User Community Vision Edits Part 2 of 3/4

 Leadership in our User Community

The first real ingredient of our user community in terms of its needs is leadership. Effectively our user community is a separate organization that is independent of both People, Ideas & Objects and the industry itself, driven by its own vision, purpose, community and leadership. Although our user community will have People, Ideas & Objects as its sole source, by license, of part-time user community participation revenue, user community members are the principles in the service provider organizations who provide the accounting and administration process management through the delivery of our software and their services. Our user community members will have their service provider(s) as their primary source of income and value generation. It is also People, Ideas & Objects objective to focus on our organizations competitive advantages of our user community, research and Intellectual Property. Therefore the leadership in our user community is an aspect that needs to be developed from those who commit to the overall vision of the Preliminary Specification and desire to provide oil & gas producers with the most profitable means of oil & gas operations. 

There will be two types of leadership provided by our user community. There is the organizational focused leadership that will be focused on the needs of our user community. Secondly there will be overall industry wide leadership of the oil & gas business model. This is discussed in detail in the next section. Our user community includes the necessary organizational support that will be demanded of it, and this will include the thirty or so Product Owners who are responsible for either a specific module of the Preliminary Specification or an element of its development. Involving the hard work of developing an organization that meets the needs of the software, the industry, the service providers and most importantly the people in the industry. To build an application on Oracle Cloud ERP can be done by anyone with the money to do so. To add a vision as compelling as the Preliminary Specification to the mix adds a lot of value to the process. However, building a user community to define and support both Oracle Cloud ERP and People, Ideas & Objects software will ensure that this environment becomes successful for all concerned. These software applications will deliver the explicit knowledge that is captured by our user community and codified in the software they develop, and their service provider organizations will deliver that software in combination with their tacit knowledge as a service offering to the profitable oil & gas producer. Providing oil & gas producers with the most profitable means of oil & gas operations. 

This leadership group contained within our user community should not be confused with the role of our user community itself. It is a supporting role, not a defining or traditional organizational structure to provide guidance to the organization. It is purely to provide our user community members with the support they need in order to perform their role in providing the oil & gas producer with the most profitable means of oil & gas operations. To suggest our user community is independent, then to continually state that they are People, Ideas & Objects competitive advantage with its own leadership structure is counter-intuitive and contradictory. I don’t see it that way. The Intellectual Property of which is the basis of what everyone is working and building is derivative of People, Ideas & Objects and our ultimate ERP software. We are seeking to build the highest quality software possible for today and to continue to do so. User based developments are the only method in which we can achieve that objective. It is more of a value to us that fits within the method that we’ve chosen to provide our solution. The leadership team of our user community is supportive. Looking to mitigate the issues and exploit the opportunities they see our user community being faced with. User community participants are focused on the demands of the producers' needs. That is where they’ll focus, seek and obtain their calling. 

McKinsey Consulting published a good article on the topic of leadership entitled “Change Leader, Change Thyself.” And within it they have an exhibit that I can’t reproduce. You can download the article and view the Exhibit for yourself. It's the one that details the roles and responsibilities of the CEO, CFO, COO and Human Resource Officer. Their focus of attention, their source of power and their sweet spot. It is these roles that need to be filled in our user community leadership as an organization. 

Other roles that will need to be filled are the 30 or so product owner roles we mentioned earlier. These are intriguing roles that take a premier seat in the software development team. They are the ultimate representative of our user community for the scope of the team's development authority. So if the team was developing the Partnership Accounting module the Partnership Accounting Product Owner would ensure that our user communities' needs were understood and implemented in the software by the People, Ideas & Objects software development team. Having expert knowledge in the area, in this case Partnership Accounting, the Product Owner is able to read our user communities needs and preferences and increase the effective communication between our user community and the development team. Ensuring that no misunderstandings or confusion between the groups causes delays or faulty software. These are just some of the obvious leadership roles that are necessary in our user community. As we proceed we will begin to put more elements of what is required and how we expect things to develop. 

We have consistently asserted that we provide greater value to the dynamic, innovative, accountable and profitable oil & gas producer over what the bureaucracy is providing today. Our focus on developing our user community, its leadership and the associated service providers as our primary task. We do this as we are striving to provide an alternative means of organization to the oil & gas industry. So that the oil & gas investor, and the people who work in oil & gas can choose the bureaucracy or People, Ideas & Objects Preliminary Specification, our user community and service providers as the method to manage their industry. Organizations don’t change, people do. Therefore without alternatives we are stuck with the bureaucracy. If we don’t work towards building an alternative, nothing will change. And this is the place where people can begin the process of changing the oil & gas industry from a tired, poorly performing, muddling along behemoth to a dynamic, innovative, accountable and profitable industry. 

There are many benefits that are and can not be quantified which are gained from implementation of the tools of specialization and the division of labor. Ours is a new way of operating the oil & gas industry, and as we have stated here before, even if the bureaucracy could park their own self interests and wanted to proceed with our developments we would not begin until our user community was fully formed. The Preliminary Specification is a fine vision of what the industry can operate as. However without our user communities involvement in the software developments it will be a great vision without the appropriate implementation. There must be robust user community involvement in the software development of the Preliminary Specification. It is mandatory, and as I have pointed out our user communities development is our number one focus and priority. We are an existential threat to the bureaucracy who are challenged by the Preliminary Specification. They are eliminated from the landscape by it and therefore don’t want to be part of it. Therefore they have not and will not support us. And we'll therefore have to build our user community brick by brick and stick by stick. And that takes time, of which we have and the producers don’t appear to.

The ultimate configuration of the leadership positions of our user community will be determined by those within the community. Industry after industry is being disintermediated by Information Technology. And that is what is being done to oil & gas through the Preliminary Specification, our user community and their service provider organizations. And it is timely from a business point of view. The prolific nature of shale reserves is demanding a new business model be generated for oil & gas. A business model that deals with the resource abundance and price destroying nature of producers over-producing unprofitable production. A business model that deals with allocating production fairly across the industry, based on profits and doesn’t damage a producer with excessive G&A costs when production is shut-in. A business model that defines and supports a basis of innovation in the producer and industry to ensure that consumers are provided with abundant energy at reasonable costs. There are significant opportunities that lay ahead for the people who participate on the leadership team and our user community in general. They will have a hand in developing the organization that defines the manner in which the oil & gas’ business model is defined and supported. 

The opportunity to take today’s prototypical producer firm and convert it to the one that operates under the Preliminary Specification and our user community doesn’t exist within today’s cultural configuration. The scope of change necessary is beyond what's humanly possible for us to do. The forces of cultural inertia from the bureaucracy would need to be fought at every step and our energy would be wasted in such battles. So we chose not to concern ourselves with such battles and instead rely on the forces of creative destruction to make the choice between the performance that the bureaucracy provides, and the solution that we present here with the Preliminary Specification and our user community. 

The transition from the bureaucracy to the Preliminary Specification may be due to successful producers buying out laggard firms that refuse to change, or their assets. That is the normal course of change as a result of creative destruction. We don’t know and we certainly don’t care how the industry configuration ultimately changes. What we are concerned with is that we provide the most profitable means of oil & gas operations. And with the Preliminary Specification we already have a material difference in our value proposition. This will be the focus of the development of our user community and particularly its leadership. One area of our value proposition that we’re unable to quantify is the value that we will be able to provide the dynamic, innovative, accountable and profitable producer due to the toolset which we implement within the Preliminary Specification. And that toolset currently consists of items such as automation of the business process, specialization and the division of labor. 

