OCI Abstract

 People, Ideas & Objects Preliminary Specification provides a comprehensive vision of the future oil & gas industry, producer and service industry provider. The Preliminary Specification is delivered through our Cloud Administration & Accounting for Oil & Gas service. A fourteen module ERP software system that uses Oracle Cloud ERP which defines and supports the Joint Operating Committee, three marketplaces and five other organizational constructs of the dynamic, innovative, accountable and profitable oil & gas producer. Our solutions competitive advantage is that we provide the North American oil & gas producer with the most profitable means of oil & gas operations, everywhere and always. Establishing a foundation for future North American energy independence.

People, Ideas & Objects vision is comprehensive and detailed in the 375,000+ words contained within the modules of the Preliminary Specification. Our software defines and supports a structured reorganization of the industry and producer firms. Through our decentralized production model, we implement a price maker strategy that converts the industry from a cash flow focus to one of “real” profitability everywhere and always. Once the industry is profitable we then deal with the resource constraints of the earth science and engineering talent through our Resource Marketplace, Research & Capabilities and Knowledge & Learning modules. It is through specialization and the division of labor that we’re able to expand the throughput of the industry from this constrained resource base. Similarly the devastation realized in the service industry is a constraint to production deliverability and needs to be purposely rebuilt by producers. Then and only then would we be able to approach the objective of achieving energy independence in oil & gas from the Canadian and U.S. marketplaces. Establishing the industry on the basis of profitably and removing the resource constraints of engineers & earth scientists, service industry capacities & capabilities which exist today are the necessary precursors to achieving energy independence. The vision of what Oracle, People, Ideas & Objects Preliminary Specification, our user community and their service providers set out to achieve.

It is reasonable to look to energy independence as an overall objective. Shale reserves provide for that. However, the way in which the industry is managed today makes that objective unreasonable and unattainable. Officers and directors have destroyed the financial, operational and political foundations of the industry. Today we see the producers have lost financial and operational control within their organizations and within the service industry of which they are solely dependent upon. Who provide these producers with the geographical and technical diversity necessary to carry out their operations in the field. We now have producers who are unable to function operationally at the capacity necessary to meet the long term demands of their consumers. 

Without significant capital to restructure and increase industry throughput. The current officers and directors are unable to achieve energy independence. They’ve never been concerned or capable of earning “real” profitability. Without establishing the industry on a foothold of profitability first and foremost. There is not enough capital in the universe to achieve energy independence in North America while remaining in the hands of these officers and directors. 

The next twenty-five years in oil & gas will be the most dramatic in its history. The demand for energy will ensure that prices remain high. Yet with the abundance of shale reserves ensures the costs of providing that energy are much higher than the costs of conventional reserves. And with many people joining the middle class we need to consider how the industry approaches this new energy era. Does anyone believe the current officers and directors, with the financial destruction they’ve caused in the marketplace today, will be the solution? And does that future involve an Information Technology perspective that is just a cost, or should it be a vision such as the Preliminary Specification provides today?

The key to providing this solution is that the Preliminary Specification is based on seven organizational constructs that include the industry-standard Joint Operating Committee. The legal, financial, operational decision-making, cultural, communication, innovation, and strategic framework of the industry. When we take the compliance and governance frameworks of the hierarchy and align them with the frameworks of the Joint Operating Committee we attain a speed, innovativeness, accountability and profitability that is desired in our oil & gas organizations. Our other Organizational Constructs include the reintroduction of specialization & the division of labor, establishment of markets, use of Intellectual Property laws, Innovation, Information Technology and Professor Paul Romer’s “New Growth Theory” regarding non-rival costs. Each construct establishes and contributes to setting a new cultural foundation to the producer firms and industry operation. A culture based on performance and profitability.

After all, as you’ll see, we are not talking about minor changes to the floor plan of accounting. We are exercising wholesale changes to the oil & gas industry by adopting the Preliminary Specification, and fully utilizing the Joint Operating Committee and these other Organizational Constructs. Change that is as significant as that which is represented by the changes in energy prices, the global energy supply and demand structure, shale reserves and IT leveraged change or disintermediation. Based on our research on innovation of Professor Giovanni Dosi and as applied by People, Ideas & Objects to the oil & gas industry, Professor Dosi asserts that the makeup of industries and companies are attributable not only to the endogenous force of competition. Innovation and imitation also make up the fundamental structure of an industry. “Market structure and technological performance are exogenously generated by three underlying sets of determinants.”

Each of the following three determinants are evident in the marketplace of an oil & gas producer today, as reflected in:

• The structure of demand.

Satisfying the demand of the global energy marketplace is critical to the advancement of all societies. American, western, Chinese and developing societies face real challenges in providing adequate long-term sources of energy. The long-term demands on the energy producer over the next 25 years have never been greater.

• The nature and strength of opportunities for technological advancement.

Which leads one to believe mankind has never faced the level of opportunity and acceleration that is possible today. The industrial mechanization of the past 100 years combined with the prospective mechanization of intellectual pursuits combines to markedly appreciate the value of human life. The availability of abundant, affordable, reliable and profitable energy will be critical elements of this advancement.

• The ability of firms to appropriate the returns from private investment in research and development.

The oil & gas industry is moving closer to its earth science and engineering principles. Innovation, research and development in both the producer firm and the service industry are and will become more commercial in nature. It is on the basis of the success or failure of these factors that will determine the success or failure of the producer firm within the industry.

The role of software in society is becoming more pronounced. Today we are still in the beginning stages of what can be done. For an industry such as oil & gas to continue without the software development capabilities that People, Ideas & Objects are proposing, and the organizational structure focused on the Joint Operating Committee, North American based producer prospects look dim. People, Ideas & Objects claim that we provide the innovative oil & gas producer with the most profitable means of oil & gas operations, everywhere and always. First by providing our software in the most cost effective manner. That is, charging our subscriber base for the one-time costs of our software developments on a shared and shareable basis. A fundamentally different value proposition coincidental with the value of Cloud Computing. To the assertion that we are establishing a Cloud Administration & Accounting for Oil & Gas software and services capabilities and capacities in North American oil & gas. 

And secondly, that in order to attain a higher level of economic output requires that the oil & gas industry employ higher levels of specialization and division of labor. To organize that specialization and division of labor in a continental economy requires the use of the software specified in the Preliminary Specification. There are no other means by which to organize a higher level of specialization and division of labor. Serendipity, spontaneous order and in many ways creative destruction have ceased to function. Officers and directors have now proven the producer firms inability to change or accommodate the speed of the marketplace. Therefore our claim to be the most profitable means of operations is valid. The only manner in which to move from the high levels of organizational methodology we currently enjoy is to design and support a more sophisticated specialization and division of labor. And that will be detailed and managed through the Preliminary Specification. We need to take control of the production of the software in order to take control of the means of energy production. That is what People, Ideas & Objects user community-based software developments are about. 

Thirdly, our development of the decentralized production model, as detailed in the Preamble, provides the oil & gas industry with the capability to allocate oil & gas production on the basis of profitability throughout the industry and obtain “price-maker” strategies. For producer officers and directors to continue to assert that oil & gas commodities are subject to the economic principles of “price takers” is a continuation of their failure. Production discipline provided from the Preliminary Specification is the necessary mechanism in the prolific and costly era of shale-based reserves. Otherwise, the industry and producers will continue to lose money due to their many decades-long behavior of chronic overproduction and oversupply in both oil & natural gas.

When it comes to undertaking a large project such as People, Ideas & Objects Preliminary Specification. And we have budgeted the project at $15 billion in its initial commercial release. Is a need to maintain a sense of urgency for the people involved through to the end of the project. As we know, most people will remain motivated as long as the money keeps flowing. Therefore, how do we ensure that the money keeps flowing? It is through the fact that we provide the most profitable means of oil & gas operations that we can motivate the producers to maintain their sense of urgency in keeping this project funded and moving forward to its conclusion. The alternative is the current officers and directors version which has effectively eliminated them from consideration. In the future, it may not be enough to own the oil & gas assets. It will also be necessary to access the software that makes the oil & gas asset profitable, that is the importance of software in today’s society. Our value propositions monetary value over the current offering is valued in trillions of dollars for the next 25 years and provides the greatest return over any other investment industry could choose. 

People, Ideas & Objects are actively disintermediating the oil & gas industry and as a result have created the adversarial position this role demands. Therefore we have come up with an innovative method in which to fund our budget which we describe as “Profitable Production Rights.” Which provides the license holder of the Profitable Production Right the ability to simultaneously benefit directly from both participation in oil & gas and the Information Technology industry. Profitable Production Rights licensees hold the exclusive rights to access People, Ideas & Objects Cloud Administration & Accounting for Oil & Gas. Therefore any producer in need of an organizational method that includes the software and services will need to have secured the appropriate amount of Profitable Production Rights to process their production, etc.

