The lack of profitability has decimated all oil & gas business value generated before the 1980s. The subsequent investment capital and all the revenues earned were fruitless when the business stands today without the ability to support commercial operations or meet consumers' energy demands. This damage extends to service industries' capacities & capabilities. And includes the fact that the oil & gas and service industries capital structures are incapable of reviving commercial operations. People, Ideas & Objects has documented throughout the Preliminary Specification our approach for the current lack of profitability. The source of our software product quality, oil & gas industry leadership and profitability is our user community and we have configured it in a manner that enables it to address the scope of this issue, formulate the solution based on the Preliminary Specification and deliver that to the North American producer marketplace. Our user community differs greatly from any other user community created to develop ERP systems. This is to ensure they succeed in their task and make the transition from today’s culture of failure. Instead, they will be part 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. Able to address the most challenging future we’ve faced before.
Quality ERP software is achieved through user driven software development. This has been proven and became the foundation of the agile software development methodology. An understanding of the oil & gas administration and accounting can only be gathered through the direct involvement of those who are familiar with the processes, data, issues and opportunities. This understanding is captured and defined for our software developers by the People, Ideas & Objects user community. 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 by-gone era.
It is therefore People, Ideas & Objects' obligation to ensure this initiative succeeds. Quality software is developed through user community software development. This is where we’ve focused our efforts since March 2014. We have made our user community one of People, Ideas & Objects' three competitive advantages. These consist of Intellectual Property and research to round out our offering. Our user community is our primary focus and highest priority organizationally. It is the area of our offering in which we can effectively implement the level of organizational change, cultural change and product quality necessary.
One of the solutions proposed by oil & gas producers was consolidation which occurred a few years ago. Centralized control of interactively complex systems is not effective and leads to failure. There needs to be decentralized control with markets able to make the necessary changes. Interactive complexity is one of the challenges facing producers today. The ability to deal with the issue as it arises through a structured hierarchy, with excessive regulatory oversight governing the producers' actions and operational decision making authority being governed by the Joint Operating Committee has created paralysis and inaction.
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 as an independent, decentralized resource. They’ll have the authority to affect the changes they need to make. They are, and will be for the long term, the ones that the industry will turn to to resolve their ERP software related issues and opportunities. It will be our user community members who are authorized to initiate the necessary changes and only our user community members. The structure we have provided has three components which will enable them to build the appropriate oil & gas ERP software from the vision of the Preliminary Specification.
Only our user community is licensed to make changes and prepare derivative works to any underlying Intellectual Property of the Preliminary Specification.
People, Ideas & Objects licensed developers can only look to our user community for input. Our developers are blind, deaf, and dumb to others.
Our user community has their own budget. They are independent business people. Not "blind sleepwalking agents of whomever feeds them."
User community members are the only individuals and / or groups who can change the Preliminary Specification and its derivative works. People, Ideas & Objects' business model is based on a fundamentally different method of developingERP 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. Our user community members will be the only ones who can configure the software. It will not be driven by technical architecture, business cycle or 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. Use of the Joint Operating Committee and the six other Organizational Constructs is a strong model that solves the administrative, accounting and operational issues. This enables the producers to realize opportunities in the industry. This business model and its future development are in our user community's hands. Included with user community members participation is the granting for development and operation of a service provider organization that is licensed for an exclusive process domain to manage on behalf of North American producers. The service providers are a reallocation of the administrative and accounting resources of the producers. They are the critical change enabling much of the value proposition realized by producers from People, Ideas & Objects et al. Providing oil & gas producers with industry-based, variable administrative and accounting costs, variable based on profitable production capacity and capabilities.
If producers want to have elements of their organization included in the People, Ideas & Objects Preliminary Specification 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. This would also belittle their overall relationship with our user community. This is what makes the People, Ideas & Objects user community so effective. It is how People, Ideas & Objects build quality software. Our user community members are involved in leading the development. They will each generate revenues for their work as users. Their service provider organizations will be the primary source of personal value generation. We expect approximately 3,000 users. These members will use their budget allocation to research, collaborate and determine the needs of producers and industry. They will communicate, oversee and ensure the software is developed in the manner necessary to ensure profitable production is produced everywhere and always. Individual users will be able to specialize in their contribution to a specific process based on the expertise individual community members provide. They're independent business people developing solutions for oil & gas, not employees of producers checking boxes off in the role of "user." Therefore comprehensive and dedicated involvement by industry and individual producers is necessary to make sure that their needs are understood and what it is they specifically require in our software and services. Ensuring that what is created on the producer's behalf is accurate. Not relegating a definition contained within a service level agreement. This is where the producer seeks to delegate responsibility and accountability to the agreement agent.
