Change, Part XI - Where’s the Value

When establishing a business model, start-up and small oil and gas producers should examine the industry to identify areas where value is being overlooked, wasted, or unrealized. This evaluation should encompass the entire exploration-to-production process, including product distribution and sales. Retaining control over product sales to the ultimate consumer can yield the most significant value enhancement. Although challenging, this approach has been successfully demonstrated by Venture Global, a start-up that achieved substantial returns.

Producers should develop business models that extend beyond mere drilling and production. While reserves must be valued, this is contingent upon their profitable extraction. Unprofitable operations can be restructured to enhance reserve valuations. Business challenges should be addressed through engineering solutions. The current focus on increasing oil and gas production is not the primary concern; instead, prospective start-up and small producers should anticipate future issues and position their firms accordingly. For instance, the management of solution gas represents a business problem amenable to engineering resolution. Excess natural gas enters the market as a byproduct of oil production, often sold at suboptimal prices.

Producers appear to adopt a policy of immediate concession regarding associated, solution, or casinghead gas, viewing it as an unavoidable constraint. However, no problem is inherently insolvable. The entity that resolves this issue will generate substantial value by restoring natural gas pricing to its heating value equivalent of 6:1 relative to oil. This challenge has contributed to the industry’s estimated $4.7 trillion in natural gas revenue losses this century. Resolving it could form the foundation of a robust business model and enterprise.

Two years ago, People, Ideas & Objects highlighted the leakage of natural gas value from North America due to producers’ failure to maintain title to the product through to the end user, resulting in billions of dollars in annual revenue losses. Fortunately now, companies such as EQT and Conoco have begun addressing this by establishing contractual arrangements for free-on-board delivery to destinations, thereby capturing the full value of their gas production when operations begin in 2029, 2030 and later. 

The oil and gas sector has evolved beyond a simple drill-and-produce paradigm. A pressing concern is the impending disruption from Information Technology (IT) and Artificial Intelligence (AI) infrastructure, which threatens to overwhelm unprepared entities in the next two to three years. The potential damage exceeds the value overlooked in areas such as liquefied natural gas (LNG). Impacts will be widespread and subtle, with firms often unaware until value is irretrievably lost. IT and AI represent direct assaults on consolidated, monolithic organizations, which must also defend vulnerable flanks. The industry as a whole remains highly susceptible. Consolidated producers may attempt to divest underperforming assets to others capable of implementing solutions they themselves could not pursue.

While this may be perceived as a critique from People, Ideas & Objects directed at consolidated producers, it underscores a consistent emphasis on value and profitability. For new start-up and small producers led by engineers and geologists, the insights in these paragraphs should inspire an entrepreneurial initiative.

A viable strategy aligns with the framework outlined in the Preliminary Specification. Recognizing the increasing demand for engineering and geological expertise per barrel of oil and gas produced, the industry must expand its resource base. Decades of retirements and inadequate recruitment have constrained available talent. People, Ideas & Objects propose addressing this through specialization and the division of labor.

This approach will materially enhance the productivity of these resources, sufficiently resolving the shortage. Specialization and the division of labor have been the primary mechanisms for value generation since 1776. In contemporary organizations, which are defined and supported by software—such as the People, Ideas & Objects Preliminary Specification—this process is essential. Please review our Work Order to understand how new producers can establish and generate secondary revenue streams. Initiating expansions in division of labor and specialization, based on unique intellectual property, will serve as a starting point.

The process of specialization and division of labor is fundamentally straightforward, driving productivity by addressing unmet needs. Historically incidental, it has become deliberate in the 21st century due to software dependency. It involves identifying and filling gaps where tasks are omitted but could add value. As suggested herein, focusing on value gaps—where producers have overlooked, unrealized, or wasted opportunities—offers significant potential for generating new value in the North American oil and gas industry. The advent of the AI and IT disruption will further disperse such value that is not captured. 

Experience indicates that consolidated producers are unlikely to act decisively to mitigate their loss or capture this value. Despite opportunities and options provided by People, Ideas & Objects, they have responded with criticism rather than collaboration. They have been afforded every possible avenue to safeguard their interests and have derived benefits from our efforts, yet they decline to act. If they choose to remain vulnerable, that responsibility rests with them.

We can all agree that: 

• a) It is irresponsible of consolidated producers to ignore these issues and those of their investors these past decades. Society may have been put at risk in terms of our continental energy independence and / or stability of supply. 

• b) It would be irresponsible of us to now just point fingers at consolidated producers. Especially when the situation would be so lucrative for us. No one will grant us that luxury in just a few short year’s time. 

An industry transition will not occur overnight when it is needed. We must be prepared and organized to pull the freight when and if we are asked to do so. If we are not asked to, then there will be no harm in us taking advantage of the consolidated producers' flat footedness and obstinate nature. 

Change, Part X - Reconstruction

 Two of People, Ideas & Objects papers published in 2025 provide a vision for how startup and small producers are able to be established and prosper in North American oil & gas. The two papers are:

Reconstructing Oil & Gas:

Enabling Engineers and Geologists 

to be 

This Century’s Pioneers and Lead the 

Industry's Future 

And 

Oil & gas Arbitrage: The Market

Finds a Way

Simply, large, consolidated and centralized producers much as all large organizations face internal performance challenges that may be existential. There’s no need to document the generic difficulties of large corporations. Oil & gas has its own incremental issues which we’ve documented at length and provide the Preliminary Specification as a solution to resolve. 

At the same time opportunities in the oil & gas market are abundant and available to those who can prove to the investment community a renewed commitment to profitability and accountability. The consolidated producers betrayed the trust of their investors, along with many others. After a decade they have not established any credibility around profitability. Investors have not participated in the industry for over a decade as a result. They want back in as they see the opportunities in the next 25 years as the most challenging and rewarding time of the industry. But only with producers who are committed to profitability and accountability. 

The expectation of the investors is that the producer commits to a tier 1 ERP system for their organization. An onerous, expensive and difficult proposition for any company to implement. Traditionally a non-starter for most startups and small organizations. However People, Ideas & Objects have configured our organization to provide the software, accounting and administrative services on our Cloud Administration & Accounting for Oil & Gas software and service. Removing the difficult and costly aspect of ERP to a transaction related processing fee. 

Cutting the amount of overhead cost necessary for a producer to incur a market listing of $3 to $5 million to a more manageable size. A formidable requirement that demands legal or investment capabilities to be the producer's competitive advantages. Whereas with People, Ideas & Objects the producer will be able to profitably advance further as a firm based on their competitive advantages of engineering and geological capabilities before seeking to list their stock. 

