OCI Request for Proposal, Part VIII

 Information Technology

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

People, Ideas & Objects - Sales Commission Program

People, Ideas & Objects are moving into the next phase of development due to the changes in the oil & gas market space. Our inability to move to an operational software development organization has been hamstrung due to what we perceived as an essential direction being communicated to us. This was necessary before we could advance. Although today we may be reading too much into this situation, we feel it is very late in the day for our software to have attained operational development status. We are therefore confident and moving forward. We believed investors were leaving the industry. With information contained within this graph, we feel it confirms what we suspected and supports what we believe is necessary to move forward. This graph is from @Soberlook on X.

Who could blame the investors? For over four decades officers and directors have used the industry to fuel what may yet become the greatest destruction known to mankind. Energy in the form of oil & gas is critical to our quality of life, economy and survival. To have it so ruthlessly destroyed as documented in this WorldOil article is only the beginning of the difficulties we’ll face as an industry. 

• The Permian basin is expected to join all other basins in experiencing production declines. 
• 2023 saw 135 rigs dropped from the fleet to now stands at 642 rigs.
• Drilling and Uncompleted Wells, or DUC’s have declined. As the article states “the lower the count becomes, the longer it will take for shale supply to return.”
• In any corner of the industry, producers do not command respect, integrity, faith, trust, or goodwill.
• Others lack motivation to do business with producers' officers and directors.

How is this happening? We know it is the officers and directors, their “muddle through,” well built balance sheets and other nonsense that has brought us to this point. Why has this happened? There has not been a penny of profit made by a single producer in the industry since the late 1970s. Nothing but the expenditure of investor money gained from specious accounting reports that claim oil & gas reserves are valuable. If they’re so valuable why are they not produced profitably? What has been proven is that with willing investors, the useless spending machine of officers and directors destroys value. They used to proudly preach to me, "Who cares about profits? It's about cash flow.” They hardly understood why profits were necessary. They never recognized that they were not profitable. They never understood what was needed to earn real profitability in a competitive market. What they have proven is they have no understanding, concern or need to operate a profitable business. Since 2015 investors have given them ample time to figure out how to earn real profits. And what did they do? Declared shale was unable to be commercial and moved on to clean energy. It's time to say goodbye. Good riddance and don’t let the door hit you on the way out. 

There is a material difference between what officers and directors believe and their reality on the ground. We are therefore making a significant change in our posture and moving to an operational software company.

What we’re reading into this is a material change in the trajectory of investors' tolerance for oil & gas. The past eight years saw no investment money flowing in. Now with no action from producers and the disaster documented in the WorldOil article, investors are selling their positions and moving on. We see this as confirming the People, Ideas & Objects Preliminary Specification. Investors have lost patience with officers and directors and are leaving. Funds flow is relatively small at this time. We see the trend as our friend and expect it to continue after oil & gas took decades to get to this degraded position. People, Ideas & Objects believes the industry is at least seven years from stopping the log rolling down the hill. And we’ve only begun to witness it’s in fact rolling.

The reason we’ve waited for these indicators to materialize is that it provides us with a clear understanding of the future. Our concern was that if we began development without a clear signal from the investors as to what their future actions would be, we could have a terminally failed project on our hands. One that has no hope of rebuilding the North American oil & gas industry as we’ve proposed. We have represented our position to the investor community. If investors suddenly supported producers again, funding their capital expenditures with new funds. This would have been terminal for our organization and we would have failed spectacularly from a distinct lack of credibility. People, Ideas & Objects would have seen an action such as this as a betrayal by investors towards the future of the oil & gas industry and all those that expect and depend on a turnaround. If this wanderlust and spendthrift industry leadership regained their investors, People, Ideas & Objects would be sent back to the stone age in terms of our product horizons. 

Therefore in order to keep the overall opportunity open we had to wait until we saw what investors would do. So we kept our powder dry and our candles lit until we knew where we were headed. We now have that. We would not waste our user community's time or money. We have a viable business model, a plan and a vision to deal with the issues at hand. We indirectly have the support of oil & gas investors who have not supported producer officers and directors since 2015. Investors who have tried to deal with dysfunctional leadership and are abandoning them. I see investors' actions as terminal to producer firms' leadership. There is no stronger message that theirs is a flawed and failed corporation than having their investors give up on them. 

I am therefore pleased to announce that People, Ideas & Objects are instituting a Sales Commission Program for our Preliminary Specification for North American-based producer firms. This program is open to those individuals in the oil & gas industry. Who believe they can close the sale of ERP software development, as defined in the Preliminary Specification, to North American producers.

Now is the time to offer this opportunity. Our perspective on the industry is expressed in our writings. Our vision, plans and Preliminary Specification resonate within the industry. What officers and directors ridiculed us for as “opportunity costs'' over the past decades materialized in the form of our substantial value proposition, irretrievably lost due to inaction. Our concern for the future of the industry if the issues were not addressed would be severely detrimental. This would harm the oil & gas economy. This is a turning point that calls for changes to be made. Changes such as those defined in our Cloud Administration & Accounting for Oil & Gas software and services. Inaction by producer officers and directors leads to others taking the necessary steps to resolve these industry difficulties. The first thing we need to do is organize ourselves in a manner that resolves these. In the 21st century, a software system that defines, supports and constrains an organization needs to be built first. We find ourselves at the point where sales must begin and our budget is funded.

Pricing for our solution is based on our value proposition. We assert that due to the implementation of the Preliminary Specification the greater oil & gas economy would realize $25.7 to $45.7 trillion in incremental revenue and profitability over the next 25 years due to its use. Our Intellectual Property provides this value, which is substantial, proven, and exclusive. Decades of evidence show that industry action cannot resolve these issues. Producer firms have chosen to do nothing, and others will now take it from here. 

The commission earned by the individual(s) who close the sale is 15% of the sales price to the producer. Producer costs will be based on the per barrel assessment plus 15% commission. We have raised the per barrel cost assessment to $600/boe. People, Ideas & Objects pricing is based on the value proposition we bring to the market. Without the Preliminary Specification the industry is only involved in the pursuit of waste and does not have any plans or vision for the future. Sales commissions are paid upon closing. 

The sales process will be long and complicated. This process will incur costs that are the responsibility of the individuals who participate in this commission program. People, Ideas & Objects are available and will support the process to the extent of our ability. Unlike the Whistleblower Program we instituted there is no exclusivity granted to any one individual. However, it is available for a fee of $5,000 U.S. which buys a two-year exclusive license to sell. License renewals are granted however they will lose the exclusivity of the initial license

With regard to startups and small oil & gas producers, two classifications of producers that People, Ideas & Objects et al Cloud Administration & Accounting for Oil & Gas software and services are dedicated to. We do not expect sales interest in these producers initially. It is likely that they will join on their own or fall into the group towards the end. The Preliminary Specification provides enhanced and distinct benefits over other producer firms' classifications. Their participation will not be material to this Sales Commission Program unless an individual expresses otherwise. Possibly as an allocation for start-up or small producer firms with an aggregate production profile of X.

Although we've done what we could in light of the circumstances we were faced with. We were driven by a strong sense of urgency. I've seen exponential growth in that sense of urgency and am announcing our "First to Close Bonus" on these Sales Commissions. A "First to Close Bonus" of 2 X commission will be paid to whomever secures the first sale. The "First to Close Bonus" will be paid from People, Ideas & Objects sales proceeds.

I’m certain that I’ve caused confusion as to how this will be implemented and managed. The underlying premise holds that there are substantial conflicts and contradictions in the fact that we are seeking to secure funds from existing producers to rebuild the industry. What I see is an obligation on behalf of those who have willingly destroyed the industry to do the right thing and support this initiative. The fact is the detail of how these communities are financially supported is unknown to me. By putting this out in public I’m looking for feedback and pushback on these points. There is much we need to do and we need to do it quickly. No one has all the answers. Please review our RFP as a tool to support this process.

People, Ideas & Object - Whistleblower Program

 People, Ideas & Objects is instituting a Whistleblower Program to terminate any unauthorized use of our Intellectual Property in the oil & gas industry. We believe there has been a serious attempt to circumvent our Intellectual Property in a material way over the past six years. Our efforts to document these are limited by access to the evidence we need. Our Whistleblower Program is designed to provide us with the evidence to proceed with our Retroactive and Compensatory License for these indiscretions. There will be three aspects to these licenses. 

1. At no time will Whistleblowers be known to anyone. I am aware of the methods used by producers to ostracize and vilify individuals who offend them. That is why we are implementing a level of absolute anonymity. 
2. Licenses provide no further provisions for producers to use any Intellectual Property that is discovered. They must cease and desist.
3. Any compensation earned in the Retroactive and Compensatory License will be shared 50 / 50 between the Whistleblower and People, Ideas & Objects.