Participation is imperative for producers if they want to proceed with the Preliminary Specification developments.Developments include the decentralized production model, the Joint Operating Committee and six other Organizational Constructs, three marketplaces and fourteen modules. To 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 mean that producers' particular requirements, distinctive ways of administration, accounting and operations are not accommodated or considered. That none of the software is built for the situations that the company experiences. This means that the premier asset of theirs would not have the software to handle the particular nuances of how it needs to make money. Producer officers and directors will say they have all of this covered under 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 participate and interact with our user community itself. I expect our user community to be dynamic and fast paced with significant iterations over the business model that uses the Joint Operating Committee etc. Non-participating producers won’t know what these changes are and what the implications are to their firm's assets. They weren't there when decisions were made. An ineffective strategy. Shareholders will be wise to these actions and wonder why their producer firms are not participating? Is profitability optimization not an issue? Or is the company unaware of the technical progress in the past 25 to 35 years? Investors will have many questions and producers will need to provide the answers.
One answer might be that it's most beneficial to wait and see how things develop with People, Ideas & Objects et al. For any producer, sitting on the sidelines will be tragic. They should choose to be in or out and have their reasons for non-participation, but sitting on the fence will be the poorest 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, subsequent software development will bring in updated concepts and features on top of the features previously built. Non-participating producers did not participate in, and therefore can’t understand or implement. Leaving them unable to transition. Permanently degrading their performance standards and competitiveness. Financially, in terms of the producer's cost to develop the Preliminary Specification, People, Ideas & Objects believe there are no free lunches.
What People, Ideas & Objects, our user community and their service provider organizations are doing is disintermediating the oil & gas business. Putting an end to the outdated business model and culture that no longer serves its users' needs and no longer generates value for any of its stakeholders. Disintermediation is necessary and timely. No industry will be immune. We have not scheduled the commencement of our software development, however we have spent our time since the publication of the Preliminary Specification developing our user community. There are no large technical issues to resolve. I believe everything we need to build the Preliminary Specification can be done with today’s technological infrastructure. Taking it as far as to assert that we have no technical risk in the People, Ideas & Objects business. Review of Larry Ellison's keynote addresses at his Oracle conference's reflects this. Although there are no large database issues to resolve, Oracle has moved their technology forward in significant ways. This will make our work faster, smarter and better. I mention this as this technological infrastructure is enabling industry disintermediation.
It will be a completely different oil & gas industry. One that is limited to what our users can imagine. One based on the Preliminary Specification and developed further from there. This is the opportunity 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 change the underlying Intellectual Property. They are the only people our developers concern themselves with. But let's not forget about their budget as well. Our goal is to provide 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 in a worthless industry. The demand for cash to support the long-term destruction of the industry continues and fewer sources of support are realized each day. Serious action is needed now. I would suggest one of the dynamic changes as a result of the shale era will be that the industry leadership will not be sourced from the engineering and earth science disciplines. But its future lies in the hands of leaders who can make the industry profitable. Oil & gas industry leadership will therefore be regenerated and exercised through our user community. This will be the means by which the industry regenerates itself, profitably, not as an out-of-control spending machine. If that appeals,people should act. Actions based on individuals working collaboratively, driven by an overall vision of real profitability such as the Preliminary Specifications are how we’ll solve this. However, remember that the losing side is the most dangerous just before collapse. Don't expose yourself to them unnecessarily.
Our user community seeks 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. Oil & gas are experiencing the most difficult issue they’ve ever faced. Collaborations with our user communities are not intended to build consensus or compromise. On the contrary, we have many issues to resolve and some of the most complex ever approached. Resolution 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 industry software for the next generation, to lead and build the dynamic, innovative, accountable and profitable energy industry we now need in North America.
Historically, North American oil & gas has not been profitable. We therefore understand why profits are so critical and should always be the focus of everyone involved in the industry. In Canada our former Prime Minister Stephen J. Harper, whose 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. p. 162.
“Real” profitability as I state 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 previously invested capital. The money needed throughout the broader 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 & gas is a primary industry where revenues are earned due to secondary and tertiary industry efforts. Service industry revenues are not generated outside of the oil and gas industry. 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 an industry except during its formative years. Eventually a viable industry will benefit those who took the risk to establish the opportunity and those that made it a reality. Today in North American oil & gas we have an industry that is not profitable in the “real” sense. It has ruined the value developed by those before them and those that were led to believe otherwise. An industry that has degraded to the point where it cannot operate profitably or satisfy its customers' demands. Profitability will be the only source of value the industry can use to generate its future. The current officers & directors historical performance record is not trusted by anyone. Besides, other than profitability there is no other source of capital large enough to even begin to approach the capital needs of the industry.
It is therefore incumbent upon our user community to take a leadership role in establishing “real” profitability in North American oil & gas. Producer engineers and geologists often say that accounting has nothing to do with industry profitability. “There is no way accounting will make the basin profitable.” The fact that they have lost what former Prime Minister Harper stated, “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 basis of “real” profits.
