OCI RFP Discussion, Part II

 Radical  Surgery vs. the Band Aid Approach

I trust my interpretation and perspective on oil & gas and its resolution are not misconstrued. It would be foolish and naive for anyone to believe that the human nature of self-interested individuals would reach so far as to define a scheme such as what I’ve accused producer officers and directors of. That’s not at issue, in my opinion. What is at issue is the unchecked pursuit of self interest by officers and directors has traveled too far along the scale of what is acceptable. And this is measured in the form of a status quo pursuit of damaging and destructive management methods. Due to its wide scope of effects, I find the damage itself to be unacceptable, as well as the fact that only the officers and directors have benefited financially from it. Not that I believe this is some anomaly of human nature or behavior. The structure of our user community and their service providers, indeed the entire sub-industry as I call this environment necessary to resolve this issue, is structured around self interest as the motivation to get things done. The key difference is our motivation is to provide for the most profitable means of oil & gas operations. The risks associated with this damage are too extreme to continue. Each barrel of oil contains the equivalent of 10 to 25 thousand man hours of equivalent mechanical labor. An amount of labor 27 to 68 times today's total population from today’s global production. An irreplaceable resource that powers our economy, life and civilization. It is my opinion that some things are better left within a range of acceptable standards and tolerated levels. 

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

Therefore the question becomes what is the resolution? Do we resolve this through radical surgery to save the patient? Or will a bandage and a slap on the back do? What’s the diagnosis? Is there an issue? Everyone has an opinion, and People, Ideas & Objects et al's are as follows. It is the 2015s that signal failure and the subsequent refusal of investors to support the capital structures of industry participants that mark this stage. Banks think similarly. An inability to conduct the appropriate level of business activity and diminishing capabilities. This is in the field through the service industry and through internal recruitment of earth science and engineering professionals. Maintaining production deliverability in this constrained environment is the next “potential” shoe to drop. As serious as each of these issues is, the one that is the root cause of all of them is the obstinate, persistent and failing strategy of “muddle through.” Nothing’s been done to deal with these when they were timely. 

We’ll now discuss why a wholesale rebuild of the industry brick by brick and stick by stick will be necessary.

Culture Shock

• Clean energy is not the message to be sending throughout the oil & gas and service industries. How can we leave oil & gas in the hands of those who don’t believe in shale's future, who have not safeguarded their investors' assets and diverted funds to unrelated industries that are commercially unproven and done so in unauthorized fashion?
• Software defines and supports the organizational structure of the producer firm, but also constrains it. In consideration should those who were responsible for this damage be the decision makers as to which ERP system to use? SAP is offering the role of a “blind sleepwalking agent of whomever will feed them.”
• Faith, trust and goodwill has been destroyed throughout the greater oil & gas economy. The need for producers to actively participate in rebuilding these is a necessity. Participate actively in the form of financial philanthropy. Producers broke it, Producers will need to fix it. Only then will they begin to respect what others built and not break it again. A.k.a. skin in the game. Capacities and capabilities are severely deprecated.
• A culture that is unaware of the need to earn profits, but also how to do so. A culture that is capable of spending money and can not achieve the higher level performance trajectory necessary to qualify as profitable operations. A culture that is fundamentally unaware of the difference or the point of this argument. 
• A culture that assumed “investors” supplied all the cash needed. One that asked for more money from investors while at the same time, when asked about the money raised two years ago, stated “that’s history and just accounting!” And “profits don’t matter.” Unaccountability is a subculture.
• What happens when the industry sees an initiative such as People, Ideas & Objects snuffed out for political reasons? What impact will be realized by those working throughout the greater oil & gas economy? Who will step up with any initiative on behalf of the oil & gas economy when the culture of “muddle through” is seen as permanent and intractable? This is not what an innovative industry needs.

These are just the highlights that come to mind at the moment. I like to think of myself as rational. Only a fool would enter a situation like this and attempt to resolve the issues this culture produces by working with this culture. This culture would consume anyone who tried. It would be an attempted mosquito bite where the mosquito's demise was certain. 

We detailed how layoffs have cannibalized the internal processes from year 1,2,3… 8 of the producers due to the 2015 investor strike and coincidental eight-year working capital crisis. The same applies to the service industry. Therefore these processes need to be rebuilt and provide the opportunity to do so without this culture attached in any way. One that starts with year 1 of the process from the Preliminary Specification vision. We provide the most profitable means of oil & gas operations everywhere and always. Rebuilding the industry and infrastructure on the basis of a dynamic, innovative, accountable and profitable producer, industry and service industry, brick by brick and stick by stick. The way I look at what the industry consists of today isn’t worth keeping. Our opportunity lies in the fact that we don’t have to scrap it. Officers and directors scrapped it for us. They can rebuild it with SAP’s blind, sleepwalking agents and their vision of clean energy. Or investors can be specific about their demand for Tier 1 ERP systems and choose the oil & gas industry they desire. This is done by selecting People, Ideas & Objects, our user community, their service provider organizations and Oracle Cloud ERP. 

As a result of the state of "muddle through," the industry has suffered far more than producers, officers, and directors may realize. Assuming the Preliminary Specification is approved. It won’t be due to which Tier 1 ERP provider they’ve chosen. I’d therefore question what role they’d have in continuing. Why should they continue and how ideally to leave the place in a position to be rebuilt? That's naive of me, I know.

Investors Will Decide

 People, Ideas & Objects have identified a threat that we feel is terminal to our existence as an operational software organization. In this threat, the officers and directors of the producer firms intend to implement an SAP configuration of the producers' own design. Choosing an ERP system from Tier 1 providers is an oil and gas producer's right and a specific requirement of their investors. It would be bold and audacious for me to suggest that an independent decision is not what a firm is entitled to make. When the performance and accountability of these officers and directors led to the comprehensive damage and destruction we see today. Which I've detailed throughout the Preliminary Specification. No one outside of the rarified air of producer firms' officers and directors has benefited from oil & gas activity these past decades. These firms have been structured to “appear” healthy to facilitate enhanced and innovative executive compensation. Therefore the broader threat of this continued non-performant, “muddle through” process of “putting cash in the ground” and “building balance sheets” would continue as soon as the producers comply with investors' demand for a Tier 1 ERP system by selecting SAP for the next generation, and People, Ideas & Objects fade into the distance as an operational software organization. We can already hear the call for producers to stop listening to their investors.

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

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

And

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

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

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

These actions have obstructed and completely eliminated other forces aside from People, Ideas & Objects. These include disintermediation, decentralization, creative destruction, spontaneous order and serendipity. The lesson I’ve learned is what I described in May 2004. Software defines and supports an organization, but also constrains it. This statement supports implementing the Preliminary Specifications ideas and its permanent ERP software development capability. However, producers soon realized that if the software never changed, their unaccountable ways would continue. However they’ve failed to consider the consequences of their lack of accountability and profitability on the long term health of the industry. They have continued to destroy the industry and all associated with it. 

Today the game’s changed for these officers and directors. There is a direct and specific request from investors to change their ERP systems to Tier 1 providers. Through consolidation and the elimination of the startup, small and junior sectors of the oil & gas industry, their administrations will remain unchallenged for a generation, at a minimum. The establishment of their upcoming business ventures focused on clean energy will provide officers and directors with a clean slate of possibilities in terms of future obtuse accountability. If only they could secure software that meets their and investors' needs, SAP fulfills their dichotomy. They could then continue in whatever direction they choose.

Time is now a premium resource. What is necessary for the oil & gas investor is to be specific as to what is an acceptable solution for Tier 1 ERP solutions. We can only achieve this by successfully implementing People, Ideas & Objects, our user community, and their service provider organizations' Preliminary Specifications with Oracle Cloud ERP, or Cloud Administration & Accounting for Oil & Gas software and services. No alternative will be acceptable. 

Alternatively, if these decisions are made to implement SAP, others will realize the consequences. The consequences will be a continuation of the status quo level of unacceptable performance, accountability and behavior displayed here for decades. If anyone believes that the officers and directors' reformed behavior of the past year (paying dividends and stock buybacks) will be permanent. Then they should ask themselves, why have they not implemented any solution to these issues since People, Ideas & Objects pointed them out? Compliance in the form of dividends is temporary, trust me. Cash being paid out of oil & gas companies for any discretionary reason will soon be stopped as soon as producers can say "they have complied." This cash will then resume its direct path back into more “traditional” pockets. The quantitative analysis of the difference between the value proposition offered through the Preliminary Specification is easily understood when we look at the industry today. And ask, what quantity of financial resources will be necessary to bring the existing infrastructure up to the needs of a profitable, energy independent North American oil & gas industry? Today producers have already begun to warn consumers to take precautions! A despicable response.

