Research & Capabilities
The Research & Capabilities module of the Preliminary Specification captures and documents producer firms' explicit knowledge of their earth science & engineering capabilities and capacities. Their development and control over the innovative process, of which the Preliminary Specification has two primary innovative processes being managed. With deep connections to the service industry, collaborative efforts throughout the industry and its tertiary industries advance the science and technology of the oil & gas business iteratively. The interface between the Research & Capabilities and Resource Marketplace modules establishes these connections to fulfill the various roles and responsibilities for the completion of any initiative. As a science-based industry whose demands will become ever more complex and difficult, it will be the innovative advancement of that science and its interplay between the industries innovative technological development that in turn push the science forward.
Control of this innovation process is a necessity as the tendency is to disallow innovation within the firm to ensure it does not become a free for all. Where experiments are tried by various different groups that may succeed or not, only to have them tried again and again each and every year. Highly wasteful, unproductive, un-innovative and costly undertaking. The ability to fully develop, test and deploy on a sample basis the innovations that are developed, to have those well documented in the Research & Capabilities module in order for people to see what the state of affairs are in terms of the innovations development and its pathways taken, as innovation is defined by its process of discovery and failure. To have explicit knowledge captured and where to turn to acquire the tacit knowledge to implement the innovation provides producers with the ability to stop wasteful “innovative approaches” being undertaken in North America today. What we’ve learned is that innovation is a defined process that can be replicated throughout the organization. It must be controlled and managed to ensure costs are not unnecessarily high. Innovation results can be achieved through the sharing of ideas through a science-based business that collaborates to move its science forward.
Explicit knowledge should be captured as robustly as possible. Providing information and knowledge about who and where tacit knowledge can be deployed. Acquisition of Intellectual Property through the Research & Capabilities module is an opportunity that must also be undertaken. People, Ideas & Objects Seven Organizational Constructs have Intellectual Property as one of the foundations of how the industry moves forward innovatively and otherwise. Without Intellectual Property being appropriately managed, no one can persist in bringing about new ideas when they take so much time and effort and are subject to so much risk of poaching in the marketplace. Conversely producers and Joint Operating Committees can mitigate the high costs of innovations through Intellectual Property's assertion that no derivative works are authorized without a license. Therefore unnecessary duplication of effort is eliminated in the marketplace. Yet at the same time the ideas are known and others can learn from and upon them.
It is here within the Research & Capabilities and Knowledge & Learning modules that the producer or Joint Operating Committee can source and organize the team they need for the task at hand. Using the search facilities within their own firm, the Joint Operating Committee, the firms they’re associated with or the larger market of producers and consulting firms. Producers will be able to acquire the resources they need to ensure the task is completed through the Preliminary Specifications Work Order. With the Preliminary Specification we are using specialization and the division of labor to resolve the current and anticipated resource shortfall in engineering and geology. However, we believe that with this diversity of resources, the demands from enhanced specialization would put the producer firm beyond the point of commercially viable operations if they attempted to maintain these specialized resources internally. We have therefore eliminated the "Operator" designation of one producer within a Joint Operating Committee. This is because providing all of these specialized resources to the Joint Operating Committee is unworkable. And therefore People, Ideas & Objects established the “pooling concept” where all participants in the Joint Operating Committee commit their unique, specialized resources to the property and any shortfall is filled by the market of consulting firms or other producers. Establishing a second source of revenue for each producer firm that generates revenue to offset the increased costs of maintaining these hyper specialized engineering and earth science capacities and capabilities. Management of this entire process is the role of the Work Order of People, Ideas & Objects.
Knowledge & Learning
We should begin the discussion of the Knowledge & Learning module with an appropriate quote from Professor Richard N. Langlois in “Transaction Cost Economics in Real Time.”
In this sense, the ability of a large organization to coordinate the implementation of an innovation, which is clearly an advantage in some situations, may be a disadvantage in other ways. Coordination means getting everyone on the same wavelength. But the variation that drives an evolutionary learning system depends on people being on different wavelengths - it depends, in effect, on out-breeding. This is something much more difficult to achieve in a large organization than in a disintegrated system. Indeed, as Cohen and Levinthal (1990a, p. 132) point out, an organization experiencing rapid change ought in effect to emulate a market in its ability to expose to the environment a broad range of knowledge gathering 'receptors'. p. 120.