From the fourteen modules Preliminary Specification, there is an overall vision of how the innovative oil & gas producer and the Joint Operating Committee would function in this new energy era. I had two comments made to me when I wrote the Preliminary Research Report. The comments were that “this solves every administrative issue in oil & gas for the past fifty years” and “it's an entirely new discipline.” Both were related to the significance of using the Joint Operating Committee as the key organizational construct of the innovative oil & gas producer. What I think that we can say as a result of completing the Preliminary Specification is that both of these comments underestimate the significance of using the Joint Operating Committee. What we’ve discovered is that the Preliminary Specification certainly resolves the administrative and accounting issues when the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks are aligned with the compliance and governance frameworks. However, when it comes to the operational concerns of the oil & gas industry, it will provide the frameworks and means to solve those problems too. And although People, Ideas & Objects have used them to highlight today's operational issues they’ll also provide solutions for tomorrow's issues and opportunities.

Changing the innovative behavior of one producer carries a scope of change that is as broad and as diverse as is contemplated in the business world. Change at this scale in many instances can not be managed within the organization but needs to be managed through the forces of creative destruction in the greater economy. Producing natural gas at a loss was the beginning of this process. We have now seen natural gas producers continue to lose money for more than a decade while the Preliminary Specification was available to be developed. Yet nothing was done to address this issue. At the height of the issue, we saw the officers and directors pray for a cold winter, abandon shale and reorganize as clean energy producers. Solutions to the actual problems have not been discussed or provided outside of People, Ideas & Objects, and the low natural gas price issues remain unaddressed in early 2023. The fact is officers and directors can’t, won’t and will not ever change. Over the early years of the natural gas price declines the relatively higher oil prices were able to cover many of the sins in the natural gas marketplace. For the past nine years, low oil & gas prices have put the industry and many of the producers in financial jeopardy due to both sides of the business's poor performance. An anomaly that hasn’t happened before. We believe these are the beginning stages of the forces of creative destruction. People, Ideas & Objects offers the Preliminary Specification, our software development capabilities, our user community and their service providers as an alternative organizational structure for the oil & gas investor to instrumentally rebuild the industry. 

Producer officers and directors have a propensity to collectively race into the “next big thing” in terms of their capital investments. Abandoning their prior “next big thing” investments with little thought or concern that they’ve never attained commercial success. Just as sheep they move from failure to failure in lockstep with one another. 2021s producer declaration that shale would never be commercial was quickly followed by their new focus and direction on clean energy. This after decades of low oil & gas prices being justified by the excuse that it was necessary to ensure alternatives didn’t get a competitive foothold. Only to shift the producers oil & gas revenues, generated by prior oil & gas investors, to clean energy in an unauthorized manner as they would have otherwise run out of “next best things.” 

Today the landscape is littered with the destruction and damage that has been authored by officers and directors and comments such as clean energy is their future does nothing to support a robust industry. Raising issues such as it should clear out the last remaining holdouts who were firmly committed to petroleum engineering and geology at the university. Any possible new investments in drilling rigs or frac capacity will have added just one more to the thousands of reasons never to invest in the service industry when producers are this abusive. And shown those trapped in an oil & gas career not to start a family or take on a mortgage in such an insecure economy, but to continue to look for work in other industries first. The positive from all of this is the officers and directors are fine and they thank you for asking. With consistent cash flow they’ll continue to provide themselves with the healthy compensation they’ve been able to “earn” over these past decades. These officers and directors are the only people who have benefited financially from oil & gas which to them is a feature, not a bug. 

I’ll only point out here that overproduction was the root cause of the Great Depression. Oil & gas overproduction has been the method of destruction for four decades. The first of possibly dozens of resulting commodity price collapses occurred in the summer of 1986. This Preliminary Specification was originally published in August 2012 and deals specifically with oil & gas overproduction. And on July 4, 2019 People, Ideas & Objects published our White Paper “Profitable, North American Energy Independence — Through the Commercialization of shale.” Which was widely distributed and received the thumbs down from our good friends, the producer officers and directors. Their absolute response came nine months later in the form of negative $40 oil prices. Only to declare shale would never be commercial and to move on to clean energy with oil & gas revenues. Our conclusion is the only conclusion one can discern from this. The officers and directors don’t appear to understand business, or maybe it's just the oil & gas business they don’t understand and they don’t know what business it is they’re in. 

A time of dynamic change driven by organizational changes focused around an innovative Joint Operating Committee. How can a firm that has been developed in an era of cost control transform itself into a dynamic, innovative, accountable, profitable and earth science & engineering capability-focused producer? In many cases the will to do so might exist, however, with the speed and unforgiving nature of the business cycle not much time will be provided to those that attempt the transformation. We see in this world the capital markets reflecting many interesting phenomena since the financial crisis of 2008. To suggest any trend or definitive result from these would be premature. It's just a different world in terms of being an oil & gas CEO or CFO than it was before 2008. And early 2023 appears to continue with wars, market surprises and disruptions that affect the producer firms.

It was in late 2022 at the Oracle CloudWorld Conference that Oracle accelerated the value that firms gain from ERP systems. Introducing advanced, integrated services that established reductions in costs and time of any firm that used their products. Examples include their integration with J.P. Morgan Chase Bank which enables users of the bank's credit cards to designate the destination of the charge within their companies accounts. Oracle Cloud ERP would then verify the charge was consistent with the company's policies and process the charge to J.P. Morgan Chase Bank on the basis of its eligibility. This eliminates the costly and time consuming task of filing expense reports that each of their staff need to undertake, and the time for others to process and review the expense reports. Considering the impact across the firm for the entire year, what this innovation and integration will yield in terms of gains include greater productivity in terms of time, lower cost and an overall reduction in everyone's frustration.

Oracle has not stopped there. This is a major initiative of theirs and what I see as the focus of their firm's future developments. What they have is the world's premier tier 1 ERP system. This is the route in which to leverage that value further to bring about the most customer value. These features are available globally and for all industries who chose to use their products. As People, Ideas & Objects have chosen to build upon Oracle Cloud ERP we will be providing these services to North American oil & gas producers. Oracle's developments will be incremental to the specific oil & gas attributes that we’re building to deal with the issues and opportunities of the oil & gas industry. Providing People, Ideas & Objects, our user community and their service providers the chance to build similar, unique time and cost saving attributes.

A New Direction

 I can remember how I felt back in 2007, 2008 and particularly throughout 2009. The evidence of the economic difficulties were being experienced broadly across all industries and the need for oil & gas to act to build the Preliminary Specification was beginning in my opinion. The Preliminary Specification was three to five years from being completed, I was four to six years into its content creation and had an immense amount of work left to do. The feeling that I was late and would fail to deliver on time was weighing heavily on me. Fast forward a decade and a half, we appear to be headed for more serious economic difficulties, ones that will devastate most businesses and the great majority of those who did not react appropriately to 2008s warnings. Artificially low interest rates over the past two decades have given license to those who thought they were producing value, such as oil & gas producers. The bill always comes due for these periods and the banking situation in the U.S. is showing me that time has arrived. Therefore the consequences of those actions by those who did not understand and ignored the lessons of 2008 will now have to be paid. 

Unfortunately there is little that can be done now. Other than the slim possibility that businesses and individuals are able to rapidly pay off their debts by selling assets at today's market values and do so quickly, otherwise they may be too late and will have no choice but to face the music. Times such as these, that are best described as capital asset deflation, little can be done to stop what’s about to happen. The world has a total of $300 trillion U.S. dollars of debt. This is measured as 349% of global gross domestic product. As interest rates rose the cost of holding the debt should have been offset by selling the assets associated with it before the assets went underwater. Generally speaking that’s too late now and whether interest rates continue to increase or decrease or hold doesn’t matter. It’s out of the regulators and the U.S. Federal Reserves hands. The market will be setting the terms and conditions from this point forward. And interest costs will become more of a burden as the assets pledged for the debt will no longer generate adequate income or compensate for the amounts of outstanding debt. Therefore investors and bankers will be wanting higher interest rates to cover their losses. Which turns this into the downward spiral until we can restart the process once again. Why the Fed had to have two decades of ultra low interest rates will be a question for the history books. An answer that may be provided a century from now. 

For me the sense of urgency that I felt in 2009 returns to bring the Preliminary Specification up to date. A process that I started around this time last year. And then restarted again in October 2022. The restart being the result of the changes that Oracle made to Oracle Cloud ERP which I feel are so significant that they must be included in the Preliminary Specification to provide an understanding of the general business functionality and process management through Oracle, and People, Ideas & Objects will build the oil & gas attributes to work seamlessly with Oracles. The higher levels of automation, specialization and division of labor will be noted throughout our writings to get a better feel for the significant advance Oracle has and will be making in the future. People, Ideas & Objects are very excited about what Oracle is doing and are pleased that we can build upon the value that Oracle Cloud ERP is bringing to all industries.  

