OCI RFP Discussion, Part I
How I See the Oil & Gas Industry Has Failed
People, Ideas & Objects see a window of opportunity to assert our solution to North American oil & gas producers' issues. This is in direct response to what we feel is a contrived and wholesale industry transition to SAP. This involves producers' officers and directors seeking to secure their management methods. Therefore, we would like to explain our advantages over SAP. We would like to make oil & gas investors aware of the $660 billion difference in value immediately if SAP is selected. People, Ideas & Objects Preliminary Specification provides a proven value proposition for North American producers. This is due to our focus on providing producers with the most dynamic, innovative, accountable and profitable oil & gas operations everywhere and always.
I have a distinct and original perspective regarding the North American producer population. Summarizing it as a failed, damaged and destroyed industry. The elements of that failure and why I can’t see the current administration doing much to repair its destroyed financial, operational and political frameworks. I fail to see how producers can continue without addressing these difficulties. Demands and expectations cannot be met. Another attribute of this perspective is that there’s no doubt as to where the fault lies in terms of responsibility for the damage and destruction. The producer's officers and directors. The amount of time it’s been in place. Our proposed resolution is to rebuild the industry under the vision of the Preliminary Specification with our user community and service providers.
As far back as the 1980s, producers sought to record as much of their costs as capital costs. This was done with minimal operating and overhead costs realized in the current period. These have built excessively large asset balances that reflect equally overreported profitability. This attracts excessive amounts of investor capital which industry relies on to create a systemic, unprofitable production profile. Which is ultimately expressed as overproduction, which leads to the systemic and highly detrimental, long term erosion of global commodity prices. Accentuated by sharp and repeated commodity price collapses in both oil & gas since July 1986. As an example, Alberta-based natural gas producers paid customers to take product off their hands. Or the COVID lockdown induced negative $40 oil in April 2020.
Producers have hardly anything on their financial statements except large volumes of property, plant and equipment and their supporting debts. Collectively these large balances across the industry do not generate, even at today's prices, the volume of revenues necessary to operate “real” profitable operations of a viable industry. It is reasonable to assume that oil & gas investors agree with that assessment as additional capital investment has been suspended since 2015. Since that time a mad scramble for cash has sought to make up for chronic working capital deficiencies. Seeking to alleviate the capital needs of their annual capital budget. Each year, it becomes more desperate and destructive to producers' long-term financial health and integrity. Producers have no capital structures, no support from the financial or banking communities, no faith, trust or goodwill from the service industry. An industry that they consistently and repeatedly destroyed. This process resulted in shortages of capacity and capability within the service industry, as well as short-long-term staff shortages within oil & gas itself.
When an industry is faced with difficulties like those presented, management usually resorts to layoffs to resolve the issue. And many have been conducted. There is a point to be made here about layoffs. The first round of layoffs should preserve the firm's capabilities. The long lead times for securing land, drilling and equipping a property for production can take up to ten years. To ensure this continues you only cut in the first year of this process, the assumption being these resources can be reclaimed next year when things improve. And if the difficulties continue they’ll cut those involved in the second year of that ten year process. The third and fourth years etc. Due to the investors' strike and critical cash shortage over eight years, it is reasonable to assume that the operational capacities and capabilities have not provided the necessary pipeline of new opportunities. The cupboards are bare. Those resources needed in the first year of processes may have been outside the industry for seven years and will be difficult to recruit. This deprecation and destruction will not be evident on a financial statement but will show when the need to resume operations is demanded of the organization. Extension of this thinking to the service industry makes it a particularly difficult aspect of producers' financial and operational difficulties. If these resources are lost, replacements will not be able to take advantage of the experience of the best of breed forerunners, which is an unnecessary tragedy. Then we need to add shale's steep decline curves. Rebuilding oil & gas is not a luxury, it’s a necessity.
Politically the producer officers and directors have taken a back seat to managing the industry for decades. They've left it to others such as governments and environmental groups to define their role in society. Producers have failed to provide any practical value or need for their products. They are therefore relegated to "muddling through" politically to ensure no one sees who they are. Frequently pointing the finger at others to redirect the focus.