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

OCI RFP Discussion, Part I

 How I See the Oil & Gas Industry Has Failed

People, Ideas & Objects see a window of opportunity to assert our solution to North American oil & gas producers' issues. This is in direct response to what we feel is a contrived and wholesale industry transition to SAP. This involves producers' officers and directors seeking to secure their management methods. Therefore, we would like to explain our advantages over SAP. We would like to make oil & gas investors aware of the $660 billion difference in value immediately if SAP is selected. People, Ideas & Objects Preliminary Specification provides a proven value proposition for North American producers. This is due to our focus on providing producers with the most dynamic, innovative, accountable and profitable oil & gas operations everywhere and always.

I have a distinct and original perspective regarding the North American producer population. Summarizing it as a failed, damaged and destroyed industry. The elements of that failure and why I can’t see the current administration doing much to repair its destroyed financial, operational and political frameworks. I fail to see how producers can continue without addressing these difficulties. Demands and expectations cannot be met. Another attribute of this perspective is that there’s no doubt as to where the fault lies in terms of responsibility for the damage and destruction. The producer's officers and directors. The amount of time it’s been in place. Our proposed resolution is to rebuild the industry under the vision of the Preliminary Specification with our user community and service providers. 

As far back as the 1980s, producers sought to record as much of their costs as capital costs. This was done with minimal operating and overhead costs realized in the current period. These have built excessively large asset balances that reflect equally overreported profitability. This attracts excessive amounts of investor capital which industry relies on to create a systemic, unprofitable production profile. Which is ultimately expressed as overproduction, which leads to the systemic and highly detrimental, long term erosion of global commodity prices. Accentuated by sharp and repeated commodity price collapses in both oil & gas since July 1986. As an example, Alberta-based natural gas producers paid customers to take product off their hands. Or the COVID lockdown induced negative $40 oil in April 2020.

Producers have hardly anything on their financial statements except large volumes of property, plant and equipment and their supporting debts. Collectively these large balances across the industry do not generate, even at today's prices, the volume of revenues necessary to operate “real” profitable operations of a viable industry. It is reasonable to assume that oil & gas investors agree with that assessment as additional capital investment has been suspended since 2015. Since that time a mad scramble for cash has sought to make up for chronic working capital deficiencies. Seeking to alleviate the capital needs of their annual capital budget. Each year, it becomes more desperate and destructive to producers' long-term financial health and integrity. Producers have no capital structures, no support from the financial or banking communities, no faith, trust or goodwill from the service industry. An industry that they consistently and repeatedly destroyed. This process resulted in shortages of capacity and capability within the service industry, as well as short-long-term staff shortages within oil & gas itself. 

When an industry is faced with difficulties like those presented, management usually resorts to layoffs to resolve the issue. And many have been conducted. There is a point to be made here about layoffs. The first round of layoffs should preserve the firm's capabilities. The long lead times for securing land, drilling and equipping a property for production can take up to ten years. To ensure this continues you only cut in the first year of this process, the assumption being these resources can be reclaimed next year when things improve. And if the difficulties continue they’ll cut those involved in the second year of that ten year process. The third and fourth years etc. Due to the investors' strike and critical cash shortage over eight years, it is reasonable to assume that the operational capacities and capabilities have not provided the necessary pipeline of new opportunities. The cupboards are bare. Those resources needed in the first year of processes may have been outside the industry for seven years and will be difficult to recruit. This deprecation and destruction will not be evident on a financial statement but will show when the need to resume operations is demanded of the organization. Extension of this thinking to the service industry makes it a particularly difficult aspect of producers' financial and operational difficulties. If these resources are lost, replacements will not be able to take advantage of the experience of the best of breed forerunners, which is an unnecessary tragedy. Then we need to add shale's steep decline curves. Rebuilding oil & gas is not a luxury, it’s a necessity.

Politically the producer officers and directors have taken a back seat to managing the industry for decades. They've left it to others such as governments and environmental groups to define their role in society. Producers have failed to provide any practical value or need for their products. They are therefore relegated to "muddling through" politically to ensure no one sees who they are. Frequently pointing the finger at others to redirect the focus.

What’s surprising is that nothing has been done about these difficulties. People, Ideas & Objects et al’s Preliminary Specification has been vilified and ostracized for our attempts to increase profitability and accountability to deal with these issues. People, Ideas, & Objects are the only group outside the investors to express concern about the current industry state. If it is as we suspect that SAP is being used to establish the existing permanent means of unprofitability and unaccountability that we documented in our RFP, then the possibility of People, Ideas & Objects survival over the next decade or even a generation while SAP proves this hypothesis is very low. Is this what’s desired? Will they be able to avoid our Intellectual Property? Or will producers avoid People, Ideas & Objects as a feature instead of a bug? And who will spend thirty years or more asserting an alternative ERP solution for oil & gas to replace SAP? In similar ways to Oracle in 2000, IBM in 2005, and People, Ideas & Objects, will they focus on enhanced profitability and accountability in the years to come? How?

There are some who might say that the Preliminary Specification is too expensive, and I can assure everyone that it will initially be expensive. Producers could have done something about that, however those opportunities are long past. Besides, our value proposition makes it the most attractive investment producers, officers and directors could make at this time, and maybe in their careers. A budget where oil & gas investors will be assured that producers are committed to profitability and accountability and that the issues are being dealt with. Looking at SAP in terms of its cost, it may be initially less costly, however there will be no returns in terms of the quantifiable or qualifiable profitability and accountability set out in their clean energy transition vision. This will result in continued unaccountable and unprofitable cannibalization of the value generated by oil & gas investors' investments. SAP acting as officers and directors "blind sleepwalking agents for whomever feeds them."

Time is now a scarce resource. What is necessary for the oil & gas investor is to be specific as to what is an acceptable solution for tier 1 ERP solutions in oil & gas. A successful implementation of People, Ideas & Objects, our user community, and their service provider organizations' Preliminary Specifications in conjunction with Oracle Cloud ERP for oil & gas is the only way to achieve this. All of these will be packaged into our Cloud Administration & Accounting for Oil & Gas software and service. No other alternative should be acceptable.

A Fundamental Betrayal

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

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

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

No!
Another viable scapegoat is unacceptable. The ultimate capitulation of accountability here. The individual with more authority and responsibility to have dealt with this long ago!  My pinned tweet above was refused by those in power. [Our July 2019 White Paper] Then in nine months they ran the price of oil to negative $40! Declared shale was a lost cause, sold it and focused on the ultimate unaccountability project in an unauthorized manner “clean energy.” 

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

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

In light of the history of People, Ideas & Objects since the August 2012 publication of our Preliminary Specification, the people that need to go without are those that caused this damage and destruction. To blame this catastrophe on someone like Putin, who will only take advantage of any situation he can find, is ridiculous when it’s Ben Van Beurden and his cohorts who gave him the gold-plated offer to do so. Who has had the Preliminary Specification available to them as the solution to these specific issues since August 2012. 

A Quick Note on our Whistleblower & Sales Commission Programs

 People, Ideas & Objects is pleased to see this blog's and our wiki's log activity levels increase over the past week.

If this is the beginning of the process for people's participation in these programs I can be contacted at paul.cox@piobiz.com if you have any questions.

OCI Request for Proposal, Part XI

 Recommendation

The Issue

The world has begun to understand and appreciate oil & gas's value. With 10 - 25 thousand man hours of equivalent labor in each barrel. Our global consumption level is 28 to 71 times the population's physical capabilities. To replace that in this century would be ambitious. What we can do, what we must do, and what we should have been doing all along is not waste one drop of these resources. This is done by ensuring they’re produced profitably, everywhere and always. Which ensures that we’re responsibly using these oil & gas resources and leaving future generations with proof that we did. This is done by passing on a viable, financially strong industry to manage that resource and an abundant, affordable and reliable resource itself?

Why would we produce oil & gas unprofitably?