Further details of what and how we manage the producers accounting and administration are available within the Preliminary Specification and the two highlighted papers. 

The central message of the Reconstruction paper is profitability is not optional. It’s the only sustainable path forward for the oil and gas industry.​​​​​​​​​​​​​​​​ Investors effectively allocate resources in a market economy. The only sustainably reliable source of capital for a capital intensive industry is profitability. Profitable operations will grant the producer the freedom and independence to pursue their purpose and objectives which is the difference between today’s producer and those who are part of the reconstruction. Today’s producer culture will never be able to change to begin earning something they evidently don’t understand. 

Business model development 

Engineers and geologists must lead this reconstruction, developing innovative business models while the Preliminary Specification provides the administrative and accounting foundation and support for profitable operations. And profitability from the first day. The traditional monotone drill and produce business model deployed everywhere no longer builds value. New models based on new ideas of how to be profitable in the industry are what’s needed. 

What People, Ideas & Objects suggest is the first step in this process is to secure the Intellectual Property necessary to support that new and innovative business model. As a science and innovation based business, having proprietary rights will be necessary. This has been a failure of existing producers to secure. Reasoning as to why Intellectual Property Rights are necessary to be secured can be determined from our Preliminary Specification Organizational Construct and our paper, Hyperspecialization in Today’s Artificial Intelligence and Intellectual Property Enabled Workforce. 

Although consolidated producers are cutting staff in these areas of their key competitive advantages. And stating they’re purging their payrolls of contractors. Industry shortages of these skills are an issue that won’t be resolved by offshoring of engineering or geology. These are part of the foundation of what we believe the startup producers can build upon, consulting fees for these skills. This second revenue stream of a producer are seen as the means in which to fund the development of a producer's earth science and engineering capacities and capabilities in the Preliminary Specification. Intellectual Property is the foundation of those consulting revenues. 

Today’s blog post will not guide anyone through the business model of the Preliminary Specification. It is currently over 400,000 words and comprehensive in its approach to North American oil & gas. Those who may be interested should start with these three of our papers from 2025 and move on to the Preliminary Specification as needed. 

Investors Need Oil & Gas Investments

Our “Arbitrage” paper addresses the desire of investors to move back into oil & gas on the basis it can be profitable and prosperous on a “real” basis as we state. Where the capital costs in a capital intensive industry are recognized and passed to the consumer on a competitive basis on North American capital markets. It is foolish beyond belief to have an industry operate for decades on the basis of “building balance sheets” and “putting cash in the ground.” It is my suspicion that when investors heard producers state these things, they thought the producers were joking. They didn’t realize producer officers and directors were serious. Utterance of this type of nonsense will be immediately disqualifying in the “Oil & Gas v. 2.0” investors are looking to invest in. 

For the past many decades producers consumed investor cash. Due to investors suspension of support this past decade producers' cultural propensities show they’re unable to earn profits or generate cash. The demand for cash in oil & gas will only increase from this point forward. Becoming somewhat of a crisis on its own in the very short term. Balances of property, plant and equipment will continue growing as producers attempt to squeeze out what earnings they can by not passing these costs to consumers. In accounting terms this is called being between a rock and a hard place. Instead of having investors put cash in the ground, producers are holding that cash in the ground out of the necessity to further deceive the market about its earnings. 

Making today’s producer firms distinct competitive advantage their insatiable need for cash. We expect to see more property sales to be the trend from 2026 forward. Establishing our “Arbitrage Strategy” to begin the transition of the old industry to the new. This strategy allows investors to acquire oil & gas assets at what are believed to be distressed prices due to low commodity prices. Realizing the upside from price increases over time and the increase in proven reserves due to the reclassification from probable and possible. 

As non-operator new investors will be able to acquire the existing operators infrastructure to manage these assets for the short term while the Preliminary Specification is developed. Coincidental investments in new “Oil & Gas v. 2.0” producers to consult and take on the assets management in some form in the future. 

This is nothing more than one possible business model out of thousands of other possibilities that can and should be coming out of the disaster that we know and understand as North American oil & gas. The opportunities have never been more substantial. 

However, it should be emphasized the competitive nature of North American capital markets. Investors know and understand the behavior of the industry. They’ve proven beyond any reasonable doubt what is not acceptable will not be tolerated. If they see it again they’ll act as they have. It is incumbent upon “Oil & Gas v. 2.0” to adhere to their demands and to prioritize the top two demands of profitability and accountability. Which begins with a tier 1 ERP solution such as People, Ideas & Objects use of Oracle Cloud ERP. And asset profitability from day one. 

These will be necessary in the reconstruction process. What will also be necessary is a commitment to changing the culture of the industry to understand why these are necessary. Why profitability is the only road to fulfil the industries capital demands. There will be no annual shareholder issuances. Investors learned that trick too.  Accounting does not exist to just pay the bills and balance the check book. They are the critical business tool that keeps the organization focused on its targets. Including profitability. They should be seen as the most valuable tool to make this new culture a success. 

I made a comment the other day that suggested Exxon's acquisition of Sulpetro was based on the reserves only. And that was how most transactions were priced since. The financial performance of those reserves led Sulpetro into bankruptcy. Asking why was the financial performance of those reserves not taken into consideration instead of just reserve volume times projected prices? I would hope that at the beginning of this industry reconstruction, considering industries desperate need for cash, the need to perform financially everywhere and always in “Oil & Gas v. 2.0” the financial criteria would weigh heavier in the Arbitrage Strategy buying decisions. Overpaying for assets is a sure, slow and painful death. Today’s producer with a losing proposition may want to discard the property and may even pay cash to do so. A thought in terms of business model # 549 - Remediating Assets. As that will be their investors only concern with respect to any losing investment they may have made in you. 

Change, Part IX - Our User Community

 As we’ve found each year, Oracle Database World / Cloud World and now Oracle Artificial Intelligence World have had an impact on People, Ideas & Objects and our Preliminary Specification. Three years ago, the Oracle CloudWorld 2022 conference prompted a comprehensive rewrite of the entire specification. A rewrite I completed in November 2023. To be clear, I won’t be spending 2026 doing a comprehensive rewrite based on 2025’s conference content. I could, but we don’t have the time—our user community can creatively fill in the blanks with how Artificial Intelligence is implemented during their developments, while I define a few of the high-level changes of direction in this series.

