Revisions to the Budget and Implementation Part 4

Partnership Accounting

Much time and energy of our user community will be incurred initially in reviewing and understanding the detailed offering of Oracle Cloud ERP. Integration of the Preliminary Specification into Oracle’s product offering will be using Oracle’s recommended method of writing our software application modules directly into their Fusion Middleware Server. This will provide all users with a seamless experience when using the Preliminary Specification and benefit them through our constant improvements by our ability to join Oracle's current quarterly updates. The need to know the Oracle offering in detail will be the first constraint upon our users and how they innovatively deal with these is where their value will arise. By following Oracle’s prescribed development method provides us with unlimited flexibility, therefore in terms of a constraint, it is rather limited in its scope. Of particular concern and focus of our user community is on the change to the Joint Operating Committee as the key organizational construct in addition to the four other Organizational Constructs influence in defining producer firms and the industry. As with the understanding of Oracle technologies, this will also include the various groups involved in the use of the accounting information, many of which are identified in this budget and have their own allocations of financial resources to deal with their needs. These will need to be part of the requirements of the Partnership Accounting and Accounting Voucher modules. 

It is in the Partnership Accounting and Accounting Voucher modules that some difficult issues are presented. These issues are unique to the Preliminary Specification and are as a result of using the Joint Operating Committee as the key organizational construct of the innovative oil & gas producer. Once we’ve adopted this change, nothing is unaffected. Within the Partnership Accounting module these issues include the Pooling of the technical resources, the Work Order, the decentralized production model, the Material Balance Report and monthly detailed, actual, factual reporting conducted at each Joint Operating Committee. And these are just the more substantial ones. These will require significant effort and budget in terms of their resolution and determination of the most innovative and effective delivery. People, Ideas & Objects are focused on our three distinct competitive advantages of our user community, Intellectual Property and research. We therefore will have a group set up for the continued research into areas of innovation and the Joint Operating Committee among many other topics. Much the same as what we’ve done over the past decades.

As background to these unique differences in the Preliminary Specification is its decentralized production model which provides the much needed production discipline across the North American producer profile. The reorganization conducted by the decentralized production model sees the prototypical producer reduced to the C class executives, the earth science and engineering resources, the land, legal and support staff with the remainder of the resources moved to service providers that will be focused on an individual process, or part of a process. There they will use the entire oil & gas industry as their client base for the one process that they manage. And they will directly bill the Joint Operating Committees for the services that they render. Therefore when a production accounting service provider located in an area where production was shut-in for the month receives no operational data, conducts no processing and therefore does not send a bill for any month the Joint Operating Committee was not producing. Creating the null operation for the property, no profit, but also no loss. Which maximizes the producer firm's profitability when losses no longer dilute profits, the reserves are left for a time when they can be produced profitably, those reserves will not have to earn additional profits to cover the continued operational losses if it continued to produce, production and storage costs on overproduction are reduced to zero when left as reserves and the unprofitable commodities are removed from the marketplace effectively placing a floor on the commodities pricing.

The Pooling concept, as a replacement to “operator,” is a strictly mechanical implementation of the Joint Operating Committee. There are a few additional twists that are above the manner in which accounting is done today, and those dovetail with the Accounting Vouchers ability to have multiple producers charging costs / revenues to an open Joint Operating Committees voucher. This can be done simply, or it can be done extensively. As it is conceived in the Preliminary Specification it is done extensively with the costing of the earth science and engineering resources, the ability for a producer to budget the departments revenues from commitments to the Joint Operating Committees etc. This commences the development of a defined second source of revenue from the earth science and engineering capabilities of the innovative and profitable oil & gas producers and the means to source the appropriate technical resources for any properties operation. The establishment of the need of all producers to generate the appropriate funding to support their capacity and capabilities in terms of earth science and engineering is seen as a necessity in a highly specialized industry. These attributes and features have broader implications across the industry that expand their scale to increase and involve substantial budgetary impact on this module’s development. 

The Work Order is technically and mechanically complex and works with the pooling concept in one of its two applications. If we only had to concern ourselves with the needs of one producer firm then we could implement this type of Work Order easily. However the system needs to be elevated in terms of scope and operated at the industry wide level. All activities of the producer’s resource deployment when using the Preliminary Specification demand the Work Order be used. 

The Material Balance Report is something that should have been undertaken by industry years ago. The scope is however beyond what can be cost effectively undertaken by a single producer, even Exxonmobil. Since we are aggregating the resources of the industry we will be able to approach a technically complex problem such as the Material Balance Report. Tracking the source and disposition of product from its origin to its point of sale in an unimpeachable manner is a necessary requirement for the innovative and profitable oil & gas producer. It is the foundation of which we build, which is also part of the budget requirements here, the automation of the business processes that depend on that volumetric reporting. 

The decentralized production model is simple in its implementation and requires little in terms of technical complexity to overcome. The difficulty is in the level of change that is implemented in people’s lives being disrupted as a result of the introduction of the model and its reorganization etc. As with any change there will be winners and losers and with the level of disruption it is reasonable to assume that there will be big winners such as our user community and big losers. It will be here on this front that conflict and contradiction analysis will be necessary to deal with these opposing forces. Our user community directs the budget and will therefore be able to override some of the historical and legacy resistance to our initiatives. People, Ideas & Objects user community should develop procedures and methods for overcoming these recurring obstructions quickly and cost effectively. 

Accounting Voucher

Where are we going in the future of the administration and accounting for oil & gas. Are we to spend the next century huddled in the backroom processing transactions ever faster than the year before? Why don’t we take a minute, step back to look at the situation and determine what it is that oil & gas will need in the future and configure ourselves for those purposes. This is what People, Ideas & Objects, our user community and their service providers are doing by creating our Cloud Administration & Accounting for oil & gas service. Using our distinct competitive advantages (as listed in the background section of this wiki) to increase the accountability, performance and profitability of the dynamic, innovative, accountable and profitable oil & gas producer. 

The Accounting Voucher, like the Partnership Accounting module, introduces many new concepts as a result of using the Joint Operating Committee as the key organizational construct of the innovative and profitable oil & gas producer. Key among those concepts is that an Accounting Voucher is open to the participants in the Joint Operating Committee during the month a voucher is open in the system and the AFE or lease budget is authorized. This is a result of the pooling concept that’s introduced in the Preliminary Specification. It’s a result of these new concepts and the fact that the Accounting Voucher is such a critical accounting module that there will be some crossover, or joint development efforts with user groups in the Compliance (Tax, Royalty, SEC), Service Provider, Service Industry, Accounting Firm, Engineering and Earth Science user community groups and their budget allocations. There is also joint development work on the Material Balance Report with the Partnership Accounting module as with most of the work between these two modules. Again it will be necessary for our user community to be well versed in the details of the Oracle Cloud ERP offering in which these are integrated. 

If we look at the service providers as a group we understand their revenues will be a reallocation of the current oil & gas firms General & Administrative costs. Which will continue to be the oil & gas producer's G&A costs as the service providers costs are distributed through the Joint Operating Committees. People, Ideas & Objects believe the G&A costs reported on the Financial Statements in annual reports are net of those that have been capitalized. It will therefore be these unknown and unquantifiable gross G&A costs incurred by the producer firms the service providers will have as their revenue stream.

Management of the various individual processes that make up the administrative and accounting tasks in oil & gas will be how the service providers earn those gross G&A revenues. How they manage those processes will be primarily through automation presented through the Accounting Voucher. In the way that the Material Balance Report is able to encapsulate the reporting entity of a facility within a voucher for material, system and partner balancing. Or it could be used to capture the royalty process for a producer's interest within a Joint Operating Committee. The ability to structure an Accounting Voucher for re-use as a template, and build the capabilities of the voucher over time, as the property and process matures and evolves are among its features. The Accounting Voucher is one of the base tools for process automation. It will be used by the service providers to manage the capital, operating and administrative costs of the innovative and profitable oil & gas producer. It will capture all of the costs associated with the producer and Joint Operating Committees financial transactions.

Our ability to continually automate the processes that are involved in oil & gas will be necessary. And secondly we need to be involved in efficiently designing transactions. The best description of what designing transactions means is the “coordination of markets.” To better understand the role of the service provider in designing transactions we turn to the ways in which we build value for the innovative and profitable oil & gas producer. Through the decentralized production model we can affect change in the commodity marketplace and ensure the commodity prices producers earn are adequate to cover each of the specific Joint Operating Committees costs of capital, operations and overhead. Secondly, with the alignment of the compliance and governance framework to the legal, financial, operational decision making, cultural, communication, innovation and strategic framework of the Joint Operating Committee we gain speed, innovativeness, accountability and profitability in the producer firm. And third, through the unlimited application of a further defined specialization and division of labor that is above and beyond what is possible through the current bureaucratic administration, we are able to achieve a greater economic output from the same resource base. It is this last point of our value proposition that is the role of our user community members in designing transactions. The structure of the Accounting Voucher must capture the capability to enhance these features of the oil & gas producer and industry to develop the tool and model to a) handle the traditional role of an accounting voucher, b) develop the tools that will allow producers with the means in which to create additional value. 