Looking at the overall scope of what can be accomplished by the leadership team and user community. It is important to remember they have the wherewithal to make this happen. This is documented in the three structural components of the community which include the money and power it needs to complete their tasks. So it is one thing to define broad strokes of a vision of what is possible and another to provide that community with the means to undertake that vision. And I think those mechanisms are within the domain of our user community. 

The Preliminary Specification provides a solid vision and workable framework of what an alternative means of organization could be for the oil & gas industry. It works in that there is no deficiency or major failing where there is a breaking down in logic or implementation. It is a result of my vision of what could be, and a decade of very painful research. It is also incapable of providing the industry with the ability to be operated upon, as it stands today. It needs the input of thousands of others who work and know what, how and why the industry operates. It is now time for these people, our users, to have their input into the process and build on the framework and vision that is the Preliminary Specification.

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

User Community Vision Edits Part 1 of 3

User Community Charter

Our user community seeks to find the right solution for the most profitable means of oil & gas  operations everywhere and always. We’ve now seen what happens when profits are overlooked in the industry. What oil & gas is experiencing is unquestionably the most difficult issue they’ve ever faced. Our user communities collaborations are not to build consensus or compromise. On the contrary, we have many issues to resolve and some of the most complex that have ever been approached. The resolution of issues lies at the point of conflict and contradiction. It’ll be our user community's job to find those conflicting attributes and contradictions, and resolve them to build the industry software for the next generation, to lead and build the dynamic, innovative, accountable and profitable energy industry we now need in North America.

We have a history in North American oil & gas of a decided lack of profitability. We therefore have a basis of understanding why profits are so important and should always be the focus of everyone that’s involved in the industry. In Canada our former Prime Minister Stephen J. Harper, who’s background began with a Masters degree in Economics states in his book, Right Here, Right Now.

Of all the advice I want to convey here, this is the most important: a company must not lose sight of its central mission. The core value proposition of the commercial sector is its ability to make money by creating products, services, jobs and growth. Social contributions should not be diminished, but business must not go too far down the path of social affirmation. Profits need to be made. And provided that laws are obeyed and ethics practiced, profits are a good thing. Businesses that stray too far from this fundamental purpose will fail regardless of their image. The saying that “the business of the business is business” is ignored at one’s peril.

“Real” profitability as I am stating throughout these writings, is the accurate measure of the earned, incremental value generated by the business. Cash flow that the industry believed was all that mattered is nothing more than the return of the previously invested capital. The money that is needed throughout the greater oil & gas economy must now be generated through the real profitability and prosperity of the oil & gas producer firms. Without these real profits there is and will be no money for the actions and activities that need to be undertaken. Oil and gas is a primary industry where the revenues are earned due to the efforts of all the secondary and tertiary industry efforts. Service industry revenues do not exist outside of the oil & gas producers. Without profits we’ve seen capacities and capabilities decline and the industry ground down to the bureaucratic malaise we find today. Investors and bankers do not exist to fuel the activity of an industry except for the time during its formative years. Eventually a viable industry will benefit those who took the risk to establish the opportunity and those that made it real. Today in North American oil & gas we have an industry that is not profitable in the “real” sense. It has ruined the value that was developed by those that came before them and those that had been led to believe otherwise. An industry that has now degraded to the point where it’s unable to provide profitable operations or satisfy its customers demands. Profitability will be the only source of value that the industry will be able to use to generate its future. No one else trusts the current trustees historical performance record.

It is therefore incumbent upon our user community to take the leadership role in establishing “real” profitability in North American oil & gas. I am frequently confronted by producer engineers and geologists who say that accounting has nothing to do with the industry's profitability. “There is no way accounting will make the basin profitable.” The fact that they have lost what former Prime Minister Harper states, “the business of the business, is business” is apparent and obvious. Although oil & gas is a complex and challenging science and technologically based business, it is a business and must be run as a business on the “real” basis of profits. 

Summary

The lack of profitability has decimated the value that was created in the business before the 1980s. The subsequent investment capital that was invested and all the revenues earned were fruitless when the business stands today without the ability to support commercial operations or even operations to meet the demands of consumers. People, Ideas & Objects have documented throughout the Preliminary Specification our remedy to the current lack of profitability. The source of our software product quality and industry leadership for industry profitability is our user community and we have configured it in a manner that enables it to address the scope of this issue, to formulate the solution based on the Preliminary Specification and deliver that to the North American producer marketplace. Our user community is configured unlike any user community that has been created to develop ERP systems before. This is to ensure that they succeed in their task and make the transition from today’s culture of failure, to one of a dynamic, innovative, accountable and profitable oil & gas industry and producer. Where oil & gas production in North America is profitable in the real sense of the term, everywhere and always.

If profitability were to drive the decisions in oil & gas we would see the resurgence of conventional oil & gas production. Not from an exploration and development point of view but from the point of view of exploiting the reserves that have existed for many decades. We know from a scientific standpoint these are not that intriguing to pursue. Particularly in contrast to shale formations. However the capital needed to exploit those resources in the past was much less demanding. These balances would also have been mostly retired in the decades in which they’ve produced. The culture of the industry in 2022 is to pursue shale and clean energy and continue to abandon the less scientifically intriguing, although highly profitable, conventional oil & gas. 

Quality ERP software is achieved through the direction and involvement of user driven software development. This has been proven and has become the foundation of the agile methodology of software development. The breadth of understanding contained within the administrative and accounting for oil & gas can only be obtained through the direct involvement of those who are familiar with the wants and needs of the process management, data, issues and opportunities. People, Ideas & Objects user community is configured to capture this understanding and define their needs for the software developers. To expect that our software developers who are specialized in their software skills will be able to comprehend the full understanding of the accounting and administration needs of the industry, without user involvement, is a foolish expectation of a bygone era. 

It is therefore People, Ideas & Objects obligation to ensure that this initiative is successful. The only method of developing quality software is through user community development and it is here that we’ve focused our efforts since March 2014. We have made our user community one of our three competitive advantages consisting of Intellectual Property and research to round out the rest of our offering. Our user community is in fact our primary focus and our highest priority organizationally. It is the area of our offering in which we can effectively implement the level of change, and most particularly the cultural change necessary. 

It is the configuration of our user community that makes it unique. We have licensed our user community members with the authority and responsibility of what is expected of them. They’ll have the power necessary to affect the changes they need to make. They are, and will be for the long term, the ones that industry will turn to to resolve their ERP software related issues and opportunities. It will be our user community member who is authorized to make the necessary changes and only our user community member. The structure we have provided to our user community has three components which will enable them to build the appropriate oil & gas ERP software from the vision of this Preliminary Specification.

• Only our user community is licensed to make changes to any of the underlying Intellectual Property of the Preliminary Specification and its derivative works. 
• People, Ideas & Objects licensed developers will only look to our user community. Our developers are blind, deaf and dumb to all others.
• Our user community has their own budget. They are independent business people. Not "blind sleep walking agents of whomever will feed them."

