the Preliminary Specification is in its second decade. 

What is the history that brought us to the point where we’re at today? How did we get here and what have been the consequences of the inactions of the North American oil & gas producers. To summarize the status quo as I see it today.

• Producer firms have diminished and in many cases non-existent capital structures.
• Either through chronic losses or specious accounting which saw everything as a capital asset and never recognized as a cost, in a capital intensive industry.
• A capital intensive industry would imply the cost passed to consumers would contain high levels of capital costs.
• Instead bloated asset values are now supported by excessive leverage.
• Abandonment in 2015 by their investors due to the producers inability to deal with their issues of unacceptable profitability and accountability.
• Abandonment eventually by their banks who began to recognize similar issues. 
• An inability to accept the global role of high cost, swing producers in global oil markets. To believe that markets would accept any level of production provided, with no consequences. Never learning the business basics of overproduction.
• Where the great depression was largely caused by overproduction.
• Where July 1986s oil price collapse saw the first of many such commodity price collapses due to North American oil & gas producers' chronic overproduction. 
• I count six “good” years in the industry out of the past thirty six years.
• In 1991 I began the pursuit of what has become several attempts to resolve the chronic overproduction in oil & gas through the implementation of software systems to alleviate the systemic overproduction problem.  
• In May 2004 published the Preliminary Research Report that set the foundation of the Preliminary Specification. A total of ten years of research to determine “what, how and why” the industry and producers would need to operate and eliminate their issues to provide for the most profitable means of oil & gas operations. Leading to publication of the Preliminary Specification on August 9, 2012.
• Throughout the period since its publication producers have only sought to violate our Intellectual Property and at no time did any of them inquire about the solution. 
• July 4, 2019 People, Ideas & Objects published a paper “Profitable North American Energy Independence -- Through the Commercialization of Shale.” The market's reception was very strong, receiving significant distribution. 
• No interest from producers was expressed in the paper’s proposal. 
• We ultimately received the producers final response to the ideas contained within the Preliminary Specification and the July 4, 2019 publication when they allowed oil prices to drop to negative $40 in April 2020. 
• Throughout 2020 and 2021 declarations that shale would never be commercially viable and asset sales of shale properties were announced with many producers exit from that business.
• Maintaining their cultural propensity to bail and abandon prior investments instead of remediate or attempt to make something of their “failures.”
• Alleged “shareholder driven initiatives” to reconfigure the producer organizations as clean energy providers were announced as the new frontier. 
• Overnight they began listening to their shareholders about clean energy? An industry that is scientifically and commercially not viable which was pointed out in our July 4, 2019 publication. An industry with a history of repeated failure, of poor accountability and massive government involvement. A bureaucrats dream. They’ll be saving the planet though!
• Contrast this with the fact they’ve ignored and continue to ignore their investor concerns regarding profitability and accountability issues for almost a decade.  
• For decades producers claimed they needed to make sure that oil & gas prices remained competitive so that alternative energy could never get a foothold. 
• Now it is these same bureaucrats who are taking the producers cash and oil & gas revenues to fund their unaccountable activities in an industry that has never performed even with government subsidies. 
• Choosing an alternative business direction shows they’ve lost the focus and drive to remediate and rehabilitate the oil & gas industry.
• Difficulties in sourcing the field resources necessary have become a primary concern. 
• Service industry providers and their staff have been repeatedly betrayed by producers. Nothing is being done to remediate these relationships. 
• The resulting field capacity and capabilities damage and destruction have severely deprecated the producer's future deliverability. 
• 2022 Lockdowns are lifted and consumption is resumed leading to price increases at the pump. Consumers are concerned about their energy supply.

To assume as we have that this failure is a cultural and behavioral phenomenon developed over the past decades is reasonable and rational. It may also be a limiting assumption in our attempt to understand why this has happened. If we dispatch that they were motivated by rational behaviors, which is appropriate in this situation, we can maybe begin to determine what drove this madness. We can begin to see the dark alleys where these producers officers and directors reside. Can we expand on this small cadre of just the officers and directors as the culprits? What about the investors, do they travel those back alleys too? Apparently not as they’ve been absent since 2015 and have expressed their displeasure with the manner of producer firm operations, accountability and most importantly profitability. Is there any other identifiable group, what about the service industry or the staff of the producer firms? They too have not fared well. Nor has the consumer. It is therefore reasonable to make our first conclusion that the producer's destruction has provided the officers and directors with the enhanced compensation that they’ve documented throughout their financial statements. They were conflicted and only ever in it for themselves. As they’re the only ones we can document that have benefited from this destruction. It is their specious and unrepresentative financial statements that are as useless as their business objectives of “muddle through,” “building balance sheets” and “putting cash in the ground” are. If only we weren’t so frustrated with their performance and just listened to the garbage they were spewing. It was only they who had the requisite authority and responsibility to act. Action via “muddle through” is exactly what they did, even while the Preliminary Specification existed. Which in fairness to them would have caused them significant levels of effort and hard work with no upside in terms of continued personal value generation, feigned innocence and luxurious way of life. 