I think the one industry that is poorly prepared for the Capital Asset Deflation we’re heading into is North American oil & gas. They operate a capital intensive industry, which they’ve made far worse by “building balance sheets” and other such nonsense, and will therefore be experiencing greater exposure. Producer debt levels are commensurately higher due to over reported asset values and their inability to ever make any “real” money, their capital structures being unsupported and seemingly oblivious to basic business principles. I have no doubt though that those paper thin, well built, “balance sheets” will prove their worth in this storm the producers are heading into. 

Therefore my argument is going to be drowned out by the screaming and yelling of those who are about to find out how bad oil & gas has been managed. I have a job to do to get the Preliminary Specification in the best shape that I can for the time that I feel we’ll be called upon. I feel a sense of urgency to get this completed as my priority. Time spent on this task will mitigate the amount of time that will be spent overall in terms of delivering the Preliminary Specification to market and reduce the amount of any confusion, errors or omissions. Therefore as of today the reviewing of the Preliminary Specification will continue as my priority.

The other task I’ll be concerned with is the promotion of the Profitable Production Rights Licenses as the means to fund the development of our software and our user community. I’m a bit disheartened however that my career in terms of screaming at bureaucrats may only resume in another life.

Operations Management Module, Part X

 Performance Evaluation

This last sub-section of the Operations Management module brings together an advanced toolset that producers and Joint Operating Committees can use to develop and test new criteria for better performance. The combination of the Analytics & Statistics, Performance Evaluation and Artificial Intelligence module within the Operations Management module is advantageous due to the combination of the financial, operational and technical data and information. This data being the engineered and documented data that is the output of the process of building the Preliminary Specification and establishing the objective and standard qualities necessary for its unimpeachable nature of what is presented and understood by its users.  

Working on the performance aspects of the producer and Joint Operating Committees the user of the Operations Management module doesn’t need to be making decisions that are based on bad data or information. The reliability and understanding of the conclusions made are only as good as its data and the information quality that exists, its consistency and what users believe the data represent. To suggest that Artificial Intelligence will be of any value when the data and information that it uses is questionable, is only the latest iteration of an Information Technology widget as the solution to a business problem. People, Ideas & Objects approach to Artificial Intelligence is fundamentally different. 

As I indicated in the Pro-forma Worksheet section of the Performance Management section of this module. The use of decision making based on factors outside of the framework of the accounting system, which is imposed when using the Pro-forma Worksheet, would lead to incorrect assumptions and hypotheses. This is of particular concern in using the Performance Evaluation section to make the performance based decisions on the actual, factual data but not using the strict interpretation of the financial accounting system and therefore leading to incorrect decisions being made on clean data nonetheless. However taking the SEC’s perspective is not how innovation is developed. New and creative perspectives and ideas need to be developed and understood for their stand alone value in order to see their worth. Once proven in the Performance Evaluation section, testing the theory in the Pro-forma Worksheet would then provide its business understanding and implications. 

This is the point of divergence between what the investors believe they see in oil & gas, and what it is the officers and directors are producing. The SEC sets out through its coordination with accounting standards bodies and the audit firms to provide a generic understanding of financial accounting in North America. Such that when an investor analyzes an annual report from company A in industry B, they’re able to use the same understanding and apply it for comparison to company C in industry D. They then will be able to make the appropriate decision as to where to invest their money for the optimum return. When company A in industry B has gone off the cliff in terms of the generic understanding of financial accounting, have begun using their own criteria to make their performance exaggerated, then investors appropriately feel betrayed. 

The purpose for this use of a standardized reporting system is substantial. It eliminates the need for each and every investor to spend the time to review each and every document of each potential investment they consider. When they understand the general framework of how the North American reporting system operates, they can defer to it and not have to spend the time reviewing the details at great cost to themselves and at the same time incur an unacceptable cost for the firm to be catering to each and every potential investor's question, their concerns and needs. Markets operate on information. Information in the form of price, when the understanding of how that price is generated then the market is able to operate efficiently. 

It is the implications of the changes that are being made within the Pro-forma Worksheet that need to be considered in all cases. It is doubly so when the mixture of many changes being made may have an overall negative effect on earnings that need to be avoided. Or the changes that generate any detrimental consequences need to be removed. When producers have the ability to see what their investors in oil & gas understand. Adjust their decision making to ensure profitability everywhere and always, the consequences of those decisions being made will be able to avoid future difficulties and errors with their investors. 

Analytics & Statistics, Performance Evaluation Modules

These two modules consist of the tools that are able to provide their users with the ability to perform statistical analysis on the data and information they’re authorized to access in their domain. The Performance Evaluation module is for the Joint Operating Committee and Analytics & Statistics provide the same tools for the producer firm as a whole. The difference is the domain of the data and information is constrained in the case of the Performance Evaluation to the members of the Joint Operating Committee.

The means to build a library of tools to use personally, as a team, a Joint Operating Committee or producer firm is available in each of these modules. The use and reuse of these formulas will assist in providing accuracy, understanding and value to each organization. The domain of an individual's data would be prescribed by their authority and responsibility within the organization of concern, and managed by the Oracle Autonomous Database role definitions.

Artificial Intelligence

ChatGPT has demonstrated the concerns that I have about Artificial Intelligence and its value. Producer firms have been using Artificial Intelligence in their organizations for up to three years now and I am unable to notice any marketable increase in their performance. I often tell people who seem so enamored with AI, the ones that were all over Facebook, that they should go write a software program. Find out how difficult it is to actually conduct anything serious in technology and then reconcile their vision of AI with that reality. 

Our approach in the Artificial Intelligence module is one of cost mitigation in this initial phase of the introduction of the technology. The costs and resource uptake involved in Artificial Intelligence is high. As with innovation the costs need to be controlled and monitored effectively with the appropriate organizational means. In People, Ideas & Objects Preliminary Specification AI is a shared and shareable resource due to its high development costs and the demand for high cost, quality resources that may in fact be displaced from productive activities. If each producer sets out to incur these costs on their own we’ll find the other factor consistent in today’s AI implementations. There are currently only 1% of these initiatives that are considered successful. 

Separate and distinct from the Analytics & Statistics module. Artificial Intelligence in the Preliminary Specification is a shared and shareable resource that is available to the Producers and Joint Operating Committees to use. Based on the development of a packaged, proven number of algorithms that are tried and tested before availability. Artificial Intelligence is potentially a powerful tool that can add significant value to a science based industry such as oil & gas. However, each and every producer throwing extensive resources at this unproven technology will, I believe, maintain its unproven nature. Ensuring that it never will become an effective tool when it fails to deliver any value at significant cost. With the high cost of AI and its success rate below 1%, sharing the costs of the infrastructure of these non-competitive resources, producers will be able to deploy it as they discern its value. 

Therefore if we provide a means in which the contributions of a service provider were available, where collaboration across the industry as to the application and use of the AI algorithms, what are the possible enhancements etc. The need to control the costs and share in its success / failure can be managed once across the industry instead of at each individual producer. When and if the success and value of the AI resources should break out into a meaningful and highly valuable discipline the industry will be able to take advantage of what it has learned in this initial phase, turn it into a competitive advantage and build from there the individual capabilities in-house what is deemed necessary. If it is deemed a success there would be an initial infrastructure in place from the collaborations and markets established through these service providers and therefore something in which to build upon. Today there appears to be only science fiction. 

There have been too many times that we’ve been led to believe that some whiz bang IT product was going to make the world spin to the left. AI appears to be today's approach. People, Ideas & Objects approach is to initialize the technology within the science and technology based industry of oil & gas, control its costs through the Organizational Construct of making it a non-rival cost, or part of Professor Paul Romer’s “New Growth Theory.”   

Operations Management Conclusion

Producers within oil & gas are faced with an interesting dichotomy. One in which profitable operations are the only acceptable means of production everywhere and always from this point forward. Much has been wasted in the past decades and the capital structures of the producers are unsupported. Damage and destruction is extensive and only a comprehensive rebuild of the industry and its secondary industry based on the Preliminary Specification is able to resolve the existential organizational issues facing the producer officers and directors. Continuation of “muddling through” does not appear to be capable of dealing with these issues or resolving the most difficult future the industry has ever faced. The other side of this dichotomy of providing profitable oil & gas operations everywhere and always is that the consumer needs to be provided with reliable, secure, abundant and affordable energy resources. With the objective of North American energy independence being fulfilled for the remainder of the 21st century. With 10 to 25 thousand man hours of equivalent manpower contained in each barrel of oil equivalent. The supply of this resource is a necessity to our civilization.