What we know today is that none of the North American oil & gas produced in the past four decades has generated one cent in profitability at any time. It was a process of taking investor money to “build balance sheets” and “put cash in the ground.” Words spoken throughout the industry as if they had actual meaning. A misguided and deluded group of officers and directors that have been self-dealing for so long they know no difference. They have failed comprehensively in their role of generating profits for their shareholders. Now their organizations are likely to fail to meet consumers' long-term energy demands. Officers and directors who when faced with the challenge of making shale formations, or any part of their business, commercial decided to walk away. They pursued the green pastures of "clean" and unaccountable energy. August 2023 shows what was discussed at People, Ideas & Objects for decades is now the state of affairs. During the first half of 2023 the service industry's rig fleet lost 90 rigs. Natural gas volumes continue to grow despite depressed natural gas market prices. Producers will use "strict capital discipline" to resolve the issue. As has been repeatedly stated over the past decades. The only method of production discipline that will resolve natural gas and oil price issues is the decentralized production model of the Preliminary Specification. Which turns producer overhead from fixed to variable. Enabling the Joint Operating Committees to shut-in any unprofitable production and incur a null operation. Allowing the producer to realize maximized profitability when only profitable properties are produced.

These are not People, Ideas & Objects issues and we certainly did everything we could to mitigate these disasters we’re about to experience. They are not our responsibility as we chose to address the issue and were ostracized and vilified for it. Which if the officers and directors of the producers take note, did not deter us from doing our jobs. If someone suggests that People, Ideas & Objects et al Preliminary Specification is only “vaporware” they’d be correct. They’d also state the obvious fact that officers and directors have killed off a viable threat to their existence. An existence that has proven to be wholly unproductive and damaging to all concerned, and most particularly society in general. Our battle with these bureaucrats since the May 2004 publication of the Preliminary Research Report has been shameful. In light of the consequences for industry from this inaction, I repeat, not a single penny has been received from them towards the development of any aspect of this work. We've only received abuse like repeated beatings with baseball bats in the alley behind the dumpster. And now, with the desperate issues Industry faces, with no preparation or capacity to deal with them, what we’re seeing is what we’ve always seen “muddle through.” After eight years of their investors' refusal to continue being the “mark,” all we see in response from the officers and directors to their investors is that they’ll “muddle through.” Not one change in any method of their management.

People, Ideas & Objects recognizes the high upfront cost and makeup of our development and implementation budget. Our budget is based on 5,000 man years of effort. The issue we’re resolving is comprehensive and we’ve discussed both the necessity of the Preliminary Specification and its cost. Officers and directors' concern about these high costs is moot when the value wasted since its publication in August 2012 is tragic. These costs may have been considered opportunity costs, however the fact that these costs have now been incurred annually for decades and led to such evident destruction proves they were anything but opportunity costs. Saving a few pennies by not funding the Preliminary Specification is compared to the trillions of dollars of value they've destroyed since its 2012 publication.

Management of risk in business is a skill and it takes industry knowledge and understanding to mitigate it. Officers and directors of the producer firms are alleged to be motivated by such objectives yet have done little to deal with the associated risk of the oil & gas business. As far as hedging oil & gas commodities is concerned, our sample of producers represents approximately one third of Canadian and American production profiles. Reported hedging losses of $34.2 billion during a five-quarter period starting with the December 31, 2021 quarter. Therefore we can assume this would represent over $100 billion in losses for the broader population of producers. Such is the skill of officers and directors of producer firms. The arguments regarding our budget are specious and self-serving in light of the consequences experienced today and the time constraints officers and directors have imposed on themselves.

The selection of the Preliminary Specification may be seen as the producers' first step in reclaiming their integrity in the eyes of their investors. There would be incremental value beyond our defined value proposition in doing so. As the value differential in terms of the cash flow multiple vs. the market capitalization of our sample of 18 producers representing 11.52 million boe / day is $220.2 billion, which is potentially triple the number for the North American producers. It may be that the capital market predicts a decline in oil & gas producer firms. However, is the fact that this differential is consistent across many quarters more valid? Producers are among the most active traders on these firms' markets. In fiscal year 2022 $35.7 billion in share buybacks were conducted by our sample of producers. Without these share buybacks how understated are these differentials? To assume that producers will act on management issues reflects my naive optimism. The reality is officers and directors will “muddle through.”

What if the following scenario occurred? Producer officers and directors ceased to be subject to commodity price swings and learned to build value everywhere and always. This was done through the implementation of the Preliminary Specification. 

• How much of that $220.2 billion for our sample of producers and $660.6 billion for the industry valuation differential would be reclaimed in the current fiscal year by proceeding with People, Ideas & Objects et al? 
• Elimination of the need to hedge commodities occurs when profitability everywhere and always is being earned and the cyclical nature of the industry is worked out.
• How much larger would that valuation differential grow when and if producers select SAP? 
• If officers and directors choose SAP does that prove People, Ideas & Objects allegations of a deliberate and destructive lack of performance and accountability? 
• For those major producers who’ve used SAP, in some cases for decades, reflect that they’re part of the problem?
• These are clearly not concerns of producer firms based on their history. Will these ever become concerns of producers, officers and directors?

My argument is this: the development budget of the Preliminary Specification is a slight after taste in terms of the annual scale of revenue and profit losses, hedging and market valuation losses that officers and directors feel are acceptable. We certainly don’t hear any concern about these issues. We have a highly advanced society today that has many complex and difficult issues and opportunities. When points of view such as the Preliminary Specification are offered in 2012 should they not be looked at objectively and evaluated on the basis of their potential to mitigate risk in the long run? Or maybe even before then, such as our Preliminary Research Report in May 2004. We have a similar situation captured in a Winston Churchill quote that addresses the point.

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

Therefore the issue is the officers and directors of the producer firms who have personally benefited at the expense of all others associated with oil & gas. Officers and directors were responsible for ensuring none of this happened, had the authority to deal with it and the resources to correct it. They recently wandered into unrelated industries and businesses only to find oil & gas revenues weren't as available as they assumed. Unable to provide a viable solution to their difficulties. It was stated that shale would never be commercially viable. In order to rebuild the industry from the disaster producer officers and directors created. Oil & gas revenues will be needed by investors, employees, and the service industry. To add insult to injury, the one action they will take after eight years of not listening to their investors is they'll implement SAP instead of People, Ideas & Objects to ensure they won’t have to be held accountable for this damage and destruction, and no one will find any of the skeletons they’ve hidden in their closets.

Accounting for the Damage & Destruction

There is no doubt that many in oil & gas don't fully appreciate what I'm discussing when I talk about damage and destruction. Officers and directors do and they’ve clearly understood since the publication in May 2004 of our Preliminary Research Report. They’ve always seen it as a threat and know they would not personally benefit from its disintermediation and high accountability levels. We can all agree that the “endless repetition of history” is what we’ve been faced with for centuries in so many situations. As a society, we no longer accept those viable scapegoats. Today people are waking up to the folly of green energy and the imminent environmental Armageddon's entry into its seventh decade. Oil & gas is nothing like oxygen to the body. It’s analogous to blood that allows everything to function. 

Here is People, Ideas & Objects' recommendation for North American producers. Select the Preliminary Specification as the industry standard ERP system. Bold, audacious and justified on the following basis. Today producers may feel they’re sailing on for a good run and do not have to concern themselves with the past. What is evident in their financial statements is that there are legacy damages and difficulties ahead. The greatest problem I can see is the lack of trust, faith and integrity the capital market holds for producer firms. Cash flows are poor compared to the capitalization accumulated in property, plant and equipment. They barely support the “lofty” valuations producers feel they earned through their obstinate “muddle through” strategy. Comparing today’s performance to the past four decades doesn’t impress. It is important to note, however, that even these valuations aren't believed, and North American producers trade at half those prices. This performance needs to be put in the context of the past two decades' environment. Interest rates have never demanded competition among management. Yet, Treasurys would have been a far better investment over the same period.

The handful of producers that can perform at the level of their cash flow multiples should participate in the development of the Preliminary Specification. Those that are not performing will be desperate for revenue and put their entire production profile on the market. As proven thousands of times before, this will continue despite the implications for commodity prices. It might be wise to remember the negative $40 prices of April 2020 for which no single producer was responsible. The Preliminary Specification recognizes that the Joint Operating Committee and the integration of producers within the partnership will enhance collaboration and innovation. Having partners in their Joint Operating Committees operational on the same standard, objective basis through the Preliminary Specification will be beneficial.

Investors of these producer firms need to know that the only acceptable solution for them is People, Ideas & Objects, our user community and their service provider organizations. Operational through our Cloud Administration & Accounting for Oil & Gas software and service which includes Oracle Cloud ERP. Selection of SAP or any other ERP system should not be an option. This needs to be communicated in the same manner that the prior request for a Tier 1 ERP system was made. Otherwise there is much to lose for all concerned.