What we are seeking is documentation of the evidence needed to prove our case. Video, audio, screen shots, software documentation, process management, emails, job descriptions or interviews with individuals. To name just a few methods. Please redact any identifying information submitted to People, Ideas & Objects.

Here is the process we’ve established to participate in our Whistleblower Program. 

• Time to document and develop can be lengthy and difficult. Therefore we ask that you register your intent to document in an email to paul.cox@piobiz.com at the very beginning. 
• Please do not use your name or your current email address. Use gmail (establishes a collaborative environment with People, Ideas & Objects.) to set up a new email address with an unidentifiable name such as xyz@gmail.com. This way People, Ideas & Objects will not know who the Whistleblower is.
• In the initial email describe the Intellectual Property that you seek to document and for which company. It will be in this way we can grant the exclusive right to be the Whistleblower for that process at that company. Confirmation of this grant will be emailed back to you.
• Producers will make it clear that participation in this Whistleblower Program will be grounds for termination. Much is at stake and the need for anonymity. 
• Video is taken from a hidden camera that doesn’t reveal anyone but the subject of concern and is from an unidentifiable perspective. 
• Video and audio are edited to not reveal anything about the other participants. Please ensure there are other participants in audio and video recordings to maintain anonymity.
• If I don’t know who you are, then no one will know who you are.
• In the initial email please comment in your own words. “You are not acting as an officer, director, agent or employee of the producer firm for the purposes of seeking to circumvent the discovery process of any violation of People, Ideas & Objects Intellectual Property. That you are an individual with the requisite access to the described process and are acting on a good faith basis to document what company X’s inappropriate behavior is.” Etc. Please attest to your employment at the firm you’re documenting. 
• I will confirm your registration which grants you the exclusive right to proceed. That no one else has or will be authorized to do so. Providing you the time and opportunity to conduct the documentation thoroughly and effectively.
• People, Ideas & Objects and yourself are therefore free to conduct a collaborative effort in terms of reviewing the process and producer firm.

To commit People, Ideas & Objects to the Whistleblower Program. Commit this blog page (not your emails) to the Wayback Machine, under your account. (Anonymity precludes a formal legal agreement between yourself and People, Ideas & Objects. The Wayback Machine and email reflect the offer and acceptance, etc.) Information regarding the Whistleblower Program can be aggregated on this blog by selecting the Whistleblower tag on the bottom left. 

For further information please contact me at paul.cox@piobiz.com  

A Not So Friendly Warning!

 Attention: Producer Officers and Directors. 

On several occasions People, Ideas & Objects have advised producers that the use of our Intellectual Property in any way is unauthorized and forbidden. That although copyright is the law we find its use in the political realm more valuable and have chosen to apply it in that context. Political in the sense that upstanding law-abiding corporate citizens would not violate or take others' property. And no software company diminishes the use and value of another software firm's Intellectual Property. Since the 1990s this environment has become firmly established in the North American marketplace. We've participated in the development and protection of our Intellectual Property on this basis. We’ll now move forward based on Intellectual Property's legal aspects.

People, Ideas & Objects advised on four occasions that our Intellectual Property was forbidden. We are currently witnessing a fifth example that began in 2017 and has been ongoing since then. This is after we’ve noted the producers' prior involvement in Intellectual Property development that violates our work and informed them of our claims. We advise any and all participating producers to cease and desist immediately and seek a retroactive, compensatory license for this additional breach. 

In each instance the violation begins as a collaborative effort among producers seeking to enhance the industry's innovation, performance or other criteria. These collaborative efforts gain momentum and soon reach a conclusion. The conclusion is that the Joint Operating Committee will be the source of performance and innovation, whatever it is the collaboration seeks. The first instance of this was in April 2004 and continued with a second event in 2007, a third in October 2013 and the fourth in 2014. As stated, the current breach started in 2017 with the overt objective of producers working together to meet production and profitability goals. I’m paraphrasing here. Our next two blog posts will document the actions we’re taking to remedy these issues. Producers must immediately cease and desist in using our Intellectual Property.

As these dates show, People, Ideas & Objects discussed the benefits of Oracle Cloud ERP packaged into Cloud Administration & Accounting for Oil & Gas. This was throughout our research, development and iterative improvements of the Preliminary Specification, our user community, and service provider organizations. Elsewhere officers and directors were actively looking to disparage our efforts in the market while figuring out a method of claiming our Intellectual Property. The third aspect of their actions that officers and directors may not have considered. These failed attempts have only proven that they lack this intellectual property. What People, Ideas & Objects express in our blog and wiki are valid and workable ideas. Officers and directors are only concerned with maintaining control, their own skin and method of personal aggrandizement method. 

And this point cannot be argued today. The contrast and conflict in our claims are further supported by additional evidence. People, Ideas & Objects began with our research proposal in August 2003 and our Preliminary Research Report in May 2004. Since that time we have been researching the development of what the industry would look like if this were the case. We have also researched how it should be structured and why. We know that our August 2003 research proposal precipitated the first instance of the other firm's April 2004 research proposal. This was a month before our Preliminary Research Report was published in May 2004. And we see a similar timing pattern with the publication of the Preliminary Specification in 2012 with two separate events occurring in 2013 and 2014. The irony is that I was looking for $750,000 in August 2003 to conduct research on behalf of the industry. Producers would have owned the copyright! The response was repeatedly that “we don’t hire small research firms.” And in May 2004 when we published the Preliminary Research Report, the only question, once again repeatedly was “who paid for this research?"

An incremental conflict and contrast shows the validity of our Intellectual Property claims. Since August 2003, twenty years ago. The industry has fallen into shambles. Fundamentally destroyed and all the value built in prior generations, all the value of investors who were duped into investing through accounting that misrepresented the state of affairs. All oil & gas production during this period has generated no residual value. It's all waste. These were the issues raised and discussed repeatedly throughout our writings. It was the issue we sought to resolve and mitigate with sound business practices and common sense since August 2003. Which the Preliminary Specification et al. provides. We were accused of collusion, being crazy and that the system didn't work. That our claims of value generation were nothing more than opportunity costs. In my defense twenty years later, I’m sure every investor of that vintage would love to have their damages exchanged back into opportunity costs. 

They say patience is a virtue. I have been patient with the producers. As we all have. What redeeming quality is expressed today in the performance, viability and future of North American oil & gas? Unsupported capital structures of producers and service industries. Technical resource constraints only become more pronounced each year. Science becomes more complex and the capacity and capabilities to conduct operations slip away from those with authority and responsibility. Based on second quarter earnings reports, not a word about this rapidly declining capacity and capability. Who do officers and directors think will build the next drilling rig after what they did to the service industries in the past decade? Their “muddle through” is a comprehensive and complete failure.

Why have I not been able to perform when the obstruction to my performance is this incompetent, self-interested and derelict? 

Questions to ask our good friends, the officers and directors of the producer firms.

During the twenty years before today?

• How much investor cash has been raised?
• How much value did natural gas production lose while trading above 6 to 1?
• How much value did oil production lose while trading below cost, or negative prices?
• How much executive compensation was granted?
• How much creative and innovative executive compensation was granted?
• How much overhead was incurred by officers and directors, then capitalized?
• How much overhead in general is capitalized? Why?
• Who is willing to say they trust oil & gas officers and directors?
• Who is willing to say they have faith in oil & gas officers and directors?
• Who is willing to say oil & gas officers and directors have integrity?
• How much goodwill exists between officers and directors vs others in the industry?
• Who believes the officers and directors will do the right thing?
• What is the vision for the future and how will we get there? Is silence and shrugs enough?
• Will the current culture of oil & gas change when this leadership exists?
• Who has the appropriate solution for the issues of today?

Just to state again. Mondays and Tuesdays posts will describe the actions People, Ideas & Objects will now take. Make sure you have a look, I’m sure everyone will appreciate them. 

A Friendly Reminder

To: SAP

People, Ideas & Objects have become aware of the elevated use of SAP for Oil, Gas and Energy in North American oil & gas producers. We appreciate the opportunity to compete and deal with an industry that desperately needs creative business models and methods of management. This is to address several existential issues in oil & gas. We write today to state that we are fully aware of the SAP software and backend infrastructure represented in your “SAP S/4HANA Cloud for oil and gas upstream hydrocarbon accounting and management.” We have, and will continue to monitor, that we are not in violation of SAP’s Intellectual Property in terms of their Oil & Gas related features, processes, business models and methods. We expect to maintain an arms length distance from the SAP application and services at all times.