In terms of Organizational Constructs the Preliminary Specifications Knowledge & Learning module relies heavily on the Joint Operating Committee, specialization and the division of labor, Intellectual Property, Innovation and Markets. Five of the seven show a high dependence on cultural influences. This tells us that the implementation of this module will be difficult as cultural forces will resist these changes. To which we'll apply our standard approach of ignoring them as we’re rebuilding the industry. And secondly the module form will have strong cultural support once what exists is forcefully ignored.
While the Research & Capabilities module is a producer-facing module that captures and documents the distinct competitive advantages of the firm's earth science & engineering capacities and capabilities. The Knowledge & Learning module is a Joint Operating Committee module designed to meet specific property needs.
People, Ideas & Objects use specialization and the division of labor throughout the Preliminary Specification as an Organizational Construct. This is to focus the producer and Joint Operating Committees organizations on what they do best. These specializations are broad and diverse and include allowing computers to store and process information while allowing humans to do what humans do best. This is comprehensive and not just shuffling data about. We have specialized the process of innovation development within the producer organization to ensure they’re constrained, focused and controlled by results and deliverables. The Knowledge & Learning module focuses on the Joint Operating Committees ability to take the producer firms that are working interest owners of that property. And select from each firm what specific capabilities and innovations are available. Select what capacities are needed by that property and for what role they’re required. Organize and deploy them to ensure field objectives are achieved.
It should be noted here that the information, the capabilities that populate the Knowledge & Learning module for each Joint Operating Committee. Are not the full complement of what the producer has developed in terms of capabilities. Each of the producers' capabilities when developed and made available will be selected or tagged with the type of capability and its application. Therefore a capability involved in multilateral fracing will not be populated into a producing zone, operation type or region to the Knowledge & Learning module of a Joint Operating Committee without those characteristics. It will only receive the capabilities of those producers for the purpose of the project.
It is this process of specialization in earth science & engineering resources that will cause producers to incur uncommercial operations under current management. Having the full breadth of skills in house will demand too extensive infrastructure and resource uptake for producers to remain viable. Particularly in the era of looming constraints on these resources. People, Ideas & Objects have therefore eliminated the “operator” designation and created the “pooling concept" to resolve these resource and specialization issues. This reorganization is necessary as the demand for these resources is subject to many changes outside the producers' control. The current brain trust is retiring and the university intake is not enough to replace them. Higher throughput is needed for energy independence and the demand for incremental earth science and engineering effort increases with each barrel of oil produced. Methods are necessary to deal with this issue. People, Ideas & Objects provides the only viable alternative to elevate an organization's throughput through specialization and division of labor.
The question then becomes what amount is charged to the Joint Operating Committee for hourly resource charges through our Work Order system? What we have developed is a unique factor that represents the value of each producer's performance, capability, and value. This is in terms of their earth science & engineering capacities and capabilities. Revenue Per Employee will be used to determine the charge out rate of any of these individuals who will work at a Joint Operating Committee. This will be done through the Work Order system. A senior engineer will be charged at x% and a junior engineer will be charged at y% of Revenue Per Employee. The diversity in calculating Revenue Per Employee numbers throughout the North American producer population provides remarkable variance. It is the only factor that differentiates the producer's quality in terms of performance. Any overt attempt to increase the producers Revenue Per Employee factor would only create incremental shareholder value and spark competitiveness within the industry to increase this factor. The initial limited production of start-ups and small producers would require a floor price for these resources.
Preparation and development of the producer's specific capabilities, and most specifically their innovations. Are processes controlled and managed within the Research & Capabilities module. Seeking to reduce innovation costs by controlling, testing and developing them before deployment. And to ensure that the producer organization is not consumed by too many similar innovations repeated throughout their organization. Once the innovative procedures are documented in the Research & Capabilities and are ready to be deployed. It is through their availability to the Joint Operating Committees that each pertinent property working interest producer can access those capabilities. They can also select them to be implemented. It is the Knowledge & Learning module that is the method that innovations, capacities and capabilities are deployed within the property. Using the fully tested and documented processes which each Joint Operating Committee producer has established and made available for use.
