Abstract

People, Ideas & Objects Preliminary Specification provides a comprehensive vision of the future oil & gas industry, producer and service industry provider. The Preliminary Specification is delivered through our Cloud Administration & Accounting for Oil & Gas service. A fourteen-module ERP software system using Oracle Cloud ERP. This system defines and supports the Joint Operating Committee, three marketplaces and five other organizational constructs of a dynamic, innovative, accountable and profitable oil & gas producer. Our solutions provide the North American oil & gas producer with the most profitable oil & gas operations, everywhere and always. Establishing a foundation for future North American energy independence.

People, Ideas & Objects vision is comprehensive and detailed in the 380,000+ words contained within the Preliminary Specification modules. Our software defines and supports a structured reorganization of the industry and producer firms. Through our decentralized production model, we implement a price maker strategy that converts the industry from a cash flow focus to one of “real” profitability everywhere and always. Once the industry is profitable we deal with the resource constraints of earth science and engineering talent through our Resource Marketplace, Research & Capabilities and Knowledge & Learning modules. It is through automation, specialization and the division of labor that we can expand the industry's throughput from this constrained resource base. Similarly the devastation realized in the service industry is a constraint to production deliverability and needs to be purposely rebuilt by producers. Then and only then would we be able to achieve energy independence in oil & gas in the Canadian and U.S. marketplaces. To achieve energy independence, we must establish a profitable industry, remove resource constraints of engineers and earth scientists, and develop the service industries' capacities and capabilities. The vision of what Oracle, People, Ideas & Objects Preliminary Specification, our user community and their service providers set out to accomplish.

Energy independence is an overall objective. Shale reserves provide that. However, the way the industry is managed today makes that objective unreasonable and unattainable. Officers and directors have destroyed the industry's financial, operational and political foundations. Today we see producers have lost financial and operational control within their organizations and within the service industry that they rely on so heavily. Who provides these producers with the geographical and technical diversity necessary to operate in the field. We now have producers who cannot operate to meet long-term consumer demands. 

Without significant capital to restructure and increase industry throughput. The current officers and directors cannot achieve energy independence. They’ve never been concerned or capable of profitability. Without establishing the industry on profitability. There is not enough capital in the universe to achieve energy independence in North America while remaining in the hands of these officers and directors. 

The next twenty-five years in oil & gas will be the most dramatic in its history. Energy demand will ensure high prices. Yet the abundance of shale reserves ensures the costs of providing that energy are much higher than conventional reserves. And with many people joining the middle class we need to consider how the industry approaches this new energy era. Does anyone believe the current officers and directors, with the financial destruction they’ve caused in the marketplace today, will be the solution? Should the future be viewed from an Information Technology perspective that is just a cost, or should it be seen as a vision, like what the Preliminary Specification provides right now?

The key to providing this solution is that the Preliminary Specification is based on seven organizational constructs that include the industry-standard Joint Operating Committee. The legal, financial, operational decision-making, cultural, communication, innovation, and strategic framework of the industry. When we take the compliance and governance frameworks of the hierarchy and align them with the frameworks of the Joint Operating Committee we attain the speed, innovativeness, accountability and profitability desired in our oil & gas organizations. Our other Organizational Constructs include the reintroduction of specialization & division of labor, establishment of markets, use of Intellectual Property laws, Innovation, Information Technology and Professor Paul Romer’s “New Growth Theory” regarding non-rival costs. A new cultural foundation is established by each construct for producer firms and industry operations. A culture based on performance and profitability.

After all, as you’ll see, we are not talking about minor changes to accounting floor plans. By adopting the Preliminary Specification and fully utilizing the Joint Operating Committee, we are transforming the oil & gas industry. Change that is as significant as that represented by changes in energy prices, the global energy supply and demand structure, shale reserves and IT leveraged change or disintermediation. Based on our research on innovation by Professor Giovanni Dosi and as applied by People, Ideas & Objects to the oil & gas industry, Professor Dosi asserts that the makeup of industries and companies is not solely due to the endogenous force of competition. Innovation and imitation also make up industry structure. “Market structure and technological performance are exogenously generated by three underlying sets of determinants.”

Each of the following three determinants is evident in the marketplace of an oil & gas producer today, as reflected in:

Satisfying the global energy marketplace demand is critical to society's advancement. American, western, Chinese and developing societies face real challenges in providing adequate long-term energy sources. The long-term demands on energy producers over the next 25 years have never been greater.

Which leads one to believe mankind has never faced the level of opportunity and acceleration possible today. The industrial mechanization of the past 100 years combined with the anticipated mechanization of intellectual pursuits combines to markedly appreciate the value of human life. The availability of abundant, affordable, reliable and profitable energy will be critical to the success of this advancement.