Users are the only individuals and / or groups who have the power to make any changes to the Preliminary Specification and its derivative works. People, Ideas & Objects business model is based on a fundamentally different method on which to develop ERP software. Therefore our user community will always have the exclusive use of People, Ideas & Objects software development capabilities to affect the changes they need and want. User community members will be the only ones who can determine the configuration of the software. It will not be driven by the technical architecture, some business cycle or any other criteria. Their license to amend the underlying Intellectual Property is exclusive to our user community. Providing a single point of contact for producers to have their issues and opportunities resolved. Whom do they go to today? Enabling a dynamic, innovative, accountable and profitable oil & gas industry.

Second, our user community has the oil & gas industry's business model. Changes, (subject to appropriate change management processes) to the underlying Intellectual Property can be made by those within our user community to a model that allows the free access to those that are licensed in our user community. Use of the Joint Operating Committee and four other Organizational Constructs are a strong model that solves the administrative, accounting and operational issues and enables the producers to realize the opportunities of the industry. This business model and its future development is in the hands of our user community. Included with user community member participation is the granting of a service provider organization our user community member will be the principle of. The service providers are a reallocation of the administrative and accounting resources of the producers and are the critical change enabling much of the value realized by producers. 

If producers want to have elements of their organization included in the People, Ideas & Objects Preliminary Specification then they will have to involve themselves with our user community. To attempt to define the risks, performance, responsibility and accountabilities within the parameters of a service level agreement would belittle the producer's demanding role in this development and their overall relationship. This will be what makes the People, Ideas & Objects user community so effective. It is how People, Ideas & Objects have chosen to build quality software. Our user community members are involved in the development on a part-time basis. They will individually generate revenues for the work they're doing. Their service provider organizations will be the primary source of their value generation. A total of $1.37 billion in the initial development phase has been budgeted to be paid to users by People, Ideas & Objects. We expect a number of 3,000 users and their service provider organizations to be created to address the specifics of each process under the ERP softwares management. User community members will use this budget to research, collaborate and determine the needs of the producers and industry then communicate, oversee and ensure the software is developed in the manner they demand. Individual users will be able to specialize in terms of their contribution to a specific area and process of which their expertise as user community participants provides. They're independent business people developing solutions for oil & gas, not employees of producers checking off boxes in the role of "user." Therefore comprehensive and dedicated involvement by industry and individual producers is necessary to ensure that their needs are understood and what it is they specifically require in our software and services. Ensuring that what is developed on the producer's behalf is accurate. Not in fact relegating a definition contained within a service level agreement, where the producer is seeking to delegate the responsibility and accountability on to the agent of the agreement.

Participation is imperative for producers if they want to proceed with the developments around the Preliminary Specification. Developments which include the decentralized production model, the Joint Operating Committee and other Organizational Constructs, the three marketplaces and the thirteen modules. And in turn achieve the most profitable means of oil & gas operations, everywhere and always. Non-participation in our user community would preclude producers from the benefits of the software, our user community and their service providers. But there's more. Non participation would also make it so that the producers' particular requirements, their distinctive way of administration, accounting and operations are not accommodated or considered. That none of the software is built for the situations that the company experiences and that the premier asset of theirs would not have the software to handle the particular nuances of how it needs to make money. The bureaucrats will say they have all of this covered with their current administration, and we all know how profitable they've reported themselves to be.

There is also the fact that the producers' would not be participating with and interacting with our user community itself. I expect our user community to be dynamic and fast paced with significant iterations being made over the business model that uses the Joint Operating Committee etc. The non-participating producers' people won’t know what these changes are and they won’t know what the implications are to the assets of the company. They weren't there when the decisions were made. As an analogy their producer firm has become a four year old that closed his eyes and covered their ears, screaming that they’re not listening. A very effective strategy. Shareholders will be wise to these actions and wonder why it is that their producer firms are not participating? Is their profitability not an issue? Or is the company unaware of the technical progress that has occurred in the past 25 to 35 years? They will have questions and producers will need to provide answers. 

One answer might be that it's best to sit out and see how things develop with People, Ideas & Objects et al. I believe sitting on the side lines will be the tragic choice for any producer. They should choose to be in or out and have their reasons for non-participation, but to sit on the fence will be the worst choice of all. When our user community iterates on the model after the first phase of development, the software will be quite advanced. More advanced than the producer organization can handle or understand if it did not participate earlier. Our user community and developers will never stop iterating on the model, the ability to catch up at that point may not exist. Once integrated into the participating producers, the subsequent software development will be bringing in new concepts and features on top of the features that were previously built that non-participating producers did not participate in, and therefore can’t understand or implement. Leaving them unable to make the transition. 

What People, Ideas & Objects, our user community and their service provider organizations are doing is disintermediating the oil & gas business. Ending the life of the obsolete business model and culture that no longer supports any of its users needs and has ceased to build value for any of its stakeholders and most particularly its shareholders. Disintermediation is necessary and timely, no industry will be immune. We have not scheduled the commencement of our software developments, however we have spent our time since the publication of the Preliminary Specification developing our user community. There are no large technical issues foreseen that need to be resolved. I believe everything that we need to build the Preliminary Specification can be done with today’s technological infrastructure. Going as far as to suggest here that we have no technical risk in People, Ideas & Objects business. Review of the many keynote addresses by Larry Ellison at his Oracle conferences reflect this. Although there are no large database issues to resolve, it hasn’t stopped Oracle from moving the technology forwards in significant ways that will make our job faster, better, smarter and higher in quality. I mention this as this technological infrastructure is what is enabling disintermediation of the industry. 

It will be a new oil & gas industry. One that is limited by our user community's imagination. One based on the Preliminary Specification and developed further from there. This is the opportunity that we have in front of us, our user community has the power in the three critical criteria we've documented in their licensing and founding. A vision being that they are the only ones with the ability to make changes to the underlying Intellectual Property and the only people our developers concern themselves with. But let's not forget their budget too. No one is going to grant us approval to proceed. We will act in the best interests of providing the oil & gas producers with the most profitable means of oil & gas operations, everywhere and always. Those are our limits. 

To say that I’m looking forward to the future would be an understatement. The issues we identified many decades ago have manifested themselves into an industry that is worthless. The demand for cash to support the long term destruction of the industry continues and fewer sources of support are being realized each passing day. The time when serious action is required is upon the producer firms. I would suggest one of the dynamic changes as a result of the shale era will be that the leadership of the industry will not be sourced from the engineering and earth science disciplines. But form in the hands of those leaders that can make the industry profitable. The future oil & gas industry's leadership will therefore be regenerated and exercised through this user community. This will be the means in which the industry regenerates itself, profitably, not as an out of control spending machine. If that appeals to you then you should act, as actions based on individuals working in collaborative fashion, driven by an overall vision such as the Preliminary Specification is how we’ll solve this. However, do remember that the losing side is the most dangerous just before the collapse. Don't expose yourself to them unnecessarily.