In saying this, it will involve quite a bit of change from not only our current configuration, but also how that is developed, delivered and who’s involved. We’ll be introducing many new concepts and ones that may not feel right initially—however we have to work within these constraints. It is, for all intents and purposes, a change in perspective. Our Preliminary Specification remains whole. And we are implementing an “Artificial Intelligence First, Everywhere and Always” policy. Artificial Intelligence in the development and implementation of our Preliminary Specification’s configuration. Affecting who it is we’ll have participating in our user community and service providers. Just as the producers themselves.

There are many distinct characteristics of Artificial Intelligence that make it unlike any Information Technology-based changes we’ve experienced before. A comment from Chamath Palihapitiya of the All-In Podcast notes one characteristic. (I heavily abbreviated this quote.)

In 1932, unemployment in the United States reached 25%. If the Artificial Intelligence boom succeeds as anticipated, affecting all industries profoundly, it will drive massive productivity gains—often a euphemism for cost-cutting—which could impact employment. This might involve reducing jobs, enabling more output, or a combination: elevating workers to focus on higher-value tasks rather than drudgery.

For instance, my wife, who runs a life sciences business, views Artificial Intelligence tools as prioritizing speed over quality. She seeks the right molecule for the right disease, even if it takes years, rather than rapid production of 500 molecules. Currently, Artificial Intelligence remains in a novelty phase focused on velocity.

People, Ideas & Objects notes our paranoia about data in a number of prior blog posts. The need to build the foundation of these systems appropriately starts with the data. We should aspire to skip through the “slop-ware phase of Artificial Intelligence” and begin generating value from the fourth Industrial Revolution immediately. To build this right, we must have the data. Moving throughout our development with Artificial Intelligence assisting our quality as the priority, not just our speed.

Impact on employment? Cost cutting? Lose the drudgery? Quality vs. speed? These are only the highlights of Artificial Intelligence-related comments. With respect to the 1932 reference, the Great Depression was economic in nature and has as many origins as there are economists. It was a time of massive societal turmoil brought about by rapid economic productivity increases from automation, specialization and the division of labor. Initially brought about by Henry Ford’s assembly line innovations in 1913. When dispersed throughout the economy it caused too much product too quickly with falling prices as a result. Corporations needed to act to survive.

The lasting legacy of this period is Fear, Uncertainty and Doubt as to what will cause another event and when it will happen again. Artificial Intelligence is creating its own Fear, Uncertainty and Doubt.

Oracle’s Artificial Intelligence Conference 2025 showed me that Fear, Uncertainty and Doubt was prevalent and top of mind everywhere. Except within Oracle and possibly People, Ideas & Objects. Though it became clear to me quite quickly. A number of Oracle presenters had their customers on stage to discuss their plans for Artificial Intelligence. Oracle was visibly frustrated with the responses, going as far in one of the discussions to say “this is an Artificial Intelligence conference, what specific Artificial Intelligence features are you planning.” Only to be rebuffed by their customer once again.

There’s a wall between producer officers and directors and People, Ideas & Objects. One that has shown a persistence that will survive. If officers and directors have provided any leadership in this industry, it is in building this wall to keep people such as us out. The remainder of their organizations are now finding the comfort and support they need in adopting fully the Artificial Intelligence-induced, Fear, Uncertainty and Doubt posture of abstinence and avoidance. This resistance to Artificial Intelligence is what is happening now in North America regarding Fear, Uncertainty and Doubt about Artificial Intelligence. Fear, Uncertainty and Doubt may be a fad, but for how long and what are the long term consequences to those who adopt it.

This upsets our apple cart in many ways. Today’s division concerns us in terms that we may not be capable of carrying the freight of what we think we need our user community to pull. Members of our user community would be heavily ostracized from oil & gas and yes socially too. We haven’t lost the support of those that covertly support us, however someone will need to explain to me why our recruiting grounds in oil & gas have not diminished.

Therefore we need to open the grounds of our recruiting of our user community and service providers to ensure we achieve the development horsepower we need. We understand people’s trepidations and can’t argue with them. There are those who can fill the role we have from outside oil & gas who’ll approach the design and development with fresh eyes. I went through a similar phase, although on a much smaller scale.

While I was in audit, we went through the introduction of the personal computer. Spreadsheets were invaluable and databases were gold mines. (Who remembers lugging an Osborne around?) Yet there were many, I would suggest at least 25% during this introductory phase, who refused to touch a computer. They were raised on 14 column worksheets with pencils and were proficient with those, so they believed. Most were near retirement and were supported as there was nothing that could be done with them. And some lasted into the mid 1990s. There are a few lessons here which we can apply to our current Artificial Intelligence-related situation. In a paper from Damioli, Giocomo entitled “Is Artificial Intelligence Leading to a New Technological Paradigm?”

Moreover, the broader concept of “techno-economic paradigm” is based on the realization that technological evolution is cyclical by nature, where extended periods of gradual accumulation are (rarely) punctuated by radical and disruptive changes. In this framework, the diffusion of radically new technologies with the emergence of a new technological paradigm brings about the need for fundamental socio-economic changes that should be widely spread across the society. This interaction initially implies a “mismatch” between the potentialities of the new technologies and the inadequacy of the current institutional setting; this mismatch often leads to a productivity slowdown (the so-called Solow’s paradox, [Solow 1987]), which can be solved only through a substantial upgrading of the societal and institutional framework (“match”) (see [Draka et al. 2007]).

The remaining question is how much of Solow’s paradox will apply to the status quo producers, and what will that involve? We have to unfortunately apply it to those who metaphorically stick with their 14 columns and pencils too.

To compare the introduction of the personal computer to Artificial Intelligence is the equivalent of comparing Orville Wright’s planes to the F-35. People, Ideas & Objects suggest the velocity and momentum driving the trajectory behind Artificial Intelligence is much steeper and non-linear in nature. A characteristic we’ve possibly not seen in prior technological trajectories. Although we can draw parallels to the personal computer’s introduction, we’ll experience far greater societal change and productivity gains from those who adopt Artificial Intelligence technology.​​​​​​​​​​​​​​​​

Change, Part VIII - Direction

 The papers published by People, Ideas & Objects this year have each touched on elements of Artificial Intelligence and its implementation in the Preliminary Specification. I want to review quickly how it is we see Artificial Intelligence being used in the oil & gas culture we’re building. We start today with our paper:

Hyper Specialization in Today’s Artificial Intelligence & Intellectual Property Enabled Workforce. (Podcast)
March 17, 2025

Artificial Intelligence plays a significant role in orchestration, particularly in a hyper-specialized, Intellectual Property-enabled workforce within oil & gas. Our paper highlights that traditional Enterprise Resource Planning systems have constrained the true productivity enhancing potential of specialization and division of labor due to 1) their inability to coordinate and manage a highly specialized market and 2) specializations diminishing returns when applied to internal producer sizes and 3) the lack of producers willingness to change. Therefore locking the organization’s definition into an unchangeable software process management.