We’re kidding ourselves to think officers and directors will act contrary to their “muddle through” behavior. It has become a culturally systemic method of operation. There is no easier way to understand this than to assess the situation in terms of where the industries stand today. All of these points are the result of decades of mistreatment and abuse of their power, authority, accountability and responsibility. This is for personal financial gain. The cumulative symptoms and attributes that have led to the damage and destruction People, Ideas & Objects rant about include…

• Never selling the attributes of oil & gas that consumers gain from the use of their products. Losing the political agenda to environmentalists and woke politicians.
• Becoming wholly dependent on outside capital to support all business operations. Oil & gas has lost the ability to maintain commercial operations.
• Overreported capitalization due to “building balance sheets” and “putting cash in the ground” enabled producers to leverage their positions excessively during two decades of low interest rates. Creating a future crisis due to extreme levels of debt during a period of normalizing interest rates.
• Financial theory presumes that during times of low interest rates firms will invest in capital to increase productivity. During periods of high interest rates employment is the lower cost alternative to productivity. Productivity in oil & gas over the past two decades has been questioned.
• Creating organizations incapable of profitability, understanding of how or what to do to earn it. Culturally sealing the inability to determine profitable operations were ever necessary and assuming they were not.
• Never taking responsibility or accountability for anything. Blaming, excusing and creating viable scapegoats of others whose fault they’ve fallen victim to. Enforcing a culture of “muddle along” and inaction.
• Liquidating the value of the industry to the point where it has a negative net present value. Current operations demand that capital be consumed in day to day activities.
• Deprecating producers' organizational structure, operational capacities and capabilities. Cannibalizing the service industry as their last source of capital financing by extending a/c payable to 18 months. Fundamentally destroying the greater oil & gas economy.
• Capital structures of producers and the service industry are unsupported by debt or equity providers. Zero remedial efforts taken to address these concerns. Approaching one full decade of inaction and uncaring since investors began their withdrawal from industry. Continuing cash flow from a capital intensive industry sustains their personal aggrandizement, therefore what’s at issue?
• Losing the mid to long term capacity to meet the consumers market demands for energy. The most powerful economy will consume the most energy. Creating a distinct threat to the most powerful economy ever developed. Therefore what’s at issue?
• Incapable of standing up to teenage wanna-be environmentalists. Asserting the value add of the oil & gas products in the lives of the consumer. Turtling at any and all points of conflict. Leaving it to pipeline companies and others to fight their battles, while they pay the grift to the environmentalists not to protest producers.
• Employing their cultural propensity to abandon prior efforts which include their latest and greatest effort, shale, which they’ve now declared would never be commercial. Instead of remediating these assets they moved on to the next latest and greatest thing. Notice the slight of hand?
• Sauntering off the field in the direction of the unaccountable clean energy businesses where they’ll continue to prosper personally and never have to concern themselves again with being successful. Using the oil & gas revenues to support these activities through contrived boardroom battles. Listening to the “investors” concerns for the environment is the only issue of the investors they’ve ever responded to. Realizing their mistake they've returned to their post as if nothing ever happened.
• Therefore, the producers leadership has walked off the stage with the oil & gas revenues in tow to the land of unaccountability where their only accountability will be "they’re saving the planet!” 
• After all of this, what are producers offering oil & gas investors? A history, a legacy, a culture of failure, greed and “muddle through.” A theft of their revenues they invested to build. An inability to understand their primary role is to earn profits. A point they not only disagreed with, they laughed when I suggested it and have no clue about how to earn it. Culturally incapable of doing so.
• Seeking to seal this culture permanently in an implementation of SAP that emulates current management methods. 

In all of this there has been no response from oil & gas producers. From our initial Preliminary Research Report in May 2004, until the investors' strike began in 2015, nothing has been done. Producers and directors need to acknowledge that it is within their domain to deal with issues. Profitability is an issue. The solution is in front of them in the form of our Preliminary Specification. There will be no one helping them from now on. Adopting the Preliminary Specification, profitability would provide all the money they need to do as they please in the business. Do they need $800 billion to build LNG facilities in Canada? Make that money. The means are on the table. If they want to do anything in North American oil & gas, the only thing stopping them is their own obstinance. Build a profitable business and the world will be their oyster. I’ll explain it explicitly. Make oil & gas profitable if officers and directors want green dreams. And do so with accountability everywhere and always.

But no, they’ll outlast investors who officers and directors believe will return begging to get in. I mentioned that oil & gas ERP systems were abandoned by our investor class in the 1990s. This was due to our inability to perform financially because we could not convince producers to manage their business properly back then. Unaccountability was and is their business, or am I redundant here? If we assume that the Preliminary Specification et al is the appropriate solution. If we assume that the value proposition is as it's stated, it would be reasonable to believe that ERP investors would smash down my door. Two things stop this. 1) I won’t accept their money because I am unaware of how I can make money in this business without the producer buy-in that this RFP solicits. 2) ERP investors are not here. They know what the situation is and based on their 1990s experience, they left. Nothing has changed and they remain where they are. 

Producers need to understand that they’ll never attract investors or banks until they change their firms' performance trajectory. There are no signs of that, only their obstinate and stubborn “muddle through” strategy that destroyed everything and continues to do so.

These are the issues People, Ideas & Objects addressed in our Preliminary Research Report in May 2004. And became the basis of our research that led to the Preliminary Specifications publication in August 2012. An interesting quotation from Mark P. Mills of the Manhattan Institute applies directly to oil & gas history.

Brookfield’s CEO said that the strategy follows the same deal-making common in other capital-intensive industries. Companies will happily take any supplemental money, but the market opportunity, not the subsidies, underpins such big investment gambles. The key, to use the famous truism from Walter Wriston (the former, storied CEO of Citibank), is that “capital will always go where it’s welcome and stay where it’s well treated. Capital is not just money. It’s also talent and ideas.”

Put this into the context of developments in North American oil & gas. Culturally, producer officers and directors believed investors became organizational subsidies. Not the means to pursue the market opportunity. 

To deal with this today requires only one solution and that is People, Ideas & Objects et al. This is defined in this RFP response. What this also proves is common knowledge that “organizations don’t change, people do.” The resistance to change that we’ve experienced, and that of the producers' investors, has originated in one area of each and every North American producer, officers and directors. Our final attempt to deal with them was sending an offer to the officers and directors in July 2021 which they ignored. This Response to a Request for a Proposal is highly derivative of the proposal sent to them. This proposal is not directed at them and therefore, no harm no foul, my abuse is inert. 

We are directing this RFP Response at those investors who have seen enough to know the situation today is not being addressed effectively. People, Ideas & Objects don’t need to tear things down to start over. That’s already been done. We need to rebuild the industry in the vision of the Preliminary Specification. In order to accomplish that, investors must direct producers' officers and directors to fund the Preliminary Specification. What will happen to North American oil & gas if this doesn’t happen? It involves a short-to-mid-term semi-permanent status quo. Or as long as SAP is around. 

OCI Request for Proposal, Part X

 Our User Community & Their Service Provider Organizations

People, Ideas & Objects primary focus and priority is on our user community. They are the means by which we can ensure a quality Cloud Administration & Accounting for Oil & Gas ERP system is delivered to North American oil & gas producers. Our objective is to ensure that we provide the most profitable means of oil & gas operations, everywhere and always. 

Our user community and service provider organizations have the following competitive advantages. This is a fundamentally different basis of competition and one that adds significant value to the producer firm. This value is provided throughout the entire oil & gas economic structure. Approaching producers' overhead costs in a systematic and analytical manner and breaking down the individual processes into standardized, objective methods provides the industry with the overall value proposition of the Preliminary Specification. Each individual user community member will work in a part-time capacity with our development team defining, designing, developing and implementing their understanding and the input of producers into derivative software products based on the Preliminary Specification. Building out the Tier 1 ERP system necessary for North American producers. Our user community members are the principal individuals of their service provider organizations that operate the accounting or administration process on behalf of the industry. 

What will not be found in our user community is price-based competition. Service providers set their own prices for their services. And receive exclusive licenses to manage their specific processes. All human endeavors are motivated by self interest and our user community and service providers are no different. In the end, their self-interest can be achieved if they ensure that oil & gas producers are provided with the most profitable means of oil & gas operations, everywhere and always. And not worry about other service providers offering comparable services based on price. Where this comparable firm did none of the heavy lifting in terms of determining “how and what” was needed, and will continue to be needed, to provide oil & gas producers with the most profitable means of oil & gas operations. The competitive basis of our user community enables them to get their heads in the game and fight to ensure producers are profitable everywhere and always. This is done by using their distinct competitive advantages.