People, Ideas & Objects user community is dedicated to providing dynamic, innovative, accountable, and profitable North American oil & gas producers with the most profitable means of oil & gas operations. Ensuring that profitability remains at the forefront of industry activities, everywhere and always.
The industry's lack of profitability has led to a devastating decline in its prospects. Shale presented one of the greatest endowments of wealth to the most powerful economy in history, yet after two decades, little value remains. We have been betrayed by the leadership of the oil & gas, specifically by the officers and directors of producer companies. Who refuse to accept responsibility, account for their performance and actions or resolve any issue. New leadership and organizations must emerge to rebuild the North American oil & gas industry according to the profitable vision we have outlined in our Preliminary Specification ERP software. This leadership begins with our user community and their service provider organizations, who are defining, building, and supporting a new culture in oil & gas—one that emphasizes resource preservation, performance, and profitability.
Oil & gas provides consumers with a value proposition of 10,000 to 25,000 man-hours of mechanical leverage in each barrel of oil equivalent. There are no substitutes for these resources. We owe it to future generations to manage them appropriately and ensure that nothing is wasted. Unprofitable production constitutes waste, and we have an obligation to demonstrate to those generations that we have managed the resource responsibly.
Therefore, it is the charter of our user community to pass on a profitable, prosperous, and healthy oil & gas industry, service sector and tertiary industries to the next generation. We aim to provide consumers with affordable, reliable, abundant, and independent sources of oil & gas supply, enabling our society to maintain its political and economic independence for at least the remainder of the 21st century.
Our user community's first need is leadership. Effectively our user community is a separate organization independent of both People, Ideas & Objects and the industry itself. It is driven by its own vision, purpose, community and leadership of providing oil & gas producers with the most profitable means of oil & gas operations. Although our user community will have People, Ideas & Objects as its sole source, by license, of user community participation revenue, user community members are the principals of service provider organizations who provide 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. People, Ideas & Objects focuses on our organizations competitive advantages of our user community, research and Intellectual Property. Therefore, leadership in our user community is an aspect that needs to be developed by those who commit to the overall vision of the Preliminary Specification. Those that desire to provide oil & gas producers with the most profitable means of oil & gas operations.
Our user community will provide two types of leadership. There is organizational focused leadership that focuses on our user community's needs. Secondly there will be overall industry leadership in relation to the oil & gas business model. This is discussed in detail in the next section. Our user community will include the necessary organizational support demanded of it. This includes approximately thirty Product Owners who are responsible for either a specific module of the Preliminary Specification or an element of its development. Involving the difficult 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. Anyone with the money can build an application on Oracle Cloud ERP. Adding a vision as compelling as the Preliminary Specification to the mix adds value to the process. However, building a user community to define and support both Oracle Cloud ERP and People, Ideas & Objects software with the vision of the Preliminary Specification will ensure that this environment succeeds for all concerned. These software applications will deliver explicit knowledge captured by our user community and codified in the software they develop. 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.
McKinsey Consulting published an article on 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 CEO, CFO and COO roles and responsibilities. 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 to fill are the approximately 30 product owners we mentioned earlier. These are intriguing roles that take a prominent seat on the software development team. They are the ultimate representatives of our user community within the development team's authority. Therefore, for the team developing the Partnership Accounting module, the Partnership Accounting Product Owner would ensure that our user communities' needs were understood and implemented in the software. Having expert knowledge in the area, in this case Partnership Accounting, the Product Owner can read our user communities' needs and preferences. This will increase 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 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 added value to dynamic, innovative, accountable and profitable oil & gas producers. A substantial amount more than what officers & directors provide today. The primary focus of our work is to develop the user community, its leadership, and the associated service providers. We do this as we strive to offer an alternative means of organization to the oil & gas industry in order that the oil & gas investor, and the people who work in oil & gas can choose the status quo 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 status quo. If we don’t work towards building an alternative, nothing will change. And this is the place where people can begin the process of improving 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 cannot be quantified from implementation of automation, specialization and division of labor tools. Ours is an innovative way of operating the oil & gas industry, and as we’ve stated here before, even if the officers & directors could park their self interests and wanted our project to begin, we would not begin software development until our user community is fully formed. The Preliminary Specification is a fine vision of what the industry can do in the future. In the absence of our user communities' involvement in our software development, it will be a great vision without the appropriate implementation. There must be robust user community involvement in the Preliminary Specification software development. It is mandatory, and as I have pointed out, user community development is our number one focus and priority. We are an existential threat to officers & directors challenged by the Preliminary Specification. They are eliminated from the landscape by it and don't want to be part of it. Therefore they have not and will not support us. And we'll have to build our user community brick by brick and stick by stick. And that takes time, which we have and producers don’t.