People, Ideas & Objects describes Artificial Intelligence’s role throughout the producer firm and industry. One way is by reorganizing the administrative and accounting resources to our user communities service providers. Where specialization on one process with its application across the industry is provided. This coordination complexity is amplified by the number of producers, number of Joint Operating Committees and volume of transactions occurring. Many of these transactions are micro transactions enabled through the Preliminary Specifications full implementation of stable coins and cryptocurrency. Detailed, tedious and redundant tasks well beyond what the role of what humans are tolerant of.

Service providers are sub-licensees of our user community members. Therefore have the scope of their exclusive authority for that process defined in that licence. These license attributes are codified in the software directly. Ensuring only licensed administration and accounting service providers are authorized to conduct work on behalf of producers and the industry. Unauthorized, nomadic accountants will not have licenses or access to the work to conduct this on behalf of the industry. An important qualification in terms of a service that employs Artificial Intelligence and importantly, Agentic Artificial Intelligence within its domain.

Coordination of this work in non Artificial Intelligence systems will be much like Exxon moving to an Abacus based accounting today. Doable but why? Artificial Intelligence, with its sophistication, is crucial for orchestrating the needs of a market that is clearly defined by its Intellectual Property. A defined role that People, Ideas & Objects sees for Agentic Artificial Intelligence is to review the service provider’s work product to ensure all of the work that needed to be done that month has been processed and to review that month’s output for accuracy. A task patently unfit for humans due to its mind numbing, tedious nature and many months of full time effort to complete even for a sample size. 

People, Ideas & Objects paper details what we believe should have been a consensus toward action in industry. We foresee that this lack of decisive action in addressing these issues will lead to “digital chaos and ‘Automation Armageddon.’” Oil & gas companies are effectively 2 generations behind in terms of their Enterprise Resource Planning systems and accounting capabilities. A choice we find will now grow to 3 generations and persist into the future.

People, Ideas & Objects continue on in spite of the current facts. Hype regarding Artificial Intelligence and Cryptocurrency we feel is just beginning. However it is building value for its participants in material ways. Just as any hype cycle would. The true objective of all this hype is the “fourth Industrial Revolution” which is a promise above and beyond the typical hype. While at the same time I personally experience the benefits of Artificial Intelligence everyday and all day. The value and time savings are material in terms of offloading the tedious nature of the job. This hasn’t happened before in my lifetime.

Adam Smith started it all with development of specialization and the division of labor with mechanical automation. All economic growth since 1776 has been as a result. Are we now entering a period where specialization and the division of labor with intellectual automation will do the same? I do know that Information Technology has been fairly effective in helping us move forward. It hasn’t been something anyone would point to as the key to everything however. It’s been more of a process of IT’s maturation of the technologies and their implementation. Which is thankfully where we are today. Fully prepared and capable for what could be. With an economy that could desperately use the help.​​​​​​​​​​​​​​​​

Change, Part VII - Dynamics

When People, Ideas & Objects developed the Preliminary Specification based on using the Joint Operating Committee as the key organizational construct for our software, we soon found the perspective for everything in the industry had changed. How and what we did as an Enterprise Resource Planning software system needed to change in order to accommodate that one difference. The organizational configuration of the producer and industry, what and how work was done, who would do that work and how our software would support them to ensure we were all focused on providing oil & gas producers with the most profitable means of oil & gas production. A quick note to say with the changes we’re undertaking at this time we expect the industry configuration and overall vision and strategy of the Preliminary Specification to remain fully intact.

When fibre optic cable was being laid across North America the physical disruption, the three years it took and the capacity that was installed, led everyone to believe no one would ever use that much capacity. This led to some spectacular financial meltdowns in companies like WorldCom and Nortel. It also left consumers with what was referred to as the “Dark Fibre” era between the late 1990s and 2005. Will history repeat itself with the Artificial Intelligence boom that’s starting? North American fiber was a continental, Information Technology led boom based on the “always on” Internet growth. Its investment was hyped by Wall Street and consumer interest. Caught up in the dot com bubble, a company with established revenues could soar. Its impact however proved to be of incremental and inconsequential value—it was not revolutionary.

Where is Artificial Intelligence taking us? Is it the fourth Industrial Revolution? We should ask those being laid off today what they think. The level of investment is impressive and outside of anything we’ve seen before. Either this is unconstrained competitiveness or something is happening in those centres we don’t see. I mentioned the money being made at these companies was so disproportionate to their past that, to me, it’s clear something is happening that we don’t see yet. We’re also not talking about a continental, Information Technology led boom over the potential of the Internet. This is global, it’s disrupting everything from currencies, business, academics, government—I could theoretically list everything. And it’s generating value for those providers. Initially just NVIDIA but now all the manufacturers. It’s in the database and available to People, Ideas & Objects in ways we haven’t even thought of yet.

Disintermediation was what Steve Jobs introduced into the business world. Initially with the personal computer but most dramatically by turning the music industry on its head. People, Ideas & Objects were disintermediating oil & gas however that is never going to happen. It’s too late, they’re too old and too far gone. We’re rebuilding oil & gas on the basis of the Preliminary Specification with Artificial Intelligence in ways that no one could ever imagine. That’s because many people in our user community have not thought about it.

It feels much like day one again. Realizing what we had in hand with the Joint Operating Committee and turning around to realize that to implement it, everything in the industry had to change through our software configuration. We have the Preliminary Specification which will be minimally affected by Artificial Intelligence, such as Analytics & Statistics and the Performance Evaluation Modules are out, etc. The same will probably be the case for our Artificial Intelligence Module.

The majority of the changes will be experienced by the producers themselves. Being connected to the Internet they’ve allowed a virus into their organization that is eating away at some aspect of their company, but they know not where. Artificial Intelligence is the ultimate toxin to bureaucracy, hierarchy and structure. Officers and directors should step outside of their retreats and gaze at the catastrophe they’ve authored. Satisfied in knowing that People, Ideas & Objects and those affiliated with us will pick up those pieces we deem valuable. So maybe a thank you is in order. Just note from who, and why they would be thankful is ambiguous to one of us.​​​​​​​​​​​​​​​​

Change, Part VI - Capital

 Producers generally believe they are performing well, with historical data supporting an upward trend and financial improvement. However, is this enough? It's improbable that current producers can secure the necessary funding for future needs, as the required effort is too significant. Investors will continue to see them as financial drains until consistent "real" profitability is demonstrated.