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

Revisions to the Budget and Implementation Part 3

Budget Detail

This is the overall framework of the software development budget that was published in January and February 2014, and subsequently updated, that is necessary to take the Preliminary Specification to its initial commercial product release. All amounts are in US dollars. People, Ideas & Objects do not have the resources to commit to a detailed budgetary process. This would demand input from many areas and incur significant costs. Neither of which are available to the firm. These budget costs are estimated based on my experience and understanding of the Preliminary Specifications needs and the Oracle technologies we are using. They are not detailed to the level necessary to provide the confidence as to their accuracy. 

People, Ideas & Objects budget is therefore subject to change and applied based on the direction of our user community and on the many assumptions we have made which include but are not limited to. 

• Our user / developer interactions are on an hour to hour relationship in terms of their time requirement. 
• Speed in terms of delivery to market is the primary concern and any budgetary relief has been and will be applied to areas where this speed can be accelerated. 
• In systems development you can have two of any three priorities: time, cost or features. And we have taken the faster delivery and feature rich applications at the expense of costs. 
• The role of the CPA firms in defining and developing the enhanced accountability framework for which the foundation of their subsequent regulatory audits will form. 
• Use of Oracle APEX application development environment will not be released in any of the commercial code of the Preliminary Specification. The development environment may be used in prototyping and other uses but not in final code. APEX applications will be available for individual producers to use as they choose.

The estimated overall time requirement of 5,450 man years of effort necessary for the developers and users to build the Preliminary Specification will need to be mirrored and possibly doubled in terms of the time and effort required by producers themselves, above and beyond the financial commitment of this budget. Just as the subsequent implementation of the Preliminary Specifications software within the producer firms will be conducted by our user community service providers. The implementation and these development participation costs will be the responsibility of the individual producers themselves as they incur them. 

In its simplest form we present the budget highlighting the breakdown of costs associated with the development of the Preliminary Specification. I am only presenting the upper range of the costs, any amount of money that is underspent will be reallocated to contingencies for redistribution as our user community deems necessary.

User

Caution is used to define in too great of detail what will and will not be required by our user community in terms of funds in the development of the Preliminary Specification. These are broad strokes and not definitive in terms of their allocations. In line with our user Community Vision, they have control of the details of their budget allocations. The budgetary process is funded by People, Ideas & Objects based on our user community submissions. As mentioned elsewhere in this discussion the detailed budget needs of each area are unknown and beyond the reach of what is possible to be determined by People, Ideas & Objects at this time.

Preliminary Specification

The first allocation of user community funds will be to the Preliminary Specification User Budget category. Here we’ve allocated 22% or 484 man years of work for our user community for a budget of up to $330 million. It is important to take this budget allocation into context. These are the costs associated with the needs of the producer in its reorganized form based on the decentralized production model. Where the producer is stripped down to the C class executives, earth science and engineering resources, land, legal and support staff. The administrative and accounting resources are reallocated to the service providers to form the Cloud Administration & Accounting for oil & gas. It should also be pointed out that the earth science and engineering resources, as well as the former administrative and accounting resources, which are now the service providers, each have their own user community budget categories defined below. These separate categories are to develop the specific applications those groups will need based on the architecture of the Preliminary Specification. 

The core of the Preliminary Specifications application modules, features and process management will be defined and developed on Cloud architecture. With various different groups having their different types and styles of applications working from this core of modules. For example a service provider's process management application will manage only the data and processing that is associated with the process in which they’re managing. This will be done through the individual microservice they manage which accesses these core modules. 

Security & Access Control

One of the first concerns of our User Budget category of resources is the Security & Access Control module of the Preliminary Specification. We are providing the right access to the right information to the right people at the right time and in the right place on the right devices. This includes access from multiple producers' resources accessing information within the various Joint Operating Committees they have an interest in. We thankfully are able to rely on the strength of a variety of Oracles security products at various layers within their technologies to assist us in making these opportunities possible. The difficult issue presented by the Preliminary Specification is the high levels of collaboration and integration that need to be conducted by the various producer firms in the Joint Operating Committee and enabled throughout the modules and processes of the Preliminary Specification. What I expect from our user community is the ability to take these difficult requirements and make them effective in an environment where our users are enabled and supported in an environment that is constructive and informative. 

And it's not limited there. Additional resources will be provided to our user community based on their needs. We are developing People, Ideas & Objects to be user based software developments. This is not our objective for just the beginning, it is the objective for the life of the software. We expect to see significant change in the innovative and profitable oil & gas marketplace. This change will need to be accommodated by changes in the software and services that are provided by People, Ideas & Objects, our user community and the service providers. A constant level of change that will require our efforts of what we’re calling this newly created “gap” or sub-industry between the oil & gas producers and the technology companies like Oracle that People, Ideas & Objects our user community and their service providers are filling. 

Resource Marketplace

The Resource Marketplace module is the crossroads of much of the collaborative and commercial business conducted across the oil & gas producers and service industry. Employing transaction cost analysis shows these costs are incurred by both parties of these transactions and ultimately paid by the producer firms. Implying that organizational and structural changes will be significant in both industries. Reduction and removal of these transaction costs through more efficient interactions will be needed.

In saying that we need to point out that it’s in the Resource Marketplace that the decentralized production model is enabled. It is here through the service providers that the prototypical producer will be stripped down to the C class executives, the earth science and engineering resources, the land, legal and support staff. Where the remainder of the producer firm will be permanently employed in the service providers who will be focused on an individual process and provide their service, and their billing, to the specific Joint Operating Committees of the entire North American producer population.

There is also shared development of the “Marketplace Interface” with the Petroleum Lease and Financial Marketplace modules. There is only one “Marketplace Interface” with elements of each of the marketplace modules components evident within the “Marketplace Interface.” Therefore a pooling of these user budgets can be achieved here. There are a number of Oracle modules that also fit within this area. Such as Purchase Orders and a number of other modules lay the foundation for a strong basis for the Resource Marketplace. 

I caution users to recall that these are based on the understanding that I have of the modules and the oil & gas business. The reason that these are user based developments is that no one individual has the global perspective of the oil & gas business. Therefore I may be completely wrong regarding certain aspects. And if there is significant conflict between what is being stated here and what our user community needs in terms of budget allocations during development, then our user community has the means at its disposal to deal with it. 

Petroleum Lease Marketplace

The Petroleum Lease Marketplace is where the innovative and profitable oil & gas producer manages half of their competitive advantages. Those being their land and asset base. It is in the Research & Capabilities and Knowledge & Learning modules that they manage the other half of their competitive advantages, their earth science and engineering capacities and capabilities. As a result, the Preliminary Specifications User Budget allocation will be material to deal with the nature of the Petroleum Lease Marketplace module. 

The Petroleum Lease Marketplace is one of the key modules in terms of the critical data that will be sourced by other modules. It is with that in mind that we should note that certain processes will be moved to the service providers with the use of the decentralized production model. Lease rental payments, surface rights payments and other processes that were the usual domain of the land and legal department are removed from producers and handled by the service providers. 

One area that is new is the Material Balance Report that falls primarily within the domain of the Partnership Accounting and Accounting Voucher modules. This is a critical document that leads to significant automation of the processes within the producer firm and Joint Operating Committee. It will be heavily reliant on clean data elements regarding the partnerships and commercial arrangements of the producer and Joint Operating Committee. These data elements reside mostly in the Petroleum Lease Marketplace and will be managed there. These data elements will not just be at the boundary of the property. They will require a coordination of the data from the boundary of the producing property, for example, to the ultimate point of sale. A clean, clear and unimpeachable data set of all of the variables that are associated with anything and everything involved in the movement of the commodities. This data will need to be organized, captured, coordinated, scrubbed, polished and stored electronically within the Preliminary Specification as a single point of reference for use throughout the Joint Operating Committee and its producer participants. All with the associated and supporting processes to ensure the data elements are kept up to date. And done so from a global industry perspective. A task that I think we may all agree should have been done long ago. The issue that has held us back from this approach is that we have not had the time or resources until People, Ideas & Objects Preliminary Specification to do this type of work. 