What may appear to be freewheeling markets to some of the existing officers and directors of the producers today is nothing more than the difference between using the market to provide for what the producers need. As opposed to what is tightly controlled within producer organizations under the “operator” designation today. Freewheeling markets may be an apt description of innovative developments as they are perceived to be chaotic. However they should not be considered uncontrolled in the Preliminary Specification. I would suggest that in the Knowledge & Learning module the ability to maintain high levels of operational control is available through these interfaces. In the Operations Management module we see many aspects of operations that are not currently provided. The data and information from the financial, operational and technical domains have all been engineered during the People, Ideas & Objects et al software development process. This is to ensure their high levels of integrity and accuracy. The level of documentation of capacities and capabilities is done for a variety of different reasons and the purposes are comprehensive. The ability to deploy producer resources through standardized and agreed methods of what the program will consist of. This is once selection in the Knowledge & Learning module has been made. And lastly, control of the operation through Work Orders, AFE's, Job Orders and other means. This will appear messy at times, however reliance on the process will ensure the outcome.
People, Ideas & Objects believe that higher commodity prices are a reallocation of capital necessary to fund innovations and capital deployment. This is for that very long list of capital projects in North America. “Muddle through” doesn’t appear to have identified the problem and the firm's officers and directors continue to sail through clear blue waters, or so it seems. Conversely the Preliminary Specifications price maker strategy is designed to ensure that the actual, factual costs of oil & gas exploration and production are recorded within each Joint Operating Committee to ensure that they remain financially successful at all times. If they are no longer profitable, these properties are shut-in so that they’ll generate a null operation, no profit but also no loss. At that point the Joint Operating Committee can turn to the Knowledge & Learning module to determine what is the most effective course of action to remedy its lack of profitability, and return it to profitable production as soon as possible. In an environment of ever increasing costs the accuracy of actual, factual, standardized and objective accounting information will be critical.
A question I would ask at this point is who do we want to participate as partners in Joint Operating Committees? There has been an interesting trend in oil & gas renewal over the years. The 1970s and 1980s saw a landscape dominated by large corporations transition to independent and start-up producers become the dynamic growth arena in the 1990s. Today many of the producers from the 1980s and 1990s that set out as the independent producers movement in the oil & gas industry are no longer with us. The past few years have seen high levels of consolidation to survive oil & gas difficulties leaving even fewer producers than before. Consolidation has been highly beneficial for the clean energy industry but not much else. Now that officers and directors realize their misdirection into other industries is a mistake, will they ask for forgiveness? Will that allow us to trust them that much more? What we believe the Joint Operating Committees would best be represented by start-up and small producers. They are the ones that have driven the change in the industry and it is the change most needed today. Innovation demands that we expand the reserves base, increase revenues and reduce costs. What have we seen from the consolidated producers? Basically, they are misguided adventures and nothing more. People, Ideas & Objects Preliminary Specification uniquely caters to all sectors of the North American oil & gas producer population.
Conclusion to the Research & Capabilities, and Knowledge & Learning modules
These two unique modules are designed to deal with the distinct competitive advantage of the producer firms through what can only be seen as the most difficult and challenging period of oil & gas history that begins today through to 2050. The transition to profitability everywhere and always will be challenging when business discipline takes center stage in decision-making. And it will be there that better, actual, factual, standardized and objective information in terms of comprehensive financial statements and other information will be provided for each Joint Operating Committee by the Preliminary Specification enabling those decisions to be made through this Operations Management module. When there is little business information available, these resources resort to their own means of determining what the situation is. The status of the industry today is the consequence.
To suggest this occurred accidentally would be incorrect. There is no doubt in my mind that the lack of funding of even reasonable levels to ERP providers in oil & gas was deliberate. Self-serving officers and directors who choose not to answer for their actions. Discovered they were successfully able to attain their lofty objective through purposely inadequate ERP systems, disorganization, comprehensive unaccountability, their excuses, lies and viable scapegoats. When was the last time officers and directors took responsibility for any aspect of their authority or the business they’re responsible for? They’ll state that “oil & gas is such a complex industry,” hide the details, confuse the point and claim they don’t have the data, which they don’t. Excuses that become too convenient and easy when endlessly repeated.
In 2015 their investors said enough and ceased to fund the industry further. An industry that’s incapable of supporting itself through profitable operations. An industry where officers and directors are personally satisfied with what is generated in terms of cash flow from investors' prior investments, keeping them enthused for another year. They’ve lost common sense of what a business should do and how it should do it. Establishing corporate objectives such as “building balance sheets” and “putting cash in the ground” as reflections of how obscure and indecent their lunacy has become.