In my view, the core problem causing this damage is a terminal disease. The practice of "building balance sheets" and "putting cash in the ground" has created a lasting legacy and culture that will ultimately be fatal. Performance accounting never stood a chance; the focus has always been, and will remain, on reserves. This pervasive culture was clear to me in the mid-1980s when Imperial Oil (Exxon in Canada) acquired Sulpetro for $750 million, seemingly based on the value of its reserves.

However, the company I remember was never that size and had declared bankruptcy just months prior. What did Exxon believe? That these assets could be rehabilitated and made profitable? Why didn't they devise a better strategy to acquire these assets from the Court at a much lower valuation, one based on their financial performance, which had driven Sulpetro to bankruptcy? Did Exxon not realize these assets were underperforming? While effort and capital could undoubtedly improve their performance, aside from a larger balance sheet, what was truly gained? Are all reserves, regardless of origin, worth the same value?

Therefore, it's crucial to question the basis of asset valuation: is it a) a perceived maximum price based on the worth of X reserves at Y prices, or b) a value derived from the assets' financial performance in capital markets? In oil and gas, option A has historically determined asset prices, with a market quickly forming around Exxon's valuation. This led to a gradual price inflation experienced across the rest of the industry. Consequently, the asset values on the rest of the balance sheet, the capital expenditures, eventually had to keep pace. These higher valuations were then supported by increased reserve volumes, such as shale, and an influx of investor capital.

Exxon clearly overpaid for these assets based on the market factors at the time. Overpaying for assets slowly kills an organization. From that point forward, trading on engineering valuations of assets became the industry standard, leading to competitive inflation in reserve values. Yet, the consequences I speak of were never fully realized. The accounting magic introduced by the SEC's Full Cost and Ceiling Test was a continuous boon. Recording the $750 million asset purchase, in this case, is allocated equally to every molecule of oil and gas reserves. If 1% of those reserves are produced, 1% of the asset costs are recognized. What happened operationally, financially, or performance-wise is irrelevant to the conversation, as the assets are wildly profitable under any strategy or implementation. In terms of the cost of capital and industry competitiveness, how reasonable is this for determining performance or which price production should command?

Shale exaggerates this, expanding assets and earnings unprecedentedly. Producers are suddenly trading in reserve volumes they could never have imagined, driving down the capital cost per barrel of shale and allowing the industry's disease of building balance sheets and reporting even higher earnings to go unchecked. The good times had truly arrived. Shale also brought about a short time horizon where steep decline curves forced producers to seek substantially more money from investors to keep operations running. But if initial revenues weren't recovering the capital cost and generating a return on those assets, how will more investment be recovered? Or does this ever end? Discovering this made investors realize that money only ever goes in the ground. Balance sheets are bloated well out of proportion in property, plant and equipment. People, Ideas & Objects recommend a pro-forma adjustment to move a minimum of 70% of property, plant and equipment to depletion to better reflect the firm's position.

For decades, producers in North American oil and gas were growing and profitable. What was actually happening in the industry was a slow erosion of performance, where simply spending money was profitable. Over time, industry competitiveness plummeted to what may be as low as 30% of what is commercially viable. How can I make such seemingly ludicrous claims? What do producers have after a decade of no support for their capital structures? A prosperous and healthy service industry? Far from it. A viable plan and vision for the future with a motivated, fully staffed workforce for the task ahead? No. A broad and deep financial foundation to leverage and meet tomorrow's challenges?

Today, cash flows can sustain producer organizations, which is only about 10% of what's needed. Producers are primary industry participants and must understand their responsibilities in maintaining the financial health and prosperity of their secondary and tertiary industries. This is urgently needed, and today's cash flows will not suffice. They will not even approach the amount of work required in the industry today. Its arrival, with its speed, velocity, and complexity, is completely inverse to producers' organizational capacities. Accounting, administration, and ERP are not competitive advantages for producers, but we wish them well in their attempts to implement these changes. What I know of oil and gas administration and accounting makes me glad I was ostracized from it for proposing the Preliminary Specification. Producers are frozen solid, incapable of making decisions or pursuing any action or direction. Good luck with their highly acclaimed "muddle through" strategy.

In terms of our current situation, consider what capital markets are offering. Dynamic companies are innovating with business models that yield from previously unrecognized resources. Last week, Elon stated he could use the processing power of parked Teslas as an AI facility, not just today's largest facility of a Gigawatt, but one of twelve Gigawatts. Drilling and producing are old news from a bygone era. No one is interested in the performance of oil and gas, and no one trusts its producers. Not because of what happened 10 years ago, but because of what hasn't happened since.

Change, Part V - Consequences

 The unfortunate reality for People, Ideas & Objects is that even a small financial gain, like finding a quarter, would significantly improve our outlook. This situation has greater consequences for producers, as we have no vested interest or obligations to them. What was already a challenge in shifting their "muddle through" culture has become even more difficult. We've previously discussed the impending changes in speed, complexity, and volume, and how producer officers and directors were unprepared. We are now entering a new environment where many may not even comprehend what's happening. What should we do in such a scenario? Should we continue to guide those who have resisted assistance with their issues for decades?

People, Ideas & Objects have chosen to prepare for the future. We will address the repercussions of the ongoing failures within the oil & gas industry. In doing so, we will attract individuals who clearly envision our direction and actively pursue it. We are already observing this divergence, with comments like, "you don’t have to worry about AI, you need to worry about the person who uses AI." AI is here, and it's advancing much faster than we realize. Evidence of this can be found in the quarterly reports of its providers: NVIDIA, AMD, Apple, Google, Oracle, and Tesla.

For instance, NVIDIA reported $90.8 billion in revenue and $45.2 billion in after-tax profit for the first six months of 2025, with $76 billion in working capital. The forefront of the AI revolution is distinct from the dot-com era. Last month's Oracle AI World conference demonstrated that AI is integrated throughout the database and is accessible within the ERP system, which we have always designated and designed the Preliminary Specification to operate from. We possess the necessary tools, but we do not, and never will, have producers as customers, thus eliminating any obligations or commitments to the oil & gas industry.