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

The Work Order

 First of all collectively People, Ideas & Objects have been the most consequential project I could ever consider that I was involved in. It is everything I would ever want to be involved in and I would never have given up a day of the time that I’ve spent on it. I see that I began writing the Preliminary Specification on this blog on August 11, 2011 and finished on August 9, 2012. All but a few of those days were posts of the Preliminary Specification and I was posting every day of the week throughout that year. I recall my concern was being late in terms of completing our product and getting it to market. A decade later it seems a misguided sense of urgency, not rushed, however the focus and need to have the product completed is evident in the product today. I was in the middle of a comprehensive solution that may be confusing to some and although it might be clear to me, the product needs to be polished. Although I’ve undertaken the task of editing the Preliminary Specification I now see the necessity is urgent, but not with my over the top sense of urgency. Today we have the completion of the Work Order page of the wiki. In terms of how we organize ourselves for a new approach to the difficulties we’re experiencing in oil & gas, we need to introduce new processes that capture new dynamics within the producer firms and industry. The Work Order is one of those new approaches. The following text was added as a preamble to the page and there was extensive editing of the document.

In oil & gas there are two methods in which to capture costs. The first is the AFE for capital, and the second is the Lease for revenue and operating expenses. These have been the standard methods used throughout the industry for many decades and have served the industry well, particularly from the point of view of distributing the costs and revenues to other working interest partners. We are introducing a new document to augment the AFE and Lease and enhance the ability to control costs in the industry. It is what People, Ideas & Objects are calling the Work Order. It has two distinct roles and serves to capture costs in ways that are not being captured today. The overall objective is to enable innovation throughout the industry, the producer firms and Joint Operating Committees on the distinct science and technology of oil and gas exploration and production. 

The Work Order is an implementation of our Accounting Voucher. A feature that we introduced as a separate module in the Preliminary Specification and a reflection of the capabilities of the Vouchers template characteristic. The Work Order is designed to capture costs in the producer firms, Joint Operating Committees or other organizational structures that may or may not have a defined structure in terms of a formal agreement supporting the project or Joint Operating Committee. Where costs and or revenues could be assigned and authorized in the Work Order as the document that forms the necessary details supporting these ad hoc organizations. These are not generally material costs however involve other complicating factors. This is not a license to spend funds in unauthorized areas. It is a feature of the Preliminary Specification that enables the innovativeness to expand by allowing informal collaborative research and development work to be conducted throughout the industry on the basis of its sciences and applied sciences. A means to benefit those participants in the research and development project. 

Today these types of costs are found outside the scope of the authority and responsibility of the management of the producers. Producers are currently constrained by the AFE and Lease as methods to capture costs. These costs are therefore accountability and accounting nightmares that have proven to be more onerous to those that have attempted to benefit from conducting this type of research and development or even ventured to suggest them. The accounting for them is usually manual in nature as necessary in order to capture the unique understanding of each effort and reflect it appropriately from a business perspective. 

Examples of these costs may include a geologic study of the producer shale gas characteristics of the Permian vs those in Pennsylvania's Marcellus formations. Or the effectiveness of fracing on a longitudinal vs latitudinal orientation of the multi-lateral section of shale gas wells. I made the last one up but the need for these types of studies would be undefinable to any one specific property. They are necessary in order to advance the industries underlying science and technology, costly for one producer to undertake and of limited value to the one producer that undertakes them. If costs can be mitigated through a shared model the results become more valuable, and it is this distribution of the knowledge that is the basis of what we learned in our research from Professor Giovanni Dosi’s “Sources, Procedures, and Microeconomic Effects of Innovation.” that would be of benefit to any of the producers who participated in the study. Contributions from the producers could include financial or technical resources, computer simulations and other data, assets or value that a producer could contribute to the study. All participating producers would be entitled to the findings if their contributions were deemed to be equitable and other criteria of how long the study would take etc being defined. From this a group of producers would gain a better understanding of whatever they were studying, and it is best to recall that innovation isn’t always as a result of these successes but also the failures that prove what the science is not. 

The other method in which the Work Order is employed is in the process necessary for a dynamic, innovative industry to broaden the science and applied science resource availability through specialization and division of labor of the earth science and engineering capabilities of each producer firm and industry. What People, Ideas & Objects have defined as one of the producers distinct competitive advantages. The other being their land and asset base. 

In order to unleash the unshared and unshareable aspects of these critical, competitive and soon to be constrained resources to the broader market based on their specialization through the elimination of today’s operator role in the Joint Operating Committee and introducing the Preliminary Specifications pooling concept. The “pooling concept” in which those with the required specializations are available from the participating producer firms making up the properties Joint Operating Committee, or the market of earth science and engineering capabilities that are available to fill the needed role demanded of the property. The pooling concept is designed to introduce an advanced and advancing specialization and division of labor to these resources. And to release what we’ve described as the hoarding of these resources in each producer firm. The need to have just-in-time capabilities available to meet the demands of the producer's operated properties requires that a surplus capacity of engineers and earth scientists be available to deal with the cyclical nature of the internal demand for these resources. This hoarding is consuming large amounts of these resources in terms of the overall population of industry. 

To make my point clearer, let's break down a process that may be provided as a better service in terms of the type of earth science or engineering resources that could be reorganized on the basis of specialization. Ideally, when drilling a well having good well control is necessary. This can be achieved when the well is drilled on a known seismic line that reflects the targeted zones geological features. It can then be compared with a variety of well logs for similar wells in the area that are produced from the target zone or drilled there. At this point the sea levels could be determined and the target depth of the well established. This could be done in the future by an outside service that specializes in a variety of these different processes of analyzing the logs, using the seismic to choose the well location and picking the tops. Machine learning, artificial intelligence and human determination in the selection of the tops could all be managed by these technical specialists with quicker turnaround, at much lower cost and with higher quality. Releasing vast numbers of technical resources that are burdened by these tasks in each producer today. The service provider's results are available for the producer to verify. Much of this is done in software today, however by the producer firm with the resources of the firm being dedicated to it in an unshared, unshareable and unspecialized manner that is costing the industry and producers due to the inefficient use of the engineering and geological resources being consumed within each producer. With less specialized equipment and constantly switching between tasks unnecessarily and inefficiently. These technical tasks within the producer firm are valuable to establish well control. In turn the engineering and earth science resources of the producers would be focused on the higher level, value generating methods of dealing with the firms and Joint Operating Committee assets. While the service provider specializes in highly sophisticated ways to ensure their service delivery is of the highest quality, lower cost, precision and effectiveness. 

The other example of the Work Order is the one we identified in Organizational Constructs that changed the start-up and small oil and gas producers competitive advantages to Intellectual Property, earth science & engineering capabilities and land & asset base. Essentially the other side of the transaction of the prior example. Where the ability to generate initial revenues using the Work Order from the services provided of marketing the start-ups Intellectual Property and their unique earth science and engineering capabilities to other producers and Joint Operating Committees. These revenues would help to offset the difficulties of the start-up oil & gas process and defer much of the overhead burden that exists today. Moving the success or failure of the start-up oil & gas firm from its ability to access capital to a dependence on the quality of its technical capabilities. It won't be an industry based on who you’ll know in the future, but what you know, and what value you bring. These will be the determining factors of success and failure in the future oil & gas industry. 