Our Cloud Administration & Accounting for Oil & Gas service has changed the structure of producer overhead, making fixed overhead costs variable. Variable based on profitable production. Overhead costs are therefore recovered in the current period. The cash incurred to fund producers overhead will be paid by the consumer and returned within the current business cycle. Replacing the present twenty-year process of capitalizing overhead and using depletion to recapture these costs. Creating producers' heavy reliance on investors for cash. It is these competitive advantages that provide substantial value to the producer firm. Getting to the root of value generation requires deep analysis and complex work. It would be difficult to achieve this in an environment where price-based competition was the main concern for our user communities and their service provider organizations.

The following classifications will be used by our user community for competition. These will be the basis of a shared understanding between our user community. This understanding determines how one user member leveraged specialization to enhance productivity in their process by using this method or that, etc. When we factor in the time and sense of urgency at which this product must come to market, this will be highly appropriate. This sharing will be collaborative and competitive. Seeking a performance and quality product for the long term. This is the effective way our user community and service providers have been configured. 

I want to mention the updated direction Oracle is taking in their products and services. What was discussed in their 2022 CloudWorld Conference regarding the developments they were undertaking has a direct impact and benefit to the oil & gas producers that will use our Cloud Administration & Accounting for Oil & Gas software and service. They are introducing higher level process automation by partnering with banks and shipping companies, etc. In the example provided, it is their agreement with J. P. Morgan Chase that attracted our attention. By integrating credit card processing into Oracle Cloud ERP at a high level. Oracle Cloud ERP software allows employees to designate their credit card charges to the account and project the expense belongs to. Then Oracle will evaluate the charge to ensure it falls within the customer companies policies and if so process the charge. The employee will have no further expense reports to complete, their immediate supervisor will have no further expense reports to review etc. In addition, they will have all of the follow-through normally conducted on firm expense reporting. Saving untold thousands of hours per year in the process. 

This sharing of software development and integration of the process with various partners is wholly consistent with the work we do on People, Ideas & Objects. The benefit to the oil & gas producer is that they will gain these advantages for oil & gas attributes through us and our user community. But they will also gain Oracle's generic business benefits. Software development and integration for the J. P. Morgan Chase process will be expensive. Where the costs are allocated across Oracle's entire customer base. However it will also be a distinct competitive advantage that Oracle provides its customers. These developments will be iterative and continuous as are the People, Ideas & Objects permanent user community and software development capabilities. 

The last point refers to our user community and their service provider organizations' competitive advantages. And describes the distinct specialization and division of labor between computers and this community. Computers excel at processing and storing data and information. People on the other hand have the distinct advantages listed below. This is a unique perspective on today’s oil & gas producers' ERP systems implementation.

Accounting & Administration Expertise

Well trained and experienced in their fields, our user community members provide administrative and accounting expertise as their primary value add to the process. This applies to their service provider organizations. Our Cloud Administration & Accounting for Oil & Gas service is a sub-industry between the oil & gas industry and technology. Filling a gap between the two as we feel they’re not communicating effectively. 

Analysis of Conflict & Contradictions as Analytical Tools

Conflict and contradiction indicate the issue's source. Analysis of these two factors will reveal alternative solutions. When we apply these to the business world, behaviors, communication methods and other factors can provide insight and understanding into an issue and its resolution. These are part of the more advanced style of tools that will be needed to resolve the many exceedingly large issues the industry and our user community will encounter. 

Application of AI & ML

Artificial Intelligence is overrated in the marketplace at this time. AI is a module in the Preliminary Specification where we establish effective and efficient AI algorithms from our user community. These algorithms can be shared and are shareable across the industry through Cloud Administration & Accounting for Oil & Gas. Offsetting the inordinate cost of each producer involved in the difficult business process of developing, testing and proving AI algorithms. 

Machine learning is a far more effective tool that will be valuable to our user community due to their unique perspectives on industry data. They will manage the entire industry's data through individual processes. This data set would be interesting to analyze from the point of view of its unknown unknowns. 

Automation

Automation will be used to ensure that the most effective and efficient operations are provided to producers participating in these developments. Relieving administrative and accounting resources to pursue higher level, value added opportunities. Reduction of costs in this sense is worthwhile, not just from a cost reduction perspective. Reduction of costs implies high automation levels. Automation does not just reduce costs directly it does so indirectly through error reduction. Error reduction reduces time. What admittedly is becoming a more critical resource as we enter the 21st century. Through People, Ideas and Objects, producer firms would benefit from these competitive attributes in both the oil & gas domains. And in the generic business domain through Oracle Cloud ERP. 

Collaboration

As I noted earlier a collaborative, collegial environment would be the basis of the competitive environment between our user community and their service provider organizations. The basis of collaboration and cooperation is the importance of the work they're undertaking and their critical role in rebuilding the oil & gas industry.

Compromising

Finding the solution in a world of difficult and complex issues requires creative solutions that meet the needs of those parties. Although we are rebuilding brick by brick and stick by stick there are established industry methods, regulations and processes that need to be adopted. We need to find creative ways of implementing and organizing them under the Preliminary Specification. This demands that our user community members offer industry solutions that work for all concerned. 

Creativity & Design

Some may struggle to imagine creativity in administration and accounting. However there is nothing that will be more critical in the discovery, testing and implementation of effective and innovative procedures that provide value to the oil & gas industry. We published the Preliminary Specification in August 2012 and soon after, in March 2014 began the development of our user community. As a result people within the larger oil & gas industry have had the model in the form of the Preliminary Specification and our user community vision in their minds for more than a decade. Understanding what their involvement could be, should they decide to join our user community based on the principles set out in these documents. Assuring that they are prepared directly and indirectly for the development and implementation phase. It is here that People, Ideas & Objects have work to break down the motivational and behavioral paradoxes. And introduce radical cognitive dissonance. 

Creative Destruction, Spontaneity & Serendipity

Each of these established economic principles has been eliminated from the 21st century business landscape through software development. It is the unchanging methods and procedures that software defines in organizations, especially ERP systems, that lock organizations into unchanging and unchangeable situations. Creating the bureaucratic nirvana we experience across the economy today. People, Ideas & Objects have shown through our user community and service providers that they can make the effective changes necessary to ERP systems. These changes will be derivative of the Preliminary Specification. Establishing a permanent user community and software development capability is necessary for businesses to evolve throughout the 21st century. 

Explicit and Tacit Knowledge

Providing software in the marketplace is a small part of the solution today. Software captures explicit knowledge and codifies it within software processes management. It is the service associated with that software where the value is derived. A service offering such as our Cloud Administration & Accounting for Oil & Gas must include tacit knowledge. Software and services must be able to make the changes necessary to accommodate the accelerated pace of change in today’s market, and what we can only assume will be the case tomorrow. The leadership and independence of our user community ensures producers remain on the optimal business model. This ensures producers continue to have the most profitable means of oil & gas operations, everywhere and always.

Ideas

The uniquely human element that will be in demand. An idea that generates a dollar today will produce a nickel tomorrow. The need to have exponential volumes of ideas will be a demand of the future in everything we do. How these are captured and implemented in software and services will be necessary. And with the shared and shareable model these ideas, once proven, tested and appropriately implemented will be leveraged throughout the industry. Building and leveraging value for everyone. 

Innovation

People, Ideas & Objects at al’s Preliminary Specification our user community and their service provider organizations are structured around innovation. Our research into the Preliminary Specification determined that innovation is a defined and replicable organizational process. These have been incorporated throughout the sub-industry we're building. Importantly our user community and their service providers can affect the changes needed to facilitate innovation in efficient and effective ways through the design of the producer organization. Our Preliminary Specification is structured on the Organizational Construct of innovation. To ensure producers fulfill their dual role of profitability everywhere and always, while providing abundant, affordable and reliable energy.

Integration / Implementation

Integration or implementation falls under the responsibility of our user community and their service provider organizations. These are the critical components and the final steps in ensuring the quality of software and services we’ll provide. Integration begins on day one of development in terms of planning and preparation. Our user community members will ensure that their service providers are appropriately implementing process management. As the principal owner of the service providers they’ll be duly authorized and the responsible parties, therefore motivated appropriately. 

Issue Identification & Resolution

“Muddling through” is over. There can be no more ignoring oil & gas issues. People, Ideas & Objects provide the tools, methods and Organizational Constructs to address and resolve issues. We see that software seals organizations in concrete. Which is commendable from a governance perspective, however it must be innovative and capable of change to achieve the high level performance trajectory of a dynamic, innovative, accountable and profitable organization in the 21 century. This will be an order of magnitude more difficult than what the oil & gas culture is currently familiar with. As difficult as the industry situation appears today. Consider how simple it was only a decade or two ago. What will it be like in a decade regarding the issues and opportunities these firms face? To be as unprepared as we are today, for what is unquestionably the most challenging future the industry has ever faced, is dangerous. 