Our sole asset is our Intellectual Property, specifically the copyright of the Preliminary Specification and its derivative works. This provides us with the essential foundation of Intellectual Property that the oil & gas industry needs to adopt. We have emphasized its importance in establishing IP as an organizational framework within the Preliminary Specification and have reflected on its impact in all our writings, including our January 20, 2025 papers for engineers and geologists, and our user community and an April 7, 2025 paper on the impact of Hyperspecialization.

While the future remains uncertain, as with all great adventures, the destination isn't always the most important aspect. We will reach our goals. Software companies like ours are currently experiencing significant disruption. If we don't adapt now, we will only be squandering resources. We have fortuitously found ourselves in a position to realize this AI future in the most optimal way, while simultaneously resolving the oil & gas industry’s greatest business challenge. Who is ready to join us?

Change, Part IV - Don’t Look

 I purposely avoid getting too far into the technical details of Information Technology on this blog, but this brief discussion is both important and worth your time. The significance of Artificial Intelligence (AI) in ERP systems, particularly within the context of People, Ideas & Objects Preliminary Specification, is profound. Larry Ellison’s Oracle AI World Keynote address contained subtle points that, I believe, require an understanding of his perspective to fully grasp. When it comes to databases, Larry Ellison stands apart, much like Steve Jobs or Elon Musk in their respective fields.

His presentation began by addressing AI training and reasoning, specifically highlighting the role of private, structured data stored in Oracle’s global databases. This structured data adheres to specific principles, which are the focus of this post.

Ellison then asserted that “AI can Perceive, Understand & Reason across all types of data.” This capability is mirrored by Palantir’s software, which excels in handling private unstructured data. The key distinction between structured and unstructured private data lies in the normalization process and the relational nature of the data stored in Oracle AI Database 26ai. Commingling structured and unstructured data, as Palantir does, raises concerns about consistency and reliability. Database management systems are typically evaluated based on their performance in implementing the “relational model.” Oracle has historically been a leader in this area, and we will observe the impact of these new developments.

Interestingly, upon reading the relational model, Ellison was inspired to create the first relational database, leading him to co-found Oracle in 1977. According to ChatGPT, Larry Ellison, along with Bob Miner and Ed Oates, established Software Development Laboratories (SDL) in 1977, which later became Oracle Corporation. In 1979, they launched Oracle version 2, the pioneering commercially available relational database management system (RDBMS) that used Structured Query Language (SQL). This innovation was influenced by Edgar F. Codd’s seminal 1970 paper on the relational model of data.

An annotated version of Dr. Codd’s paper, relevant to this blog post, is available here. I strongly recommend a thorough review and understanding of this paper. After 55 years, its foundational principles for data management remain highly relevant. Today, relational databases appear to be the most valuable assets for a firm. C. J. Date’s textbook, Database Design and Relational Theory, also offers excellent guidance here. For those looking to effectively leverage AI and IT, proficiency in relational databases will provide a significant competitive advantage.

In the abstract of Dr. Codd’s paper, a crucial word stands out: “inference.” A properly normalized relational database allows users to “infer” information from its data. This concept is elaborated in section 2, “Redundancy and Consistency,” specifically subsection 2.1, “Operations on Relations.”

We will now explore the implications of these developments for the oil and gas industry, building on the Preliminary Specification. A clarification is necessary before proceeding: we are cautious about exposing data in ways that compromise security, accuracy, or reliability. Our user community and service providers—the accounting and systems providers for producers—have been empowered to leverage the numerous benefits offered by the Preliminary Specification. Producers will lack the in-house accounting knowledge or resources due to the reorganization from the Preliminary Specification.  However, service providers will possess the necessary background, system understanding and authority to furnish producers with the accurate, factual data they need. AI generating “garbage out” is not in the best interest of our organizations, the industry, or the producers.

People, Ideas & Objects must finalize our data model in light of these significant advancements. AI has already assisted us in developing it, and we anticipate continued and expanded use of this technology. While I am hesitant to fully embrace Oracle’s enthusiastic promotion of APEX, ChatGPT indicates its use of programming languages as follows:

Oracle APEX application code generators primarily use PL/SQL for server-side logic and JavaScript for client-side functionality. APEX itself is built on the Oracle Database, so the generated processes, triggers, and dynamic actions are mostly executed using PL/SQL, with HTML, CSS, and JavaScript for the user interface.

Oracle’s choice to “primarily rely on PL/SQL for server side” is brilliant. It is their proprietary, procedural language that allows for conditions and loops to be embedded close to the database. Having used it in our developments in the early 1990s, I find this choice entirely appropriate. The “primary” qualification suggests that Java can be injected for handling database triggers and, I presume, stored procedures, or if not Java, then PL/SQL. The use of client-side technologies is less critical to this discussion. Other relevant considerations include the ongoing optimization of Java for AI, and the fact that SQL and PL/SQL are currently running on NVIDIA GPUs. (Oracle proof of concept.)

I largely view APEX as a client-side access tool. For individuals well-versed in the requirements of Oracle AI Database 26ai, with authorized access to People, Ideas & Objects, our data model, and the Preliminary Specification, this would be immensely beneficial to oil and gas producers. It would support both daily ERP operations—identifying profitable areas and opportunities for growth—and AI-driven inferences on the database.

We do not need to delve into vectoring, its storage, or use at this stage; these are features we will implement later. For now, our transactional needs necessitate the structural integrity of the Oracle relational database.

Regardless of how this technology is marketed by any vendor, the core point remains: Oracle is very close to fully meeting the relational model requirements defined by Dr. Codd in 1970. Our diligence in developing and implementing AI over the next decade will be a top priority. With Oracle, we have access to research, development, unparalleled tools, products, and support. We must also balance these technological advantages with our objective of providing producers with the most profitable means of oil and gas production.

Implementation

Oracle APEX and its Agentic AI have a significant role to play in the Preliminary Specification. Our user community and service providers would find immense value in its application to support profitable North American oil and gas producers. With exclusive licensed support from People, Ideas & Objects developers, they would be able to facilitate the dynamism and innovation that producers are engaged in, through detailed, accurate ad-hoc reporting and other essential functions.

Oracle APEX operates with two SQL database sublanguages: Data Manipulation Language (DML) and Data Definition Language (DDL). Responsible database developers will never grant general access to DDL, leaving our user community and service providers with DML access only to the fields within the tables they are authorized to view.

Oracle APEX is a powerful tool, and Agentic AI currently benefits from a robust development process where Oracle verifies the safety and validity of each Agent before release. This makes it an incredibly potent tool for industry professionals who utilize the Preliminary Specification, our user community, and service providers. We do not anticipate extensive hands-on development use by producers themselves, as this involves accounting information that requires appropriate preparation for presentation.