Facilitating these changes is the Work Order and this is our solution to the constraint of these resources in the foreseeable future. What is agreed throughout industry is an issue as a result of the lack of replacements and the retirement of the braintrust of the industry. What we know is that the North American economy is the most powerful economy in the world and will continue to be so. For the oil and gas industry to attain and maintain profitable energy independence will demand much more of this existing scientific and technological resource base that may be static in terms of its population for some time. This shortage may be further aggravated as we also know that each barrel of oil produced will continue to be progressively more difficult from an earth science and engineering point of view. Our Work Orders resolution of this shortage is to turn to specialization and division of labor principles to leverage more throughput from the same resource base. These are some of the details of our Work Order.

Our next page will be our User Community Vision.

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

Miles to go Before I Sleep...

 I’m pleased to have completed the review of the Organizational Constructs page of the Preliminary Specification. Being the high level architecture of our offering. We are unaware of any other ERP systems offering that has adopted and codified the societal principles that have moved western economies forward and embedded them in their software. We believe these will be beneficial to oil & gas when People, Ideas & Objects, our user community and their service provider organizations are operational in the oil & gas marketplace. All five of these constructs are solid in terms of their determination of a structure and understanding that people throughout the oil and gas industry are able to relate to. That the Preliminary Specification they will use will be consistent with their understanding of the means of society in general. A high level alignment which is the much sought after wholly grail of ERP software.

The first Organizational Construct is specialization and the division of labor. In terms of generating value, these are the only means western economies have been able to build value for the past 246 years. Turning the administrative and accounting capabilities and capacities into industry based variable costs, variable based on profitable production, which will enable these non competitive attributes of the producers to achieve four critical features over today’s business model.

• The reorganization of the producers accounting and administrative resources into our user communities service provider organizations brings about the ability for producers to determine which properties are profitable, shut-in the unprofitable ones and therefore maximize their corporate profitability.
• Variable overhead costs are covered by profitable production. Overhead therefore is recovered in the current period and a “cash float” to pay these recurring costs will be created.
• An industry based capacity and capability replaces the individual producer based capabilities that are individually replicated throughout each of the producer firms on an unshared and unshareable basis. Therefore reducing the overall costs of North American oil & gas exploration and production overhead.
• The structure of People, Ideas & Objects software development capabilities, our user community and their service provider organizations provide producers with an iterative and incremental means to enhance specialization and division of labor consistently over the long term. Providing greater industry throughput from the same resource. 

Intellectual Property is the second Organizational Construct of the Preliminary Specification. It provides a legal framework that exists in North America that enables the rapid and efficient development of the science and technology basis of the oil and gas industry. The brilliance of this American system is the root cause of their economic dominance. Using that, which is the law, seeks to educate, inform, allow others to stand on the shoulders of giants, to protect their work while they do the difficult tasks of developing the much needed solutions to the difficult issues we face today and reduces the unnecessary costs of innovation by eliminating the “me too” and the repeated mistakes that are made when innovation is disorganized and unfocused. 

Tying into the industry culture of the Joint Operating Committee as one of seven of its frameworks enables an alignment between all aspects of the oil and gas exploration and production process. This is our third Organizational Construct. Creating a dynamic, innovative, accountable and profitable oil and gas producer and industry when the hierarchies compliance and governance frameworks are moved into alignment with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. The results are an organizational speed, innovativeness, accountability and profitability over today's base case. 

The fourth Organizational Construct that we’re incorporating into the Preliminary Specification is markets with the three specific markets that are dominant in the oil and gas industry. These are the Petroleum Lease, Financial and Resource Marketplace modules. Each seeks to provide a simulation of the market that exists in the industry with the facilities of a fully enabled ERP system supporting the activities and actions of the producer firm and Joint Operating Committee. When we’re moving from a centralized to a decentralized method of organization through enhanced use of the Internet. The dependence on the firm shifts from its internal use to a much greater use of markets. To enable this market facility within the Preliminary Specification is a capability that will enhance the producer firm, Joint Operating Committees and industry. 

The last Organizational Construct of course is the Information Technologies themselves. People, Ideas & Objects are not offering the latest version of a new wizbang technology. We are focused on the business value of the oil and gas industry. And enabling that through the now mature technologies that have developed in the IT market space. The value we generate from It is substantial and is noted here as a full Organizational Construct not only as a stand alone benefit but also as an enabler of the other four Organizational Constructs. The specific value from the IT Organizational Construct that we’ll bring about is as follows. The first is expanding the Cloud Computing paradigm to say that what it is that we are doing throughout our offering is precisely the same. Bringing about an administrative and accounting capacity and capability that involves a high capital cost in terms of establishing the capability, with substantial technical difficulty and bringing this down to a low variable cost. We could call what it is that we are doing “Cloud Administration and Accounting for Oil & Gas.” Extending this shared and shareable cost model throughout oil and gas administration and accounting to include even many elements of the CFO position. 

From our point of view these are the approaches that we need to take to begin dealing with the serious nature of the difficulties in oil and gas. This is the type of approach that will yield the lower cost and higher quality innovative and profitable producers everywhere and always that were looking for. And more than that, it will set a foundation for continued performance improvement. Although the alternative “muddle through” certainly has that special ring to it, doesn't it? 

I want to regress here for a minute and point out that People, Ideas & Objects have moved on from our position of where we were just a few weeks ago. We were actively engaged with the bureaucrats in an effort to encourage them to do the right thing in building the Preliminary Specification by funding the project. This is no longer the case. We’ve stated we don’t know who will ultimately be responsible for the funding of these developments, however we’ve proven the bureaucrats will not be motivated to do it. I now want to clarify how I see the situation that the bureaucrats have. 

Accountability is something that I don’t believe can be avoided, only deferred from the current period. The ability of the bureaucrats to skirt their responsibilities has been deft and wise from their point of view and to their personal financial benefit, however they’ll need to account for it nonetheless. Although they did not respond to the past seven years' call by their investors for an account of their actions, today’s high commodity prices don’t make any difference to this situation other than the stakes are higher and the issue more protracted in terms of the amount of money that’s on the table. Actions may be taken imminently. Making this a dangerous time for our very good friends. We are declaring that we are now unavailable for them and they will need to deal with the situation with whatever resources they have at their disposal. This was their choice and they’ll have to live with those consequences. If they are truly unaware of the situation that is one thing. That they have no solution to the issue after seven years is the other, and I don’t see their solution of destroying the industry further these past years as necessarily what was expected of them either. 

We are configuring an industry of successful producer and service industry organizations based on the issues that have caused the systemic failures that will also dictate future difficulties. These Organizational Constructs enable the producer firm to enhance their profitability everywhere and always, reduce their overhead costs in structural and permanent means to build real value for the producer firms and generate the cash resources they need to finance the future capital expenditures that no one denies will be required. Non participating producer boards of directors have told their shareholders they’ve opted out of an investment being made in their organizations profitability and performance? They’re in the clean energy business. Since directors didn't like our changes then their future will have been written through non participation. 

Our next page of the Preliminary Specification review will be the Work Order.