At the same time we will continue to focus on Intellectual Property licensed to be commercialized through People, Ideas & Objects. These are original expressions of how we manage an oil & gas enterprise. We are focused on developing an entrepreneurial culture in the industry around a dynamic, innovative, accountable and profitable oil & gas producer, industry and service industry. The legacy of this Intellectual Property in its current form began in August 2003 and can be reviewed through our wiki or blog. Subsequently we spent a decade on pure research to determine if we did make such a fundamental change in the industry would work, and how would it work? This research concluded in August 2012 with the publication of the Preliminary Specification. From there, the build-out has occurred with comprehensive contributions to the Preliminary Specification and our user community.  

Software developers cannot disregard other software developers' Intellectual Property. It is for this reason that I am informing you of our work in the North American oil & gas marketplace. One of the coincidental consequences of the work we are doing is that we are disintermediating oil & gas producers in what can be described today as the traditional sense. Producers are not sympathetic to our needs and therefore our reliance on Intellectual Property is exaggerated beyond that of a normal software developer. Intellectual Property is one of our three competitive advantages and a means of organizing our offerings. 

We therefore expect that our Intellectual Property, however controversial, will be respected by all other software vendors as we are all reliant and dependent upon it as the source of our revenues. I thank you for your time and consideration. Open communications should be our policy going forward. If you have questions about our Intellectual Property please contact me. 

Paul Cox

Thank you. 

These Are Not the Earnings We're Looking For, Part LXVIII

 Issues surrounding the recording of capital costs are complex and the implications across the industry cause many tragic difficulties. The consequences are being realized today in what I consider serious fallout in every area of the industry. Officers and directors believe these are accounting issues and will affect the accounting debits and credits and not much else. Misunderstanding the business aspect of the discussion and the underlying subtleties. Accounting is about performance. It’s not about bookkeeping or "building balance sheets" or recording the volume of cash being put into the ground. These are serious issues and the toll on the industry is plain to see. I feel we’re headed towards a grave downward step in our performance trajectory, are ignorant of what the future holds and our leadership is wandering about in and out of the industry, selling themselves as heroes to one another and have comprehensively failed everyone else. Did I miss anything?

At the same time I have not been able to convey the subtlety of the issues in coherent form to those that refuse to listen or consider an alternative point of view. They contrast my arguments with their peers at the golf club and the response they received when visiting their Ferrari dealership. "They built the oil & gas industry." They are the chosen few who find these others have leached from their achievements and efforts. Others do not appreciate the science and skill put into what they do." Theirs is a myopic view of the world where they occupy the center and will do nothing to explain their point of view to those who they feel have no ability to comprehend. I think I’ve covered it. 

One of us may be right or there may be a hybrid of the two perspectives. Oil & gas is a business first and foremost. It has not been a business since the 1970s. The culture that formed around that time does not understand the difference between what is done, what should be done or why. A capital intensive industry will always generate adequate volumes of cash that overwhelm anyone’s objective thinking. When you deceive yourself by never recognizing the capital nature of the costs incurred, everything appears to be profitable, organizations have no reasonable measure to assess their performance against, they find themselves intoxicated by their ability to achieve alleged success at every corner in anything they try. They soon lose perspective and become unreachable and unteachable. As time passes, the culture becomes intractable.

I saw what was happening to the business and the need for change in 1991. As I said, mine has been a single voice in the wilderness for the better part of that time. That’s not the case anymore, and the level of damage and destruction is clearly seen by most people in the industry outside of those officers and directors. The details of what I’ve been concerned about are evident in the solution we propose in the Preliminary Specification. This solution is discussed repeatedly on this blog and the wiki. 

Let me be clear. This is not Joe Biden's or Justin Trudeau’s responsibility. If you want to accuse them, they’ll be responsible for all the good the industry has accomplished. They have done neither. It is not the service industry. They have given everything and have nothing left to give. They have no motivation, no desire and no need to be in the oil & gas service industry. Pipeline companies are in the same boat. They are regulated companies and are therefore protected financially. It is not the fault of investors who can earn superior returns in other industries and invest their money there. Those who today see that nothing will happen after eight years of waiting for those responsible for the damage and destruction fail to act. Employees of producers who have tried everything but are powerless without leadership. It is, and always will be the leadership of the producer firms as represented by the officers and directors. There is no one else with the authority and responsibility to ensure that all contributors profit, prosper, and serve their purpose. And do not let them say they made a mistake, they didn’t know or they’re sorry. For two decades they sought others to blame, excuse and created viable scapegoats for the damages from their “muddle through" strategy. Did nothing to correct their actions. And there was an alternative for them that began in August 2003 and continues today. They did nothing but choose to eliminate People, Ideas & Objects from the marketplace and try to steal our Intellectual Property outright 5 times. 

I’ve been reading Professor Richard N. Langlois's recent book “The Corporation and the Twentieth Century: The History of American Business Enterprise.” He has some fascinating information within the book and I highly recommend it to everyone. Professor Langlois suggests the Twentieth Century Corporation benefited from primary industries such as coal, oil & gas. Oil & gas' mechanical leverage today is between 10 and 25 thousand man hours per barrel. This was realized through innovations and developments in machines and tools deployed by 20th century businesses. And on the other hand, WWI, the Great Depression, WWII, and the Vietnam War each presented organizational issues that markets were too unsophisticated and unable to approach. Government and big business therefore found a role for the bureaucracy and the question needs to be asked, what exactly is the benefit of today's bureaucracy from the structured hierarchy? Its benefits do not seem relevant since Internet-supported markets are sophisticated enough to accomplish what bureaucracies cannot. Moreover, coal, oil, and gas are unable to realize the significant gains on an annual basis that offset outright the cost of bureaucracy. This is in terms of what I think has always been bureaucracies' forte. Negative productivity. I feel it's clear we don’t want or need them anymore.

These Are Not the Earnings We're Looking For, Part LXVII

 Our sample of producers' second quarter reports have been published and I have to say that I’m quite surprised with the producers' outcome. There appear to be some changes in the industry. These changes reflect officers' and directors' behavior, and second, the disenchantment it has produced. What I’m stating is that all the tricks used to make producers look more attractive in the past have been resurrected and are fully employed again. The disheartening aspect of this is investors who have been patient with producers since the beginning of their refusal to give them more money. It has been eight years. Are now giving up on waiting for producers to turn the ship around. That's the oil & gas ship, not clean energy or any other industry the officers and directors may find interesting on a Monday morning. This act alone probably sealed their fate with their investors. Producers' inability to compete on the North American capital markets affects investors' commitment to the industry. Other industries are positioning themselves for substantial upside in the long term and hanging around in the deadzone with zombie management doesn’t seem to have a future. Therefore investors are walking. 

Production discipline is a key issue. Natural gas prices ranged from 25 to 1 and 40 to 1 in 2023. Not a word is heard about the absolute catastrophe this is. Natural gas prices broke down from their historical 6 to 1 pricing in 2009. What we’ve seen is another step down in 2023 of natural gas prices from the revised pricing established in 2009. This direction seems mindless. Arguing that it's casing head gas or associated gas that is the issue, they don’t pretend to look at that issue from the point of view of resolving it. At the same time they continue to see the service industry unwilling to commit the resources needed to supply oil & gas producers with their needs for the long term. Who could blame them for that based on the treatment they’ve received over the past decades? Nothing will happen until producers commit to rebuild the service industry. And that means supporting them with generous philanthropic efforts. Producers broke it, producers need to fix it. This occurs at the same time they dump natural gas as a byproduct onto the market with catastrophic losses hoping to make it up in volume, or "oil prices are healthy enough to cover the loss," or "build balance sheets,” or “put cash in the ground.” Officers and directors may find my arguments repetitive, because they are. Imagine how their investors feel about them.

In terms of oil prices, the understanding is that oil & gas is a capital intensive industry which generates strong cash flows. As a result these strong cash flows enable officers and directors to keep the lights on and the circus moving. This argument is lost on producers. Most importantly, it provides strong executive compensation. The problem is that it's not profitable. Specious accounting, which we'll discuss later, is back in vogue, and I don't mean to suggest it ever left. Oil prices are too low to be profitable. They are certainly not enough to compensate for natural gas losses. What producers fail to consider is that Saudi Arabia has two million barrels of oil per day withheld from the market at this time. Will this reduction continue? Will a recession begin soon? What will be 2024s oil price?

Only People, Ideas & Objects, our user community and their service provider organizations configured with Oracle Cloud ERP in our Cloud Administration & Accounting for Oil & Gas have a proposed solution to chronic oil & gas overproduction. Production discipline is attained in the Preliminary Specifications decentralized production model. A proposed solution we have discussed since January 5, 2007. Natural gas volumes speak of this unconstrained production nightmare. Our method uses profitability to allocate production. We can therefore ensure oil and gas production in North America is profitable. This is a strong foundational element of our value proposition. What is clear is what has been stated simply as: “Think of it this way: If you've got a leaky bucket, you're better off fixing the leak before pouring water in the top." From January 5, 2007 until today, what would be the differential between the specious cost of oil & gas production reported and the revenue received? Vs. the comparison to the actual cost of oil & gas exploration and production, what revenues should have been received to be profitable in the real sense?