The ultimate configuration of our user community's leadership positions will be determined by those within the community. Industry after industry is disintermediated by Information Technology. And that is what's 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 demands a new business model be developed 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 allocates production fairly across the industry, based on profits, without affecting a producer with excessive G&A costs when unprofitable production is shut-in. A business model that defines and supports innovation in the producer firm, Joint Operating Committee and industry. This is to ensure consumers receive abundant energy at reasonable costs. There are significant opportunities ahead for the leadership team and our user community in general. They will help develop an 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 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. We’ve chosen 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. We prefer the solution 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 due to creative destruction. We don’t know and don't care how the industry configuration ultimately changes. What we are concerned with is providing 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 its leadership. One area of our value proposition that we can't quantify is the value we'll be able to provide to the dynamic, innovative, accountable and profitable producer. This is due to the toolset we implement in the Preliminary Specification. And that toolset currently consists of items such as business process automation, specialization and the division of labor, and the principle of non-rival goods developed by Professor Paul Romer.
Looking at the overall scope of what can be accomplished by the leadership team and our user community. It is critical to remember they have the wherewithal to make this happen. This is documented in the three structural components of our user community vision which include the money and power needed to complete their tasks. It is one thing to define broad strokes of a vision of what is possible. It is another to provide that community with the means to realize that vision. And I think those mechanisms are provided to our user community.
The Preliminary Specification provides a solid vision and workable framework of what an alternative organization method could be for the oil & gas industry. It works in that there is no major flaw or defect where logic or implementation breaks down. It is the result of my vision of what could be, and a decade of research. It is also incapable of providing the industry with the ability to implement it 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 contribute to the process. They should build on the Preliminary Specification framework and vision.
The questions to be asked are how does the North American oil & gas industry avoid the continuing disaster it has become? Why did business leadership fail? Why hasn’t it been corrected? Did producer firms adopt the cultural, IT, and organizational changes demanded? If not why not, and what motivation stopped these changes from happening? Has business leadership in oil & gas changed? Has it taken on a broader industry focus and away from the individual organization? Or is it that producers today have lost the script on business performance? What is business leadership and why has its loss been so devastating for all concerned? Why hasn’t the science and technological leadership of the industry expressed their dissatisfaction with all the others? Or are they satisfied with doing enough to get by?
A quotation from one of my favorite authors Victor Davis Hanson in his recent book The Second World Wars.
Thucydides’s ancient warning that “it is a habit of mankind to entrust to careless hope what they long for, and to use sovereign reason to thrust aside what they do not desire.” p. 563.
It seems that I have not been able to get to the beginning of the discussion on the difficult topic of leadership. What I know is that Information Technology has made oil & gas organizations sink into a comfortable, fixed configuration. This works for one small group of people at the expense of everyone else. Producers' decision makers are conflicted and self-absorbed to the point of being caricatures of responsible, accountable and authoritative business leaders. Unable to make the necessary changes due to the conspiracy of the Greta Thunbergs, their investors, Joe Bidens and the monsters under the bed… They’ll “muddle through” as they always have, which has proven to be lucrative, for themselves, and somehow acceptable in the past. For them there is no demand for change as there are no issues.
Will our user community as configured be the means to provide business leadership in terms of the governing business model for North American oil & gas? We’re suggesting here that producers have difficulties making changes to deal with their organizations due to ERP software constraints. When ERP software defines process management, the only way to make changes is to change the software first. This knowledge has been used in current producer firms to ensure that nothing can challenge their management methods and ensure their positions remain secure. It is therefore essential to change the software used in the industry to deal with business issues and opportunities as they arise.
What People, Ideas & Objects recommend in the Preliminary Specification is that a permanent software development capability for our ERP system. This is in addition to our permanent user community and their service provider organizations. Our business model is based on change and discards ERP software firms' traditional means and methods of revenue generation. Post commercial release of our Preliminary Specification, we will see People, Ideas & Objects generate the revenues necessary to support our developers and our user community. This will be done through the changes we make to these systems. These will be funded through an assessment made to the producers based on the prior quarter's costs etc.
This change in funding brings about fundamental differences between our offering and what is traditionally undertaken. The first is that our user community remains independent. They will not, and never will be “blind, sleep-walking agents of whomever feeds them.” They will be driven by what is necessary to ensure that the industry and all of its secondary and tertiary industries are provided with the most profitable means of oil & gas operations everywhere and always. Capital markets will then be able to evaluate a producer's performance based on its knowledge and implementation of engineering and geology science and technology. Producers who cannot perform financially will fail, much like today’s producers. Secondly, People, Ideas & Objects itself will not be constrained by what we believe to be the two major ERP software providers' funding constraints of code and customers. As the customer base becomes larger over time, scale becomes more of an issue, as a result, software code becomes exponentially more complex and difficult to manage. Neither of these costs are fully covered in the Service Level Agreement from the point of view of support costs. And they leave nothing in terms of financial resources for changes, and certainly nothing for innovation or improvements. If our user community determines that some software process is redundant through a higher level of specialization, they’ll have only moderate to no vested interest in supporting it. Therefore, they will implement the change.