We’re not going to get there with the chronically unprofitable production of the past four decades. The investors have bowed out and the only source of capital large enough to fulfill the task to fund these capital demands is the profitability of the industry. In other words the oil & gas business in North America is going to have to be operated as a going concern. Only the Preliminary Specification has the plan in which to make that happen. We have no right to pass an industry on to the next generation until we can prove that we’ve produced the resource responsibly. Which means all of it was produced profitably. Each barrel of oil equivalent should be profitable from the “real” sense from this point forward as the resource is irreplaceable and is the blood of our economy. If we lose the script now it would not be difficult to foresee foreign sources of oil & gas demanding North America to play second fiddle to China, Russia or others in terms of our supply demands? 

People, Ideas & Objects Operations Management module is designed to provide producers and Joint Operating Committees with a means to monitor and control their operation. Establishing a sound base of data and information necessary to ensure that decisions and actions are conducted with precision and profitability in mind. Where the financial, operational and technical data of the producer or property are available for use. Technologies involved in the Internet of Things are deployed and operational to the advantage of these users. And resources are deployed based on the budgets and plans that are generated and set through this module. The Operations Management module is the aggregation of and accumulation of the efforts that are being undertaken in the Preliminary Specifications other 13 modules and presented in a format where the information can be used effectively for profitable decision making.

Operations Management Module, Part IX

Conclusion to the Research & Capabilities, and Knowledge & Learning modules

These two unique modules are designed to deal with the distinct competitive advantage of the producer firms through what can only be seen as the most difficult and challenging period of oil & gas history that begins today through to 2050. To establish a footing of profitability everywhere and always will be a challenging transition when the business discipline takes center stage in the decision making process. And it will be there that better, actual, factual, standardized and objective information in terms of comprehensive financial statements and other information will be provided for each Joint Operating Committee by the Preliminary Specification enabling those decisions to be made through this Operations Management module. When there is none of this business information available these resources have resorted to their own means of determining what the situation is and the status of the industry today is the consequence. 

To suggest this occurred by accident would be incorrect. There is no doubt in my mind that the lack of any funding of even reasonable levels to the ERP providers in oil & gas was deliberate. The self-serving means of those officers and directors who have chosen not to be accountable for their actions. Discovered they were best able to attain their lofty objective through purposely inadequate ERP systems, disorganization, their excuses, lies and viable scapegoats. When was the last time officers and directors took responsibility for any aspect of their authority or the business they’re responsible for? They’ll state that “oil & gas is such a complex industry,” hide the details, confuse the point and claim they don’t have the data, which as stated they don’t. Convenient and easy. 

In 2015 their investors said enough and ceased to continue funding the industry any further. An industry that was and is incapable of supporting itself through “real” profitable operations. An industry where officers and directors are satisfied personally with what is generated in terms of cash flow from investors prior investments, keeping them enthused for another year. They’ve lost the common sense of what it is that a business should do and how it would do it. Establishing corporate objectives such as “building balance sheets” and “putting cash in the ground” as reflections of how obscure and indecent their lunacy has become. 

Nonetheless the industry is in a state where its issues throughout North America are serious and demand resolution. The seriousness of the difficulties we face is not only the volume of issues, but their consequences. I’ll first put an apt quote from Professor Richard Langlois’ paper “Transaction Cost Economics in Real Time”

F.A. Hayek (1945, p. 523) once wrote that 'economic problems arise always and only in consequence of change.' My argument is the flip-side: as change diminishes, economic problems recede. Specifically, as learning takes place within a stable environment, transaction costs diminish. As Carl Dahlman (1979) points out, all transaction costs are at base information costs. And, with time and learning, contracting parties gain information about one another's behavior. More importantly, the transacting parties will with time develop or hit upon institutional arrangements that mitigate the sources of transaction costs. p. 104

• The protracted oil & gas downturn, covid and other concerns leaving inappropriate staffing levels available in the industry. 
• The inventories of work-in-progress within the industry and producers are shallow and will demand excess attention. Issues such as shales decline curve and the cannibalization of the processes that support normal operations. What capacity is the industry capable of operating at?
• Capacities and capabilities in the service industry are a severe detriment to the needs of the producers in the normal course of business. Service industry representatives are not motivated to rebuild the infrastructure that producers destroyed during the past decades and most particularly during the COVID epidemic. 
• The service industry will not rebuild their industry to have it ruined again by producers. Their thinking is if the producers had some skin in the game then they’ll think twice about destroying that industry again. Therefore the producers broke it, the producers can fix it. Oil & gas producers are the primary industry and all others participate in secondary or tertiary industries. 
• Rebuilding, refurbishing, reclamation and infrastructure need to be undertaken on a scale never done before. Just to maintain the status quo production. The status quo is unacceptable to the most powerful economy in the world, and if we become dependent on foreign sources of energy we may no longer be able to claim the title of most powerful economy. 

The serious nature of the consequences of continued inaction on behalf of the officers and directors will have a severe impact on all those involved in North American society. The officers and directors are fine and they thank you for asking. They are oblivious, uncaring and fundamentally inactive. “Mudding through” and “doing nothing” are the only strategy and tactic I’ve ever seen from this bunch. They can sit high above and continue to criticize the Preliminary Specification because it was rude, or it didn’t have that feature or they didn’t like that one and wait for exactly what it is they’re thinking of when they’re “muddling through.”

However we are undertaking a comprehensive rebuild on the basis of the vision of the Preliminary Specification. We won’t be compromising and dealing with them in much detail. We’ll ignore what we feel are their cultural influences and establish the performance based culture that we are seeking. A comprehensive rebuild at this time will be less onerous, it will take far less time than attempting to deal with their compromises and culture. And our user community will be far more successful building from the ground up in terms of breaking away from the losing traditions of today's oil & gas producer. 

I’ll reiterate that the Intellectual Property that underlies the Preliminary Specification is comprehensive. Any effort by the producer officers and directors to circumvent it in any way our IP will be dealt with. They are unlicensed, unauthorized and warned not to use it. Other software companies whose revenues are dependent upon their Intellectual Property respect other software vendors Intellectual Property. Therefore we feel the appropriate level of assurance that none of our IP will be used by them. The implications of this are broad and consequential to the producer firms as they are therefore unable to breach what we have set out in any attempt that they may make to establish alternative ERP systems. As indicated earlier in this conclusion to the Research & Capabilities and Knowledge & Learning modules. Producer officers and directors are probably satisfied with that as it reinforces their method of operation in somewhat of a permanent state. Or until someone makes the decision for them to build the Preliminary Specification with our Profitable Production Rights initiative. 

Finishing off the Research & Capabilities and Knowledge & Learning modules we have a quotation from Professor Richard Langlois that builds off of Harvard Professor Carliss Baldwin’s “Knowledge begets Capabilities, and Capabilities beget Action.” There is also the quotation from Professor Richardson that capabilities are the “Knowledge, Experience and Skills” (1972, p. 888) to which we at People, Ideas & Objects have added “Ideas.” And this next quote from Professor Langlois helps to bring the clarity we need.

In a metaphoric sense, at least, the capabilities or the organization are more than the sum (whatever that means) of the 'skill' of the firm's physical capital, there is also the matter of organization. How the firm is organized - how the routines of the humans and machines are linked together - is also part of a firm's capabilities. Indeed, 'skills, organization, and technology are intimately intertwined in a functioning routine, and it is difficult to say exactly where one aspect ends and another begins' (Nelson and Winter, 1982, p. 104). p. 106

Operations Management Module, Part VIII

 Knowledge & Learning

We should begin the discussion of the Knowledge & Learning module with an appropriate quote from Professor Richard N. Langlois in “Transaction Cost Economics in Real Time.”

In this sense, the ability of a large organization to coordinate the implementation of an innovation, which is clearly an advantage in some situations, may be a disadvantage in other ways. Coordination means getting everyone on the same wavelength. But the variation that drives an evolutionary learning system depends on people being on different wavelengths - it depends, in effect, on out-breeding. This is something much more difficult to achieve in a large organization than in a disintegrated system. Indeed, as Cohen and Levinthal (1990a, p. 132) point out, an organization experiencing rapid change ought in effect to emulate a market in its ability to expose to the environment a broad range of knowledge gathering 'receptors'. p. 120

In terms of Organizational Constructs the Preliminary Specifications Knowledge & Learning module relies heavily on the Joint Operating Committee, specialization and the division of labor, Intellectual Property, Innovation and Markets. Five out of the seven shows a high dependence on cultural influences. This tells us that the implementation of this module will be difficult as the cultural forces that exist will resist these changes. To which we'll apply our standard approach of ignoring them as we’re rebuilding the industry. And secondly the form of the module will have strong cultural support once what exists is forcefully ignored. 

Whereas the Research & Capabilities module is a producer-facing module that captures and documents the distinct competitive advantages of the firm's earth science and engineering capacities and capabilities. The Knowledge & Learning module is a Joint Operating Committee module designed to manage the specific properties organizational needs. 