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

A Tuneup For Its 10th Birthday

 As People, Ideas & Objects have expressed throughout our history. Our concern was that the value in the oil & gas industry was being eroded away due to the lack of “real” profitability being earned throughout the industry. That this would ultimately lead, we believed, to a diminished capacity being realized in the producer's ability to function from a capabilities perspective. Leading to producers being unable to meet their primary objective of providing an abundant level of affordable oil & gas to consumers. The most powerful economy will also be the largest consumer of energy. North American society and standards of living would be severely diminished in terms of its opportunities if energy wasn’t readily available. A risk that is evident to most people today. This is People, Ideas & Objects, our user community and their service providers legacy and we’re proud of the work that we’ve done in working to mitigate this outcome. 

As with all things oil & gas there is a boom and bust cycle that is prevalent in the market as a result of the bureaucrats inability to appreciate their role in creating it and their lack of a response to eliminate it. What they’ve described as their “muddle through” strategy has been successful for five of the past thirty six years and we should have no doubt that it will be successful for up to another five years out of the next thirty six. 2022 appears to be the beginning of a potentially good year, the first in over a decade; however, the cycles of boom / bust are much more violent, rapid and short term on the boom side in comparison to the protracted periods of bust. The propensity and capacity to mess things up is undiminished as is my faith in these bureaucrats' capabilities to do so. These are not issues however as the bureaucrats are paid throughout the cycle and we’ll no doubt see the phenomenal innovativeness that we’ve always seen from them in the past in their form of innovative executive compensation. 

The question that may be answered in 2022 is how extensive the financial damage is that the producer firms have realized? Are the capacity and capabilities in the service industry resolvable in the short term? These and similar questions that have been unaddressed in the market are far more extensive than what’s realized today. And we understand that most people are concerned. “Muddle through” may be the only position to take as the ability to address their issues in superficial ways, in the very short term and with their limited resources will make their transition to clean energy appear to be the more viable strategy from a bureaucratic compensation and active management presentation. To suggest they don’t understand the issue reflects they have no plans or understanding on how to deal with these problems. When the leadership of the industry is this stale, uninvolved, focused on clean energy, uncaring and possibly unaware I don’t hold out much hope of these larger issues being resolved. 

These boom time era’s, where cash is filling the bureaucrats pockets, puts People, Ideas & Objects on our back heals again while the boom works its way into its ultimate disposition. I personally look forward to August 2022 when we’ll celebrate the decade of the Preliminary Specifications existence. Where we see the quality of that work being more relevant today than at any time during this past decade. It is therefore incumbent upon me to undertake a review of the Preliminary Specification to see how much of the clarity and meaning can be enhanced through application of some editing. 

If there has been a miscommunication on my behalf it is that I’ve been too focused on the chronic overproduction of oil & gas issue as it’s the cause of the disaster we’re experiencing. The title of this blog is innovation in oil & gas and that is also the basis of the structure of the industry we are proposing is necessary. It’s one thing to be profitable, but it is also necessary to ensure that the consumers are provided with an abundant source of affordable energy. These two opposing ideas are the dichotomy of the Preliminary Specification, the oil & gas producers and what is resolved in our solution and necessary in a science and technology based industry. Some may find it convenient that I can hammer bureaucrats for any reason as a result and I’ll certainly be doing more of this. Review of the Preliminary Specification shows that innovation isn’t a happenstance occurrence in organizations. Innovation is a purpose built feature of organizations and industries that demand specific elements be available and are required to fulfill these opposing objectives of the producer firms. Providing oil and gas producers with the most profitable means of oil and gas production, by establishing a dynamic, innovative, accountable and profitable producer and industry. If you believe that today’s producer firms will be able to innovatively resolve the problems they face then you may be mistaken. They’ve at best ignored the opportunity to enhance their innovativeness and profitability for the past ten years and did nothing but try to silence People, Ideas & Objects. They’ve ignored their investors since 2015. And worst of all they’ve ignored the needs of their business for the past four decades. 

We know from past experiences with the bureaucrats that they are always on their best behavior during these boom times. For the first couple of weeks anyways. These are the times when they’re waiting to ensure the ground they're standing on is firm enough for them to return to their most natural pose in terms of how they deal with things. 

Someone needs to make the decision to live with the consequences of “muddle through” or change it to what we have developed here at People, Ideas & Objects. My case has been made and we await the appropriate decision. The Preliminary Specification will be a decade old in August and I’m now reviewing and editing it for the purposes of clarity and any enhancements we may be able to make. Although 99% of the editing will be for clarity purposes, I will be attempting to enhance the area of where accountability is raised as I believe that area has fallen further in terms of what bureaucrats have done, there has also been a significant amount of change in the world of business since 2012 and although the oil and gas producers are still in the 1950s and 1960s organizationally that doesn’t mean we have to stay in the teens. I don’t see much occurring here either, as the precedent of using disintermediation was well established, little has changed in that arena and the Information Technologies were certainly mature at the time we originally published. I hope to be surprised and since we’ll have the time I’ll use it in the most effective way I can think of using it.

My intent is to continue with this editing until August and I’ve begun with the Organizational Constructs page, have a look. As I update them I’ll post the results when completed and any major changes, of which I doubt. There will be some research involved however more just to catch up then any new areas. Ideally September of 2022 would be a great time to start with this project however that possibility is slipping from our fingertips as we speak. Possibly the best news that I can say at this time is that postings during this period will be lighter and sporadic in terms of timing, I’ll always keep them sporadic in terms of content however. 

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

Change it, or Sustain it?

 It is here in the early spring of 2022 we find ourselves in the situation that People, Ideas & Objects have sought to avoid. Bold and pious claims however, our history is before you in this blog's consistency, dedication and concern for just this issue. Bureaucratic inaction has created a stalemate that is forcing oil & gas to make a decision, will we accept the status quo, or change it? Are we now at the point of that “jarring gong” as so eloquently spoken of by Winston Churchill?

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

Or as Thomas Paine stated in his pamphlet entitled “Common Sense” which was widely distributed and established much of the logic behind the need to develop the U.S. Constitution.

As Britain hath not manifested the least inclination towards a compromise, we may be assured that no terms can be obtained worthy the acceptance of the continent, or any ways equal to the expense of blood and treasure we have been already put to.

There has been no willingness to act, no compromise on the principles of the bureaucracy since the beginning of this issue as I documented in the prior post. The scale of damage and destruction has been tremendous. Over the course of these four decades how many trillions of dollars were lost, careers lost unnecessarily and the many businesses that would otherwise have been successful. From John Stuart Mill, On Liberty.

A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury.

The facts are in and they are devastating. Today’s service industry's inability to respond to the producer's demand to drill is understood in the following graph provided by @SoberLook. 1600 drilling rigs were active in mid 2014. By early 2016 there were 400. That was more or less seven years ago. Then a resurgence of drilling occurred to almost 1100 rigs in 2018. Showing signs of life in oil & gas however this we’ve learned subsequently was a false signal. We recall the expectation was that this activity would be paid for by producers on an 18 month basis. Producers were financing their field activity on the good graces of the service industries ability to grant them credit. “It was the only source of capital though!” After the destruction in the service industry, realizing finally there was no means of capital to support their organizations, producers began producing more to generate the necessary cash to pay the bills. Pushing the oil price to almost negative $40. Only to have the rig activity collapse to what appears to be 200 rigs in the third quarter of 2020. Expressing to any investors, entrepreneurs and people working in the service industry that they were the marks in the scam. We can reasonably ask today, maybe these rigs weren’t cut up for scrap metal due to the need for cash as much as they were cut up due to their rusting away? How could producers treat an industry that they’re solely dependent upon in this way? After seven years the expectations are that the producer bureaucrats are fine, where are the drilling rigs? How could anyone look at just this treatment of the service industry and state that the producer bureaucrats had any thought that ever occurred to them outside of their own skin? If the service industry fills the viable scapegoat role in the future oil and gas producer bureaucrats mind, then they’ll be happy with just that. 