Producers will generally be unaware of any of these transactions. The People, Ideas & Objects cost model distributes these costs across the producer population based on the North American production profile that participates. Otherwise, as they do today, each producer firm will face these same costs of changes individually, within their own InformationTechnology empires. Producers' independently replicated, unshared and unshareable overhead costs are the secondary reason for their lack of profitability. By introducing our Cloud Administration & Accounting for Oil & Gas, we are enhancing the cloud computing paradigm. Taking a highly complex and difficult process that is capital intensive to build and maintain, that is costly to operate, which is not a producer's competitive advantage. Turning it into a shared and shareable variable cost. Variable based on profitable production.
We have been fortunate at People, Ideas & Objects to quantify the differences between our organizational method and current bureaucracies. Documenting the $25.7 to $45.7 trillion in our value proposition over the next 25 years makes our case for change. These differences are made up by having the $20 - $40 trillion in capital expenditures funded internally through an appropriate business model instead of the current expectations that investors will be available to continue to “build balance sheets,” and “put cash in the ground.” The $5.7 trillion is the differential between our determination of “real” profitability and the definition of profits used in the historical base case. The ongoing, never ending cash crisis, which will be resolved in our model, is included in those figures.
Another area that is just as material in terms of the scope of change that we’re unable to quantify or qualify. Are the differences that are attributable to the toolset that we employ within the Preliminary Specification, our user community and their service provider organizations of automation, specialization and the division of labor, and the sharing model introduced by Professor Paul Romer's non-rival costs. These will add value to the dynamic, innovative, accountable and profitable oil & gas producer. Potentially of greater value than those benefits we can quantify today. It's interesting that producer officers and directors expect investors to invest in them when they themselves can't invest in their own organizations to enhance their own profitability. After the producer's financial records reveal a comprehensive disaster!
Recently we learned during Oracle’s 2022 CloudWorld conference that many of the same developments and features have become Oracle's focus. Finding “gaps” between offerings and filling them with automated processes is the direct application of enhanced specialization and division of labor that our user community is using and will apply in this community. Oracle Cloud ERP has accelerated these same principles across the generic business function and process landscape. This has brought about even higher levels of value to North American producers. Those producers who opt in to the Preliminary Specifications development will therefore have our user community developing this value adding process to the specific North American oil & gas and general business attributes and therefore covering the majority of a producer's accounting and administrative needs.
To suggest that administration and accounting in the oil & gas industry are static is disrespectful of the word static. These are the foundation of an organization where business leadership is derived and exercised and is therefore static too. People, Ideas & Objects do not understand engineering or geology and don’t pretend to. Leadership in these areas is constrained by the lack of effective business leadership in these producer firms and the industry. Relegated to complaining that investors won’t let them do this or that. If effective business leadership was enabled and permitted to flourish, where would the industries scientific research and technology be today? What would North America’s production profile be? Would they constantly look behind them as they seem to always do now? Why is this acceptable to them when it’s destructive to what they’ve built and leaves them with inadequate resources to do what is necessary and more? Would the development of profitable oil & gas operations everywhere and always provide them with the resources, capacities and capabilities to apply their sciences and technologies in a more competitive manner? Instead of dealing with this situation they’ll vilify and ostracize those that seek to provide them with the very solution! People, Ideas & Objects are not the enemy.
Let's add a bit more of the dynamic nature to our user community and their service providers overall structure that differentiates them from the static business environment that somehow became so acceptable. We believe, and it is our opinion, that the lack of investment in ERP systems over the past decades has left oil & gas companies with very poor systems today. And this has nothing to do with those ERP providers who have worked miracles in impossible financial conditions as producer officers and directors felt the need to ensure nothing threatened their status quo franchise. With IT developments over the past decades unrealized we can imagine how it stands today. However, the most accurate description that I can offer is that people are busy working for computers. We believe the shoe should be on the other foot and computers deployed to manage storage and processing. The work that is unique to humans is the work that involves these distinct competitive advantages.
Leadership, Issue Identification & Resolution, Creativity, Collaboration,
Research, Ideas, Design, Planning,
Thinking, Conflict & Contradictions, Observation, Reasoning,
Judgment, Application of Implicit & Tacit Knowledge, Quality,
Automation, Specialization & Division of Labor, Innovation, Integration,
And I’m certain there are many more. It will be up to our user community to ensure that we employ this advanced tool set in the development of the Preliminary Specification. This will be done through their service providers. This will be a challenging aspect of their work in terms of its execution. With the reorganization of the industry and the reduction in size of the prototypical producer, the service provider becomes a specialized provider who uses their division of labor to approach the entire oil & gas industry as their client base. This of course is an entirely different way of organization and perspective on how things are done. We actively recognize the industry culture through the Joint Operating Committee, not based on the producer's corporate compliance and governance culture. The scope of the change is tremendous. The size of the G&A resources being shifted in this reorganization is unknown at this time.