Judgment

Computers do not have a distinct competitive advantage in judgment. A uniquely human characteristic that will be the basis of understanding for the remainder of this century and as long as we choose to. Oil & gas is valued in the consumer marketplace purely on cost. Unfortunately, not for its risk of shortage or the potential impact on civilization. Setting the proper landscape for a dedicated environment in which oil & gas can prosper and conduct its business operations. What is our judgment regarding current producer organizations' capability and capacity to realize these opportunities?

Leadership 

I expect that our user community will provide the leadership necessary for the administration and accounting of North American oil & gas producers. The expectation of how and why the industry earns its profits, along with the development and evolution of its business model. To provide the industry with the tools it needs to evolve at the capacity and speed necessary to meet its future demands, the greater oil & gas economy needs an objective and standard basis for evaluating that. 

Negotiating

Negotiation and compromise in response to the interactions between producers and our user community will occur frequently. Compromises and negotiations on the Preliminary Specification however cannot and will not occur. The business model is integrated and heavily dependent on it functioning together. Changes at the Preliminary Specification level may have implications unknown in other areas of the system. If these changes are necessary, they can be analyzed and corrected based on the most comprehensive understanding, once developed.

Observation 

Since everything always turns out as planned there are no unexpected consequences. This may have been the case in prehistoric times. When unintended consequences do occur they can be invisible and fall into the category of unknown unknowns. Awareness of these possibilities needs to be at the forefront of our user community and service provider organizations. This is to ensure that errors and omissions are not manifested as difficulties. As complex as it is today, there may be increased difficulties due to the speed and complexity of what needs to be done. 

Planning

Planning in a dynamic environment is a futile activity at times. It however communicates to participants the information necessary to begin the process. It is the first step. 

Quality

Define it, clarify it, communicate it and ensure its implementation. It used to be driving downtown to work in the morning, and returning at night. 2 - 3 cars were broken down on a 15 mile trip. Japan exploited this opportunity to enter the North American auto market. They introduced reliability. As the cloud computing era secures a software and service operating environment, software is experiencing increasing reliability. Phones are far more sophisticated than people realize due to Steve Jobs starting in the mid 1980s when he was fired from Apple. And Sun Microsystems with its first commercial release of Java in 1994. Cloud Administration & Accounting for Oil & Gas, standardization, objective accounting and other methods will provide higher reliability on top of these technologies. A duly authorized and capable user community can do so much more. 

Research

Primary research has become abundant in the 21st century. We can choose to stand on the shoulders of giants, or recreate it again if we like. The amount of primary research unused at this point is probably larger than what has been implemented. There is rich ground here for value generation for those that can leverage these ideas into reality in oil & gas. In light of all the competitive advantages listed under our user community, putting research under their domain is a natural fit. We see this as highly complementary to the research People, Ideas & Objects lists as their competitive advantages. 

Specialization & the Division of Labor

We’ve covered this extensively in all areas of this RFP Response. It has been the source of all realized economic value generation since 1776. However, software disables this natural development process of “gap-filling” when it has no capacity for change, and the organization has a vested interest in the status quo. Producers have relied on “cost cutting” in field operations to generate value for decades and have nothing to show for it but a fundamentally destroyed service industry. Specialization & the division of labor in terms of the development of our user community and their service providers will continue to be a priority. And they will introduce the same understanding throughout the greater oil & gas economy.

Thinking

The contrast between “doing” and “thinking” may grow more significant as we proceed through the 21st century. Writing is thinking. In today's world, organizations' ability to provide basic functions, such as oil & gas, is at risk. More may not resolve the issue. Getting ahead of the game may be a thing of the past and a luxury we can tell our grandchildren about. The environment we're working in today requires testing hypotheses based on various scenarios of possible outcomes. Determine what is right based on what generates value for the firm. An environment where what an individual gets out of it depends on their generated value.

OCI Request For Proposal, Part IX

 Competitive Advantages

We turn now to the three distinct competitive advantages of the People, Ideas & Objects offering. These consist of our user community, including their service provider organizations, research and Intellectual Property. These combine to form a sub-industry we’ll create between technology providers such as Oracle, oil & gas and the service industries. Each element of our competitive advantage contributes to our Cloud Administration & Accounting for Oil & Gas software and services. 

People, Ideas & Objects

In order to match our competitive strengths, we selected our user community, intellectual property, and research as our competitive advantages. 

Our User Community 

Quality in a product or service, like profitability, is difficult to achieve. Implementing a Tier 1 ERP system for an industry on a revolutionary, disintermediated basis is ambitious. A rebuilding of a dynamic, innovative, accountable and profitable North American, energy independent oil & gas industry is needed for the long term. We’re not trying to tear down the industry to rebuild it. This destruction has been done by the officers and directors of the producer firms. Delivering the Preliminary Specification to all producer classifications brings additional challenges not previously attempted in any industry. Now add quality. Can this be done? Not on the basis of the industry's current point of view, attitude or method of operation. Our failure rate would be 100% due to cultural inertia against our success. A 100% exhaustion rate and a high probability of systemic mental health difficulties for all concerned. It would leave the producers the viable scapegoat that they’re the only solution, all else failed. People, Ideas & Objects and our user community must secure our budget to ensure our independence from producers. Otherwise we’ll become producers “blind sleepwalking agents of whomever feeds us” to demonstrate that we failed and theirs was the only solution and opportunity.

The point needs to be made that oil & gas producers haven't satisfied today’s market needs. As with the Soviet Union's inability to feed its people, organizations eventually exhaust their ability to meet the demands of what they’re established for. The structured hierarchy can no longer operate effectively or efficiently enough to meet the needs of any aspect of the greater oil & gas economy. The producers, service industry, and critical resources of the financial, operational and political frameworks are all structurally and financially depleted. This is due to long term unaddressed issues created by producers' officers and directors. Our proposed method of rebuilding the greater oil & gas economy, brick by brick and stick by stick, is therefore the constructive approach. 

It is here that we can look to our user community for leadership in the business aspects of this rebuilding. People, Ideas & Objects have provided our user community with the power and control over this rebuilding process through our user community vision. There we find three distinct policies that enable them to instill the quality and leadership such an initiative requires. 

• Only our user community members are authorized to prepare derivative works to the Intellectual Property of People, Ideas & Objects. 
• Our development team is authorized to look only to our user community for their direction and needs. They are operating at the behest of our user community and are otherwise deaf, dumb and blind to all others. 
• Our user community has direct influence over their budgets.

Therefore if anyone from industry needs or desires to have any aspect of the Preliminary Specification dealt with at any time. They will only need to speak with the appropriate member of our user community responsible for that area. Providing a resource for all those in the industry to have input and a say in what they need to do their jobs. A permanent resource, along with our software development capability to provide the changes and enhancements producers require and desire. This will enable producers to continue to achieve the dynamic, innovative, accountable and profitable objectives their investors set for the oil & gas producers.

I’m only briefly introducing our user community's competitive advantages. There is a section directly below detailing and describing their specific attributes and how they’re applied.

Intellectual Property

We’ve covered this area fairly extensively in the Organizational Construct section of this RFP document. Intellectual Property forms the basis of our strategic and operational approach to the industry. We do not see Intellectual Property being as much of a legal construct as it is the political and cultural foundation of how the western economy and its civilization now operate. With software dominating industries, or having the potential to do so, the underlying value and protection of this intangible asset class is held in the Intellectual Property that software is derived from. This western cultural economy involves law-abiding citizens who uphold software companies' rights. This is especially the case with software companies where other firms' Intellectual Property is carefully managed and only used in contractual agreements. Intellectual Property is best described in what we describe… 

It's no longer enough to own an oil & gas asset. It's also necessary to have access to ERP software that makes the oil & gas asset profitable.

While we operated in the 1990s this was not the case. Intellectual Property was more like the wild west in terms of whoever had the largest arsenal had the largest opportunity. Intellectual Property development and respect in the 21st century, particularly in the software industry, has been necessary and dramatic. Innovation, intellectual development, and leveraging of our economy have been needed to provide the much-needed leverage to our economy. Much as mechanical leverage benefited society in the 20th century. 

We will continue to apply our Intellectual Property in the manner we have. It is our desire and we are pursuing the opportunity to resolve the issues in oil & gas as an operational software and service related sub-industry through our Cloud Administration & Accounting for Oil & Gas. North American producers' actions are highly consequential. We see the industry making a decided move towards SAP’s ERP offering as it is the only other Tier 1 ERP offering on the market. Producers may do so to satisfy their investors. If this scenario continues, this would preclude People, Ideas, & Objects from remaining an operational software organization for many years. 