People, Ideas & Objects have used specialization and the division of labor throughout the Preliminary Specification as an Organizational Construct to focus the producer and Joint Operating Committees organizations on what they do best. These specializations are broad and diverse throughout and include allowing computers to just store and process information while having humans do what humans do best, which is comprehensive and not just shuffling data about. We have specialized the process of innovations development within the producer organization to ensure they’re constrained, focused and their costs are controlled with results and deliverables. The Knowledge & Learning module specializes in the Joint Operating Committees ability to take the producer firms that are working interest owners of that property. And select from each of those firms what specific capabilities and innovations are available, at what capacities they’ll be needed by that property and for what role they’re required. Organizing them and deploying them to ensure that their field objectives are attained.

It should be noted here that the information, the capabilities that populate the Knowledge & Learning module for each Joint Operating Committee. Is not the full complement of what the producer has developed in terms of their capabilities. Each of the producer's capabilities when developed and made available will be selected or tagged with the type of capability and its application. Therefore a capability involved in multilateral fracing will not have been populated to a producing zone, operation type, region, etc to the Knowledge & Learning module of a Joint Operating Committee without those characteristics. It will only receive those producer capabilities for the purpose that they are undertaking. 

It is this process of specialization in the earth science and engineering resources that will cause producers to incur uncommercial operations under the current management. Having the full breadth of skills in house will demand too extensive of an infrastructure and resource uptake for producers to remain viable. Particularly during the era of the looming constraints of these resources. People, Ideas & Objects have therefore eliminated the “operator” designation and created the “pooling concept” in order to resolve these resource and specialization issues. This reorganization is necessary as the demand for these resources is subject to a number of changes that are outside the producers control. The current brain trust is retiring and the intake from the universities are not replacing them quickly enough. Higher throughput needed for energy independence and the demand for incremental earth science and engineering effort increases with each barrel of oil produced. A method is necessary to deal with this issue and People, Ideas & Objects are using the only viable alternative to elevate an organizations throughput through specialization and the division of labor.  

The question then becomes what amount is charged to the Joint Operating Committee for these resources hourly charges through our Work Order system. What we have developed is a unique factor that represents the value of each individual producer's performance, innovativeness and value in terms of their earth science and engineering capacities and capabilities. Revenue Per Employee will be used to determine the charge out rate of any of these individuals who will work at a Joint Operating Committee through the Work Order system. A senior engineer will be charged at x% of Revenue Per Employee and a junior engineer will be charged out at y% of Revenue Per Employee. The diversity in calculating the Revenue Per Employee numbers throughout the North American producer population provides for a remarkable variance. It is the only factor that I can point to that differentiates the quality of the producer in terms of performance. Any overt attempt to increase the producers Revenue Per Employee factor would only create incremental shareholder value and spark a competitiveness within the industry to increase this factor. A floor price for these resources would have to be established for the start-up and small producers due to their initial limited production.

Preparation and development of the specific capabilities of the producer, and most specifically their innovations. Are processes that are controlled and managed within the Research & Capabilities module. Seeking to reduce the costs of innovation by controlling, testing and developing them before they’re deployed too soon. And to ensure that the producer organization is not consumed by too many similar innovations being conducted repeatedly throughout their organization. Once the innovative procedures are documented in the Research & Capabilities and are ready to be deployed. It is through their availability to the Joint Operating Committees that each of the properties working interest producers will be able to access those capabilities and select them to be deployed. It is the Knowledge & Learning module that is the method that innovations, capacities and capabilities are deployed within the property. Using the fully tested and documented processes which each of the Joint Operating Committees producers have established and made available for use.

What may appear to be freewheeling markets to some of the existing officers and directors of the producers today is nothing more than the difference between using the market to provide for what it is the producers need. As opposed to what it is that is tightly controlled within the producer organizations under the “operator” designation today. Freewheeling markets may be an apt description of innovative developments as they are perceived as being messy. However they should not be considered to be uncontrolled in the Preliminary Specification. I would suggest that in the Knowledge & Learning module the ability to maintain high levels of operational control is available through these interfaces. In the Operations Management module we see many aspects of the operations that are not currently provided. The data and information of the financial, operational and technical domains have all been engineered in the People, Ideas & Objects et al software development process to ensure their high levels of integrity and accuracy. The level of documentation of capacities and capabilities are done for a variety of different reasons and the purposes in doing so are comprehensive. The ability to deploy the producer's resources through standardized and agreed methods of what the program will consist of once the selection in the Knowledge & Learning module has been made. And lastly the control of the operation through the Work Order, AFE, Job Order and other means. This will appear messy at times, however reliance on the process will ensure the outcome.

Principally People, Ideas & Objects believe that higher commodity prices are a reallocation of capital that will be necessary to fund the innovations and capital deployment for that very long list of capital projects that need to be undertaken in North America. “Muddle through” doesn’t appear to have been able to identify they have a problem and the firm's officers and directors continue to sail through clear blue waters, or so it would seem. Conversely the Preliminary Specifications price maker strategy is designed to ensure that the actual, factual costs of oil & gas exploration and production are recorded within each Joint Operating Committee to ensure that they remain profitable at all times. If they are no longer profitable, these properties are shut-in so that they’ll generate a null operation, no profit but also no loss. At which point the Joint Operating Committee can turn to the Knowledge & Learning module to determine what is the best course of action that is available to remedy its lack of profitability, and return it to profitable production as soon as possible. In an environment of ever increasing costs the accuracy of actual, factual, standardized and objective accounting information will be critical.

A question that I would ask at this point is whom do you want to participate as partners in Joint Operating Committees. There has been an interesting trend in oil & gas of renewal over the past decades. What was in the 1970s and 1980s a landscape dominated by large corporations quickly saw independent and start-up producers become the dynamic growth arena in the 1990s. Today many of the producers from the 1980s and 1990s that set out the independent producers movement in the oil & gas industry are no longer with us. The past few years has seen high levels of consolidation being the means in which to survive the difficulties in oil & gas leaving even fewer producers than before. Consolidation has been highly beneficial for the clean energy industry but not much else. Now that officers and directors realize their misdirection into other industries was a mistake, will they ask for forgiveness? Will that allow us to trust them that much more? What we believe the Joint Operating Committees would best be represented by would be the start-up and small producers having the opportunity to participate. They are the ones that have driven the change in the industry and it is the change in the industry that is most needed today. Innovation demands that we expand the reserves base, increase revenues and reduce costs. What is it that we’ve seen out of the consolidated producers is foolishness, misguided adventures and nothing much else.

Operations Management Module, Part VII

 Resource Management

Deployment of the producers and Joint Operating Committees engineering and geological resources towards their chosen strategies and tactics is a requirement People, Ideas & Objects propose for the Operations Management module. Whether it be in any one of the three main subsections of this module, those being Producer / JOC Operations, Performance Management or Resource Management, how and where these people are deployed and their activities will be able to be managed, monitored and controlled through this module. This is the purpose of the Operations Management module of the Preliminary Specification. We are not replacing what may exist in the marketplace, we are rebuilding the oil & gas industry on the basis of profitability and performance. Therefore what is done today should be seen as redundant.

The Operations Management module is a senior management Console enabling producers and Joint Operating Committees to manage their operations. Having the financial, operational and technical data and information of the producer and its Joint Operating Committees is appropriately collected, stored and available through these systems. Although much is discussed in the marketplace about data and information and their respective values. Little is discussed about the disparity of the sources within these organizations, the quality of the data or how it’s used and if it’s being managed appropriately. The Preliminary Specification, overall, should be seen as the opportunity that it is to begin the process of objectively standardizing, organizing and implementing the data and information of these organizations. Only then could any value be discerned from these sources. After all, who knows the officers and directors may have been making excellent decisions, they just were using really bad data.

The tools People, Ideas & Objects, our user community and their service provider organizations have included and developed in the Operations Management module of the Preliminary Specification, such as the Work Order, AFE, Job Order and others. Are made available to invoke the authority and fulfill management's responsibilities. These form the basis of the Operations Management modules' purpose. To consolidate the interface of information and tools necessary to effectively operate their domain of responsibility, to document these and ensure compliance and reporting to regulatory authorities is handled.

It’s important at some point in this discussion that we reiterate the two distinct types of information that are the domain of the producer and the Joint Operating Committee. As we’ve noted elsewhere in the Preliminary Specification the producer data and information is predominately proprietary and confidential to all those outside of the producer firm and tightly controlled within the firm. The Joint Operating Committee contains information that is predominantly of a public nature and any of its proprietary information is shared between the producer participants of that property. The use of Oracle Cloud ERP is able to provide the assurance that the architecture of how all of this information and data is stored and shared will be able to meet these requirements and comply with North American regulatory requirements. Security levels are of the highest in terms of Oracle’s capabilities and capacities in terms of its Oracle Autonomous Database. Their Java security model establishes it as the most secure development environment available as nothing is able to be run outside the Java Virtual Machine. Part of our user community's tasks is to define a hierarchy of roles and responsibilities that define access privileges to the data. Then producers are able to assign the appropriate roles to the appropriately authorized individuals to read / write those data elements. Compared to other vendors these security features may seem redundant and more trouble than they’re worth, however they provide good coverage. Oracle’s commitment to security continues as their firm uses Oracle products internally in a practice known as “eating their own dog food.” Also please review the Security & Access Control module of the Preliminary Specification and the unique attributes we introduce and resolve there.