What’s surprising is that nothing has been done about these difficulties. People, Ideas & Objects et al’s Preliminary Specification has been vilified and ostracized for our attempts to increase profitability and accountability to deal with these issues. People, Ideas, & Objects are the only group outside the investors to express concern about the current industry state. If it is as we suspect that SAP is being used to establish the existing permanent means of unprofitability and unaccountability that we documented in our RFP, then the possibility of People, Ideas & Objects survival over the next decade or even a generation while SAP proves this hypothesis is very low. Is this what’s desired? Will they be able to avoid our Intellectual Property? Or will producers avoid People, Ideas & Objects as a feature instead of a bug? And who will spend thirty years or more asserting an alternative ERP solution for oil & gas to replace SAP? In similar ways to Oracle in 2000, IBM in 2005, and People, Ideas & Objects, will they focus on enhanced profitability and accountability in the years to come? How?
There are some who might say that the Preliminary Specification is too expensive, and I can assure everyone that it will initially be expensive. Producers could have done something about that, however those opportunities are long past. Besides, our value proposition makes it the most attractive investment producers, officers and directors could make at this time, and maybe in their careers. A budget where oil & gas investors will be assured that producers are committed to profitability and accountability and that the issues are being dealt with. Looking at SAP in terms of its cost, it may be initially less costly, however there will be no returns in terms of the quantifiable or qualifiable profitability and accountability set out in their clean energy transition vision. This will result in continued unaccountable and unprofitable cannibalization of the value generated by oil & gas investors' investments. SAP acting as officers and directors "blind sleepwalking agents for whomever feeds them."
Time is now a scarce resource. What is necessary for the oil & gas investor is to be specific as to what is an acceptable solution for tier 1 ERP solutions in oil & gas. A successful implementation of People, Ideas & Objects, our user community, and their service provider organizations' Preliminary Specifications in conjunction with Oracle Cloud ERP for oil & gas is the only way to achieve this. All of these will be packaged into our Cloud Administration & Accounting for Oil & Gas software and service. No other alternative should be acceptable.
A Fundamental Betrayal
This discussion is in response to an article posted by World Oil regarding comments by the CEO Ben Van Beurden of Shell Plc at a conference in Europe. He stated,
“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and as a very, very quick build out of alternatives,” Chief Executive Officer Ben Van Beurden told reporters at a conference in Stavanger, Norway. “That this is going to be somehow easy or over, I think is a fantasy we should put aside -- we should confront the reality.”
I responded to the World Oil article through X with the following comment.
No!
Another viable scapegoat is unacceptable. The ultimate capitulation of accountability here. The individual with more authority and responsibility to have dealt with this long ago! My pinned tweet above was refused by those in power. [Our July 2019 White Paper] Then in nine months they ran the price of oil to negative $40! Declared shale was a lost cause, sold it and focused on the ultimate unaccountability project in an unauthorized manner “clean energy.”Today’s failure started long ago and we published our solution in August 2012. #failure
First of all, this is not a betrayal by Shell Plc, its investors or employees at any time. This is a comprehensive failure by Ben Van Beurden and his cohort of officers and directors of their “muddle through” club. Rotten fish stink from the head down. The company’s been led off the cliff and now he wants to use the convenient excuse that it's Putin’s fault. Consumers should learn to go without. This is not Shell's history and culture. Investors, employees, and annuitants have built a company that reached the highest standards of excellence. They’ve been betrayed by these self-serving officers and directors who’ve used and abused the industry to the point where the consumer is told to go without?
In light of the history of People, Ideas & Objects since the August 2012 publication of our Preliminary Specification, the people that need to go without are those that caused this damage and destruction. To blame this catastrophe on someone like Putin, who will only take advantage of any situation he can find, is ridiculous when it’s Ben Van Beurden and his cohorts who gave him the gold-plated offer to do so. Who has had the Preliminary Specification available to them as the solution to these specific issues since August 2012.