Research

Our capacity and capabilities in the area of research into oil & gas administration & accounting are of value to the industry. The issues we identified in our May 2004 publication and resolved in the Preliminary Specification in August 2012 have now become the primary concerns of the industry. As we suspected and were concerned at that time, if the issues the industry faced remained unaddressed, they would lead to an existential crisis for the industry. With devastating fallout consequences for society due to the mechanical leverage of up to 25,000 man hours derived from each barrel of oil. Officers and directors run their firms in their own interests. Having no regard for their fiduciary responsibilities and the broader responsibility of running a profitable company. 

It should be noted that we were ridiculed by these individuals who said profits don’t matter. Profits always matter. Running a profitable business is fundamentally different from taking investors' money and spending it. It is difficult and challenging. It takes skill, courage and fortitude to achieve, persevere and lead. None of the characteristics or culture of what we’ve seen from those who claim profits don't matter. They’d “muddle through.”

I’ll also note that today the consequences of running a profitable operation are not within the domain of understanding or the culture of the oil & gas industry. The litany of excuses, blaming, viable scapegoats, “muddle through,” “put cash in the ground,” and other nonsense permeates the culture. A culture that fails to meet market expectations of its needs. Maybe not today, Europe is our warning, but we’re headed in that direction. Running a profitable operation is the only unlimited source of capital. Limited only by one's imagination which answers why we’re in this existential crisis. If the organization pursued profitability everywhere and always, they would meet investor demands and have the financial resources to fulfill market opportunities. If the industry wants to do this or that, if this is the direction they want to move to then a profitable operation will provide them with the opportunity to pursue those areas. If the proposed investments fail, they will suffer severe consequences of diminished profitability and difficulty moving forward with their next initiative. Such are profitability perils. There are far more capital resources available to those running a truly profitable operation than any investor class. This fact is either lost in the cultural malaise, conveniently ignored through bureaucrat mismanagement or they're just busy coming up with more excuses. 

My frustration is that this societal mess we find ourselves in was unnecessary and avoidable through the adoption of the Preliminary Specification in August 2012. People, Ideas & Objects provide a mid- to long-term solution to marketplace problems. Those that had the responsibility and authority to act and deal with this appropriately did nothing but fight this initiative with underhanded, cheap tactics. It is not that they did not fully comprehend the issue or the solution that People, Ideas & Objects promote. If they didn’t understand the issue or our solution why would they have undertaken these tactics towards People, Ideas & Objects? 

Based on our research today, we found the following. Society lacks time in this fast-paced world. To satisfy the personal concerns of the chosen few officers and directors at the cost of their fiduciary duties. This is done by fulfilling one's roles, responsibilities, authority and accountability. People, Ideas & Objects' concern is that we're well behind on the time necessary to turn this around. Seven years before we can do so. Which may be more time than our issues allow. And in that seven year time frame the development and implementation of the Preliminary Specification is a small fraction of the total work and effort needed across the entire North American oil & gas industry.

OCI Request for Proposal, Part VIII

 Information Technology

Our next Organizational Construct that defines how oil & gas producers operate in the Preliminary Specification of People, Ideas & Objects, our user community and their service provider organizations is the Information Technology environment. In terms of increased productivity, performance improvements, and leveraging a firm's business model, these have had a revolutionary impact on business. The promise of additional performance and productivity enhancements is available as these technologies mature and become more integrated. When applied to other Organizational Constructs such as specialization and the division of labor and Professor Paul Romer's shared or non-rival costs. Extensive leverage between the three can generate value for oil & gas.

The key technology today and the one we leverage throughout oil & gas administration and accounting is cloud technologies. Introducing a shared and shareable cost model for its users. This is how People, Ideas & Objects perceive Information Technology affecting producer firms' performance. With cloud computing, instead of incurring large capital, infrastructure and operating costs to acquire IT capabilities, users can access these needs for a variable monthly operating cost. This is a variable cost based on usage. The shared and shareable cost model doesn't end there. Producer users are supplied with the latest applications and technology service and support is enhanced. This is done through an enhanced and constantly evolving definition of specialization and division of labor. Cloud computing is expanding throughout the business community due to IT resources access. One that provides a lower overall cost, yet provides the full value of IT that would otherwise demand that each company invest in unique capacities and capabilities outside of their competitive advantages, and consume significant corporate resources and focus to build, achieve and maintain. 

If we look at the difficulties of “what, how and why” producers are consistently unprofitable. We see high overhead costs incurred within each producer that are the secondary cause of a systemic lack of corporate profitability. Building the necessary administrative & accounting capacities and capabilities, particularly in this regulatory environment, is costly to achieve and maintain. These costs are also incurred individually by each and every producer on an independent and isolated, or unshared and unshareable basis. These are not core strategic competitive advantages. We are faced with the same issues that earth science & engineering resources are faced with as a result of their advancement of specialization and the division of labor. The need for resources to cover each and every aspect of corporate administrative and accounting demands has or will soon exceed the commercial capacity of all producer firms. I would say it happened decades ago. People, Ideas & Objects' multi trillion dollar value proposition should show that the need for attention in the area of managing the business more effectively and efficiently is necessary, desirable, achievable and tangibly valuable. A shared and shareable business model through our Cloud Administration & Accounting for Oil & Gas will offer variable administrative and accounting state of the art capabilities and capacities. Providing lower costs from many distinct perspectives unavailable in the current business model. From an overall industry and individual producer perspective, a lower cost is due to the shared and shareable nature of these services. Conversion of fixed overhead to variable overhead, variable based on profitable production. Specialization and the division of labor increase the producer and industry throughput from the same resource base. These are just a few of the methods we use to provide oil & gas producers with the most profitable means of oil & gas operations. 

When we listen to customers who have implemented Oracle Cloud ERP applications within their organizations there are a number of consistent messages coming through that I find interesting. The first change is that their roles as senior management and officers change in response to the quarterly releases and upgrades of Oracle Cloud ERP. These now number around 200 additions per quarter. When the Preliminary Specification becomes operational, additional changes will be added to these Oracle changes.

People, Ideas & Objects would ask, based on the selection of which ERP solution is determined by producers' Board of Directors, how many of these quarterly changes will be the concern of producers' senior management and officers, or be handled on their behalf by our user community and their service provider organizations. The majority of these changes would be handled by our user community under the People, Ideas & Objects et al model. Service providers would implement, maintain and support them. With input from the producers funneled through to our user community, consolidated and optimized from the producers' point of view. This is a task that will be shared and shareable among producers senior management and officers. Ensuring effective and efficient producer process management, both from a time, effort and cost perspective. Which brings up a pertinent question. Who can effect change in this ERP ecosystem as proposed by People, Ideas & Objects et al? It is the greater oil & gas economy and most specifically our user community members that provide producers with the means to change the software and services. Our user community members will look for input on any and all information provided by the oil & gas industry. Our developers are deaf, dumb and blind to everyone except our user community members. Our user community members are the only ones licensed to develop derivative works from the Preliminary Specifications Intellectual Property.

The traditional approach to having an ERP system that caters to a specific industry is to customize the Tier 1 vendor's application to do so. Oracle frowns upon this and advises against it. People, Ideas & Objects have adopted Oracle’s policy on our user community and service provider licenses. Stating that application customizations are to be avoided at all costs. This certainly seems at odds with what we're doing. The point is subtle and distinct to Oracle Fusion Applications. Other than Workday they are the most recently developed applications for all ERP systems. Oracle Fusion Applications were the first to be written in the Java Programming Language which introduced the full object model to those applications. Providing inheritance, encapsulation and polymorphism on top of Oracle Autonomous Database as People, Ideas & Objects development environment. (Note: we are database developers.) Oracle Fusion Applications are supported by Oracle Fusion Middleware which is an enhanced Java Server with expanded functions and process management. It is generic and developed by Oracle Fusion developers. It is also the base of any "additions" written to provide industry specific application capabilities to Oracle Fusion Applications. Enabling People, Ideas & Objects to embed oil & gas industry features directly into Oracle Fusion Applications through Oracle Fusion Middleware as “additions.” 