Research & Capabilities

The Research & Capabilities module of the Preliminary Specification is concerned with capturing and documenting the producer firms explicit knowledge of their earth science and engineering capabilities and capacities. Their development and the control over the innovative process, of which the Preliminary Specification has two primary innovative processes being managed. With deep connections through to the service industry, the collaborative efforts throughout the industry and its tertiary industries are able to advance the science and technology of the oil & gas business iteratively. The interface between the Research & Capabilities and Resource Marketplace modules establishes these connections in order to fulfill the various roles and responsibilities for the completion of any initiatives. As a science based industry whose demands will become ever more complex and difficult, it will be the innovative advancement of that science and its interplay between the industries innovative technological development that in turn push the science forward. 

Control of this process of innovation is a necessity as the propensity to disallow innovation within the firm is done to ensure it does not become a free for all. Where experiments are tried by various different groups that may have success or not, only to have them tried again and again each and every year. A highly wasteful, unproductive, un-innovative and costly undertaking. The ability to fully develop, test and deploy on a sample basis the innovations that are developed, to have those well documented in the Research & Capabilities module in order for people to see what the state of affairs are in terms of the innovations development and its pathways taken, as innovativeness is defined by its process of discovery and failure. To have the explicit knowledge captured and where to turn to acquire the tacit knowledge to implement the innovation provides producers with the ability to stop much of the wasteful “innovative approaches” being undertaken in North America today. What we’ve learned is that innovation is a defined process that can be replicated throughout the organization. It must be controlled and managed to ensure that costs are not unnecessarily high. Innovations results can best be realized through the sharing of ideas through a science based business that collaborates to move the science forward.

Capturing the explicit knowledge can be, and should be as robust as possible. Providing the information and knowledge of who and where to have the what and how or “know how” of tacit knowledge deployed. Acquisition of the Intellectual Property through the Research & Capabilities module is an opportunity that must also be undertaken. People, Ideas & Objects seven organizational constructs have Intellectual Property as one of the foundations of how the industry moves forward innovatively and otherwise. Without Intellectual Property being appropriately managed, no one is going to be able to persist to bring about the developments of new ideas when they take so much time and effort and are subject to so much risk of having these poached in the marketplace. Conversely producers and Joint Operating Committees can mitigate the high costs of innovations through Intellectual Properties assertion that no derivative works are authorized without a license. Therefore unnecessary duplication of effort is eliminated in the marketplace. Yet at the same time the ideas are known and others can learn from them. 

It is here within the Research & Capabilities and Knowledge & Learning modules that the producer or Joint Operating Committee can source and organize the team they need for the task at hand. Using the search facilities within their own firm, the Joint Operating Committee, the firms they’re associated with or the larger market of producer and consulting firms, depending on the publication definitions of the producer. Producers will be able to acquire the resources they need to ensure the task is completed through the Preliminary Specifications Work Order. With the Preliminary Specification we are using specialization and the division of labor to resolve the current and anticipated resource shortfall in engineering and geology. However, we also believe that with this specialized diversity of resources, the specialized demands would put the producer firm beyond the point of commercially viable operations if they were to attempt to maintain them internally. We have therefore assumed the “operator” designation of one producer within a Joint Operating Committee, providing all the resources to the Joint Operating Committee is unworkable. And therefore People, Ideas & Objects established the “pooling concept” where all participants in the Joint Operating Committee commit their unique, specialized resources to the property and any shortfall is fulfilled by the market of consulting firms or other producers. Establishing a second source of revenue for each of the producer firms that generates revenue as a means to offset the high(er) costs of maintaining these engineering and earth science capacities and capabilities. Management of this entire process is the role undertaken by the Work Order of People, Ideas & Objects. 

Operations Management Module, Part VI

 Performance Management

To resolve many of the difficulties that are present in oil & gas today. It is necessary to add financial performance based on the actual, factual accounting information of the property to the operational and technical data that’s aggregated within this Operations Management module. Then delivering it to those decision makers within the producer firms and Joint Operating Committees. To be able to rely on this information as the unimpeachable truth of the performance of the property will add clarity and precision to the decisions being made in the industry. With the implementation of the Internet of Things (IoT), as discussed earlier in this module, monitoring and controlling the operation will be considerably more remote. Therefore, based on the decisions made from these three distinct sources of information it will make the producers dynamic in ways that were never imagined before. 

Partnership Accounting

There are two distinct accounting based modules within the Preliminary Specification. Partnership Accounting and the Accounting Voucher work to report for the producers and Joint Operating Committees, and to capture the data and transactions. The two critical aspects that differentiate the accounting between what is done today and what is proposed in the Preliminary Specification is that financial statements are provided for each and every Joint Operating Committee and overhead costs have been converted to variable as opposed to fixed. These financial statements are based on the actual costs of the property and include an allocation of capital in the form of depletion that provides for the property to compete for capital in the North American capital markets. Secondly the overhead is the actual overhead that’s incurred by the property. There are no overhead allowances as the Preliminary Specification has converted the producers' fixed costs of accounting and administrative capacities and capabilities into the industries variable costs of accounting and administrative capabilities and capacities. Variable based on profitable production. Providing the producer with the ability to shut-in any unprofitable production, as determined by the detailed financial statements for the property, which if it is shut-in it will incur a null operation, no profit but also no loss, to maximize their corporate profitability and achieve the many other monetary benefits.

What may become obvious to many readers is that this is a different environment for the accounting resources to be occupied in. We no longer just record transactions and report on them. If we go back to the beginning of this module's description we find that the “pull of data” and “push of instruction” from the Internet of Things will have severe implications on the accounting of oil & gas. The volume of data will be tidal waves larger than what it has been at any point in the history of the industry. If we’re to obtain the benefits of automation and turn the computers to begin working for us then we’ll need to be grasping this opportunity on a holistic scale and implementing it broadly. Not everyone fits into this redefinition, however the future of the dynamic, innovative, accountable and profitable oil & gas industry depends upon it. 

It is this vision that can not be left to spontaneously appear. Spontaneous order has ceased to function in a world where software and global markets operate. The Information Technology infrastructure exists and is incumbent upon businesses and industries to ensure that they’re the ones that implement and realize the benefits. Otherwise others who are capable of operating in this environment will be the ones that leverage the opportunity to their benefit. The officers and directors' obstinance has already cost them the overall Intellectual Property and ERP software arena to People, Ideas & Objects and our user community. As we claim we are the only ones capable of providing North American producers with the most profitable means of oil & gas operations. How else could anyone do so? It would take, as I did, a decade of research to figure out another method to do so, and whomever would have the additional difficulty of having to avoid the Intellectual Property that exists within the Preliminary Specification. The fun part would come about when the officers and directors obstinance takes hold for another dozen years or more to be convinced they need the new technology.

Financial Statements

For purposes of the Operations Management module the producer will be able to view the makeup of their organization in any perspective they need. Having the ability to aggregate the specific Joint Operating Committees they desire to get a more holistic view of the larger asset to evaluate. These Financial Statements will enable the user to analyze the costs incurred against what was planned and expected in their operational and technical sources of information. Reconciliation of these three sources of data and information may lead to previously unknown unknowns. 

While marginal commodity prices may occur these financial statements would show the progression towards any unprofitable operations. It therefore provides a window for the Joint Operating Committees where the threshold of potentially falling into a period of non-production due to the lack of any commercial operations begins. The early foresight provided will enable those to look at their costs and determine with these three rich sources of data what an appropriate and innovative plan may be when and if the property is shut-in. To return it to profitable production by increasing its production, reducing its costs or enhancing its reserves. Limiting the time in which the property is shut-in and providing the time to more effectively plan and consider what may be the most effective method to return it to production. 

Pro-forma Worksheet

Having the ability to sketch out a what-if scenario based on the actual historical situation is the general purpose of any pro-forma worksheet. “What-if we changed this” and would that make a material enough change to make the property commercially viable again? Will provide historical data that sets the scenario in a factual basis that will ensure that guessing is eliminated. The implication of any changes to the financial statements can at times be difficult to understand the full scope. This is due to the pro-forma following the accounting methodology as set out in the preparation of the financial statements, the implementation of any pro-forma changes will follow and show the full implications of these accounting methods and therefore mitigate any surprises that the accounting world springs onto its users. 