Who could blame the service industry for being in the condition that it’s in. Drilling rigs are only part of that industry however they’re the leading indicator. If there’s been a seven year decline in drilling activity we know it has not been exclusively to that area of the industry. Therefore there is now a seven year lag time in terms of the producer firms responding to today’s market for more energy while the producers rebuild the capacities and capabilities to deal with today's demand. They’ll be needing many more excuses, people to blame and viable scapegoats. How this is ultimately resolved is with producer cash. They broke it, they get to fix it, there’s no one else and those are the rules. Oil & gas is a primary industry and were generating revenues throughout this period and as a result did not suffer other than at their own hands as a result of their obstinate and self centered deviance. Yet we see a lack of understanding and appreciation of the difficulties of others, much as what was expressed to the producers' investors demand for earnings since they began of their strike in 2015. And just as Britain showed no compromise towards America in their negotiations with the King. Thomas Paine reflects accurately in this next quote what our positions today need to be with our good friends the bureaucrats. 

But the most powerful of all arguments, is, that nothing but independence, i.e. a continental form of government, can keep the peace of the continent and preserve it inviolate from civil wars. I dread the event of a reconciliation with Britain now, as it is more than probable, that it will followed by a revolt somewhere or other, the consequences of which may be far more fatal than all the malice of Britain. 

And for us that form of “continental government” is a decentralized, disintermediated oil & gas  industry based upon the vision of the Preliminary Specification. Otherwise the question of where these bureaucrats are leading us can only be predicated by their history. As we’ve been aware these past decades we are unaware of any plan or direction of the oil and gas producers. They will “muddle through” as always. The consequence of this strategy demands that significant remedial action be taken by the producers in terms of rebuilding the capacity and capabilities of the greater oil and gas economy of North America. That Joe Biden inhibits them from this task is evidence of their continued direction of muddling through and viable scapegoating. Admitting to their current seven year lag time would be too honest.

The inability to act and respond to the demands of the market, which I would include their inability to listen to their investors, is the most remarkable characteristic of our good friends. They are set in their ways and know better than all others. To get where we are today demands they destroy everything that was built in the past, all of the subsequent investor stock issuances and all the revenues generated so that they can…? This is unknown and unknowable. The first question we may ask will it be a future where they’re accountable for their actions? And do so through the tier 1 ERP systems that investors demand are a requirement for their return? Will they respond to what is necessary to earn “real” profits? A point they do not understand, do not know how to do and will not listen to criticism of the quality of what they’ve reported or the implications of their ways. And most importantly, as Milton Friedman states.

The social responsibility of business is to make profits. 

The lack of real profitability in the oil and gas producers has been responsible for the lack of a prosperous and viable industry today. When people are asked to suffer through the boom and bust as if it’s a normal part of the business cycle then the bureaucrats come to rely upon that as their reasoning for their bad management and will never be motivated to change. All the while alternatives to the means of “muddle through” in the form of the Preliminary Specification which sets the foundation of a dynamic, innovative, accountable and profitable oil and gas producer and industry. Something we have nothing of today as a result of the lack of profits in the producers for so many decades. Relying on investors for a never ending supply of cash is like communism, it works until you run out of other people’s money. Operating an industry based on spending is a world less complex and difficult than an industry that demands profitability everywhere and always. And that is what is demanded in the Preliminary Specification and the primary reason that People, Ideas & Objects are so vilified.

One of the important lessons that we can learn today is that we now know the past inactions and behaviors of the producer bureaucrats. Even when they were in desperate difficulties themselves they did not listen to anyone, they did nothing. Therefore we can ask today what action and behavior should we expect when the business is reasonably healthy? Will the cash being received today be managed appropriately? There were commitments made for the loyalties that bureaucrats realized during their darkest days, and payback to those people are now due. And these commitments will be handsomely and willingly paid with all the other grift. 

Our choice is to sustain this failed industry or change it. I don’t know who’s decision this is to make, but it needs to be made. If this is acceptable action and behavior to others then we need to stand behind the bureaucrats' history and support it. There is this ugly quote in The Genealogy of Morals from Friedrich Nietzsche.

It is possible to conceive of a society blessed with so great a consciousness of its own power as to indulge in the most aristocratic luxury of letting its wrong-doers go scot-free. 

If it is not acceptable then someone needs to show the time has come and fund the development of the Preliminary Specification. If they too have determined it’s unsustainable then it must be changed. Putting off this difficult business of dealing with the bureaucrats has come to the point for someone needing to make this decision. They’ve earned our distrust as we watched them continue to destroy in such obvious ways. We’ve seen no leadership but more than that we've seen no commentary coming out of the producers. Their ability to articulate the role that producers should be fulfilling in the marketplace of supplying abundant, affordable energy to the consumers. And the importance of oil & gas has never occurred and is desperately needed from producers today. Tragically we've got elected government officials taking up the role of representing the industry and the direction that is needed. Therefore what's happening is the future is a complete capitulation of all leadership, accountability and responsibility by producer bureaucrats. This may have been their objective all along we’ll never know. If this is the future then we need to either accept it, or reject it now while it still remains an option. The forces of disintermediation have affected many industries already. And it is possible that all industries will eventually be disintermediated at some point. If it is the choice of the oil & gas industry to stand alone against this disintermediation by People, Ideas & Objects et al then that is what we need to deal with and accept. I am unaware of any other options for oil and gas. And this last quote from Winston S. Churchill, Volume 2: Young Statesman, 1901 - 1904. In his authorized biography written by Randolph Churchill and Martin Gilbert.

Are we to put aside great projects because they are debatable, or close the Empire to avoid friction in the House of Commons? Free criticism is the breath of our Constitution. To shrink from great tasks or newer enterprises because of the greater burden they impose upon representatives, and representative institutions, means simply shrinking from growth, and from the responsibilities of growth. 

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.

People, Ideas & Objects et al's Marshall Plan, Part VII

 Leadership is one of those aspects in life that you know when you see it. You need to trust and expect the leadership of any organization will do as it states and that it will avoid the pitfalls that life can throw at it. As difficult as it is to define, delivering the necessary leadership that is needed as we proceed during times such as we find ourselves in becomes paramount. Today we find that the speed, volume and complexity of our lives demand that leadership provide the understanding and direction necessary. Leadership is no longer expected just at the top either, its demands that it come from all areas of the organization on all aspects of what the organization is involved in. 