The oil & gas industry is moving closer to earth science and engineering principles. Innovation, research and development in both the producer firm and the service industry are and will become more commercial in nature. It is the success or failure of these factors that will determine the success or failure of the producer firm within the industry.

Software's role in society is increasing. Today we are still in the beginning stages of what can be done. For an industry such as oil & gas to continue without the software development capabilities that People, Ideas & Objects propose, and the organizational structure focused on the Joint Operating Committee, North American-based producer prospects look dim. People, Ideas & Objects claim that we provide the innovative oil & gas producer with the most profitable means of oil & gas operations, everywhere and always. First by providing our software in the most cost effective manner. That is, charging our subscriber base for the one-time costs of our software development on a shared and shareable basis. A fundamentally different value proposition coincidental with Cloud Computing value. Where we are establishing Cloud Administration & Accounting for Oil & Gas software and services capabilities and capacities in North American oil & gas. 

And secondly, to achieve higher economic output, the oil & gas industry must employ higher levels of specialization and division of labor. To organize that specialization and division of labor in a continental economy requires the use of the software specified in the Preliminary Specification. There are no other means to organize a higher level of specialization and division of labor. Serendipity, spontaneous order and creative destruction have stopped functioning. Officers and directors have now proven the producer firms' inability to change or accommodate marketplace speed. As a result, our claim to be the most profitable operation method is valid. The only way to move from the high levels of organizational methodology we currently enjoy is to design and support a more sophisticated specialization and division of labor. And that will be detailed and managed through the Preliminary Specification. We need to control software production to control energy production. That is what People, Ideas & Objects user community-based software development is about. 

Thirdly, our development of the decentralized production model, as detailed in the Preamble, provides the oil & gas industry with the capability to allocate oil & gas production on the basis of profitability throughout the industry and obtain “price-maker” strategies. For producer officers and directors to continue to assert that oil & gas commodities are subject to the economic principles of “price takers” is a continuation of their failure. The Preliminary Specification provides production discipline in the era of shale-based reserves that is both prolific and costly. Otherwise, the industry and producers will continue to lose money due to their decades-long behavior of chronic overproduction and oversupply in both oil & natural gas.

When undertaking a large project such as the People, Ideas & Objects Preliminary Specification. And we have budgeted the project at $1,000 U.S. per boe for its initial commercial release. There is a need to maintain a sense of urgency for the people involved through to the end of the project. As we know, most people will remain motivated as long as the money keeps flowing. Therefore, how do we ensure money flows? It is through the fact that we provide the most profitable means of oil & gas operations that we can motivate producers to maintain their sense of urgency. Keeping this project funded and moving forward is essential. The alternative is the current officers and directors version which eliminates them from consideration. In the future, it may not be enough to own oil & gas assets. It will also be necessary to access software that makes the oil & gas asset profitable. This is the importance of software in today’s society. In the next 25 years, our value proposition will be worth trillions of dollars over the current offering. This provides the greatest return on producers' investment. 

People, Ideas & Objects are actively disintermediating the oil & gas industry and have created the adversarial position this role demands. Therefore we have come up with an innovative method to fund our budget which we describe as “Profitable Production Rights.” Which provides the license holder of the Profitable Production Right the ability to simultaneously benefit directly from participation in both oil & gas and the Information Technology industry. Profitable Production Rights licensees hold exclusive rights to access People, Ideas & Objects Cloud Administration & Accounting for Oil & Gas. Therefore any producer in need of an organizational method that includes software and services will need to secure the appropriate amount of Profitable Production Rights to process their production, etc.

There is an overall vision of how the innovative oil & gas producer and Joint Operating Committee would function in this changing energy age. This vision comes from the fourteen modules of the Preliminary Specification. I had two comments when I wrote the Preliminary Research report. The comments were that “this solves every administrative issue in oil & gas for the past fifty years” and “it's an entirely new discipline.” Both were related to the significance of using the Joint Operating Committee as the key organizational construct of an innovative oil & gas producer. What I think we can say as a result of completing the Preliminary Specification is that both of these comments underestimate the significance of using the Joint Operating Committee. The Preliminary Specification certainly addresses administrative and accounting issues. This is when the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks are aligned with the compliance and governance frameworks. However, when it comes to oil & gas operational concerns, it will provide the frameworks and means to solve those problems too. And although People, Ideas & Objects have used them to highlight today's business issues they’ll also provide solutions for tomorrow's issues and opportunities.