It is these topics and areas of focus that will be the domain of business leadership within our user community. Very high level, once in a century type of work that an individual can highlight their career and establish a business in. The changes we are making are dramatic. They will have a material effect on the performance, makeup and manner of how North American oil & gas operates for the next 20 to 30 years. Foundational work that affects how the producer performs financially. Since all our organizations are a critical part of our society, healthy organizations lead to healthy societies which lead to healthy individuals.
Back in the late 1990s I was trying to determine what asset would be the most valuable in the future. I’d always put my efforts into software and was wondering if that was adequate for the future or was there something more? While contemplating the next stage of this adventure I realized that Intellectual Property was the only real asset in the 21st century. It was the only real asset that provided owners of any asset with value. Today the economic environment does not offer anything of the type of reward that Intellectual Property does, in my opinion. This is most particularly one that is inflation and interest rates desensitized. In the future all business will be based on some form of Intellectual Property.
At People, Ideas & Objects we believe that in order to obtain gainful employment people will need Intellectual Property to do their work. To better define this, have the right to do their work. This would be acquired through education and experience, but one would also have to have one of three levels of IP access. The first is outright ownership of their own Intellectual Property which is commonly known as copyrights, trademarks, patents and to a lesser extent trade secrets. Secondly, an individual or company is licensed access to others' Intellectual Property through a contractual arrangement. And the last will be as an employee of a firm that either has the IP or is licensed to use it. These three tiers of IP are distributed throughout People, Ideas & Objects, our user community and their service providers in the following ways.
I myself am the beneficial owner of the underlying copyright to the Preliminary Specification and its derivative works. I have licensed People, Ideas & Objects to commercially develop the ERP application, communities and all its associated needs. Our user community members are direct license holders of People, Ideas & Objects, either as individuals or as representatives of their service providers. They are licensed to prepare derivative works. They also sub-license on a run-time, read only basis the Intellectual Property that our user community member has licensed access to, which is unencumbered, to the staff they employ in their service provider organization.
To ensure this IP is held and developed in pristine condition. Our user community members are paid by People, Ideas & Objects for their contributions to the development of the Preliminary Specification and other derivative works. These include software code and binaries. It is in the process of this payment that we are purchasing the IP from each of our user community members in order to ensure that the entirety of it remains whole, and most importantly, available to our user community to prepare derivative works. If this was not done we would have an unworkable model. Due to the claims of individuals and trolls who hold up oil & gas producers' profitability for their own monetary purposes by withholding their IP. If you have your own Intellectual Property and feel that it should be recognized in oil & gas, the market is available for you to do so.
There are a number of conditions that must be met in order to participate in the People, Ideas & Objects user community. To begin with, we aim to provide the most profitable means of oil & gas operations to North American oil & gas producers everywhere and always. A task that enables others to rebuild the industry and sub-industries themselves. That is our objective. We are not providing producers with clean energy systems in any way. Our user community and their service providers earn revenues from oil & gas production. Therefore the license precludes user community members and their service providers from operating outside of the oil & gas realm.
It also precludes them from working in any area other than oil & gas ERP systems of People, Ideas & Objects. This includes our user community and their service provider organizations. Our user community is our primary competitive advantage and is therefore not accessible to our competitors or others in the broader oil & gas software industries or anywhere else. Maximizing producer profitability is an unending task that demands our focus.
We need to consider the possible contamination of this IP in a scenario that disrupts this community. If a licensed user community member or its service provider used this IP, and augmented their efforts with other software providers or vendors' products from outside of our community. This would be a can of worms that would demand People, Ideas & Objects terminate our user community license. This would enable us to protect ourselves from any allegation or potential claim of contamination. In a world where Intellectual Property is the domain where all value is generated, in situations such as we have, where it’s not enough to own the oil & gas asset anymore, it’s also necessary to have access to the software and services that make the oil & gas asset profitable. The basis of this industry-wide profitability is derived from Intellectual Property produced in this community. Value of this magnitude needs to be protected from incidental and minor actions that would appear non-consequential. However, it could be based on the actions of others outside the community who wanted to leverage the community's work in an unproductive manner. Our safeguard here is to state the risk to the community of a participant that may innocently fall prey to these actions. We advise them of the consequences in advance. That the loss of the license could be communicated to our user community members staff within their service provider organization. Those within that organization would be wise to consider the risk and consequences and ensure they and their service provider did not fall down that path. Sabotage by an employee is a different criminal act that has its own remedies and would not fall under these provisions.