Acceptance of this behavior is not the status quo. As indicated, the big cheese in the industry, the officers and directors, stand alone. There is not one representative group of individuals outside of their direct reports that would be supportive of the situation as it stands today. Change is what is demanded and it needs to be undertaken yesterday. What we have however is a well entrenched, highly satisfied group of individuals with all the requisite authority and budget to maintain their hold on power. They are nameless and faceless. Tell me the name of the individual at Suncor who “agreed to leave as president and CEO and resign from the board of directors” on July 8, 2022? It will only be through the deliberate act of their removal from office that we’ll be able to seek any remedy to the situation. Consider the following.

What has been the historical norm established since the great depression is the exit of the management class from the scene when their administration has become untenable. What I would have assumed, and if we could make the assumption here that the traditional message of the investors withdrawing their support as the ultimate message of dissatisfaction and demand for change. Which occurred in 2015 was the point when the producer firms became “untenable.” Why I am writing this in August 2022 is that the traditional tools of a market economy have failed and are being exploited by these bureaucrats to benefit themselves exclusively? 

• Bankruptcy or business failure is no longer possible as all that it does is reinstate the officers and directors and eliminate the angry shareholders. Forces the banks to dilute their loans and start again for the requisite period of time between bankruptcies that is deemed acceptable. The game is played with such skill and brashness now that officers and directors declare themselves pre-bankruptcy bonuses. 
• Serendipity where organizations can change with the times. Unfortunately our advanced, software driven world is securing organizations in metaphorical cement. Only through the active change in their ERP software can organizational change occur. This has been the reason that no change has occurred in any of the producer ERP systems. Securing the bureaucrats' administration in perpetuity. All tier 1 ERP providers left by 2005 and a tier 1 ERP solution needs to be implemented by industry as an explicit demand of the investors.
• Spontaneous order occurs when people can see the opportunity in the market and act. In highly diverse continental markets where people are connected through electronic means the ability to see and to organize markets efficiently and effectively has been rendered obsolete. Things need to be actively pursued in order for them to occur.
• Creative destruction has been massaged from the financial statements of the producer firms. Each producer firm has massive capital cost in the form of property, plant and equipment. These are not representative of the performance of the firm but are an attempt to represent the value of the producers. The homogenization of producers is the result. Each firm is the cookie cutter financial statement of a deemed industry standard that only differentiates on the basis of the size of the production profile. Can you discern from any one of the financial statements who is the hero and who is the zero? Outside of bankruptcy that is. 

Another behavior of these officers and directors that we can reliably count upon is their ability to turtle in the face of criticism or opposition to their (in)actions. Only to eventually resurrect their prior behaviors through the “muddle through” culture they’ve fostered and enabled. Allowing this culture to quickly reimpose the prior unacceptable behaviors. Dishonesty, blaming and viable scapegoating have been the toolkit of the officers and directors these past decades. There have been a litany of reasons that they’re unable to get up off the couch and do anything, things don’t work in their favor or objects are in their way. The defining characteristic of this behavior is that all the producers will be discovered to be singing from the same hymn sheets and in perfect harmony. 

Unfortunately, the way I’ve summarized this situation would be the same way that anyone else outside of this bureaucratic class would summarize it. Unaccountable, uninterested, unprofitable, culturally conflicted, unmotivated, uncaring and with large streams of cash with which they have absolute authority over. The decade of the Preliminary Specification attempt to enable the most profitable means of oil & gas operations, everywhere and always is all the evidence that anyone now requires to discover the otherwise permanent issue our society faces. The inability to appreciate or concern themselves with the fact that each barrel of oil is equivalent to 10,000 to 25,000 man hours of mechanical leverage in the most advanced economy the world has ever known is irrelevant to them. It won’t affect them. 

This is the evidence that exists today. This is the dark and dreary future that they’ve created and sent us down. It could have been so different if the alleged leadership did their job and made the appropriate changes at the appropriate time. 2015 when the investors withdrew their support was unquestionably the point where action was necessary. Now that we face such an issue change needs to be forced upon the producer bureaucrats. They are not responding to the usual forces and they’re not following what has been considered to be the traditional behaviors in times of financial duress in our economy. They are entrenched and have proven to be untrustworthy and unworthy of our continued support. They must be terminated from their positions or forced out in some manner. Or I’ll be here in 2032 etching these writings in stone. I’ve painted many visions here during the time that I’ve been writing on this blog. I don’t know what my accuracy has been in terms of getting it right but I know I’m close. I would hate to be right about that future we all face. 

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.