Financial Marketplace

The key aspects of the Financial Marketplace module is to align the financial framework with the Joint Operating Committee and to have the producers' capital structures perform beyond market expectations. The speed that the producer is able to attain over their investments in oil & gas properties needs to accelerate. That is, the expectation that the producer will be able to accelerate their investments' turnover of capital. This performance has not been attained and will require the producer to have the Preliminary Specification operational within their organizations. Providing them with the capabilities to be able to compete for capital within the broader capital markets as well as within a competitive oil & gas.

Speed is nothing without control. The producers ability to maintain their capital discipline in an environment as discussed above will be of critical importance. How they do that is detailed to some extent in the Preliminary Specification but it is here again that our user community will need to determine “how” the producer firm can maintain control of the higher throughput in terms of investment capital. Ensure the Compliance & Governance module is invoked where necessary and design the interfaces necessary to increase the producers performance in this critical area. The budget allocation by the user community will be a difficult, controversial task that introduces conflict and contradiction in the development of the Financial Marketplace.

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

Revisions to the Budget and Implementation Part 2

 Intellectual Property Royalties and Profit Margins

The thing about being in the software business is the healthy nature of the margins that are realized. Microsoft earns 73% profit margins from their Office product suite. These margins assume the firm is able to attain the point of generating revenues. The real downside of this business is that all of your costs, the actual cost of development, are conducted without the benefit of any revenues. You have to incur the costs of development before you get to the point of earning any revenues. Such is the way of the software business. And with People, Ideas & Objects large scope and scale, the small number of oil & gas producers to market ERP systems to, we’ve implemented a Revenue Model (Background section of this wiki) that is fundamentally different. That is, we are developing the software with revenues up front from the producers as our scope and scale is beyond the capabilities of the investment community. 

I have allocated 33.3% of People, Ideas & Objects revenues as an Intellectual Property Royalty, or approximately $5.0 billion to myself, the owner of this Intellectual Property. Producers have and will hold this royalty out as a reason not to proceed. From my point of view these royalties establish the allocation of net proceeds within People, Ideas & Objects from the beginning of the organization. There are additional profit margins of 33.3% totalling approximately $5 billion. These are the profits of the firm and are distributed as dividends to the shareholders. People, Ideas & Objects provide oil & gas producers with the most profitable means of oil & gas operations, everywhere and always. There is a tangible difference in our business model in comparison to any other. The methodology defined above is the means that has been chosen to monetize these efforts, and is commensurate with and immaterial to the value that is available to the industry. To refocus the industry on the basis of a dynamic, innovative, accountable and profitable footing is what is necessary.

The justification for the royalties and profit margins are based on the value generated but also the need to establish People, Ideas & Objects as a profitable operation. With the size of this budget and the Preliminary Specifications Intellectual Property, producers' involvement will be high as they’ll have a vested interest in the outcome. They will work to ensure a profitable oil & gas industry is rebuilt and their money is well spent. This producer buy-in is a critical part of what we’ve deemed necessary to be successful. What People, Ideas & Objects are delivering to industry is the reduction of time and the choice of a workable model. A process that will otherwise take the traditional amount of time that any new idea would need to be worked through. Which is normally a decade long process, as it was with the Preliminary Specification. Any new alternative also needs to ensure it excludes the IP that is expressed in the Preliminary Specification.

It will be this method of pricing, cost plus 200%, that will be used for any additional development funds. This will also be the pricing method used on the go forward, day-to-day charges that are assessed when the software is operational. These budgeted costs cover the competitive advantage of People, Ideas & Objects which include our user community, research and Intellectual Property. This being the costs of developers and our user community. It does not include any of the costs of implementation of the software. Interaction with the user community members service providers during implementation will result in direct charges from the service providers. 

Oracle Corporation

Oracle Corporation plays a critical part in the People, Ideas & Objects Preliminary Specification. Oracle Cloud ERP is the foundation of the thirteen module Preliminary Specification. We also use Oracle’s database, Java, hardware, services and solutions. One could suggest we are an Oracle shop. However with this level of commitment to these product categories we will be able to secure Oracle’s commitment to provide the oil & gas producer with the most profitable means of oil & gas operations. All Oracle costs are covered by People, Ideas & Objects.

Doing the same thing over and over again, expecting different results is a sign of insanity. I’ve always claimed that you don’t have to be crazy to do this job, I do find it to be a distinct competitive advantage however. This is the same position I was in back in 1991 when I first approached Oracle to develop what were then Client / Server solutions for oil & gas. This time I’ll be approaching them with a much larger wallet in order to take on the scope and scale that is defined in the Preliminary Specification.

As we noted in the prior section regarding Intellectual Property royalties and profits. People, Ideas & Objects competitive advantages consist of our user community, research and Intellectual Property. Under the IP is the software and its code of the Preliminary Specification. Please note this does not include the development of software as a competitive advantage. That is because we’re no longer in that area. For the purposes of time, the oil & gas industry does not have the requisite amount necessary for People, Ideas & Objects to spend the half to full decade to become the well functioning team of software developers capable of producing the Preliminary Specification. And then to undertake the development. We therefore eliminated this aspect from our competitive advantages and focused instead on the area where the oil & gas attributes of our product quality would be best represented, our user community. Our user community development is our primary focus which we began in March 2014 and have continued for the past eight years. User community development is a slow time consuming process of convincing people of the need for their commitments, providing them with an overall vision of the role they’re undertaking and raising their awareness of how they’ll do that work and what will be expected of them. User community developments are the only method in which to bring quality software such as the Preliminary Specification to market. To capture the understanding of oil & gas, verify it and ensure that it’s implemented correctly in the software itself. Our user community has the appropriate motivation as defined in our user community vision. They’ve also been provided with the appropriate focus of providing the most profitable means of oil & gas operations, everywhere and always in our user community charter. 

People, Ideas & Objects will be contracting the software development of the Preliminary Specification to Oracle Corporation for all of the above reasons. Most particularly the time they’ll take to put a team together will be minutes in comparison to our decades. They’ll be able to start with the appropriate people and build out the capacities and capabilities as People, Ideas & Objects and our user community grows in the years to come. Services of this type are a major part of their product offering and they state they have 41,000 developers on staff. I would suggest at least 15,000 of these people are in the consulting side of developing applications for customers such as People, Ideas & Objects. At our peak we expect to have demand for around 600 developers. Oracle also notes they have 18,000 implementation consultants. There will be a synergy with these 59,000 people that our developers would never be able to achieve or emulate. They are developing the Oracle Cloud ERP offering internally and are able to access the information and people behind those products and features, and in some cases are the same people. 

Oracle Cloud ERP is the premier tier 1 ERP system available in the global market. There is no greater level of product quality and these are built on the finest database and programming language. Oracle brings a unique character to the Preliminary Specification, one that I’m pleased to be providing People, Ideas & Objects applications on their technology. When we add the quality nature of oil & gas user community to this we are building real value. Building an application for the 21st century for the dynamic, innovative, accountable and profitable oil & gas producers.

Google v. Oracle Supreme Court Ruling

The Supreme Court of the United States ruled on April 5, 2021 in the case Google LLC v. Oracle America Inc. that Google would prevail in Oracle’s 2010 lawsuit regarding Google’s use of Java in the Android operating system. Citing that it was “fair use” for Google to have copied the API (Application Programming Interface) of the Java Programming Language. I don’t think that the Justices were fully aware of the consequences of their decision and stated categorically that their assumption was that Oracle’s copyright of Java was valid. And therefore their ruling only applied to the API and did not violate their understanding of copyright. I believe that this separation of copyright and API is not valid and will hold copyright holders to the same rights and privileges they’ve always had. The consequences of this decision will have significant implications towards software developers, developments in general, software in general and the software user overall. An important consideration in this discussion is that most object oriented software code is freely accessible, subject to the license requirements upon download. Signing the license by downloading it is your agreement to uphold these requirements which state that the Java Programming Language is free to use, however, any revenues generated from those derivative works would be subject to a royalty payable to Oracle. Oracle has received payments from every other developer on this basis but not Google. This honor system has provided for a robust development environment.

It came down to what the definition of an API is and what it’s for. In the past programming code was procedural and all aspects of the software application including menu items, features and variables were included in the one holistic software code base. Think of the computer just processing through a loop of code from beginning to end and then starting over and over. The issue was when software became more capable bugs creeped in and caused the entire application itself to become unusable. Limiting the upside in terms of software developments capabilities. Java, built upon the concept of object oriented programming, introduces that each of the components of the program are separated and each of the individual features are implemented within a single object. Think of building a program with Leggo bricks. Therefore isolating the bugs and issues to the objects that were unable to function as desired. Each object is unaware of any other object's existence however can access other objects capabilities through methods and other features of the programming language. Packaging of a comprehensive feature set of objects into a framework or API for others is one of the desired capabilities of object oriented programming. 