However, as an ERP system, we are involved in conducting mission-critical transactions. APEX cannot be involved in the development, creation, or management of these transactions. Processes such as the Material Balance Report have persistent, asynchronous, and stateful issues. APEX is stateless and, therefore, currently incapable of handling such demands. In terms of transaction processing and process management, People, Ideas & Objects’ software development requirements exceed APEX’s current capabilities. Java, SQL, and PL/SQL will be essential in these areas. 

Until proven otherwise, we must take all necessary measures to ensure the security, reliability, and integrity of producer data is captured and reported accurately. We look forward to fulfilling our objective of ensuring a renewed culture of reserves preservation, performance and profitability is established. With Oracle we know we can. Supporting producers, and the service industry as they undertake the next 25 years in oil & gas which have to be its most challenging ever. 

Change, Part III - That Makes Four

 In the past, many producers’ officers, and directors were questioned about the justification for their drive for consolidation. Continuing with their limited understanding of anything beyond their corporate world, they claimed consolidation was necessary because "small producers continued to overproduce to make their bank loan payments," thereby destroying commodity prices. In hindsight, they might want to reconsider their perspective.

The definition of a cartel is provided by ChatGPT.

A cartel is a group of independent businesses, organizations, or countries that agree to collaborate to control prices, limit supply, or restrict competition within a specific market or industry. The primary goal of a cartel is to increase members' profits by coordinating activities rather than competing.

Cartels are most commonly found in industries with only a few major producers, such as oil, gas, or certain commodities. A well-known example is the Organization of the Petroleum Exporting Countries (OPEC), which coordinates oil production levels among its member countries to influence global oil prices.

Key features of a cartel: 

• Members collude (secretly or openly) instead of competing.
• They may set production quotas, agree on prices, or divide markets.
• Cartels are usually illegal in many countries because they harm consumers by reducing competition and increasing prices.

In summary:

A cartel is a group that works together to limit competition and control a market, typically to boost their own profits, often at the expense of consumers.

People, Ideas & Objects designed the Preliminary Specification to accommodate all producers, regardless of size. Using Cloud Administration & Accounting for Oil & Gas shares the entire infrastructure needed to operate an oil & gas business. Through our user community and service providers supporting our software, ownership in a Joint Operating Committee or producer firm is unknown and irrelevant to them; it's just data. Therefore, whether the user is part of Exxon or a startup down the street, they are only charged for the overhead costs they incur.

For the publicly listed small producers that once existed, overhead was a fixed barrier that demanded $3-5 million per year in incremental free cash flow to be offset. This obstacle prevented them from pursuing their distinct competitive advantage in engineering & geological capabilities & capacity development, forcing them to focus on raising cash to survive. Those who did were not necessarily the oil & gas professionals driven to explore and produce.

People, Ideas & Objects finds this unacceptable, as the distribution of innovation funds among small firms is approximately equal to the amount spent by larger ones. Yet, it could be argued that most innovation is developed by those in the small sector of an industry. Nonetheless, this sector of oil & gas is on the endangered species list or technically extinct as we stand.

I have chronicled the lack of business understanding inherent in the officers and directors of oil & gas producers. When we published the Preliminary Specification, we were accused of proposing collusion and introducing a conspiracy. Nothing could be further from the truth. It's plain, common-sense business practice to stop the bleeding in any area of the business to maximize profitability. In oil & gas, there is an inherent responsibility upon all of us not to waste this limited resource by ensuring we produce everything profitably. Our Preliminary Specification provides oil & gas producers with the most profitable means of oil & gas operations.

The Change Element

In their zeal to pursue their seasonal objectives of consolidation, some producers may have accidentally revealed their true motivations. First, for them to deal with the small producers' overproduction is a fairytale of mammoth proportions. Second, their stewardship of the industry for the past year has presented a rather dismal outlook. Is it overproduction that's causing continued global price declines? Or is it the plateau of production volumes and the realization that the steep decline curves of shale cannot be dealt with by the service industry they so carelessly destroyed? Contradictions are a byproduct of oil & gas officers and directors.

A strong history of collusion and cartel activity has haunted oil & gas for decades, sponsoring onerous regulations and a consumer backlash that has officers and directors cowering in the corner. Yet, on several occasions, we hear the need for consolidation based on the pretence of small producers being out to get them.

The Solution

It's unfortunate for the hardworking people stuck in these firms. If only there were alternatives such as the Preliminary Specification. To prove consolidated producers were not involved in a conspiracy would be difficult for the officers and directors. How could they provide evidence to the contrary? How could they now take positive steps to support the small producers?

I could be seen as biased if I promoted the Preliminary Specification. Since I don’t care much what they think, I’d say it’s the solution that solves many of their issues, such as:

• “Issue Mitigated, Nothing Litigated” strategy regarding their risk to investors who may pursue natural gas losses. Insurance coverage can’t be lost if actions are taken to mitigate officers and investors risks. (I’m not a lawyer.)

• Implementing next generation AI enabled ERP systems based on Oracle Fusion ERP and People, Ideas & Objects. 

• Participating in what appears to be the 4th Industrial Revolutions initial traction beginning to take place.
• Oracle Cloud ERP Keynote: Rocket Forward with Agentic Finance Now
• Oracle AI in Fusion Networks

• Prove they did not form an illegal cartel while consolidating their operations and blaming small producers. 

• Our Preliminary Specification specifically addresses all sectors equally, fairly and in a transparent way. Providing proof that no such cartel was formed.
• Realize the benefits of a purpose built Cloud Administration & Accounting for Oil & Gas focused solution. 
• Designed to provide profitable operations everywhere and always. With a value proposition far in excess of any cost they may be facing.

With all that's happening outside the oil & gas industry, is it not time for people to begin their participation? Or is "muddle through" so comfortable, or so constraining, that action is beyond consideration? It’s time for everyone to personally decide what the industry needs and what their individual role is, and maybe if they too have an obligation to act. If we don’t act, who will consumers turn to for their energy needs?

Change, Part II - Not So Changed

 As much as the velocity and trajectory of change are accelerating, some elements of the Preliminary Specification will remain constant. We would only consider changing something if it represented an improvement. This applies particularly to the reduction of overhead costs for both producers and Joint Operating Committees. People, Ideas & Objects, along with our user community, have dramatically cut overhead costs to mere pennies on the dollar, leading us to question why officers and directors so strongly resist our initiative.