Issue

Leadership in the North American oil and gas industry is non-existent. Constrained by the bureaucracy and granted only to those who have the authorization and responsibility. Any natural leadership that resides in the organization is limited to their job description and the consequences of stepping outside of their well defined domain is forbidden and the consequences are well known. The archaic and mechanical process of being granted ad-hoc authority is difficult with this process familiar to all who have attempted that gauntlet before. No doubt some may have succeeded in doing so, however the process is designed to discourage initiative and is highly successful in that objective. The leadership with the authority and responsibility chose to blame and scapegoat others, and the natural leadership within the organization is stifled. 

Regulation of the corporation twists those with the authority and responsibility of any opportunity into a legal and political pretzel that turns men into mice in remarkably short periods of time. This is where we find ourselves in 2022. It’s primarily Joe Biden’s fault because he’s responsible for all the oil and gas production that was ever produced before. The question therefore that needs to be asked is this the failure of the hierarchical means of corporate organization? Has the failure to respond in today's fast paced world defined an environment that bureaucrats can no longer deal with or effectively participate in?

What I would call the excessive time in which the answer to this question has been deferred has been several decades. The passage of this time has eroded the integrity of those with the authority and responsibility to manage these organizations. It has led to the overall lack of trust in these organizations in terms of their words and actions on a wholesale basis to all of its constituents. First it was the investors, bankers, the people in oil and gas felt betrayed too, the service industry and those involved in the greater oil and gas economy. Not to stop at that achievement, there seems to be an effective campaign to eliminate any trust that governments and consumers have in North American producers to do just their basic job of providing the market with product. Such is the scope and scale of the damage and destruction that I see in the North American oil and gas industry. 

Our “Marshall Plans” Response

My readers know that I am good with the broad statements that support my cause. I however choose to back these claims with evidence as to the issue of how and when the industry became so distorted and what efforts have been taken to resolve them.

• Late 1970s SEC changes to adopt Full Cost accounting and Ceiling Test regulations. 
• Leading to accounting distortions that caused overcapitalization and its inverse of equal amounts of over reported profits, creating overinvestment and finally chronic overproduction or as we define it, unprofitable production. 
• Profits were always reported yet producers became wholly dependent on investors annual investments to just pay the bills.
• This led to the creation of the term “market rebalancing” and its foolishness of deliberately deprecating productive capacity as we experienced in 1986 when oil prices collapsed to $10 and all subsequent collapses in the commodity market price. 
• Arguments to blame OPEC as the responsible party, yet their production remained profitable in the real sense at $10. Subsequent repeated price collapses in the oil markets have occurred since that time. Natural gas has shown the same characteristic price collapses, primarily due to shale. Yet OPEC does not participate in this continent's natural gas markets. 
• People, Ideas & Objects published the Preliminary Specification in 2012 to deal with this chronic overproduction by ensuring all production is produced profitably, in the real sense, everywhere and always. 
• Initiative is wholly rejected by producers as “collusion” and “unworkable.” Specious arguments that we refuted as self serving and a continuation of the excuses, blaming and viable scapegoating by producer bureaucrats.
• July 4, 2019 People, Ideas & Objects publishes a White Paper entitled “Profitable North American Energy Independence -- Through the Commercialization of Shale.” Promoting the Preliminary Specification as the solution to industries chronic overproduction. 
• The White Paper achieves a wide distribution, yet met with the same rejection and resistance from producers as the Preliminary Specification did before. Excuses such as they “can’t shut-in production without damage to the formation. Is operationally difficult and requires significant costs to restart the well.” Are repeated throughout the industry for months.
• April 20, 2020, nine months after the publication of our White Paper the price of oil dropped to almost negative $40 due to chronic overproduction and collapsing demand due to virus related lockdowns. 
• Refineries stop accepting deliveries forcing producers to shut-in production. 25% of world oil production is consequently shut-in. Subsequently all production is resumed without any formation damage being realized by producers. Damaged formations due to shut-in production in response to our White Paper was a lie, of which they knew the truth all the time. 
• Decline in North American production is due to natural decline and the inability of producers to function in the field with the decline in the service industries capacity.
• 2021 “Shale is not and probably never will be commercial.” 
• Are the words spoken by the majority of the producers. Sales of premier shale properties to get out of shale begin. 
• 2021 “Clean energy is the future.” Shale property sales proceeds are diverted to clean energy investments. Unauthorized and unapproved changes to the corporate direction of the organizations, producers declare they are focusing on clean energy. 
• Taking with them the oil and gas revenues to do so. Exxon feigns a boardroom battle over some board seats to make the transition appear shareholder driven and “real.”
• For decades producers claimed they needed to make sure that oil and gas prices remained competitive so that alternative energy could never get a foothold. 
• Now it is the bureaucrats who are taking the cash and oil & gas revenues to fund their unaccountable activities in an industry that has never performed even with government subsidies. 
• Choosing an alternative direction shows they’ve lost the focus and drive to remediate and rehabilitate the oil and gas industry.
• 2022 Lockdowns are lifted and consumption is resumed leading to price increases at the pump. Consumers are concerned about their energy supply and producers tell them they “shouldn’t look to them for their oil and gas needs.”
• 2022 Joe Biden becomes the viable scapegoat that is causing producers not to be able to increase production. Imputing that Joe Biden has been the one responsible for all the oil and gas production we’ve ever seen before. 
• Although bureaucrats have regaled us with their spectacular innovative ways, we may have to suspend their innovativeness hypothesis to the specious category where most of their statements reside. 

The financial statements that were produced by producers during the “building balance sheet” and “putting cash in the ground” days have been proven to be of little value when they can’t support profitable operations in an industry that can’t support operations or its customers. This is the legacy of the bureaucracy, and here we’re satisfied in knowing that they’re doing well personally and they thank you for asking. 

We’ll never be able to trust these people again to do what we know needs to be done. It is to build the North American oil and gas industry to the prosperous, productive, energy independent and profitable one we need to provide us with the abundant and affordable energy necessary to secure our energy needs. The most powerful economy will be the economy that consumes the most energy. To take this sad, dilapidated state of affairs in oil and gas and achieve what is necessary is a task of monumental proportions and we have no opportunity for failure. Organizing ourselves based on a different approach of how the industry needs to operate in order to achieve these objectives is now required. I’m suggesting the Preliminary Specification, our user community and their service provider organizations are the means in which to do so. ERP Software such as the Preliminary Specification are the way that organizations are supported and defined in society today. To do otherwise is impossible in a specialized, global market where the scope of operations is the entire North American continent. Expectations and actions arising from somewhere else haven't happened. The time to evaluate options is limited to the time that we have available; however one cares to define that. The need for energy may have become clear to consumers. And if not, we are certainly headed towards a period where their awareness will be heightened. 

People, Ideas & Objects et al are certain that producer bureaucrats are not motivated to deal with the issues that they’ve created. They had every opportunity to do so and did nothing. It is suggested here too that they are conflicted by using oil and gas revenues to fund a competitive industry to oil and gas. More of their efforts have been sought to eliminate People, Ideas & Objects and if I were to give them the benefit of the doubt, maybe they just don’t understand what’s going on. Either way there is no prosperous future with the existing leadership. The question therefore is who will make the decisions that are necessary to deal with this industry and set it on its appropriate path?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering? We know we can, and we know how to make money in this business. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.