This is opposed to industry customizations which traditionally sit on top of ERP applications. Oracle’s method avoids a key difficulty in an environment where users' needs are dynamic and changing. Any system changes at the Oracle Cloud ERP, or Fusion Application ERP level will not break customizations that sit on top of the Preliminary Specification, as there will be nothing there. Oracle quarterly releases will be embedded with "additions" from People, Ideas & Objects' own scheduled releases. Therefore, as they too are Java object-based, independently updated with their own enhanced and unique features, Java’s encapsulation leaves them unaffected by Oracle changes. Yet, I am satisfied that our application code base is separate and distinct from Oracle Fusion Middleware and Fusion Application code. Maintaining full control over our Intellectual Property that drives People, Ideas & Objects' competitive advantage. Oracle Fusion Applications and Middleware will soon have another unique feature. A feature called "Fusion - Zero Down Time.” Seems self explanatory. 

This next point is one of contention between the IT community and the business community. It is a method of implementation that is becoming increasingly the norm and the more successful method of ERP implementation. It is known as “rip and replace.” I subscribe to it for the time element of the roll out of the Preliminary Specification when completed in its commercial release. Please note it is the domain of our user community and service providers who will plan and conduct the implementations for each of their individual processes. Of course, this includes the producer firms. At this time rip and replace is the most appropriate implementation methodology for our rebuilding process.

We have implemented a policy not to map, provide product features, services or implementation for producers who have selected SAP in the market. Implementation of the Preliminary Specification will be conducted as written and prepared by our user community. There will be no shortcuts. Our competitive advantage relies heavily on Intellectual Property for People, Ideas, & Objects. Respecting other firms' Intellectual Property is necessary in the 21st century. We will also avoid those individuals who were involved in prior SAP implementations and or developments in prior work engagements. The latter being a minor change in our policies as we do not accept those Integrators who were “blind sleepwalking agents of whomever fed them.” Firms such as the major accounting firms, Accenture, Cognizant and the like. We are interested in solving oil & gas related issues, not arguing about cultural differences between the Preliminary Specification and the way it may have been done before. As we hold the officers and directors accountable for the damage and destruction caused to the North American producer population and service industry. We also see these groups share minor responsibilities for blindly doing what they were told. The people we're interested in participating in our user community are those who choose to work and have extensive experience in oil and gas administration & accounting. Can evaluate right from wrong and know intuitively the appropriate course of action. With the powerful tools provided in our user community vision, they can make the necessary changes.

Time is the demand that should focus producers on dealing with their shareholders' issues of accounting integrity, accountability, Tier 1 ERP systems use and the melting down of their financial position due to absolutely no capital structure. Time is People, Ideas & Objects' primary concern across North American producer markets. Therefore the need to focus the energies of the industry on this task will need to be a priority. Both from a software development and implementation perspective. Otherwise the industry will melt down and oil & gas will have failed in its primary role of providing affordable energy to the North American consumer. North Americans will become dependent on foreign energy sources to meet consumers' needs. And as we’ve noted, the most powerful economy in the world is also the largest energy consumer. These foreign sources of oil may hinder our ability to fulfill our traditional economic role. 

People, Ideas & Objects have chosen to pursue our user community, research and Intellectual Property as the three areas of focus for our competitive advantages. Note that none of these involve developing software code. We’ll own and provide the software code derivative of the Preliminary Specification and our Intellectual Property. We have contracted all of our software development to Oracle Corporation. Their services division is well versed in ERP products and ready and capable. We believe we would need to dedicate at least a half decade to assembling a team large enough to accomplish this project. We would then need to spend an unknown amount of effort to turn them into a functioning capable team competent to produce the quality of software necessary. Instead, we've been working on our user community development since the first quarter of 2014. A task we’ve prioritized since then. One that differentiates our product offering by quality. Time is not a commodity available to producers at this stage. The time we’ve invested in developing our Intellectual Property and most importantly our user community will offset industry needs tremendously. Contracting with Oracle in this manner leverages our time advantage. Focusing on the IP and user community aspects of this project will be a better use of our time, resources and skills. It is also where we see value in the software business. It is consistent with our belief that specialization and the division of labor will need to be applied to all aspects of the economy. By doing so we can do a better, more productive job.

If directors believe these ERP developments can be done within their organization, why haven’t they happened? Our scope of application development in the Preliminary Specification would be considered equal to what each and every producer would need to undertake. This is if they choose to continue going it alone in the unshared cost model. The main difference is scale. To acquire just the depth of understanding and detail necessary of the Oracle ERP Cloud offerings would require the same costs replicated across the industry in each and every one of the producer firms, assuming producers had a timely, oil & gas, workable, profitable business model. I could read things differently in terms of producer investors and bankers' timing and expectations. 2015 was when investors expressed their discontent with the industry at large. They identified lack of performance, accountability and transparency as issues at that time. I would never have assumed that a decade of inaction was a tolerable amount of time.

I should state here that the bulk of this RFP is a derivative of the one I wrote specifically “To the Board of Directors, Our RFP Response…” in late June and July of 2021. I raise this point as after 18 years this blog receives a high distribution across the North American producer population. Yet not one phone call or any other method of communication was used by any producer at that time to contact People, Ideas & Objects. Producers continue to declare us persona non grata.

I personally have worked on ERP systems in the oil and gas industry for thirty two years. Our first attempt in 1991 failed in 1997. This initiative began in 2003 and has been unsuccessful to date. There are few ERP providers available today and nothing else specifically designed for oil & gas from a Tier 1 provider. The benefit of this latest initiative is that copyright law is now upheld in all marketplaces and I’ve secured what I've developed. My point is to suggest that oil & gas companies have mistreated oil & gas ERP systems vendors in the three decades I’ve been involved. Much as it has mistreated the service industry, its investors and bankers. The need to financially support these initiatives from oil & gas sales revenues is now a result of this mistreatment. Producers must realize this reality. Just as there are no oil & gas producer investors, there are no investors interested in anything associated with oil & gas ERP systems. This is until these producer issues are resolved. 

To the point of Intellectual Property. It is the basis of all software. No software vendor will violate another's Intellectual Property. SAP or any other reputable company would adhere to those principles as that is the basis of their firm's value. It is detrimental to violate others' IP. Therefore the producers will be left to develop their own systems and may, or may not adhere to respecting the Preliminary Specification and People, Ideas & Objects Intellectual Property. That would be their choice and we would transition from an operational software company to one where our IP is respected. On the other hand, the producers could come up with their own methods of ERP software development and fight it out among themselves as to who owns what. This is after the money necessary to fund all those developments has been spent. The IT resources consumed in the process are sent on to their next industry with all the other service industry resources to find gainful employment elsewhere. It should be noted, as I have said, that accounting and administration are not distinct competitive advantages for producer firms. 

Although I feel highly productive today, that will not be the case in thirty years. Who’s coming into the field with the scope and scale of opportunities presented in the marketplace that these producer bureaucrats have created? What Intellectual Property will those that enter in thirty years bring, and conversely after consideration of People, Ideas & Objects et al, what IP can they bring? Producers may be surprised to learn that there are other dynamic and exciting industries right now. I can conclude that I am stuck with the consequences of my choices and can live without regrets about what I’ve done. I doubt those that follow me will feel the same after they’ve put in the three or more decades of effort necessary to generate that first penny of revenue from oil & gas producers. And that assumes People, Ideas & Objects reach that point. Producers today have no one to turn to for funding as its proven directors didn't care about their organization's profitability, or even oil & gas? It's clean energy!

Throughout our writings we have alleged that producers' accounting over the past four decades, and particularly the profitability reported, is specious. This is due to the phenomenon of “building balance sheets,” “putting cash in the ground,” overhead and other expenses that are not handled appropriately. Depleting cash chronically and raising serious governance issues that resonate throughout the investment community and elsewhere. This accounting allegation of ours is that the specious accounting methods conducted throughout the industry have been obscured through poor ERP systems that were deliberately created through producers' bureaucratic mismanagement. Governance over the quality of accounting and management systems has become an issue at the board of directors in recent years. Due to a direct request from their investment community. There are no tier 1 ERP systems providers selling oil & gas systems today and more importantly, outside of People, Ideas & Objects et al no interest. SAP sells to producers, but it is inadequate for oil & gas. How many producer issues are attributed to poor SAP systems? It has not been the case that producers have not been able to participate in the development of People, Ideas & Objects. 

A purpose-built oil & gas ERP system will need to be developed on a Tier one systems vendor platform to implement a governance model that satisfies the investment community. People, Ideas & Objects use Oracle Cloud ERP. The market leader in ERP systems according to Gartner. Based on our Preliminary Specification, our user community, and their service provider organizations we’ll provide a comprehensive and complete oil & gas solution in our Cloud Administration & Accounting for Oil & Gas software and service offering. One that provides a comprehensive value proposition in reducing producer overhead costs. Turning what remains of those costs into variable costs based on profitable production.