We are not focused on minor adjustments to individual costs or contracts. Instead, People, Ideas & Objects is pursuing fundamental, structural changes that will yield significant benefits and outcomes. There are synergistic advantages, where improvements in one area enhance others. For instance, specialization and the division of labor are built upon the shared infrastructure of our upcoming Cloud Administration & Accounting for Oil & Gas software and service. Here's our approach to overhead:

Turn All Costs Variable

The reorganization and configuration supporting Cloud Administration & Accounting for Oil & Gas aim to make overhead costs variable, tied directly to profitable production. This enables producers to shut in unprofitable production, resulting in a null operation—no profit, but also no loss. This maximizes corporate performance, conserves reserves, and offers numerous other specific benefits.

Directly charging Joint Operating Committees for these overhead costs allows producers to include overhead in the current month's costs, which are then passed on to the consumer. As these are part of profitable production, the cash incurred to fund these costs is recovered within 30-90 days. Producers will no longer face decades-long waits to recover this cash, a consequence of their current policy of capitalizing most overhead costs.

As a result of these changes, overhead costs will cease to be a significant burden for producers. If a property is unprofitable, it will be shut in, and no overhead will be incurred. If a property is profitable, it will incur overhead and draw financial resources from the producers recurring monthly cash float established by using the People, Ideas & Objects Preliminary Specifications methodology.

Sharing of Accounting & Administrative Infrastructure

Applying Professor Paul Romers New Growth theory to oil & gas accounting and administrative infrastructure frees each producer from the need to build identical, non-competitive accounting and administrative capabilities. By consolidating industry resources and developing a single solution, producers can reduce their accounting and administrative resources and infrastructure, relying instead on our service providers through our Cloud facility. 

Our Cloud Administration & Accounting for Oil & Gas eliminates the redundant duplication of building the same infrastructure within every producer. We have reached a point where the IT resources are no longer available for each producer to undertake these tasks, where the financial burden has become too significant, and the task too complex for individual producers to manage. These are not part of a producer's distinct competitive advantage. Today, Cloud Computing is the only viable solution. As a related example, no one would suggest building their own infrastructure and capabilities for their own Artificial Intelligence’s Large Language Model’s (LLM) use. People, Ideas & Objects believe this same principle applies to oil & gas ERP.

Would any producer subscribe to an Exxon or Chevron-derived oil & gas ERP system? Our independence provides all producers with a standard, objective, actual, and factual accounting of their operations. This is essential. If a producer faces a property reporting a loss, they need to confidently know that all properties were subject to the same independent accounting criteria as theirs. Otherwise, production discipline will devolve into an accounting exercise aimed at boosting earnings, much as it is today.

Specialization and the Division of Labor

Producers have argued that our scope and scale are too complex and difficult. Yet, in making this argument, they fail to see that our scope is only marginally greater than their own. Our task is as substantial as their responsibilities and obligations. It is our scale that we need to address, and we are finding with these AI facilities that bigger is more efficient. The limiting factor is now the number of available natural gas turbines to power the cloud.

The configuration of accounting and administrative resources, as reorganized in the Preliminary Specification, presents a unique opportunity—one unavailable to any producer today or tomorrow, regardless of their size. Specialization and the division of labor are currently out of reach for most producers. They have been maximized to the point of diminishing returns; the greater the division of labor, the less efficiency is gained, as the volume of work within the organization does not justify the change. Low percentages of resource utilization diminish any benefits from task specialization.

However, by approaching the industry as a whole, we gain the transactional volume necessary to justify specialization and the division of labor, thereby realizing those benefits. Taking these advantages to our next category of automation and Artificial Intelligence, we see some of the synergies between these major categories in how People, Ideas & Objects reduces overhead and builds further incremental value.

Automation and Artificial Intelligence

We have discussed the benefits of automation in the highly specialized process management within Cloud Administration & Accounting for Oil & Gas software and service. It is reasonable to assume that the benefits from specialization and the division of labor will be substantial, and subsequent automation and Artificial Intelligence will be limitless in the short term—an empty canvas on which to build value for the industry and achieve the objective of People, Ideas & Objects, our user community, and service providers: to provide the most profitable means of oil & gas operations.

With discussions on how People, Ideas & Objects has adopted the high levels of automation and Artificial Intelligence embedded in Oracle Fusion ERP and their Database 26ai as a third, foundational justification for producers to support the development and implementation of the Preliminary Specification (as discussed in yesterday's blog post), there are many areas in the oil and gas industry where overhead costs are endlessly consumed. Production reporting processes are noted as the greatest consumer of all. Recall how our Material Balance Report (Podcast 32) and the subsequent automation of related processes are designed to address these issues.

A Conclusion

People, Ideas & Objects would strongly refute the idea that we are applying Oracle technologies for technology's sake to the business issues of oil & gas. That is not, nor has it ever been, our approach. We have consistently used advanced technologies to resolve business problems. We are not the ones who will tell you Windows 11 will make everything right. Oracle is using AI as a technology to solve business challenges, just as we are. The difference is stark, and it is the reason we are now adding their AI initiative as a fundamental justification for the survival of oil & gas producers.

Producers may report that all their operations are profitable yet still report corporate losses. If overhead costs remain as they are today, chronic and systemic corporate losses will continue. The magnitude of these changes introduced by the Preliminary Specification will reduce overhead costs to single-digit pennies on the dollar.

Let's assume, for discussion purposes, that the shared infrastructure of Cloud Administration & Accounting for Oil & Gas reduces overhead by 50%, which I would consider the minimum. Recall Adam Smith’s research at a pin factory, which yielded a 24,000% increase in production from specialization, the division of labor, and mechanical automation. What could intellectual automation yield in accounting and administration? Making all costs of the producer and Joint Operating Committee variable introduces an operational flexibility that People, Ideas & Objects believes should be welcomed.

It's easy to think these changes will make a producer profitable. I would beg to differ. They will help; however, the industry operates at a low level of competitive efficiency—a level that is unprofitable and far from competitive or profitable. It has a culture of "muddle through," which is anti-initiative and ingrained over at least 40 years. Hence, People, Ideas & Objects' much-needed rebuilding through the Preliminary Specification.
Drilling and producing is the only business model producers currently have. Accelerating their level of competitiveness to profitability will be an engineering and geological pursuit. Accounting and administration will serve in support, providing the much-needed understanding of what works and what doesn't from a financial and business perspective. The challenges of ensuring profitable, abundant, affordable, and secure energy are competitively produced are their responsibility.

We believe it's time for everyone in the industry to decide what their role will be in this rebuild.