Nonetheless the industry is in a state where its issues throughout North America are serious and demand resolution. The seriousness of difficulties is not only the volume of issues, but their consequences. I’ll first quote Professor Richard Langlois’ paper “Transaction Cost Economics in Real Time”
F.A. Hayek (1945, p. 523) once wrote that 'economic problems arise always and only in consequence of change.' My argument is the flip-side: as change diminishes, economic problems recede. Specifically, as learning takes place within a stable environment, transaction costs diminish. As Carl Dahlman (1979) points out, all transaction costs are at base information costs. And, with time and learning, contracting parties gain information about one another's behavior. More importantly, the transacting parties will with time develop or hit upon institutional arrangements that mitigate the sources of transaction costs. p. 104.
The protracted oil & gas downturn, COVID and other concerns leave inappropriate staffing levels available in the industry.
The inventories of work-in-progress within the industry and producers are shallow and demand excess attention. Issues such as shales decline curve and the cannibalization of normal operations processes. What capacity is the industry capable of operating at?
Capacities and capabilities in the service industry are a severe detriment to the needs of the producers in the normal course of business. Service industry representatives are not motivated to rebuild the infrastructure producers destroyed during the past decades and most recently during the COVID epidemic.
The service industry will not rebuild itself only to be ruined again by producers. Their thinking is that if the producers had some skin in the game, they'd think twice about destroying that industry again. As a result, the producers can fix what they broke. Oil & gas producers are the primary industry and all others participate in secondary or tertiary industries.
Rebuilding, refurbishing, reclamation and infrastructure need to be undertaken on a scale never done before. Just to maintain current production levels. The status quo is unacceptable to the most powerful economy in the world. If we become dependent on foreign sources of energy we may no longer be able to claim the title of most powerful economy.
The serious nature of the consequences of continued inaction on behalf of officers and directors will have a severe impact on all those involved in North American society. Officers and directors are fine and thank you for asking. They are oblivious, uncaring and fundamentally inactive. “Mudding through” and “doing nothing” are the only strategies and tactics I've seen from this bunch. They can sit high above and criticize the Preliminary Specification because it didn’t have that feature or they didn’t like that one. They can wait for exactly what they're thinking when they’re “muddling through” certain some will provide it someday.
However we are undertaking a comprehensive rebuild on the basis of the Preliminary Specification vision. We will not compromise with them or deal with them in any detail. We’ll ignore their cultural influences and establish the performance-based culture we seek. A comprehensive rebuild at this time will be less onerous, and it will take far less time than dealing with their compromises and culture. And our user community will be far more successful in building from the ground up to break away from the losing traditions of today's oil & gas producer. What of anything that is occurring today in oil & gas is worthwhile?
I’ll reiterate that the Intellectual Property that underlies the Preliminary Specification is comprehensive. Any attempt by producers, officers and directors to circumvent our IP will be dealt with. It is unlicensed and unauthorized, and they are warned not to use it. Other software companies whose revenues depend on their Intellectual Property respect other software vendors' Intellectual Property. Therefore we feel the appropriate level of assurance is that none of our IP will be used by them. The implications of this are broad and consequential to the producer firms. They are therefore unable to breach what we have set out in any attempt to establish alternative ERP systems. As indicated earlier in this conclusion to the Research & Capabilities and Knowledge & Learning modules. Producer officers and directors are probably satisfied with that as it reinforces their method of operation permanently. Or until someone decides to build the Preliminary Specification under our Profitable Production Rights initiative.
Finishing off the Research & Capabilities and Knowledge & Learning modules we have a quotation from Professor Richard Langlois that builds off of Harvard Professor Carliss Baldwin’s “Knowledge begets Capabilities, and Capabilities beget Action.” There is the quotation from Professor Richardson that capabilities are the “Knowledge, Experience and Skills” (1972, p. 888) to which we at People, Ideas & Objects have added “Ideas.” And this next quote from Professor Langlois helps to bring the clarity we need. From Professors Richard N. Langlois and Paul L. Robertson "Firms, Markets and Economic Change: A Dynamic Theory of Business Institutions."
In a metaphoric sense, at least, the capabilities or the organization are more than the sum (whatever that means) of the 'skill' of the individuals in the organization. In addition to the ‘skill’ of the firm's physical capital, there is also the matter of organization. How the firm is organized - how the routines of the humans and machines are linked together - is also part of a firm's capabilities. Indeed, 'skills, organization, and technology are intimately intertwined in a functioning routine, and it is difficult to say exactly where one aspect ends and another begins' (Nelson and Winter, 1982, p. 104). p. 106.