Changing one producer's innovative behavior carries a scope of change that is as wide-ranging as contemplated in the business world. Change at this scale cannot be managed within an organization. Instead, it needs to be managed through creative destruction in the broader economy. Producing natural gas at a loss was the beginning of this process. We have now seen natural gas producers lose money for more than a decade while the Preliminary Specification was available. Yet nothing was done to address this issue. At the height of the issue, we saw officers and directors pray for a cold winter, abandon shale and reorganize as clean energy producers. Solutions to the actual problems have not been discussed or provided outside of People, Ideas & Objects. Low natural gas price issues remain unaddressed in 2023. The fact is officers and directors can’t, won’t and will not change. Over the early years of the natural gas price decline, relatively high oil prices covered many of the sins in the natural gas marketplace. For the past nine years, low oil & gas prices have put the industry and many producers in financial jeopardy. This is due to both sides of the business' poor performance. An anomaly that hadn't happened before. We believe these are the beginning stages of creative destruction. People, Ideas & Objects offers the Preliminary Specification, our software development capabilities, our user community and their service providers. This is an alternative organizational structure for oil & gas investors to rebuild the industry. 

Producer officers and directors tend to collectively race into the “next big thing” in capital investments. Abandoning their prior “next big thing” investments with little thought or concern that they’ve never succeeded commercially. Just like sheep, they move from failure to failure in lockstep with one another. 2021s producer declaration that shale would never be commercial was quickly followed by their focus and direction on clean energy. This was after decades of low oil & gas prices justified by the excuse that alternatives shouldn't get a competitive foothold. Only to shift the producers' oil & gas revenues, generated by prior oil & gas investors, to clean energy in an unauthorized manner as they would have otherwise run out of "the next best thing." 

Today the landscape is littered with destruction and damage caused by officers and directors. Comments such as clean energy is their future undermine a robust industry. Raising issues such as this should clear out the last remaining holdouts committed to petroleum engineering and geology at the university. Any possible capital investment in drilling rigs or frac capacity will add just one more to the thousands of reasons never to invest in the service industry when producers are this abusive. Those trapped in an oil & gas career should not start a family or take on a mortgage in such an insecure economy. Instead, they should continue looking for work in other industries first. The positive from all of this is that officers and directors are fine and thank you for asking. With consistent cash flow they’ll continue to provide themselves with the healthy compensation they’ve earned over these past decades. These officers and directors are the only people who have benefited financially from oil & gas which to them is a feature, not a bug. 

I’ll only point out here that overproduction was the root cause of the Great Depression. Oil & gas overproduction has been the method of destruction for four decades. The first of possibly dozens of commodity price collapses occurred in 1986. This Preliminary Specification was originally published in August 2012 and deals specifically with oil & gas overproduction. And on July 4, 2019 People, Ideas & Objects published our White Paper "Profitable North American Energy Independence — Through the Commercialization of Shale." Which was widely distributed and received the thumbs down from our friends, the producer officers and directors. Their absolute response came nine months later in the form of negative $40 oil prices. Only to declare shale is never commercial and move on to clean energy with oil & gas revenues. Our conclusion is the only conclusion one can draw from this. Officers and directors don't understand business, or maybe it's just the oil & gas business they don’t understand. 

A time of dynamic change driven by organizational changes focused around an innovative Joint Operating Committee. How can a firm that has been developed in an era of cost control transform itself into a dynamic, innovative, accountable, profitable and earth science & engineering capability-focused producer? In many cases the will to do so might exist. However, with the speed and unforgiving nature of the business cycle not much time will be provided to those that attempt transformation. Since the 2008 financial crisis, the capital markets have shown many interesting phenomena. To suggest any trend or definitive result from these would be premature. It's just a different world for oil & gas CEOs or CFOs than it was before 2008. In early 2023, wars, market surprises, and disruptions are expected to continue.

Oracle accelerated firms' ERP value in late 2022 at the Oracle CloudWorld Conference. Introducing advanced, integrated services that drastically reduce costs and time for any firm that uses their products. Examples include their integration with J.P. Morgan Chase Bank. This enables users of J.P. Morgan Chase Bank credit cards to designate the destination of the charge within their companies' accounts. Oracle Cloud ERP would then verify that the charge was consistent with company policies. Depending on its eligibility, the charge would be processed by J.P. Morgan Chase Bank. This eliminates the costly and time-consuming task of filing expense reports that each staff member needs to undertake. It also eliminates the time to process and review expense reports. Considering the impact across the firm for the entire year, what this innovation and integration will yield in terms of gains includes increased productivity in terms of time. It will also reduce costs and everyone's frustration.

Oracle has not stopped there. This is a major initiative of theirs and what I see as the focus of their firm's future development. What they have is the world's premier tier 1 ERP system. This is an opportunity to leverage Oracle Cloud ERP further to increase customer value. These features are available globally and for all industries who use their products. As People, Ideas & Objects have chosen to capitalize upon Oracle Cloud ERP we will provide these services to North American oil & gas producers. Oracle's general business developments will enhance our oil & gas attributes.