The calling of Java is write once, run anywhere. The redundancy of having to rewrite the same code over and over again in procedural programming was a major hindrance to the development, quality and speed of the deliverability of software applications. Object reusability became the focus of all developers. If you could access a framework that conducted the necessary work you needed, all you needed to do was access that framework’s API. The API provided the doorway to the published code of the framework that someone spent a significant amount of time and money developing. The code had become tried and tested, was generally what was needed and because it was object oriented, was extendable by any Java based developers, and here’s the necessary requirement, through the license of the frameworks copyright holder. The API they were providing was a doorway to facilitate ease of use and understanding in how to use the framework. What the Supreme Court did was to effectively eliminate the copyright protection on the API. Saying Google’s use of the API was fair use is ridiculous when the Justices also indicate that Android had provided over $42 billion in revenue to Google. This is wholly inconsistent with the concept of fair use. Fair use doesn’t permit the generation of revenues off others' works. The API doorway will now be effectively closed. It will be replaced with a drawbridge, and a moat will be built around the framework for any developer to enter. Partial compensation will probably be necessary as a down payment to sign the license and access the framework. Licensing will be far stricter. The honor system is no more.

One of the consequences of this is that object oriented programming languages will cease to be as effective in developing software efficiently, effectively and affordably. Royalties will be higher to access the frameworks and content of those who own valuable copyrighted material. Think Microsoft, IBM, Google and all of the other software companies that were proponents of Google in this action. Content will be king and everyone will have to pay dearly for it. Developers' work will be more constrained as access to the necessary frameworks will be a legal process that precedes their access and possibly have to pick through the copyrighted materials themselves to find what it is they’re looking for and how to use it. Ease of use through the API may no longer be available. 

Oracle is our technological provider. We use the entire Oracle product suite as the technology base of the Preliminary Specification. This includes Java, as well as many other products written in Java. It is reasonable to assume that much of this code may also be licensed from other software providers who are allowing licensed access to Oracle for its use through their API. I anticipate this will affect our development of the Preliminary Specification in detrimental ways. As the copyright holder of the Preliminary Specification we own that content and it is unaffected by this decision. We will not be publishing any API’s at any point. We also have expectations that our costs will escalate due to the superfluous legal necessities this unnecessarily causes. Our ability to access API’s for our convenience will be a doorway that is no longer open to us. And as object based developers this will have a time and monetary impact on our development. 

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

Revisions to the Budget and Implementation Part 1

 Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world. 

Joel A. Barker

Budget Discussion

We begin with a discussion regarding the justification for People, Ideas & Objects, our budget for the Preliminary Specifications development and its unique configuration. We are presented with many issues and opportunities that are unique and fall under the category of a once in a lifetime characteristic. Our budget demands that we secure full funding prior to any further development being undertaken. These are detailed here or referenced to the text in the Preliminary Specification. 

Budgetary Justification

Disintermediation

All industries are being subjected to the process of disintermediation. The introduction of new business models that use advanced technology and most specifically the Internet as a means to organize production. Many industries have had the process successfully begin and these continue to iterate on the initial models to unleash tremendous value and prosperity for all concerned. By eliminating the bureaucracy and red tape from industries, consumers are able to have greater choice, lower prices, better quality and services with little to none of the personal effort necessary to acquire the products and services in the previous business model. Investors are reaping billions and trillions of dollars in value as a result of the creative destruction that disintermediation causes and is made possible by new and innovative ideas. Although disintermediation has been predominantly conducted in consumer industries it is now moving into the enterprise.

This decades-old process has established a method of resistance that those who subscribe to the old business models can use to fight this transformation for longer periods of time. This is the situation that People, Ideas & Objects has been faced with by an obstinate bureaucracy who have a vested interest in the ways and means of their operations. At the expense of the financial, operational and political frameworks and overall health of the industry. They have no interest in disintermediation and we’ve found them to be resourceful and resilient in terms of their resistance. If only they would show such resolve towards their business. 

One of the arguments that have been successfully put across about People, Ideas & Objects Preliminary Specification, our user community and their service providers. Is the scope & scale of our undertaking is too large, broad and grandiose to be successful. What we can definitively assert at this point is that their bureaucratic methods have proven to be not viable. We have all the evidence needed to prove our claim of their failed methods. We have also suggested the scope & scale of the Preliminary Specifications undertaking is far easier than what each individual producer will have to provide in order to attain the same accountability as defined by their investors. Tier 1 ERP systems will be difficult to implement either way and we will not stand as the viable scapegoat for the bureaucrats' continued inaction on this front. There are always more than two trillion reasons not to do something. Action is required. Nonetheless in comparison they will need to undertake the same work that we are, granted with much less of the difficulties that scale brings about, with their much more limited budget and resources. I prefer our chances of success in this regard. We will be more successful and will do so with far lower individual producer costs when the one time industry wide cost of our development is shared across each producer. 

We also have in Oracle Corporation a technology provider that is more than capable of delivering the solution defined as the Preliminary Specification for the North American producers. Granted in 2012 when the Preliminary Specification was published nothing of the scope and scale had been suggested before or ever attempted in any industry. Today, Oracle Cloud ERP is the outcome of up to $50 billion in investments by Oracle in bringing their software and systems to market. These systems began as blank sheets of paper and were developed to meet 21st century organizational needs. They’re the ERP market leader and unquestionably the preferred choice, Oracle has dedicated themselves to this market space. In terms of the scope and scale issue. I’m pleased to have been joined by other industry initiatives that share the same concerns in their industry and have conceived of such value generating benefits of disintermediation on the scale that is even substantially larger than what we proposed for North American oil & gas. 

It is with this in mind that I am pleased to post here a June 14, 2022 video from Larry Ellison Founder, Chairman and CTO of Oracle Corporation regarding their efforts in the Healthcare industry. This is truly impressive and is consistent with the different perspective that technology allows us to break down new approaches and release new value. We’ve stated in many areas of this Preliminary Specification that producers accounting is focused on the “corporation” as a result of a number of conflicting objectives over the past decades. The oil & gas business is best defined as the partnership that represents the oil & gas property, it's the one aspect that everyone intuitively knows and understands about oil & gas. It's the focus that was lost and is now being recaptured in the Preliminary Specification. In the Oracle Healthcare initiative it is the patient that’s the focus, not the hospital or doctor or some other aspect of health. This is all explained in the following video. 

Oracle Live: The Future of Healthcare | FULL SHOW

Industry Accountability

Today’s systemic lack of transparency and accountability throughout the North American oil & gas industry, the lack of any tier 1 ERP systems being deployed are the natural growth from the seeds of the “successful results” of what Alberta producers orchestrated in October 1997. (And yes we’re aware of many large SAP deployments. We believe SAP sells ERP systems in oil & gas and SAP does not have an oil & gas solution.) Oil & gas ERP providers have survived under a deliberate effort by producer bureaucrats to starve them for decades of the financial resources they need. Would producer bureaucrats have failed if they had appropriate tier 1 ERP systems and were held accountable? Today the financial consequences being experienced by the producers are a result of the specious financial statements they’ve produced. It has been through their questionable interpretation of the 1970s SEC regulation of Full Cost accounting that have caused the financial accounting of producers to morph from its purpose of measuring and recording performance to recording value in the form of “building balance sheets” and “putting cash in the ground.” When asset valuations are high and overstated, there is a commensurate overvaluation and overstatement of profitability. When profits are high investors rush in to capture those profits with the subsequent capital investment causing overproduction of the commodities of oil & gas, systemically exceeding market demand. When oil & gas commodities are price makers in terms of their economic characteristics, overproduction causes prices to collapse as has been experienced multiple times in the past decades. Motivating producer bureaucrats to game their financial statements even further in order to attain the necessary additional capital from investors to keep the doors open. After more than forty years this circus had carried on too long for the industry to be sustainable without the annual investor infusion of cash. Enter the 2015 investors strike.

Conversely People, Ideas & Objects have asserted, and the history of these producers show a legacy of defined specious accounting, financial accountability and obscured transparency on a deliberate basis. With the experience of my first market failure in 1997 which was due to our then software products emphasis on producers accountability in paying Alberta royalties to ensure they realized the lowest possible royalty costs, based on an accurate and full accounting. Exercising a strong knowledge base of what the regulations were and ensuring the producers were paying the lowest possible royalties was not the approach they chose to pursue in terms of paying Alberta royalties. This market failure is what led to the firm's collapse in October 1997 when producers convinced the Alberta government the system they proposed was flawed and wouldn’t work. The regulations for these changes were announced in 1991 and were the precursor to myself getting into the business and promoting Oracle to join me. The new royalty regulations came into effect in 1994. Investments were made by all of the ERP systems providers throughout this time without any financial support of the producers to fund these incremental development costs. And unilaterally producers determined that they did not want to participate in October 1997 which the government accepted and announcements were made to change their royalty regulations, trashing our software investments in newly redundant requirements. All the other tier 1 ERP providers subsequently left the market in 2000 and 2005 due to this lack of participation by producer firms. Leaving no investments whatsoever in oil & gas ERP systems that I’m aware of outside of my activities with People, Ideas & Objects which began in August 2003. 