With respect to Artificial Intelligence and its use. What the user community and their service provider organizations are doing are preparing derivative works of the Intellectual Property they are licensed for. Therefore, derivative works produced by Artificial Intelligence cannot be claimed as Intellectual Property of the developer of the Artificial Intelligence algorithm. And can therefore be used as productivity tools for the user community and service providers.
Membership in our user community will be maintained during the initial development period as a privilege and not a right. We need an environment within the community where community performance is maintained at the highest levels. If we have the solution for the greater oil & gas economy, a matter of opinion, then we have a commensurate obligation and hence the need to build a highly performative community. We therefore need to start by establishing the means by which our user community's performance is the overriding requirement. Methods will therefore be implemented to ensure that a lack of contributions, free riding, trolling etc is dealt with effectively. What I am suggesting is that in either of these or other possible scenarios, licensing and management of the IP in the structure of our user community allows that the community’s leadership can manage who contributes. If the community member is not able to do so, or is implementing a value proposition inconsistent with the overall objective, our user community leadership, under the license provisions will have the means to terminate the license. With the right to "cull the herd," our user community will be in a position to ensure quality and performance in every aspect of their work. Vetting cannot always determine the most qualified candidates. Successful implementation of IP and software in the industry is necessary for our user community and their service provider organizations to succeed as organizations.
Those that contribute are compensated appropriately and need to perform to ensure producers can rely on quality ERP systems. Members of the community themselves will know with certainty that they will not have to tolerate the inappropriate behaviors and antics of those that haven’t fully participated. They’ll also not have to carry any “dead weight” with them. If you want to belong to a high performance community, these are the methods used to establish other high performing organizations. Success must be a priority when the stakes are this high and the dependence is wholly upon our user community's performance. We are building upon the depth of industry knowledge necessary to ensure the full scope and scale of the application is conducted correctly and in innovative ways. There is an opportunity to determine if you qualify, can participate, if this arena is your calling. This is where you can make a contribution and a difference. There are risks, and I have worked to ensure that none are incurred unnecessarily. However, we should all agree the responsibility we have is substantial and the role our user community members have in this task is critical.
This is a challenging and difficult environment where the task appears impossible for many. And then it will attract exactly the kind of people who thrive in an environment like this. One of People, Ideas & Objects' first tasks is to establish the leadership group, which are full time positions. Then they can take our existing user community members and recruit the many, many more that will be needed. This will cover the entire scope and scale of the Preliminary Specification.
As a group, our user community has specific tasks to complete in the first iteration of our development. These only apply to our initial development and will change once the software is operational in the marketplace. If we look at these tasks from a global perspective we are taking Oracle Cloud ERP, applying the vision of the Preliminary Specification, developing, integrating, servicing and supporting that across North American oil & gas. Technical risk is moderate. We use proven technologies on a large scale. In terms of business risk we see the North American producers failing in their primary objective of profitably supplying abundant supplies of affordable energy to the consumer. A failure on many levels and therefore our level of business risk has to be none. We must complete this successfully, in my opinion. Ditto for market risk. Our vision within the Preliminary Specification is comprehensive and unifies our user community in the appropriate direction for successful implementation. And most importantly we are user community driven and therefore quality software.
The first step in this initial development phase is therefore to implement the model which is the Preliminary Specification. This vision provides a broad outline of what and how applications need to operate. Our user community handles the details of how each individual's work needs to be handled. They fill in, define and ensure that our developers provide producers with the systems that they want and need. For example, if a user community member was working in an area where the Material Balance Report was part of the domain of their efforts. They'll collaborate with others to determine what is required, ensure that it’s correct and iteratively, and innovatively develop the functions and processes in ways that meet the overall vision that will be managed by the software and their service provider organization. We are capturing the manner in which the industry needs to operate profitably everywhere and always which includes everything that is on the table, exceptions noted below. Ensuring it is the operational, administrative and accounting manner for the future we’ll need and redefining it around the Joint Operating Committee, the other six Organizational Constructs and the vision of the Preliminary Specification.
What we don’t need in this first iteration of the Preliminary Specifications software is any innovation on its business model completed by our user community. What exists today in the vision works in terms of its global perspective. It may appear that in some small areas it might be better to change an element of the business model to accommodate another condition. What we may not know is if this change upsets the global perspective and puts the overall vision out of sync in terms of its operational capabilities in other areas. The first development iteration is not a time in which to innovate on the business models contained within the Preliminary Specification. This may be introduced in the second phase of development, when the software is operational on the market. There will be substantially more that needs to be done that is incremental to the traditional software development process that we need to ensure we don’t bite off too much of a task to begin with. I would point out that our initial needs will include such one-time events as familiarity with Oracle Cloud ERP and the other people involved in our user community and initiative which would be demanding much of our time and energy. Focusing on what works from a business model point of view would provide consistency in terms of understanding throughout the industry.