The breadth and depth of the accounting information provided through the Partnership Accounting module is comprehensive. Whether it is the Oracle Cloud ERP related information or what People, Ideas & Objects have built in to accommodate oil & gas. This information is available to authorized users of the Operations Management module. It is structured in a way to provide the performance of the producer firm and drilled down to the individual Joint Operating Committees or any combination of those. I hesitate to suggest that this information can be catered to in revised formats that meet any specific user's needs. That runs counter to its purpose. We are striving to represent the financial performance from the perspective of the capital markets. To have ad-hoc reporting would be of an advantage if it does not distort the financial performance to make things appear better than they actually are. It is therefore necessary that the Operations Management modules users will have their enhancements addressed by our user community to ensure they’ve implemented and prepared the software and services they wish to see but also to ensure that the financial integrity is maintained in any ad-hoc reporting. This will ensure the capital markets focus is the priority of the properties financial performance.

Accounting Voucher

The second of the two pure accounting modules of the Preliminary Specification, the Accounting Voucher brings about several new dynamics into the oil & gas industries accounting. Introducing the Accounting Voucher as an encapsulated document that holds the information that supports transactional information captured, approved and recorded in the accounting system of the producer or Joint Operating Committee. To deal with the resource constraints in the earth science and engineering disciplines People, Ideas & Objects have used a variety of methods to resolve the issue. These are listed in the Organizational Construct section of our wiki. The predominant Organizational Construct affecting this change in the Accounting Voucher is specialization and the division of labor. In order to resolve any technical resource shortfall, specialization and the division of labor are the only proven method to resolve organizational productivity. Therefore each producer will need to be contributing their highly specialized technical resources to the Joint Operating Committee in order to provide for the full set of necessary resources. These may also be augmented through outside consultants who are specializing in the lower level skills of these disciplines. Allowing for producers to specialize on their distinct competitive advantage. 

Therefore what People, Ideas & Objects have done in the Accounting Voucher is provide a “role” in Oracle Cloud ERP which provides for the authorization necessary to incur costs on behalf of the producer or Joint Operating Committee. And therefore within a Joint Operating Committee there may be multiple technical resources that have authorized expenditure authority on their behalf. Therefore an Accounting Voucher in this instance is a Joint Operating Committee based voucher with overall budgetary authorization granted through the AFE process. However multiple firms may have this secondary or tertiary authorization, within the scope of the AFE to authorize specific expenditures to be purchased and payments authorized. That Accounting Voucher is therefore part of each of the Accounting systems of the working interest owners of the Joint Operating Committee. 

The Work Order mentioned earlier is also an Accounting Voucher that has been modified and enhanced to conduct processes in generic ways that fit the described purpose. As it is incurring costs and allocating them in either of the two scenarios of its operation, it has to inherit the capabilities of the Accounting Voucher first and foremost. Then our developers will, at our user communities direction, build the necessary infrastructure to meet the needs as defined to instill the Work Order as a permanent industry wide Accounting Voucher Template for use to manage their costs. 

Data, Information and Performance

If we could step back for a moment and ask ourselves how much time, and more importantly, how much frustration is consumed in the process of collecting data and information, moving it from one location to another, interpreting and recalculating it which is conducted on a daily basis. Why are we still doing this and what can we do to stop this financial drain that no one can support continuing? Would we be able to isolate the actual, factual information necessary, store that data in one location and have the system interpret it in the manner necessary for each of its users. Relational Database theory is designed for this purpose. Does the potential explosion of data as a result of the oncoming identified technologies demand we look at these issues and address them? The development of the Preliminary Specification, our user community and the reorganization of the administrative and accounting resources into their service provider organizations brings about this opportunity to set the foundation for realizing a more constructive basis of understanding the producer firm. And possibly the most valuable aspect of this information change for producers would be the quality of the decisions being made are more precise, reliable and factual. 

There is one more critical aspect to the reorganization of the data and information that needs to be discussed and that is the performance of the producer firm. How does a producer accelerate their performance, their trajectory and their velocity in terms of throughput? Would clean data and information, that was the foundation of the industry, standardized and objective, where everyone knew and understood the origins and its purpose accelerate the producers performance and throughput?

Or is “muddle through,” “do nothing,” apparently knowing and understanding nothing appropriate for the next generation of oil & gas officers and directors. They have their model and we should understand what that is now. We’ve seen them embrace Artificial Intelligence, digital twins and I can guarantee the next three buzz words coming out of the Information Technology industry will be immediately heralded as “the savior of the industry that’s already providing huge gains in performance.” Yes, it is that bad. When do we address this, the Preliminary Specification is the time in which to do so.

Material Balance Report

Another implementation of the Accounting Voucher is the Material Balance Report which is a comprehensive approach to the reporting and balancing of production through to its ultimate disposition. The Material Balance Report is an Accounting Voucher Template that is augmented to deal with a Joint Operating Committees unique needs. And then saved as its own specific Accounting Voucher Template to be reused each month. As changes occur and additional production, facilities or dispositions are added to the specific Accounting Voucher its Template is updated to accommodate those changes for that and subsequent months.  

The key overall objective of the Material Balance Report is to achieve the reconciliation of the oil & gas reporting volumes on the continent in unimpeachable form. It is at that point that we have the basis in which to automate the subsequent processes throughout their production months lifecycle. Whether that is production, accounting, administration, marketing, regulatory reporting or royalties. These are all subsequently dependent on the data and information that is derived in some way from the industry standard Material Balance Report. 

Undertaking this from the global perspective of an industry initiative is possible, valuable and necessary. The costs are too great for one firm and the net benefit is not the continental reconciliation as the base of automation. Again, this may be conceived as being too ambitious overall. However it can be done and done far easier than it sounds. In 1994 the Alberta government introduced their Royalty Simplification system that reconciled the entire province's monthly volumetric natural gas and liquids production on this basis. To the satisfaction where the government was confident enough to assess royalty shortfalls based on volumetric reporting anomalies. What could be done three decades later is unknown, however improvement is assumed. To not undertake this will leave the industry at the behest of manual processes that consume human resources in redundant processes that should be deemed unnecessary. These people are needed in the area of making the appropriate decisions as to where and what needs to be done to earn profitability. 

Production

There is an abundance of opportunities in terms of combining, comparing and reconciling the three sources of data and information that producers and Joint Operating Committees are dependent upon. Financial, technical and operational sources that are unimpeachable is a lofty objective, however one that is necessary to base the accuracy of future decisions upon. To be consumed with data in the future may be the operative word for the unprepared producers. If we do not spend the time to organize and ensure that the data and information we are using and preparing is of this high quality, then it’s a simple manner that’s well known by most of “garbage in, garbage out.” Decisions need to be made at a scale that will be logarithmic to what’s done today. These are the areas that people will be spending their time. If we are in an endless paper chase looking for the source of the actual data, that will be the eventual outcome of the current officers and directors' obstinance. These may be the two possible scenarios that people may be pursuing in the future oil & gas. An endless paper chase, or leaving the processing and storage to the computers and we’ll make decisions based on the understanding that everyone in industry participated in building the Preliminary Specification and understand what the sources and disposition of the data are.

Production data is the most interesting challenge and we have set out to engineer the appropriate solution in the form of the Material Balance Report of the Preliminary Specification. The ability to balance the Joint Operating Committees volumetric activity, gathering, processing facilities, pipeline, tank car or truck deliveries etc for the up-stream oil & gas business is more than possible. It is well beyond the scope of what is possible for one producer to undertake as the cost would be horrendous and the value would be quite limited. On an industrial scale however it makes sense and is the foundation of the critical value generation as a result of the specialization and division of labor between people and computers. Instead of feeding differing systems with the same data and occupying our time reconciling these we can engineer the appropriate solution and establish the appropriate roles for people to pursue. Roles such as enabling automation, innovation, leadership, integration, negotiating, financing, observing, reasoning, judgment, thinking, planning, ideas, researching, collaborating, creativity, issue identification and resolution to name just a few. 

Field Data Capture

Could this be the area of focus in terms of the implementation of the Internet of Things and the rebuilding of oil & gas through implementation of the Preliminary Specification? SCADA systems have worked well for large, integrated producers and independents. Their costs are unnecessarily high and the technology is, I would imagine, coming to an end of life situation. An area that will be critical to capture the production data and an area that is the foundation of securing the production data in unimpeachable form. 

It will be a matter of perception whether I’ve opened Pandora’s box or the world of opportunity. The reality is with much of the acceptance of the Preliminary Specification. We stand at a crossroads where the bureaucracy has ruled and their domain is crumbling. They’ll continue to fight for the last few pennies of value they can extract at whatever cost to others. However, we have to move forward. It is this vision, as incomplete as is stated here, and more broadly articulated in the Preliminary Specification itself that needs to be undertaken.