Even though today investors are demanding producers upgrade to tier 1 ERP systems, there has been no evidence of action and we can safely assume there will continue to be resistance that is consistent with this history. Producer bureaucrats “believe” investors will eventually “come around” and end their strike. What People, Ideas & Objects is selling is a tier 1 ERP system based on Oracle Cloud ERP to enhance producers accountability and transparency. A level of accountability that is deemed to be the necessary minimum requirement of a successful business. Which is absent, and the cause of that is therefore subject to interpretation as to the motivation why oil & gas bureaucrats have sought the permanent obfuscation of the producers actual performance. It is however easily documented that the only prosperous group throughout these past three decades and more, are the officers and directors of the producer firms.

The bureaucratic culture that exists today is obstinate and unworkable. Investors have concluded the same with their strike beginning in 2015. That bureaucrats have ignored these demands of their investors is telling. There is no greater action an investor can take than to suspend support. It is traditionally a terminal act unless there is immediate remedial action taken to deal with the issues. Even then it is difficult to determine the success of an outcome of this action. The refusal to deal with this or any of the specific terms of concern of their investors in the past seven years is telling. Yet, we are led to believe at the same time it is these same investors who are demanding producers move into clean energy. A business that in the past bureaucrats explained was the reason and justification for low oil & gas prices. They needed to ensure that no alternative energy sources became competitive. Notice how quickly producer bureaucrats jumped at the alleged demand of their investors in 2021 to move to clean energy, yet are silent on 2015 demands for accountability and profitability. It is these same producer bureaucrats who in unauthorized fashion will now move oil & gas revenues from past investments and investors into a business that competes? There is no greater violation of their fiduciary duty by a firm’s management than to conduct this type of action. Clean energy has never supported commercial operations, is not viable from a physics perspective and has been kept alive as a result of government support and looming threats from teenagers and uneducated congresswomen. An industry with its own questionable record of accountability, and any failure will be met with the morally righteous argument that “we’re just not there yet, but we’re still trying.”

Producer bureaucrats, once again the officers and directors, inability to account for past failures is systemic and chronic. When difficulties are determined it is usually on to the “next great thing” from the prior “next great thing” as it didn’t turn out and was determined to be uncommercial, therefore it was time to cut and run. Oddly, each iteration of the “next great thing” always appeared to be the advancement of the science of oil & gas and high levels of technical difficulty. Not remedial commercial operations such as what today’s low cost, unexciting conventional oil & gas would be. The business wouldn’t be any fun otherwise. 

Recently we heard that shale would never be commercial and that supported the move to clean energy, “the next great thing.” There never has been any attempt to be accountable at any time for their past activities or investments, or to remediate the investments into profitable operations. Shale failed just as all the prior “next great things.” Making outlandish claims such as these about shale inspires those in the field and universities to recommit to the oil & gas business? No, they understand producer bureaucrats' minds have moved on to clean energy. Therefore, for others outside the industry looking to work to make the industry better, to take the chances that are necessary to make oil & gas a profitable business, they’ll sit this one out. It’s not foolishness that drives the bureaucrats, it's a far more sinister motive. 

There is a point to this trip down lovers lane with the bureaucrats to ask. Which tier 1 ERP vendor would now be willing to subject their system and its reputation to this systemic, unaccountable nature of oil & gas? If the oil & gas industry is only interested in obfuscation, why would any ERP provider subject their products' reputation of tier 1 level of accountability to support oil & gas? As we’ve documented in our White Paper they haven’t and won’t with those last few that were providing services leaving in 2000 and 2005. Which ultimately fulfilled the bureaucrats' unspoken objective. The protracted battle that I’ve waged against these officers and directors is documented throughout this blog and is reflected in the producers decades of inactions. They inform those of our position with regard to the unacceptability of what has gone on, who is responsible for this horrendous failure and the definition of the cultural change necessary through People, Ideas & Objects budget for development of the Preliminary Specification. Bureaucrats interest in the deployment of People, Ideas & Objects would be suicidal for them to contemplate due to the high level of accountability Oracle and ourselves will impose. And do so on behalf of the oil & gas investors, which is why they’re asking. What alternative tier 1 ERP vendor would step up to make that difference? Where will other ERP providers make their difference from this status quo outside of our Intellectual Property and how will they survive financially when they too have built their tier 1 ERP solutions on enhanced accountability? Can they make a product viable in oil & gas or are they better off keeping their reputations whole and pursuing other industries? The fact of the matter is the industry has failed and how will their product make the difference at this eleventh hour. 

To throw one more straw on the camel’s back. The overproduction of commodities that are economic price makers is not rocket science. The basic principles are taught in introductory university courses and the general understanding is available to anyone capable of reading and writing. We know for example that the Great Depression was caused as a result of overproduction. We know that in July 1986 oil prices collapsed as the world was awash in oil as a result of its abundance. As to who was responsible, I have articles from the Calgary Herald dated July 26, 1986 quoting OPEC officials of their desire to deal with the issue in collaboration with North American producers. Never happened. People, Ideas & Objects published our Preliminary Specification in August 2012 to deal with the system of North American oil & gas overproduction destroying the financial, operational and political frameworks of the North American producers. July 4, 2019 People, Ideas & Objects published our White Paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale” to a broad industry audience. Not one phone call from any producer expressing any interest. Ultimately we heard their response in April 2020, nine months later, in the form of negative $40 oil prices. This precipitated the declaration that shale was not commercial and the move to clean energy. Granted this is not a disaster for the oil and gas industry. It’s a disaster for civilization as in 2022 energy becomes the political football that arises from a lack of financial wherewithal to support the capacities and capabilities needed to support the demands of the market. The concern that is expressed in the Preliminary Specification and throughout this blog which began in 2005. And People, Ideas & Objects recognize the assertion by some bureaucrats that the Great Depression may have come about by other causes.

Our Value Proposition

There is no greater investment that could be made than the Preliminary Specification in 2022. We provide the oil & gas producers with the most profitable means of oil & gas operations, everywhere and always. The best discussion of our value proposition is the last section of the Preamble of this wiki. 

What Can a Producer Do Today?

Although there are many other areas where People, Ideas & Objects can provide incremental value to the oil & gas producers there are over five thousand reasons to each of our points that the bureaucrats will not proceed. A thorough reading of the Preliminary Specification will provide for a description of how we increase that value. The three listed here in this budget justification should be ample in light of the state of affairs in oil & gas. The two main issues regarding this budget are its size and its use of Intellectual Property. In terms of both of these issues we recommended the following approaches to be taken by each producer to help mitigate these issues within their own organizations. 

The budget scope and scale are substantial and necessary. I analyzed and defined the issue many decades ago, prepared the Preliminary Specification in excess of a decade ago, it is the solution to what ails the industry, it is that definition that indicates we have a handle on the issues and opportunities in the industry. That our implementation covers this scope and scale with the means to make it real also reflects that we understand the difficulty in doing what we propose. I personally have been the principal in both Genesys Software Corporation and People, Ideas & Objects. The triggering event for me to build these systems was the need for oil & gas producers to just shut-in some production and discontinue overwhelming the markets to the point where the price collapsed as they initially did in July 1986. The difficulty then as it is now is they can’t, it’s impossible and hence the need for new systems such as the Preliminary Specification to deal with it. After 31 years of attempting to bring a solution to this issue, and now as of 2022 we are prepared and ready to undertake this task as soon as our budget's funding is secured. With oil & gas prices where they are, what's the hold up? The oil & gas bureaucrats.

We understand the producers point of view and appreciate that none of the overproduction is a result of them, they’ve been profitable. Which we’ve addressed elsewhere. The issue may be their working interest partners though. At their other properties that are causing the overproduction. It would also be highly beneficial to have a producer's working interest partners on the Preliminary Specification in order for both parties to realize the full benefits. This will also help to mitigate the costs of the budget when every producer puts their proportionate share of the costs in. 