In the land of what could have been. Theoretically when interest rates are low it is capital intensive, labor saving productivity that firms should invest in. Overreported capitalization due to “building balance sheets” and “putting cash in the ground” enabled producers to leverage their positions excessively during two decades of low interest rates. Adding to the difficulties of chronic overproduction or unprofitable production. Creating a future crisis due to extreme debt levels during a period of normalizing interest rates. Officers and directors have now achieved neither benefits of these worlds.

We hear in the press about producers' phenomenal efforts to reduce debt. At the end of 2016 our sample of producers' debt percentage was 55.9%. As of the second quarter of 2023 it’s 61.7%. (Our numbers include short and long term liabilities.) Here for example is their previously tried and tested method of "hysterical" accounting. From Reuters.

To get a picture of how much improved the cost efficiencies are in 2023, conventional greenfield unit development costs (development cost divided by the reserves developed have been curbed by 60%, from US$16.1/boe in 2014 to US$6.5/boe today. It is claimed that oil wells generate nearly three times more production for the same unit of capital than in 2014. 

And later in the article.

“Contrary to popular opinion, the world is investing appropriate amounts of money in fossil fuel production to satisfy demand. Cost savings mean operators can produce the same amount of oil at a lower cost…” 

The issue is twofold. Producers should not celebrate the ability to force discounts on the service industry due to officers and directors treating them abhorrently. Doing so over a number of decades deserves special recognition however. The second issue is that the statement is false. These are historical costs, not recycle costs as producers call them. Capital costs are not variable based on what can be done in the field today. That is what producers think they can show profitability at, the $6.5, but can’t compete based on their actual, factual and historical cost of $16.1. And long term readers know I have significant difficulty accepting the $16.1 / boe cost being assigned to each of the 30 to 40 years of reserves as anywhere close to what capital markets provide from other industries. What we know is that shale exposes prolific reserves and the capital costs incurred to explore and produce them are allocated to each molecule of those reserves. Shale has steep decline curves demanding costly rework and recompletions assigned to the entire reserve base. Capital costs are never reasonably realized or passed on to the consumer. They are for the sole purpose of “building balance sheets” or “putting cash in the ground.” What they cannot understand is that running a truly profitable operation would provide them with all the financial resources they could ever need. It's easier for officers and directors to wait until investors finally see the brilliance of producers' unknown and unseen plans than to do something about these issues. Yet all investors see are mice scrambling for their daily cheese.

People, Ideas & Objects proposes the following. First, the current production cost is what the replacement cost will be. Ultimately, that's the cost of replacing the product. Oil & gas are unique products in that they are irreplaceable and irretrievable. This demands a different approach if we are to manage the industry appropriately. With the decentralized production model these costs will be recognized in the product price, passed to the consumer and therefore recovered as cash to be distributed for future capital expenditures, dividends and bank debt. Profitable operations seek to realize costs appropriately and on time to fund future operations. 

At times people argue that I contradict myself, recycle costs are production replacement costs. I disagree. My arguments are that a dynamic, innovative, accountable and profitable oil & gas industry, as a primary industry, has a responsibility for the service and other industries. This is to ensure that they are healthy, well-paid, and prosperous. Cutting the price of the services because they can get another drilling rig for half price because all producers have slashed activity levels, only drops the rig operators' revenues into the low teens. Cannibalizing those that work directly for you may not be an effective long-term strategy. Secondly, recognizing the actual cost of production by competing in the capital markets for capital, demands that capital costs be recognized on a performance basis that is in quarters, not decades or centuries. Certainly competitive with other industries.

We’ve seen over the past few years our sample of producers report hedging losses of $109.7 billion. Yet as of 2023 reported hedging gains of $2.863 billion. My argument regarding hedges is that it sets the high water mark for organizational performance. It also sets the low water mark for organizational performance. So why would any of the staff do anything other than what the officers and directors do in the form of “muddle through?" Conversely you could have honed your organization to operate at the peak of perfection as a producer. However, what good are you in a sea of sludge? Officers and directors foster and enable a culture of failure and shrugging shoulders at each and every other producer firm.

In what I call their bankruptcy business model. Officers and directors at Chesapeake survived this otherwise terminal process and were rewarded with $25 million in bonuses following their bankruptcy declaration. There is only one conclusion to be drawn here: the loser is the investor. Who was the fool in the oil & gas firm management transaction? In addition to "muddle through," specious accounting, dilution by repeated annual stock issuances, and now dilution by consolidation. These are cultural, time-honored traditions. 

Officers and directors should also be commended for their actions towards innovators, entrepreneurs, and thinkers. Companies such as Packers Plus and coil tubing providers have suffered through their own persecution and prosecution by producers. Though we have not brought a commercial product to the market at this time, we have brought more ideas to the administrative and accounting areas. In terms of solving profitability related issues and value generating ideas we’ve been working on some promising leads. We’ve seen 5 attempts by officers and directors to use our Intellectual Property in an unauthorized manner. All while receiving nothing but the wrath of the officers and directors and their desire to maintain control of the sinking ship. My argument here is that these should not be seen in isolation. Others see these actions and think, I’ll shrug my shoulders and “muddle through” as well. Eliminating initiative and therefore nothing gets done.

This is the environment, the culture and the status quo of what North American oil & gas producers want to be known for. There was a video I came across that suggested Canadian producers should stop listening to their investors because what they’ve said was wrong for them. Although I cannot find the video, it was on Yahoo! I'll continue to look for it or others as it seems to have that old familiar twist we’ve seen many times before from producers. If there is a recession in our future, if the Saudis reverse their production cuts, these are all the risks we need to face on a day-to-day basis. When we assess the North American oil & gas industry it's at times difficult to get a handle on my perspective, I’ll admit. The industry operates on hope and possibility. Never accounts for the way things are or who’s responsible. To reconcile yourself to my perspective however, only asks the question, where do we proceed from here, and how?

OCI Request for Proposal, Part VII

 Innovation

The reason People, Ideas & Objects is concerned about the startup to junior sector as much as any other classification of producer is purely because the industry’s rebuilding will be done innovatively. Innovation is the basis of the Preliminary Specification. It enables People, Ideas & Objects, our user community and their service providers to achieve our two opposing objectives of providing oil & gas producers with the most profitable means of oil & gas operations everywhere and always, and providing consumers with the lowest possible cost of an abundant energy supply. Through our decentralized production models, price maker strategy, we ensure that all production is profitable. Including Exxon’s, Shell’s and that startup oil & gas firm that began this morning. And to do so innovatively to ensure oil & gas costs remain affordable. In addition, the commodities continental production profile and reserves continue to expand. Achieving profitable North American energy independence.

Enter two variables not available in prior decades and centuries. The cloud computing era coincides with the maturation of the overall technological infrastructure represented by the Internet. We are in the infancy of the Internet. Second, we have the "service" aspect of our user communities. We found that the level of innovation attributed to the small and medium sectors of an industry was as substantial as the larger sectors. Although the larger sectors contributed large amounts of total spending, their impact was no greater than the other sectors contributed. Professor Giovanni Dosi was one of the key sources of research we used to determine the framework necessary for an innovative oil & gas industry. Innovation within a science and engineering-based business is therefore an inherent part of profitable operations and consumer affordability. 

Professor Giovanni Dosi was one of our primary sources of innovation research. His paper “Sources, Procedures, and Microeconomic Effects of Innovation” September 1988, discusses and asks what are “the sources of innovations opportunities, what are the roles of markets in allocating resources to the exploration of these opportunities”?

People, Ideas & Objects research in oil & gas focused on these points: 

The main characteristics of the innovation process. 

• The factors that are conducive to or hinder the development of new processes of production and new products.
• The processes that determine the selection of particular innovations and their effects on industrial structures.  (p. 1121). 

There are two major sets of issues here: first, the characterization in general of the innovative process.

And second, the interpretation of the factors that account for observed differences in the modes of innovative search and in the rates of innovation between different sectors and firms, and over time. (p. 1121). 

Professor Dosi then states: 

The search, development and adoption of new processes and products in market economies are the outcome of the interaction between: 

Capabilities and stimuli generated with each firm and within the industry of which they compete. (p. 1121). 

People, Ideas & Objects research in oil & gas focuses on organizational capability. Moreover, innovation depends both on the firm and the industry. Coordination of the capabilities and stimuli of both the firm and the industry would therefore need to be advanced through changes in the organizational structure of both.

Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers, and so on; (p. 1121). 

Additional issues include 

The conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulations, tax codes, patent and trademark laws and public procurement.) (p. 1121).

As People, Ideas & Objects suggest, these define an Organizational Construct that innovation demands to either flounder or flourish. As both an Organizational Construct in itself, and as we outlined in the Joint Operating Committee as a framework for that construct. What we can conclude from this definition of innovation is that it is a defined and replicable process that can be established through an organization's design. And this design can be part of the organization's ERP software that identifies and supports that organization and its industry. The Preliminary Specification accomplishes this.

Our second source of primary research material came from Professor Richard N. Langlois. Throughout our review of his work we determined the appropriate nature of the organizational design of the producer firm and the oil & gas industry. We selected specific areas of the firm or market where process and management capabilities should reside. By fully implementing the Internet and using Professor Langlois' research, which included Professor Carliss Baldwin's determination of where exactly that transfer between firm and market should occur. We designed the appropriate software tools, such as our task and transfer system. Enabling our user community to define which processes to undertake and manage in their service provider operations. Introducing enhanced efficiency in oil & gas administration and accounting. 

And building on other innovations that generate value, such as cloud computing. People, Ideas & Objects, our user community and service provider organizations can accomplish this through the introduction of our Cloud Administration & Accounting for Oil & Gas. A service that operates with Oracle Cloud ERP and turns fixed producer overhead into variable industry-based overhead. This can be provided to any producer no matter what their size or production profile. Enabling producers to shut-in unprofitable production, incur a null operation, and only produce profitable properties to maximize corporate profitability and shareholder value. A substantial portion of our published value proposition of $25.7 to $45.7 trillion over the next 25 years is attributable to introducing this production discipline. This is to eliminate the chronic overproduction, damage and destruction.

Speaking of value propositions priced in trillions of dollars, People, Ideas & Objects have started a definitive trend. ARK Investment CEO Cathie Wood suggests that innovation makes up $8 trillion of global public equity markets. She also suggests that this will grow exponentially to over $200 trillion in value in the next 8 - 10 years (2030). Moving from a 10% valuation of the total equity markets today to 60% of the global equity markets. All as a result of technology's capacity to disintermediate and the introduction of revolutionary business models that will “disrupt the traditional world order.” People, Ideas & Objects published our value proposition in 2012 and have held to those numbers. They are far less shocking and ridiculous than when initially proposed. What I would suggest regarding the oil & gas industry is that the $8 trillion in Ms. Wood’s estimate doesn’t include any innovative values from the producers. There are none. All innovation is done in the service industry. And it is undetermined at this point if any of the $200 trillion innovation estimate will be realized in North American oil & gas.

Let's set the tone for engineering and geological demands. People, Ideas & Objects have identified substantial capital cost structures that include the costs of:

• Recovery of the past property, plant and equipment account balances, or as we describe them, the unrecognized capital cost of prior production. Whereas if recognized today and these costs were passed to the consumer, would provide incremental cash flow to provide dividends in compensation for past excessive reliance on investors.
• The refurbishment of the infrastructure as it stands today. 
• The rebuilding and expansion of the infrastructure and production deliverability to attain and maintain energy independence. 
• And finally the looming and escalating reclamation costs of the industries past. 

Producers will incur these costs as a result of providing energy to consumers. Without a means of passing these capital costs on to the consumers, such as the Preliminary Specification does, they will bankrupt the industry, or their investors under the officers and directors current business model of “building balance sheets” and “putting cash in the ground.” Methods that we believe will not be recaptured in any software implementation conducted by the industry officers and directors choosing to move to SAP. Infrastructure and production deliverability expansion will be the largest costs. A dynamic, innovative, accountable, and profitable oil & gas industry presents the greatest opportunity for everyone. The focus here is on their secondary and tertiary industries. Having a dynamic, innovative, accountable and profitable business model and means to deal with these costs is an urgent priority.

The Preliminary Specification has captured this understanding of innovation and incorporated it within the innovation framework of the Joint Operating Committee and Innovation Organizational Construct. Each of the fourteen modules of the Preliminary Specification is materially affected when we identify the Joint Operating Committee as the key organizational construct. That provides us with an opportunity to incorporate this understanding of innovation into the design and reorganization of the oil & gas producer firm and industry. These can be identified by several major design processes within the Preliminary Specification. One of these ensures that innovation and its underlying processes are not repeated in separate and distinct areas of the organization each year. Repetition of failed ideas is not innovation. By building creative ideas based on prior failures, we can move forward in new directions. Another major aspect of innovation is improving the scientific basis of producer firms and the industry as a whole. Moving forward on the basis that an idea that generates a dollar today will only produce ten cents tomorrow. We therefore must increase the volume of ideas generated and incorporated into our work processes to continue enhancing our value. Various other innovation processes have been incorporated throughout the Preliminary Specification based on primary research conducted by Professors Giovanni Dosi and Richard N. Langlois. Enabling producers to earn unquantifiable trillions of dollars of increased value above what has been quantified here, for decades to come.

OCI Request for Proposal, Part VI

 Markets

The Preliminary Specifications marketplace modules include the Financial, Petroleum Lease and Resource Marketplace modules. Each replicates the three primary markets in which a producer actively participates daily. Seeking to profitably and innovatively apply their distinct competitive advantages, 

• coordinating the markets of earth science & engineering capabilities. 
• their land & asset base. 

The Petroleum Lease Marketplace module is exactly what you expect. An opportunity to post, bid, purchase, and sell mineral rights and producing properties in the marketplace that exists and is replicated virtually within the Petroleum Lease Marketplace module. Everything from the opportunity to participate in a joint venture to establishing and ensuring surface rights payments are fully supported by our Cloud Administration & Accounting for Oil & Gas of the Preliminary Specification. Our ERP product sits on top of Oracle Cloud ERP which includes Tier 1, Oracle Fusion Applications. Gartner ranks it as the best ERP solution on the market. These oil & gas Marketplace modules include Federal, State, Provincial, Freehold and Offshore leases. Industry can consolidate on a dynamic platform that uses proven Tier 1 technologies with service providers' constant support. All within a dynamic platform that maintains transaction administration, standard and objective accounting. 

This will be enhanced by the constant iterative design and development being undertaken by People, Ideas & Objects user community and developers on a permanent basis. This will be available through our Cloud Administration & Accounting for Oil & Gas service. While if a jurisdiction reviewed and changed their royalty rates at some point, in terms of either the rate or method calculated, producers would not need to concern themselves with the administrative or accounting aspects of those changes. Changes to the software and services would be implemented in a timely and accurate manner by our user communities, developers, and service providers. Producers would only need to deal with revised royalty costs and performance consequences. 

As with the Resource Marketplace module we see many changes in this oil & gas marketplace. Which I would think producers would welcome at this point as financing is next to impossible for producers and particularly the service industry. We noted that the movement of knowledge to where decision rights were held, the Joint Operating Committee, enhances accountability. It's here that the Financial Marketplace enhances that accountability with the board of directors' interaction with their current and prospective shareholders and bankers. A review of the Financial Marketplace module specification would be the most comprehensive source of information to capture an overall understanding of the module. Furthermore, the Preliminary Specification and service providers' accounting are standardized and objective. Consider if that would satisfy some of the issues investors and bankers have raised regarding their investments and loans in the industry? With the Preliminary Specification everything being produced is profitable and producers seek to maximize their profits by shutting in unprofitable production. 

The three marketplace modules share the Marketplace Interface which is a virtual representation of the markets. The Marketplace Interface demos were prepared by the underlying technologies available to us at the time and over a decade ago. Much has developed in the technological environment since. There are many points I would argue are different today, including.

• The work from anywhere and its enhanced productivity of employees.
• The co-mingling of professional and personal lives, the reduction of redundant travel times and archaic rituals has had a marked increase in the performance of white collar workers being engaged over a 12 to 14 hour day. 
• Zoom induced hell. (The demand to always be on camera.) 
• Turning cameras off for peace of mind is now a necessity to this ball and chain. All to satisfy one’s immediate supervisor's demand for command and control through continuous mandatory attendance.
• The current lack of ERP tool support availability.
• Search, contracting, buying, selling, financing, billing, paying, marketing etc. What is currently being done in the ERP area of oil & gas vs what could be done in a hybrid ERP system such as the Preliminary Specification. With a marketplace interface could not be more stark. Oil & gas is in the dark ages in comparison.
• Proliferation of bots. Both good and bad. Note, Oracle’s Cloud ERP now has “good” bots that fight the “bad” bots that may be attempting to get in. 
• “Always there” capability. 
• Establishment of permanent, virtual real estate and representation for a producer's bot’s and organization. 