Operations Management Module, Part V

 Petroleum Lease Marketplace

Petroleum Leases are the legal foundation of the land and asset base of producers and Joint Operating Committees and therefore a distinct element of their competitive advantage. As with our other two marketplace modules, participation within our virtual marketplace of Petroleum Leases are of interest to producers and Joint Operating Committees. Those people, vendors, governments and producers that operate within this marketplace are actively engaged in creating the data and information that is represented in the Petroleum Lease Marketplace module. Through the Operations Management module, the producer or Joint Operating Committee are able to engage in this marketplace to exercise their strategy and employ their competitive advantages. It is here that the operations and participation within the marketplace can be enacted with the decisions and actions they deem necessary. 

The objective of the module is to organize the unimpeachable, standardized, objective, business, operational and technical data into one location for the purpose of making decisions and undertaking appropriate actions. There are many sources of information both public and private that are currently scattered through producer organizations, the same data resides in disparate systems and accessibility is not necessarily available as expected. The purpose of this module is to eliminate the redundant and / or incorrect data being produced, where the right people have access to the right information, with the right authority at the right time, in the right location and on the right device. To approach this from a system wide perspective of the industry, where each individual producer's makeup is fundamentally different, with different systems, containing different information, serving different needs would be an impossibility. What is similar in this Operations Management module is the data, information and systems needs of each producer are all consistent and not part of their distinct competitive advantage. Therefore to approach this from a rebuilding of the industry perspective as People, Ideas & Objects et al are, standardization of the data and information, but also the systems becomes a possibility that would otherwise be unattainable and certainly untenable. A rebuilding that uses the administrative and accounting resources of the industry on a shared and shareable basis. Where the costs to build this infrastructure are shared across the industry and standard, objective systems are available in return.

Which brings us to the larger question of what it is that People, Ideas & Objects are doing? What is necessary in order to mitigate the issues in oil & gas? What is necessary to resolve the high overhead costs of the industry and to present a platform that can be what the industry needs to rebuild itself into the dynamic, innovative, accountable and profitable industry it needs to be? Ensuring that profitable energy independence is attained in North America, everywhere and always. This is certainly not going to be done on the basis of what the systems approach has been in the past. And to further that point, what is operating within industry today that can be considered of value and worth saving? An industry that has summarily destroyed itself. The arm’s length distance that we’re able to maintain by making the Preliminary Specification the necessary rebuilding of the industry into the dynamic, innovative, accountable and profitable industry that we need. Will be far simpler and more consequentially, quicker to do from a clean slate. Uncontaminated by its past failed culture and its legacy of “muddle through.”

From my perspective active producer participation is not an option but there will be many who may choose not to participate. Whether that is individuals or producers they’ll have their reasons and we can’t please everyone. If they’re towards the end of their career or their firm is facing difficulties it would be understandable. What we’ve done is introduced mechanisms where everyone can participate and yield some monetary benefit as a result of their participation in this effort. From our Profitable Production Rights, our user community and their service provider organizations, producers attain far lower overheads through the sharing of administrative and accounting infrastructure through our Cloud Administrative & Accounting for Oil & Gas software and service. Secondly they’ll have the price maker strategy ensuring that the marginal cost on any production will be covered and therefore only produce profitable oil & gas production everywhere, and always. Each of these have substantial monetary and value benefits to those participating producers. Participating in benefits from both the oil & gas and the Information Technologies industries. Alternatively what reason will be provided to producers investors as to why a producer is not participating in enhanced organizational profitability? 

Therefore the Operations Management module is the core of where a producer will be able to manage and implement their distinct competitive advantages of their land & asset base and the coordination of the markets earth science & engineering resources. This demands that both feet be placed firmly in this future so that the sinking of the current industry doesn’t pull everything down with it. To hedge one's bets may be possible, and to await the results of others efforts may also be possible. However, I think those producers that hedge may be put in jeopardy of being left a laggard as the industry's trajectory accelerates and those that hedge would not be able to comprehend the new dynamics or compete. 

To suggest that a wait and see strategy might be best to determine if this initiative is successful will be a mistake. There won’t be anything that will or could be tried again. Officers and directors of the producer firms have left it far too long for me to have established the Intellectual Property of the Preliminary Specification as the only viable option within the industry. 2023s natural gas prices have proven they have no alternative plans and no idea what it is they’re even doing. Any future initiative will need to preclude the Intellectual Property contained within the Preliminary Specification and its derivative works. Time has been consumed that could have been used more productively. All as a result of their “muddle through” and “do nothing” strategy and operating procedure. 

Profitable Production Rights

As with the service industry experience during COVID. Producers have shown their understanding of business extends to the closest group to them that has money to pay their costs. At one point the service industry became the select choice and was hollowed out by the actions of producers. SLB and Halliburton left the continent to pursue global opportunities. Domestic suppliers were relegated to cutting up their equipment for scrap metal to pay their bills. Investment capital and banking are as foreign a concept in the service industry as one could imagine. The reputation of the producers has been sealed and the need for capital in the service industry will have to be undertaken by them on the basis of the “producers broke it, producers will need to fix it” out of the goodness of their hearts, philanthropically. This is the experience of the ERP systems vendors of the early 1990s. And since then the industry has been unable to raise capital as we’re incapable of proving how earnings could come about with the producers operating in the manner that they do. 

People, Ideas & Objects have always looked to source our revenues from the production of oil & gas. This has been a futile exercise that we’ve been unable to overcome as we are at the same time actively disintermediating the industry. The upside has been that we’ve been able to prove that the industry has existential issues associated with the current form of organizational structure and management. And the only method forward is to terminate the methods used today. The Preliminary Specification is the only oil & gas specific ERP application that is proposed to be built on a tier 1 provider, Oracle Cloud ERP and distributed to all producers through our Cloud Administration & Accounting for Oil & Gas software and service. Therefore new methods of funding needed to be developed to finance the development of the Preliminary Specification in order to have it built. Profitable Production Rights maintain the direct or indirect source of its proceeds from the oil & gas production. 

We therefore developed the Profitable Production Right which provides its rights holder with the ability to license a producer with exclusive access to the People, Ideas & Objects et al Cloud Administration & Accounting for Oil & Gas software and service for one boe /day. Profitable Production Rights hold exclusive access to these services as they are the ones that are financing and building the facility. We believe that the Preliminary Specification when built provides the Profitable Production Rights holder with two advantages. To participate in the oil & gas and IT industries simultaneously by providing access to the Preliminary Specification which is the only system that offers the means to produce oil & gas profitably, everywhere and always. It’s not enough to own the oil & gas asset anymore, it's also necessary to have access to the software that makes the oil & gas asset profitable. Secondly we believe that as a result of our Intellectual Property and the market situation we are the only system alternative that has identified these issues and built a solution to them. Therefore the Profitable Production Rights gains a material value proposition which they hold in the form of the production right that allows a producer to have the contracted boe / day processed through the Cloud Administration & Accounting for Oil & Gas software and service. Only Profitable Production Rights owners have access to the software and service. They’ll be able to license, transfer, assign and market their Profitable Production Rights based on the market that is established here for those rights. Rights holders will negotiate with producer firms their share of this value proposition.

It is incumbent therefore that each producer in their Operations Management module has the means in which to secure the appropriate amount of Profitable Production Rights in order to manage their production profile. This will be part of the Petroleum Lease Marketplace section of the Operation Module as an element of that market. 

Areas of Mutual Interests

Defining the producers or Joint Operating Committees agreed to commitments in terms of their Areas of Mutual Interests in a graphical form. Where the producer can see within the Petroleum Lease Marketplace the ability to monitor and control their land position with their working interest partners. If an AMI is established in an area that is expanding they need to know what their obligations are and what the consequences of participation will be. 

Bringing these to the attention of those with the roles, responsibilities and authority in the Operations Management module from the Petroleum Lease Marketplace module is appropriate. To maintain operational control with high quality, unimpeachable information on future obligations and opportunities will ensure that producers are not extended or exposed to unwanted consequences or commitments. 

Lease posting, bidding, rentals etc.

What is the status of the Petroleum Leases that are held by the producers? Although not an active part of the processes involved in securing or managing these leases. Providing the unimpeachable data and information of the producers land holdings is necessary for a clear understanding of their competitive advantage. 

In addition to the producers information access to the public land information will be provided. Determining the land position of others, what are the posting and bidding positions of adjoining lands to the producer properties and what are the opportunities in areas of general interest of other producers. 

Market Acquisitions and Divestitures 

What would it take for our user community and their service provider organizations to provide for the ability to build a market of all publicly announced properties and divestitures of firms and agents in the industry. To have this data and information organized as a single source of searchable information, where discovery, serendipity and spontaneous order would bring about new opportunities on top of what was already available and conducted in the industry? As a shared resource the robustness of this service would be exceptional. What could be undertaken from a systems development point of view by one individual producer would not be worthwhile as the costs would outweigh the benefit and make the expenditure uneconomic. Spontaneous order and serendipity need to be restored in order to increase the dynamic nature of the industry. When people are able to find one another through sales and purchases that were unknown and previously unknowable, then new business and innovations will develop. New markets can be created and value generated in innovative ways.