It is however important to note that it’s not just about the money. That only secures the buy-in from the producers. If we don’t succeed I’ll take the blame if that is what the bureaucrats want. However, what else will they have at that point? Handing the money over is the beginning of the process and the hard work is going to have to come from the producers themselves. Telling the People, Ideas & Objects user community members the issues they have. You should note our user community members will be disinclined to listen to the solutions these bureaucrats have in mind. 

In regards to the Intellectual Property of the Preliminary Specification and elsewhere. We provide the dynamic, innovative, accountable and profitable oil & gas producer with the most profitable means of oil & gas operations, everywhere and always. Such that in the 21st century it's no longer good enough to own the oil & gas asset. You also need to have access to the software that makes the oil & gas asset profitable. These are the new rules of the road. We need this IP in order to organize ourselves as we have in the user community charter of the user community vision of this wiki. We need this IP to ensure that we’re able to secure the funding from the producers before developments are undertaken, not after. We need this IP to ensure that once built, the producers don’t decide to encourage others to copy our software and violate our rights to create unnecessary price competition. We need this IP to ensure that our competitive advantage is not on the basis of price, as the price of our offering in terms of our valuation of providing the most profitable means of oil & gas operations is negligible and immaterial. We need our IP in order to establish our competitive advantages on the basis of what the oil & gas producers and greater oil & gas economy needs in the 21st century. Such as automation of the process, division of labor, specialization, creativity, innovation, collaboration, research, thinking, issue identification and resolution, leadership, ideas, design, planning, negotiating, compromising, financing, observation, reasoning, judgment, spontaneity, using conflict and contradiction in analysis and deploying both the explicit and tacit knowledge of doing so. 

There is no reason that the producers need to have the Intellectual Property of the Preliminary Specification as theirs. It is not part of their distinct competitive advantage of their land and asset base, or their earth science and engineering capacities and capabilities. Just as the drill bit manufacturing process and mining of steel are of any concern of the producers. Specialization and the division of labor demands that organizations focus on what they do well. We need to own the IP in order to do our job well. And producers should focus on their competitive advantages in order to do well too. 

I am the beneficial owner of the Intellectual Property that makes up this body of knowledge. These are not my concerns and I only point to our IP and the reason it is fully respected by all other software companies. You don’t get far as a pirate in this business anymore. Our IP will also be adhered to by those boards of directors who are respectful of the laws, such as the U.S. Constitution, to ensure they’re not in any breach. Whether that includes producer boards is to be determined.

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

Revisions to the Revenue Model

Our Value Proposition

People, Ideas & Objects value proposition is that we provide North American oil & gas producers with the most profitable means of oil & gas operations, everywhere and always. We do this by providing, implementing, supporting and defining within the Preliminary Specification, our user community and their service providers a business model that enables the producer to be more profitable than any other business model. Our value proposition is quantified over the next 25 years in the range of $25.7 to $45.7 trillion in incremental value in comparison to the current “corporate” business model that’s in use by oil & gas producers. This value is a result of the differences in the average oil & gas prices that will be realized vs. what we’ve determined to be the necessary prices producers need to realize to earn a “real” profit. These prices were based on the assumption that the property, plant and equipment account of the producers, as they stand today, would be exhausted in the next 30 months. Producer firms would cease using investor capital to subsidize the capital cost of consumers' consumption of their commodities. All the value and cash resources of the industry are held up in the producers property, plant and equipment account reflecting the amount of the cumulative subsidy producers have forced investors to subsidize consumers by. If industry were to recognize those costs based on our Preliminary Specifications decentralized production model they would resume normal healthy operations at the end of this 30 month period. Key to this strategy and the realization of this value is the implementation of the price maker strategy which would enable the oil and natural gas prices to be capable of capturing all of the costs of exploration and production in a timely and accurate manner to ensure profitable operations and therefore the industry would be able to compete in the capital markets. Oil & gas is a capital intensive industry, it is therefore reasonable to assume that the consumers costs will be predominately capital in nature. This has not been the case in the past four decades. Please review the Preamble to the Preliminary Specification for more information on our decentralized production models price maker strategy.

Everyone intuitively understands that if each producer scaled back their production by 5% their revenues would triple. We however are talking about commodities that are economic price makers, not price takers as has been assumed, with an elasticity of supply / demand characteristic that is severely impacted by the incremental barrel. The issue is the producer organizations that have been built today were developed during a period of resource scarcity. When resources are scarce, full production is assumed to be necessary at all times. Therefore use by the producer of the high throughput production model, where full production is used to offset the high costs of the operation, particularly its overhead, is the logical organizational methodology. However the shale era now consistently presents the commodity markets with that incremental barrel causing commodity prices to collapse. Therefore a new organizational methodology is needed in which to organize North American producers. One in which only profitable production is produced everywhere and always. And profitable from the point of view of all of the costs of exploration and production are recognized on a timely and accurate basis. Turning over the capital trapped in property, plant and equipment so that the capital resources, and cash, are not sitting idle waiting for decades to be returned and redeployed. While investors are asked again and again to fund the basic operation. Investors are unwilling to invest their money and watch it sit in property, plant and equipment for ten to twenty five years when other industries are turning their capital over in as little as six months. Oil & gas producers are not competing for capital, only consuming it as evidenced in their claims of “building balance sheets” and “putting cash in the ground.” 

People, Ideas & Objects are turning the entire industry's focus to where its value can best be increased. Profitable energy independence on the North American continent. The producer's value proposition to the oil and gas consumer is quantified in the area of 10 to 25 thousand man hours of mechanical leverage for each barrel of oil equivalent. The greatest contribution to society of any industry. One that civilization is lost without. This has to be the new focus and drive of the producer firms. This is where their value is realized and the outsized role they take in the critical nature of providing abundant and affordable oil & gas products to the most powerful economy man has ever known.

Whom Are We Building Systems For.

We now apply and extend Professor Jurgen Habermas’ 1960s theory of different knowledge interests. We delve into the difficult question regarding what we need the Preliminary Specification for. Are we developing systems that manage the commercial operations of an oil & gas producer, service industry and service providers? Yes we are, but that does not address the societal and individual needs of these systems. If we continue to look at just the needs of the producers, then we are leaving many needs unaddressed. Society and individuals are critical elements of a profitable oil & gas industry. For example society benefits by having producers and the service industries efficiently interact, develop profitable operations, pay royalties and taxes. Individuals create innovative solutions to the producer's demands they see for their services. Profits from primary industries such as oil & gas are necessary to ensure prosperity is realized throughout the secondary and tertiary industries that exclusively support North American producers. Trickle-down economics is a valid theory in this application. This has not occurred in oil & gas and now there are significant issues ahead and large consequences as a result of the past management of the industry. Today no one in oil & gas would question the need for real profitability in North America, everywhere and always. 

Overall organizations, individuals and society benefit by an increased and expanding division of labor and specialization. In today’s globalized, high technology workplace an expanded division of labor and specialization can be more efficiently created through a permanent industry wide software development capability such as that described by People, Ideas & Objects in its Preliminary Specification. When we concern ourselves with the economic output of the oil & gas industry. To expand that output requires that we organize ourselves based on greater levels of specialization and a further division of labor. The responsibility for increasing output does not fall to society, individuals or organizations in isolation but to all three. Therefore it is reasonable to state that what we need is the Preliminary Specification to address societies, individuals and organizations needs. I do not foresee further development of the division of labor or specialization occurring within the oil & gas industry without the active involvement of systems development. In a somewhat deliberate manner where all groups are represented such as People, Ideas & Objects Preliminary Specification.

The Flow of Funds

In addition to People, Ideas & Objects software development teams funding. There is also our user community member that has one of their two sources of funding as a result of its affiliation with People, Ideas & Objects. I now seek to clarify how our revenue model provides the flow of funds within these associated communities. To start we need to clearly identify the two different groups that are supported by People, Ideas & Objects revenues and who is not. These groups include (1) People, Ideas & Objects, (2) our user community members. The service providers are a separate and distinct group of independent businesses that will be funded by the producers themselves as the replacement cost of their current accounting and administrative resources. They will be delivering People, Ideas & Objects software with their process management services to the producer firms directly. This will therefore provide the second revenue stream of the user community members as they are the principle in the service provider organizations. The size of the service provider's revenue stream would be consistent with what is incurred today in the oil & gas industry for accounting and administration. The need for the financial support of these communities is as follows.

Funds will then be distributed from People, Ideas & Objects to our users groups themselves for their participation in the development of the software. Our user community participants are independent business people. They are the ones that will define and design the systems that are necessary for the oil & industry. This is a revenue generating activity for their organizations. It is in this way that People, Ideas & Objects are purchasing the Intellectual Property rights of the contributions made by the user community members. Please see the User Community Vision for further information. 