Looking at the establishment of IT in other industries where technology has been embraced we can ask some interesting questions. Why is there such volume on the stock exchanges today? What are all those algorithms doing? It’s been more than two decades that they’ve existed. How can Elon Musk outperform NASA, Ford and GM? And how is it that oil & gas is generally and rightly regarded as having many of the most advanced science and engineering Information Technologies available to it? Yet its business is about to be trashed? 

North America has advanced its overall quality of life through market and price discovery. The Preliminary Specification has therefore adopted these as part of the structures that define and support the oil & gas industry. Our decentralized production models price maker strategy relies on the principle of oil & gas commodities being priced based on their ability to satisfy the economic definition of a price maker. Producers must produce only profitable production, after full consideration of all costs on a timely and accurate basis. This is how they’ll operate under our ERP system and service provider offerings. Using all of the information contained within the commodity market price (production, inventory, consumption, reserves) to determine profitability and ultimately what will and will not be produced. It is the same mechanism involved in every transaction on a free market. 

From the Preliminary Specifications Resource Marketplace module we quote from a paper written by Professors Richard Langlois and Nicholas J. Foss entitled “Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization.” They note.

The organizational question is whether new capabilities are best acquired through the market, through internal learning, or through some hybrid organizational form. And the answer will depend on (A) the already existing structure of capabilities and (B) the nature of the economic change involved. p. 21.

And

If by contrast, the old configuration of capabilities lies within large vertically integrated organizations, creative destruction may well take the form of markets superseding firms. History offers many examples of both. p. 21.

And

Either way it boils down to the same common-sense recognition, namely that individuals - and organizations - are necessarily limited in what they know how to do well. Indeed, the main interest of capabilities view is to understand what is distinctive about firms as unitary, historical organizations of cooperating individuals. p. 17.

We first need to discuss two components of how I see one of the marketplaces in oil & gas. Field service providers have a role to play in extending producers' capabilities and capacities into the regions of their focus. Owning and operating their own field infrastructure would otherwise hinder progress. The second component is the history of abuse and disrespect producers have displayed and presented to the service industry for over forty years. And especially since 2015, when they realized their financial difficulties were amplifying. Their assumption that oil & gas is a boom / bust industry has been accepted by producer bureaucrats. All other industries sought to work these issues out of their businesses and industries many years ago. It is this continuing acceptance that has left us with a legacy of six good years out of thirty seven. Officers and directors don’t understand this point as they’ve experienced thirty seven years of excellent compensation. 

Producers assume the service industry needs to adjust to the boom / bust trend in lock step with producers. There is an implied assumption that the service industry, like the oil & gas industry itself, enjoys revenues as a primary industry. Therefore, it continues business as usual during the bust cycle. The diversity of service industry offerings, and their coverage across various regions of North America spread them relatively thinly. As secondary industry participants their revenues are not persistent and therefore they are not as resilient as producers believe. The collapse of their revenue streams into the low teens has been devastating.

Now the consequences of this latest downturn have destroyed many service industries' capacities and capabilities once available to producers. This decline in support since 2015 on top of the cumulative difficulties imposed by oil & gas producers for decades has created a situation where many will struggle to survive. The largest service industry providers have left the continent due to abusive treatment. Therefore working out the boom / bust cycle through our price maker strategy will rectify this issue. This is done by providing a stable environment, or constant level of demand, in which the service industry can prosper. However, service industry investors have had it for this millennium. They invested in good faith and were repeatedly abused by the producer firms. They’ve witnessed the equipment they invested in being cut up for scrap metal. Horse power is sold off to other industries to survive. This was primarily due to producer bureaucrats determining they could get away with leveraging additional field activity by not paying their bills for 18 months after the jobs were completed. As their last source of capital to keep their show running. The dilemma today is who’s willing to provide the financial resources for the service industry to recapitalize itself? This will enable it to reestablish the capacities and capabilities necessary for a self-sufficient and profitable oil & gas industry? The Resource Marketplace module engages producers and service industry participants in constructive discussions regarding the oil & gas and service industry business. 

This is what’s known and understood on the market today. It's not news. Producers will expect the service industry to dance for their dollars just as they’ve always done. If People, Ideas & Objects are correct and no one plays that game, what would be the result? I would point to the example of the history of ERP providers in oil & gas over three decades. I can report that there is still no consideration of a second chance that first-tier ERP providers may rescue production firms. Why? They feel the industry is too complex, too costly and there are not enough producers to negotiate sales prices fairly. The last two Tier 1 ERP providers left in 2000 and 2005, as documented on page 17 of our White Paper. This was due to producers' inability to pay for software development in advance. Producers have never paid for ERP systems anyway, so why start? If as suspected SAP is being turned to by producers to satisfy investors' demands for Tier 1 ERP system level accountability. Based on a September 2022 SAP conference and their 14 page brochure. SAP will ensure they’re paid each month for each producer's integration.

Producers have had over a decade to invest in the Preliminary Specification to make their organizations profitable and avoid this inevitable, predictable and disastrous outcome but didn’t. Not a penny has been spent on People, Ideas & Objects at any point. As a result, producers will be responsible for all of the costs related to the development of the Preliminary Specifications and our user community. The need for skin in the game is the apt approach when so many ERP providers and their investors have been betrayed so comprehensively. This will be the necessary approach throughout the oil and gas industry rebuilding process.

Producers sit on revenue from their primary industries. (And mostly for enhanced, innovative, executive compensation, I question what's in those capitalized overhead accounts we never see.) Officers' and directors' inactions have consequences detrimental to everyone else in the industry. They will argue, rightly, that what we propose does not remind them of what markets and price discovery should look like. Correct, it's what’s necessary after the destruction of markets. It is the rebuilding process. These facts on the ground are what bureaucrats refuse to consider or admit. Until they do the industry will be plagued with problems. And they’ll never admit it. What they will do instead is leave which is the historical action other bureaucrats have taken in other industries since 1929. Which is possibly what they’re doing in their transition to clean energy. Taking oil & gas revenues with them. These issues need to be dealt with and I am unaware of another solution. The fact is officers and directors broke it, officers and directors of the producer firms will need to fix it. The need to rebuild these industries brick by brick and stick by stick must be financed by the only means available. Oil & gas industry revenues. Producer cash generated through our Preliminary Specifications decentralized production models. With active participation in the development of tertiary industries that support the primary industry of oil & gas. Or in other words, ultimately the consumers. Granted there will be those within the service industry that will continue to scrounge for the pennies falling from the bureaucrats' pockets. However, that does not create the dynamic, innovative, accountable, profitable and energy independent oil & gas industry that we need.

OCI Request For Proposal, Part V

New Growth Theory

People, Ideas & Objects has taken North American producers' administrative and accounting resources and reorganized them into independent, individual service providers. This has allowed them to focus on one process and turn producers' overhead costs variable, based on profitable production. In turn none of the producers' costs are fixed in the Preliminary Specification. Creating six substantial value propositions that are tangible and clearly evident. Which include:

• Maximize producer profitability by not diluting corporate profits through the production of unprofitable properties.
• Save the producers petroleum reserves for when they can be produced profitably.
• Reserves would no longer need to recapture additional costs of previous losses as future profits.
• Reserves are seen as a cost-free means of inventory and storage.
• Removing marginal production from commodity markets ensures prices dictate market activities. 
• While shut-in producers can focus their innovative efforts on increasing production, reserves, and cutting costs to return their properties to profitability.

Secondly and perhaps more importantly in terms of building value for the greater North American oil & gas economy. Specialization and the division of labor which has proven to be the primary method of generating all tangible value for western civilization since 1776. Based on these principles, we have reorganized administrative and accounting resources to build value to ensure profitable operations. Specialization and division of labor will enable industries to enhance productivity in unknown, unquantified and unqualified ways. We facilitate this through our permanent software development capability, our user community, and their service provider organizations implementing these principles.

We have adopted an incremental method of building value on top of these two methods through Professor Paul M. Romer “New Growth Theory” of non-rival costs. In a December 1, 2001 Reason article he summarized his theory as “People, Ideas & Things.” Throughout the Preliminary Specification we've adopted these principles and named this initiative People, Ideas & Objects as we are object-based software developers. Using Professor Romers' "New Growth Theory" and non-rival costs, we've elevated them to an Organizational Construct. Standing on the shoulders of giants and especially Adam Smith’s Specialization and Division of Labor. Professor Romer has elevated business thinking in this direction and it is the next frontier in building value for organizations through the mitigation of costs in substantial yet unquantifiable ways to enhance the performance of those that use these methods. 