Once we have the software fully operational in the marketplace, we’ll be able to innovate on the model. We'll also be able to determine further interactions and implications within the various domains of our operation. We are focused on providing the oil & gas industry with a dynamic, innovative, accountable and profitable oil & gas producer everywhere and always. This requires that constant change will be part of our developers, user community and service providers' operations. People, Ideas & Objects Revenue Model is structured to generate revenues based on changes in the software that we provide to oil & gas. Services revenues fall under the domain of service provider organizations individually and are managed by our user community members who own and operate those concerns. That is the dynamic that keeps this community moving forward. Otherwise software has the effect of becoming concrete to an organization as is the case today. Turning it into an unchangeable beast. If an organization needs to change, it is the software that needs to change first. And in order for the software to change, our user community or producer firms will initiate the changes through the mechanisms we provide to affect that change. And in People, Ideas & Objects our user community has obtained that power through this user community vision.
What we can do, and what brings about the greatest value from the model is exploring, innovating and implementing the interactions and implications of our model. When we move to the Joint Operating Committee and the other Organizational Constructs of the producer and industry we change every aspect of their operation, administration and accounting. Including within the service industry. Not much will be left unchanged in terms of the effects of implementing the Preliminary Specification. The interactions and implications are where the dramatic value will be generated for the various stakeholders in our targeted market. It is here that I expect to see the value of the model be at the forefront of our user community's search for delivering tangible value. Upon commercial release we’ll have a solid foundation on which to innovate on a known - known in terms of the Preliminary Specifications business model.
It's true that not everyone qualifies to work within our user community. This applies to both their leadership team and the general community. We’ll look for certain individuals that are unique in their skills and knowledge of the oil & gas industry. That is a given. And the diversity of those skills will make up the entire scope of the oil & gas industries administrative and accounting needs. It is these skills and understanding that are the primary concerns that need to be addressed in the work done by our user community. The ability to analytically break down the processes and design new innovative and effective ones that are consistent with the Preliminary Specification is not something that will be easily done. That is why we have priced this work into our budget at the $345 U.S. / hour rate for our user community participants. We are looking for people of that calibre. Recently Mr. Tom Hood, CEO, Maryland Association of CPA's published a list of 7 skills that clearly identify what is required.
As I noted the primary concern is that our user community participants be trained and experienced in the disciplines that fall within the administrative and accounting areas. Their work experience falls under the greater oil & gas economy. However, we expect that their skill set will include a strong element of Information Technology aptitude. Particularly in the two areas we mentioned before, relational databases and Java. Having a good working knowledge of these two specific technologies will make the design and development of the software, which will be the job of a user community member and service provider, that much easier and more successful. The importance of this IT aptitude will make a significant difference in the quality of the People, Ideas & Objects Preliminary Specification in many different ways. Today Oracle provides an "Always Free" tier of their Oracle Cloud Infrastructure (OCI). This is available to everyone and anyone and I would encourage user community members and prospective members to sign up to be familiar with the basic structure of our systems offering.
First it will permit users to better understand the issues and opportunities that these technologies provide. What is possible for users as a result of the Oracle database, its deployment in a cloud computing environment and Java, which now includes Oracle Fusion Applications. To add these to a users tool kit and be able to employ them, either to use them as a service provider, or to ensure that the producers who use them are provided with the most dynamic, innovative, accountable and profitable means of oil & gas operations, should be of concern to all within the community. There will be no demand here to write code at any time. That is not what we specify. It is the conceptual framework of these technologies that needs to be addressed.
Secondly the ability to communicate with People, Ideas & Objects developers in their primary skill set will be necessary to enhance the communication between our user community and developers. It is easier for users to understand the basic elements of these concepts in relational theory and Java than it is for them to comprehend the understanding of the oil & gas industry as represented and understood by the entire user community. Therefore to enhance the communications between the developers and our user community it is by far the easiest for our user community to speak at an elementary level of the language of the developers. As there is no way each developer can fully comprehend the scope and scale of the oil & gas industry contained in our user community. Particularly since no one else carries that body of knowledge around individually.
This understanding of technology may take four or five university level courses to acquire the type of understanding I think is necessary. We seek to communicate effectively with developers. Think of it as a career investment. Oil & gas producers need the most dynamic, innovative, accountable and profitable means of oil & gas operations. Is that the user will be able to provide our substantial value propositions. And therefore, everyone within the greater oil & gas economy will benefit monetarily.
Now for the relational database geek in all of us, I provide the videos of the last number of keynote presentations by Larry Ellison founder of Oracle Corporation. These are technical. Understanding the basis of relational databases and the Java Programming Language at a high level will provide any participant in our user community with a better knowledge and understanding of how the system is put together. And the best place to get that understanding is from C. J. Date, An Introduction to Database Systems.
Here are Larry Ellison’s last number of years keynote addresses. All are must-see viewing for our user community.