People, Ideas & Objects Capitalization

Another element of our Revenue Model is the means in which People, Ideas & Objects is capitalized. Traditionally software developers are stand-alone organizations with their own banking, regulatory and venture capital influences. People, Ideas & Objects is taking a project management perspective in providing this software solution to the marketplace. The differences in our capital structure are significant, with our Revenue Model being a critical element in defining and supporting these differences. Some of the key deliverables of this organizational structure is the Intellectual Property royalties paid as detailed in our budget. Another is the ability to maintain our focus on the needs of our user community. I believe the situation in oil & gas today is the most significant issue that the industry has faced in its history. The monetary value of our solution to the oil & gas industry is substantial. On the other hand the oil & gas industry, from an ERP marketplace, is very small and raises a number of difficulties in terms of realizing any value from our efforts. Our budget is immaterial to the value that can be created by the producers implementing the Preliminary Specification. Far more money is lost each month due to oil & gas overproduction and oversupply. 

The scope and scale of our application is very large. We need to eliminate and deal with any constraints that would otherwise occur with a compromised capital structure within People, Ideas & Objects. An element of concern and unacceptable compromise is having our user based developments defined and supported by our various communities, and particularly our user community. To then have various venture capitalists, or other groups who are involved in a traditional capital structure, influence whether or not that software was built to that specification. This would be too large of a compromise to be viable. Therefore People, Ideas & Objects is funded by its Revenue Model and focused on its users, making it more of a project management type of venture. To be clear the scope and scale of People, Ideas & Objects is well beyond what venture capital groups would be willing to fund. Complicating our capital structure only complicates and compromises the deliverability of our software and services. To suggest that People, Ideas & Objects can be structured without the traditional involvement of investment capital might be naive for me to consider. However I do know that it would be naive to suggest that the systems as described in the Preliminary Specification could be built with the traditional influences of a capital structure. Therefore, with that in mind and to ensure that the Preliminary Specification captures the full scope and scale of the technical and geographical concerns of the profitable North American oil & gas industry we can ensure that our user community basis of our software developments remain our priority. 

There is also the demand that we break from the failing culture that is the current industry's administration. If forced to compromise with their failing ways in order to receive our next month's funding, then we’ll only be recreating the same failed state. Another issue with our funding is that we are subject to the whims of the producer firms. When push comes to shove and the dynamics of the market may have changed as they did in 2022 with higher commodity prices. It would be an opportune time for them to cancel the project. Please note that 2022 may turn out to be the producers 6th good year out of the past 36! Only when they have some “skin in the game” will they remain committed in the manner that will make this project successful and carry it to completion. 

We have discussed the risks of becoming “blind sleepwalking agents of whomever will feed us.” An issue of concern when we’re discussing systems development. People, Ideas & Objects Revenue Model shows these risks are real and require a new approach to funding our software developments. It serves no one's interests, People, Ideas & Objects, our user community, service providers, producers or service industry to proceed without dealing with this issue. It is best to identify these conflicts and compromising situations now, while the influences are manageable. Financial participation is how our communities are supported and hence are able to avoid the trap of becoming “blind sleepwalking agents of whoever feeds us.” People, Ideas & Objects are user focused developments. The choices that a software development project can prioritize are many. Users are one, technical efficiency another and there are many other possibilities. For users to support the oil & gas industries needs and to focus on a producer's competitive advantages of their land and asset base, their earth science and engineering capabilities. Ensuring that they’re profitable across the continent and always. Users need to have the software tools, capabilities and means of production, (the financial resources to build these products and services) within their control. If funding were to be cut or suspended mid-way through this project only the producer bureaucrats would win. There would never, and could never, be the resurrection of the project or anything similar. The bureaucrats would make certain of that by ensuring all of the user community members received what I’ve called the “full baseball bat treatment out back by the dumpster” that I so regularly enjoy. 

Change Based Software Development Capability

People, Ideas & Objects focus is on our user community. Providing them with the software development capabilities they need in order for them to support the oil & gas business opportunities and issues in the 21st century. This is not a static one time instance. As the oil & gas business changes, the software that is derived from the Preliminary Specification will accommodate those changes through establishment of our permanent software development capability and this user community. We are therefore providing a change based software development capability to the North American oil & gas industry. We are not providing “new” technology for technology's sake. With respect to our revenue model, technology has a substantial impact on our product delivery. However it is the business of the oil & gas business, and the changes in that business that drive our user community.

Traditional ERP vendors in the oil & gas marketspace have “sold” a solution to the oil & gas producers and then support that application through an annual service contract. Our competitors are selling a product that does not consider changes to the business environment. Contrast that to the People, Ideas & Objects Revenue Model that is dynamic in that we are focused primarily on the changes in the business environment. Offering a Cloud Administration & Accounting software and service through this offering. It is these changes that are the source of our revenue stream. Without changes to the software, there would be no developments and no fees would be assessed in that year by People, Ideas & Objects. 

It is a fundamentally different point of view. The traditional ERP vendor is constrained by their code and their customers. Any changes to the code need to be populated to the variety of customers who use their software. Therefore there is resistance to change by the vendor. The more code the software vendor has the more complex the changes will be. And the more customers the vendors have, the more costs and conflicts that arise. Innovations and new features are not covered by the software vendors service contract. People, Ideas & Objects will be using Oracle's Cloud ERP where changes will be populated to our user base on the same quarterly basis as Oracle’s product. We are oriented to the changes in the oil & gas producers business environment through the demands of our user community. It is these changes that drive our revenue. The contrast between the traditional ERP vendor and our change based software development capability could not be greater. 

The scope and scale of our applications are to provide a software development capability to the oil & gas industry, service providers and service industries. One that enables the industry to make the changes necessary when the business opportunities and issues arise. We believe that proceeding through the 21st century without a team of committed and capable ERP software developers will unnecessarily constrain the oil & gas industry within the Preliminary Specifications definition. Evolution of that model is necessary in order to eliminate the possibility of systemic and chronic issues such as the current overproduction and oversupply issue that has been present since the late 1970s.

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

Revisions to Background Pages

Leakage vs. The Right Information

People, Ideas & Objects established the means in which producers build value from their competitive advantages through their land and asset base, and their earth science and engineering capabilities. This was through the profitable expansion of reserves, increases in production or reductions in costs. With the Preliminary Specification a second revenue stream is firmly established from the deployment of their science and engineering capabilities to the various Joint Operating Committees they have an interest in. This revenue stream is designed to, at a minimum, offset the full cost of building and maintaining the competitive advantage the producer has in terms of their earth science and engineering capacities and capabilities. 

Providing people with the appropriate knowledge and information for them to act in a fast changing environment is difficult. Speed will be a critical component of the producer's capabilities, deployment and competitive advantage. Currently, some of the difficulty in getting the knowledge and information to the right people is a result of ensuring the integrity of the information was not breached by those that were not part of the organization, or not the information authorized by the organization. The Security & Access Control module of the Preliminary Specification imposes high levels of integrity on all the communications and storage of data and information. However with high levels of collaborations throughout the People, Ideas & Objects Preliminary Specification. There may be the expectation that these collaborations between firms in the Joint Operating Committee is where there may be some perceived leakage of proprietary losses of knowledge. And it is here that People, Ideas & Objects are asking if those losses of information impose any risk to the innovative oil & gas producers competitive advantages of their land and asset base, or earth science and engineering capabilities? No they don’t. In fact, it is the collaborations that enhance the innovativeness and the capabilities of the firm. In a fast moving, innovative industry the last thing a producer is going to want to be constrained by is a method of operation that they own the Intellectual Property of and as a result is the only method of operation the firm pursues. Are the producers and Joint Operating Committees capabilities that are being deployed a fixed point of science or an ability to apply the innovations and sciences developments, and most particularly the developments from the oil & gas marketplace as they occur?

The question therefore becomes how is this proprietary information and capability deployed on an as needed basis? Professor Giovanni Dosi notes that although the free movement of information has occurred in industries for many years, yet has never been easily transferable to other companies within those industries. The ability to replicate a competitive advantage from one company to another is not as easy, and indeed may not be worthwhile doing. Dosi (1988) goes one step further and states, “even with technology license agreements, they do not stand as an all or nothing substitute for in house search.” A firm needs to develop “substantial in-house capacity in order to recognize, evaluate, negotiate and finally adapt the technology potentially available from others.” Therefore why not focus on the need to increase the company's own unique and specific competitive advantages based on advanced specializations and divisions of labor of these sciences.