Professor Romer’s theory is the basis of how cloud computing has brought value to our economy. Users can share the costs of heavy capital investment in technology, capacity, capabilities, resources, maintenance and support costs and turn them into variable costs. Variable based on usage. Conversely service providers can enhance their service offering through specialization and division of labor which would otherwise be unavailable to individual organizations. We have extended this thinking to include not only Oracle Cloud ERP but also oil & gas administrative and accounting functions to be managed as shared and shareable resources. Eliminating the need for each producer to build, resource and maintain the necessary non-competitive accounting and administrative infrastructure they need as dynamic, innovative, accountable and profitable oil & gas producers. Providing a standard, objective and value driven service that shares the sole objective of ensuring oil & gas producers achieve the most profitable means of oil & gas operations, everywhere and always.  

Professor Romer's theories are one of seven Organizational Constructs of the Preliminary Specification. All seven are focused on building value for producers and providing tangible means to do so. In this proposed configuration, they are available through the Preliminary Specification, our user community, and their service provider organizations. Creating the culture necessary for the industry to be dynamic, innovative, accountable and profitable. The culture will be established with permanent software development capabilities and our user community. This culture will iterate on these principles over time to bring further value to the industry. 

Professor Paul M. Romer

Published in October 1990 “Endogenous Technological Change” became the foundation of “New Growth Theory” in economics that has developed and provides value throughout the economy through its application. In a Reason Magazine interview Professor Romer explained many of the points.

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a non-rival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth. S71

Professor Romer won the 2018 Nobel Prize in economics for these principles. It is our view that these are incremental value-adds to traditional specialization and division of labor. It is this principle of sharing non-rival costs that will mitigate what we believe to be the secondary reason for the systemic lack of profitability in oil & gas. In general, overhead costs are currently corporate. We will shift responsibility for those expenses and charge the actual, factual overhead costs incurred by service providers' billings directly to the individual Joint Operating Committee. There they become a cost of a property product and are captured in the sale price of the commodities. Through the sale, these funds are recaptured and returned to the company, which are used for overhead costs for the following month, etc. Currently producers capitalize overhead costs and therefore sell their product below its actual cost and are not recovering the cash spent on monthly overhead expenses. As they state, they're “putting cash in the ground” and building balance sheets." Constantly sourcing new cash to finance their overhead expenses each month.

By sharing the administrative and accounting infrastructure, turning these costs variable based on profitable production, and applying specialization and the division of labor to the administrative and accounting areas. Through the development of our user communities and service provider organizations. And then delivering to industry our Cloud Administration & Accounting for Oil & Gas software and service. People, Ideas & Objects are adding real value to North American producers in terms of resolving what are their largest impediments to profitability. Chronic overproduction, or unprofitable production as we describe it and high overhead costs. 

Oracle CloudWorld 2022 Conference

It was during this conference that it became apparent that Oracle was pursuing the incremental value adding process that Professor Romer defined in his paper “Endogenous Technological Change.” Augmenting their generic business processes with service providers such as banks and logistics companies with fully optimized and integrated services with Oracle Cloud ERP, just as People, Ideas & Objects are approaching the unique oil & gas attributes. We all have an extensive software development workload ahead. I see at least 20 years of work in this area. Continually improving upon prior innovations. 

The most impressive example provided during the conference was the expense reporting features of J.P. Morgan Chase. If an employee uses their credit card for business, they can choose the type of expense to be classified. Oracle Cloud ERP would evaluate the charge based on the company's policies and determine its eligibility. If eligible it would be processed and payment made to the employee or the credit card company. Eliminating the massive number of hours and costs incurred in expense reporting by organizations during the year in their current systems. This is reduced to a few milliseconds of processing time. While the cost to the organization to use Oracle Cloud ERP is incidental in terms of the time spent on Oracle Cloud Infrastructure. As well as the engineering costs associated with the development of the specific system the software engineering costs are amortized across the global population of Oracle Cloud ERP customers using the feature. To a lesser extent People, Ideas & Objects provide this level of service to North American producers for their unique oil & gas attributes. The lesser extent is due to the smaller population of oil & gas users for which this development and implementation will be targeted. As such, North American producers have the opportunity to realize both Oracle and People, Ideas & Objects innovations concurrently and at substantially reduced costs. These are due to Professor Paul Romer's theories.

Intellectual Property

People, Ideas & Objects establish the need to rebuild the oil & gas industry and producer firms. This is due to the damage and destruction caused by producers' officers and directors. Their “muddle along” strategy has instilled a “do nothing” culture that provides a status quo existence that has not and will never change. Even the event of 2015 and all subsequent years in which investors have refused to participate further in the industry has not prompted a response or action. Where does motivation come from to efficiently and effectively conduct this rebuild? Oil & gas is one of the most advanced science and technology industries. One that demands innovation and iterative development of those sciences to ensure adequate reserves and production are provided by a dynamic, innovative, accountable and profitable oil & gas and service industry. And to ensure that it always meets the conflicting objective of ensuring consumers are provided with abundant, long-term supplies of reliable and affordable oil & gas. 

The importance of Intellectual Property in the oil & gas industry is that it will organize innovation. The most productive innovation is when it’s organized under a structure that enables the market to focus on its development. The North American marketplace established Intellectual Property centuries ago and we have reaped its benefits. The United States included copyright in its Constitution. Copyright must be published to earn it. Exposing it to the marketplace of ideas where it can be built upon and enhanced by others. It reduces the “me-too” phenomenon that oil & gas bureaucrats have created and benefited from to generate price competition in the service industry, elsewhere and to ensure everyone was rendered “blind sleepwalking agents of whomever fed them.” Is this the method that an innovative industry is built upon? With bureaucrats sitting on top of the primary industry of oil & gas and using its revenues to endow their favors with a penny or two here and there? 

The organizational structure of the proposed oil & gas industry People, Ideas & Objects et al are rebuilding will be based on Intellectual Property and innovation. Structured and based on the laws of the land. These laws will define what innovation is undertaken and what is not. Violation of another's copyright or other Intellectual Property is not allowable under the law so there cannot be any violators. A self-policing mechanism reduces the overall costs of unnecessary innovation duplication. Focusing energy and resources on profitable innovations in products and services. Providing the incentive and motivation for those with the ideas to do the hard work of making those developments. Fully protected from Intellectual Property poaching that's actively sponsored by producers, officers and directors. Which is culturally ingrained and accepted by them in oil & gas today. And to do so not just today, but always and everywhere. 

Copyrighted publications enable an understanding of how things are done. Providing the means to build upon that understanding with additional innovations. Intellectual Property therefore provides us with a strong legal structure that encourages innovation, eliminates the costly redundancy of duplication of efforts, educates and ensures the necessary legal protection to enable the motivation for the individual to do the difficult and challenging work we can all agree is the foundation of the industry. This applies across the greater oil & gas economic structure which includes all secondary and tertiary industries. The 21st century will be known for Intellectual Property leverage. Much like the last century leveraged mechanical effort. For officers and directors to avoid this or opt out is foolhardy in the extreme.

What is the motivation for people to develop their “ideas?” Are they not, just like the bureaucrats, in it for themselves and looking to siphon off what they can from the industry? Self interest is part of human endeavor. It comes down to whether or not it builds value. Self-interested officers and directors have been well compensated while the industry has been destroyed. A contrast due to the fact that they’ve not been motivated by the discovery of ways to create value. Intellectual Property is therefore not only a structural organizational component that can enable control of the innovation process throughout the industry. The participants are motivated to build value through incremental profitability, cost reduction, enhanced production deliverability or reserve expansion. It is the law, and most importantly, it is proven. The reason the United States dominates in the manner that it does is due to the fact Intellectual Property laws provide the motivational and organizational principles of how their economy and society operate. It assumes people are intelligent beings, not serfs like bureaucrats. It is productive, constructive, focused on generating value and benefits society. Otherwise why would individuals do the difficult work that’s necessary? By bureaucratic command? As a science and technology business, that is refuted to be second only to the space industry in terms of complexity. What has and what have these bureaucracies done under their business model?

Difficult work needs to be undertaken in a complex science and technology-based industry in a 21st century business environment. Oil & gas is a critical necessity for our economy and way of life. One in which the environment and organizations we are presented with today can be assessed as wholly inadequate to meet those needs both today and in the future. And what is potentially more difficult is they’ve shown no propensity to recognize any of its issues or the need to make any changes. There is a need for significant development in all aspects of the greater oil & gas economy during this rebuilding period. A method of organization will be the first element necessary for a solution. However we have to address the issue of how that organization is formed and the subsequent pieces are put in place. The need to understand “how” those involved in this rebuilding will be motivated to do this difficult work and where they can fit in is addressed in the Preliminary Specification. This is accomplished through the adoption of Intellectual Property as an Organizational Construct. This is defined and supported by the software and services People Ideas & Objects et al propose in this RFP.

People, Ideas & Objects, our user community and their service provider organizations focus on providing all North American oil & gas producers with Cloud Administration & Accounting for Oil & Gas. To ensure startup, small and junior oil & gas producers receive all the Preliminary Specification capabilities and capacities. This is due to the critical role and nature of their existence in terms of dynamism and innovation. Currently we have a market in oil & gas where officers and directors point to the startup to junior producers as causing the difficulties we’ve seen in the industry. In fact they may have become the officers and directors' most recent viable scapegoat! Our focus is appropriate, and we can ensure these producers can enter the industry with fewer barriers to entry. We do this by providing all producers with the means to generate a second source of permanent revenue from day one. A ready market where demand and coordination for the markets earth science & engineering resources will be made available through the Preliminary Specifications Work Order, Resource Marketplace, Research & Capabilities and Knowledge & Learning modules. Providing them with the cash to pay their mortgage, Internet, work from home and skip past the dog food aisle for their families' nutrition. Incorporating their experience, skills, knowledge, and ideas into the broader market for oil and gas. We also eliminate that impossible wall of never ending overhead costs that consume investors' dollars year after year. This is the base of fixed overhead of the small to junior producer. Which is and has been the cause of their demise today. It didn’t matter how advanced their technical skills were, that’s not what determined their success or failure as a startup oil & gas producer. Instead, it was if they could get past that wall of base overhead costs. 

Officers and directors know the Preliminary Specification establishes a strong foundation for Intellectual Property of individuals within the industry. This value becomes available to those original authors, innovators and entrepreneurs which is in turn marketed to oil & gas producer firms whose distinct competitive advantages include the coordination of the markets earth science & engineering capabilities and their land & asset base. This is provided through the Preliminary Specifications Resource Marketplace, Research & Capabilities and Knowledge & Learning modules that were published in final form in August 2012. From the Resource Marketplace module I summarized the points as follows.

Another key point is the tearing down of the existing Intellectual Property culture. An industry such as oil & gas is based on earth science & engineering needs. After all, it is a science-based business. If we are to expand the capabilities of science and innovation in the industry, we have to address many difficult problems. And as we progress, the volume of ideas needed will be an order of magnitude greater than what is required today. These problems cannot be addressed in an environment where there is no incentive for individuals to solve them. Addressing the motivation to solve these problems and enabling the people to earn the rights to the Intellectual Property within the People, Ideas & Objects application modules is the first step in making the necessary industry wide changes. This will turn the oil & gas industry into a more dynamic business.

With the oil & gas industry fundamentally destroyed as it is, its Intellectual Property is also in disarray. The capabilities and capacities are deteriorating as we speak. Making this an Intellectual Property gold rush in the industry, to save it from bureaucrats. However, employment contracts may have clauses that state that while working for them, any product is theirs. Consolidated producers' difficulty is that none of this is published and the act of publishing is how copyright is earned. Patents and trademarks are defensive, in that they protect what is known of Intellectual Property at a time. Copyright is offensive and allows Intellectual Property expansion through the creation of derivative works. Copyright does not secure idea rights. It only grants monopoly rights to the expression of that idea. In other words, it must be pursued and maintained as I do here. 

It is particularly relevant to consider Intellectual Property Rights in an industry that coordinates market capabilities for earth science & engineering, along with its land & asset base. These seem diametrically opposed in terms of how they function. What People, Ideas & Objects suggest is that there is no need and no benefit in having the producer firms own any of the Intellectual Property that supports “what, how and why” the industry operates. We need to address the motivation for how the industry progresses, how science and technology progresses innovatively and quickly. And address why this hasn’t been the case. 

This Intellectual Property section of our RFP Response is ripe with conflict and contradiction. We stated earlier that shale science and technology were the most advanced, yet belittled its development over the past years. The contradiction is that I’m only suggesting oil & gas producers are static. The development and implementation of shale technology would have taken place decades earlier if producers had kept up with progress in the service industry. It is there, in the service industry where all innovation and development occurs. There is no benefit to a producer owning Intellectual Property on a drill bit. And we are extending Intellectual Property deployment to the sciences of geology and engineering. What have been the bottlenecks to the further development of the industry over the past few decades? 

Business changes quickly. Intel's dominance in the market is now a constraint that causes them to lag the market in consequential ways. As the dominant processor manufacturer, it has been deemed a redundant business model. Business value is no longer in processor manufacturing, it's in their design. Contract manufacturing is a commodity business where others find profits and opportunities in that area where Intel cannot compete. In terms of design being the value, that is now the case. People should read the summary of Ampere Computing’s Leadership Team that now has one of the most powerful processors available. Oracle (a major shareholder) has moved their high performance cloud offering to Ampere processors, which Oracle’s Cloud offers today. 

This is the changing business world and there are more innovative business models. It comes down to one word, the individual. To organize society today, with its global reach, cannot be done spontaneously. There is no serendipity when individual A meets individual B 1,000 miles away on the Internet. This is done through software providing them with the means to conduct their business. Software defines and supports this organization style. Without People, Ideas & Objects none of this oil & gas vision will come about by sitting and waiting for the phone to ring. At least it hasn’t happened yet.

The question also needs to be asked: why does Apple continue to innovate consistently? Although their products are more costly, they earn in excess of 80% of the profits of the mobile phone industry. In addition, they bring incremental value to their customers through innovation. They too rely on Intellectual Property as the basis of their value. They consider themselves a software company that sells hardware to bring customer value. Software defines and supports organizations. Who would run a company that sources products from a number of countries that total 3.5 billion in population? And then snap their fingers and say “now innovate.” It doesn’t happen without software.

For producers to double and triple down on their failed vision is the method chosen to resolve the oil & gas industry and producer issues. This is done by the current officers and directors. Raising the viable scapegoat that it's the small producers who are overproducing to meet their bank payments is causing the disaster in the industry today. When officers and directors raise this argument we see the source of their own future demise. For them to admit the overproduction issue is attributable to their own actions would never cross their minds. Everything is always someone else's fault. Should they be successful in implementing SAP or other means to secure their method of organization and management this will most certainly continue.

We’ve defined our alternative vision in the Preliminary Specification. We would note that it’s in stark contrast to the clean energy vision producers and SAP are transitioning to. Disintermediation is best defined as the removal of bureaucracy and red tape rendered redundant through the Internet. Although the world is unaware of “how” and “what” the producers current consolidation driven vision will operate as, or any details, we can only speculate as to why it’s being done when all other industries are, and not by choice, finding efficiency in the decentralized methods of organization and disintermediation through technology. People, Ideas & Objects have repeatedly stated the fact that each boe provides 10 to 25 thousand man hours of equivalent labor, or 28 to 71 times the entire global population. Officers and directors capitulation of shale resources for clean energy should be seen as irresponsible when we understand that it’s the world's most powerful economy that is the largest consumer of energy. Why aren't officers and directors seeking profitability in shale? 

Due to the demands for market coordination of earth science & engineering resources in the near future, we've discussed how specialization and the division of labor are used in the Preliminary Specification to deal with these associated resource demand issues. Conceptually we have implemented the pooling concept where the ability to have the Joint Operating Committee assigned with the available technical resources of each producer firm would be how the property was managed from an earth science & engineering perspective. Pooling replaces the operator role. Establishing the second source of revenue for the producer and its supporting administrative infrastructure is in the Preliminary Specification. We have also implemented the necessary governance model to support these resources with the appropriate organizational structure. This is to ensure effective operations across the producer and each Joint Operating Committee. 

Two other interesting aspects of Intellectual Property are first, safe harbor provisions. Why don't producers turn around and sue the copyright holders? This would be an unfortunate world where “big” ruled the earth and we serfs would be the drones who were forced to comply with their every command. The safe harbor provision states that people cannot sue the copyright holder. Secondly, the division of tacit and explicit knowledge. Tacit knowledge cannot be captured or written down. Only explicit knowledge can. Therefore it is up to people to take the explicit knowledge they have secured and apply their tacit knowledge as a service. This will support their Intellectual Property and generate value. These services are as relevant as Intellectual Property itself. Just as People, Ideas & Objects user communities service provider organizations deliver our software and tacit knowledge to producer firms.

There is no question that People, Ideas & Objects user community and their service provider organizations are Organizational Constructs, market supporting institutions and a critical element of the future success of the oil & gas industry. Intellectual Property is the foundation of their formation, organization and delivery of value to the oil & gas industry. The configuration of their Intellectual Property however is fundamentally different from what is described here for the engineering and geological sciences. It is for that reason that they are given specific pages within this wiki. These pages deal with the unique characteristics of their Intellectual Property and how that is developed, implemented and employed.