We are also discussing the operational governance of the firm and Joint Operating Committee. An important element of this discussion is the capabilities that these organizations have access to. Capabilities are documented in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. These are the documentation of the explicit knowledge that the producers capabilities are able to conduct. Therefore from a governance point of view these capabilities need to be safeguarded and ensure that they’re kept for their firm's eyes only? Nothing could be further from the truth. The simple usage of these capabilities will cause their leakage to outside firms. And it is imperative that the firm consider the use of their capabilities as having the right information deployed by the right people at the right time in the right location as their priority. Governance therefore should be more concerned with the appropriate and timely use of these capabilities in terms of generating value, rather than the hoarding and protection of information that will be released in some form nonetheless, may be generally understood throughout the industry and will be the basis of further innovations and developments in the near future. From Professor Richard Langlois “Organizing the Electronic Century''.

This is the basic modularization of the market economy. It accords well with the modularization G. B. Richardson (1972) suggested in offering the concept of economic capabilities. By capabilities Richardson means "knowledge, experience, and skills" (1972, p. 888), a notion related to what Jensen and Meckling (1992) call "specific knowledge and to what Hayek (1945) called "knowledge of the particular circumstances of time and place." p. 27

If the Joint Operating Committee coordinates these capabilities in the appropriate manner then the externalities will flow to the producers represented there. That is what the governance of the operation is most concerned about. That there was leakage of some explicit knowledge of these capabilities during the operation is immaterial to the externalities and the competitive position of the firm. Recall during our review of Professor Giovanni Dosi for the Preliminary Specification. His research showed that it took an equal and sometimes greater effort to copy another firm's capabilities than it did to generate the capabilities themselves. It is therefore more effective for a firm to focus on their key competitive advantages of their land and asset base, and their specialized earth science and engineering capabilities. In a dynamic, innovative and rapidly changing environment a producer firm wants its key competitive advantage to be state of the art and on the cutting edge at all times. Using the market offerings in ways that encourage and reward those that develop the actual Intellectual Property that make the service industry and other vendors able to support the oil & gas producers and their efforts to generate value. Intellectual Property is not the domain of the oil & gas producers or industry in any way whatsoever. Their value development is a result of the deployment of their tacit knowledge of the resources of the marketplace and what the producers capabilities can do with that knowledge to build value from their oil & gas assets. 

Pooling

People, Ideas & Objects are using specialization and the division of labor as the method to increase the performance trajectory and productivity of the industry. We have applied this solution to the earth science and engineering disciplines to deal with the anticipated difficulties in accessing adequate numbers of these resources in the mid to long term. When using the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil & gas producer we are moving this earth science and engineering knowledge to where the operational decision rights reside to increase accountability for the decisions that are made. Therefore we have eliminated the “operator” designation to introduce our pooling concept. 

The capabilities to house “state of the art,” “just in time” earth science and engineering resources necessary to operate each of the properties within one oil & gas firm is believed to be beyond what will be commercially viable in the very near future. This is a result of the further specialization of earth science and engineering skills needed to be attained by each individual and each producer firm within the industry. Under the current environment, with the increased demand for these resources due to retirement and low numbers of people entering the professions, there will be an increase in producers costs as a result of the limited resources supply. Additionally the anticipated increase in throughput necessary to meet the future demands of energy independence. The known fact that each barrel of oil or gas demands more earth science and engineering effort as we consume the “easy” reserves first. When specialization is required, if each producer firm were to maintain the full scope of their capabilities necessary to achieve “operator” status, they would no longer be commercially viable businesses due to this increased demand from specialization. Specialization and the division of labor is the only proven solution to increase the performance and productivity from any and all organizations. Introducing multiples of what is currently available if the ERP supports any revised organizational definition. Therefore under the Preliminary Specifications pooling concept it is necessary for each producer in the Joint Operating Committee to contribute their uniquely specialized capabilities. The objective being to enable the Joint Operating Committee to draw from the much larger pool of the Joint Operating Committees producers capacities of engineers and earth scientists, but also the market offerings, in order to obtain the necessary “operator” scope and scale of capabilities for the properties operation. Additionally, there is the need for the removal and offloading to the marketplace of the lower level technical work from the producer firms to service providers that will specialize and divide their labor on the basis of their skills. Enabling producers to specialize in those highly specific areas of competitive advantage that provide them real tangible value creation. 

The producer firm is committed to developing their capabilities with the understanding that they advance their competitive advantages, and earn a return on their investment. They are the critical competitive differentiator in the industry under the Preliminary Specification. How within People, Ideas & Objects ERP software does the producer earn a return on their investment on their capabilities? The most obvious answer is through expanding their petroleum reserves, their production deliverability or by reducing their overall costs on a barrel of oil equivalent basis and therefore expansion of these capabilities through a highly competitive, dynamic and innovative environment. The answer in the short term is to ensure that these critical resources costs are recovered from the costs of oil & gas exploration and production on a day to day basis. Their time and direct charges being recovered from the joint accounts. That is to say that the people (representing the producers capabilities) who are pooled into a Joint Operating Committee, have been assigned a role within the Industrial Command & Control, Job Order and Work Order systems of People, Ideas & Objects et al Preliminary Specification and whose costs are captured in the Partnership Accounting module and are therefore recovering an established second revenue stream from these producers capabilities to offset the cost of building and maintaining these capabilities.

This pooling concept is the solution that People, Ideas & Objects have developed as a replacement to the current “operator” designation. The ability for each producer to have the just-in-time capabilities for all the properties they manage requires, on an industry wide basis, to have surplus or unused and unusable earth science and engineering capabilities to fulfill this just in time nature. This has led to what amounts to a hoarding of these resources by individual producers to meet their just in time needs, causing industry-wide low utilization rates. The ability to pool the producers' highly specialized resources into the Joint Operating Committee releases these otherwise unused and unusable capabilities and facilitates the expansion of specialization and the division of labor to resume. All producers need to contribute their specialized knowledge, skills, experience and ideas they’ve developed in an innovative oil & gas industry. Therefore each of these producers need to have the ability to charge and recover their costs for these resources through the joint account as necessary. Charges being made to either operations or capital expenditures in amounts necessary to earn a return on their specialized capabilities.

A note here to say that this falls under the domain of an ERP (Enterprise Resource Planning) solution for the following reasons. People, Ideas & Objects noted the research of Professors Anthony Giddens and Wanda Orlikowski in terms of their Structuration Theory and Model of Structuration. In summary these suggest that software defines and supports organizations and therefore also constrains them. Without software to define what an organization is and does then it more or less won’t exist on a commercial basis in the North American oil & gas marketplace. And to seal the producer firm in the definition of the Preliminary Specification is just as inappropriate as today’s business issues continuing in the bureaucrats unchanging ERP software environment. Therefore People, Ideas & Objects, our user community and their service providers are building the Preliminary Specification and a permanent software development capability based on the needs of the dynamic, innovative, accountable and profitable oil & gas marketplace. Ensuring the Preliminary Specification and the services associated with it are kept up to date and serving the greater oil & gas economy. 

Operational Control

Operational control and innovation are on two opposite ends of the same spectrum. That however does not mean that they can’t be attained by the same organization. The innovative oil & gas producer must have both. One without the other is not worth pursuing. The conflict and contradiction will show up in the organization at some point and the need to deal with it becomes a governance issue. Producers using the Preliminary Specification will have the tools necessary to ensure that the Joint Operating Committee is able to discern the difference between innovative markets and tight operational control. 

When the Joint Operating Committee is conducting some field operations it is establishing a one time temporary organization representing individuals from a variety of different sources. Other producers who are partners in the Joint Operating Committee, vendors, suppliers and service providers are some of the sources that make up these temporary organizations. To have operational control over these resources is critical for the success of the innovative oil & gas producers. In the Preliminary Specification we provide a number of tools to enable the Joint Operating Committee to attain high levels of operational control over these temporary organizations. 

The first of these tools is what we’ve called the Industrial Command & Control. An ability to impose a chain of command over the resources that span the producers, suppliers, vendors and service providers that are working in the temporary organization that has been established. Next there is the Job Order which is a means in which to execute the plans and operations of this temporary organization during its operation. Simply nothing should be done without the appropriate Job Order being issued from the recognized authority listed in the Industrial Command & Control chain of command first. There is the AFE in which the budget is established and maintained, or possibly a lease. And the Work Order that enables the producers resources to be charged to the Joint Operating Committee ensuring the producers recover the costs they incur in building and maintaining their distinct capabilities. 

These are the tools that are at the disposal of the people who are responsible for the operation in the Joint Operating Committee. They are provided to bring a sharp contrast to the freewheeling innovative ways of the market that are healthy for the further development of the innovative oil & gas industry and provide the necessary operational control to have the execution, accountability and success necessary in a dynamic, innovative, accountable and profitable oil & gas producer. 

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