Our 12th Module, Part VI

Canadian natural gas producers are driving the industry forward with new innovations on the natural gas front. We can only assume they’ve been unhappy with low natural gas prices and therefore have implemented a policy of paying their customers to take their gas. That’s correct negative prices of natural gas are all the rage in the Canadian natural gas industry. After all, the time to have implemented the Preliminary Specifications decentralized production model’s price maker strategy and only produce profitable production was around 2009. We have to give them credit for this bold and determined move since then to fully explore the implications of chronic overproduction. Now we’ll only have to wait and determine if the same principles of chronic overproduction apply to the oil market.

We now shift back to our documentation of our Blockchain module. Before we get into that I want to clarify a seeming contradiction in last week’s commentary. That producers are focused on “where the money is” of finding and producing reserves which is consistent with their competitive advantages of their land and asset base, and their earth science and engineering capabilities. Therefore their current focus is appropriate. My criticism is that they don’t understand that they’re a primary industry and the secondary industries that support oil and gas, the service industry, pipelines and software etc. need to be a part of the business and the producers concern as well. Producers can’t just leave the outcome of these activities to fate. They need to be involved in order to make them happen and they need to be involved in ensuring these businesses are compensated appropriately. If investors see that the service industry, pipelines and software businesses are treated with disrespect and financially abused then they’ll be hesitant to get involved in those businesses, as is the case today. Leaving producers unable to get the job done. So yes they need to focus on the things that they’re able to be competitive in. And they need to understand that as a primary industry it’s not just the producers who’ve earned or are entitled to those oil and gas revenues.

Security & Access Control

We’ll now take a module by module step through each of the eleven modules of the Preliminary Specification and discuss the implementation of the Blockchain in each. The first module is the Preliminary Specifications Security & Access Control which seeks to ensure that “the right people have the right access to the right information with the right authority at the right time and at the right place.” Which is one of the more difficult aspects of the Preliminary Specification. This requirement is complicated by a number of unique elements that are introduced as a result of using the Joint Operating Committee and the expectation that producers, as well as service industries dependent on the producers, will be required to expand their throughput through enhanced specialization and division of labor. This as a result of the natural demand for more engineering and earth science effort in each incremental barrel of oil or gas produced. And the reduction in the industry wide availability of earth science and engineering resources as a result of the recent downturn and the anticipated retirement of large percentages of those professions. Triggering the need for a pooling of technical capabilities between each of the producers that are participants in the Joint Operating Committee and imposing a temporary compliance and governance structure over this pooling through the Preliminary Specifications Military Command & Control Metaphor, a feature of the Security & Access Control module.

The majority of the information that is contained within each producer firm regarding the Joint Operating Committee is the same. Each producer shares in all of the data and information that is pertinent to the Joint Operating Committee and will be party to the billings from the service providers for the administrative and accounting services that are rendered for that Joint Operating Committee. One clarifying aspect of using the Joint Operating Committee was the data and information that was created and used within that organizational construct was unique to the partnership. The sharing of this data within the Joint Operating Committee is standard fare in the industry and has always been. This contrasts to the unique and proprietary nature that is contained within the producer firms data and information. Segregating these two unique types of data from each other would and should be the first order of business during our developments. That way members of a Joint Operating Committee, of which a producer firm may have an interest in several thousand of, doesn’t leak any proprietary firm data.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our 12th Module, Part V

Implementing blockchain technologies within the Preliminary Specification is mandatory for the oil and gas industry and producers. With the volume of transactions that are managed through People, Ideas & Objects system a means to provide the safety, security and documentary evidence that the blockchain provides is the only reasonable way for the industry to proceed. We are not providing a solution that is available tomorrow but one that will build value for the industry in the mid to long term. Therefore the adoption of Oracles technologies including their Oracle Blockchain Cloud Service (BCS) and Oracle ERP Cloud in combination with People, Ideas & Objects Preliminary Specification, our software development capabilities, our user community driven development and service providers fit well with the needs, opportunities and issues that the industry and producers face today and in this time frame.

Might I be so bold as to suggest. It is clear in evaluating the financial statements of the producers for the 1st quarter of 2018. That the accounting games are still being played and the lack of cash in the industry continues. No cash is being generated from operations. Nothing is being provided from the investment community and no banks are jumping back on the bandwagon. Therefore no one’s buying the industries story. Producers continue to manage as if the status quo is the only operational choice they have. This as far as any objective person can see is a dead end. I would therefore ask, what would happen if the industry proceeded with the developments of the Preliminary Specification by providing the funding for our budget. Would that change the perspective of the investors and bankers that the status quo was being discarded for the mid to long term future? The future that is defined by People, Ideas & Objects Preliminary Specification and therefore prove to the investors and bankers that the industry was a viable choice for their investments once again?

One of the areas that will benefit the most from blockchain technologies is our Material Balance Report. It resolves the processes involved in the measurement and reporting of production of oil and gas on a monthly basis. Capturing the production data in the field through field data capture and automating the subsequent processes all the way to the financial statements. Within this broad definition we have introduced the Material Balance Report as the means in which the producers within a Joint Operating Committee are able to balance the reporting of the various disparate groups that are involved in these processes between field data capture and financial statements. Introducing the ability through the report to material, system and partnership balance the production. The user community through their work will need to determine at what point and where the production volumes within the Joint Operating Committee for a property, plant or gathering system can then be recorded within the blockchain that supports these transactions. Once that production data has been captured, verified and secured then the processes and automation that we note in the Accounting Voucher and Partnership Accounting modules would commence.

Within those modules we address the never ending amendment process that plagues this area of reporting. This is a natural part of the oil and gas business and will continue for some time, I would imagine. What needs to be done in the case of volumetric amendments is that they are written in similar fashion to the blockchain. This somewhat denotes that there is a specific blockchain for the industries production volumes. Which would aid significantly in the global reconciliation processes that are instituted within the Preliminary Specification through the material, system and partnership balance reconciliation process to ensure the integrity of the reporting is either consistent with the facts of the production, or the agreements that governs the Joint Operating Committee. Whichever of those two is in effect. As I noted before it will be the user community that determines the use of the blockchain and whether we are using one or many blockchains within the Preliminary Specification. If there were many one could understand the need for blockchains for volumes, prices, fees and distributions.

The use of Ethereum’s blockchain has the added advantage of implementing smart contracts. Therefore if there was an Ethereum blockchain for processing fees then the smart contracts could be used to process the appropriate fees on the volumes that were processed through those owners assets. On a fully automated basis. This is the concept that the Material Balance Report is designed to capture. Control the production volumes and ensure that the numbers reported, which includes the amendment process, captures the integrity and unimpeachable level of confidence in the volumetric data. Therefore by doing this we are able to automate the remaining processes on an iterative and continuous basis. Providing the ability of the industry to increase the throughput of the industry through enhanced specialization, division of labor and automation. From the Ethereum website

On traditional server architectures, every application has to set up its own servers that run their own code in isolated silos, making sharing of data hard. If a single app is compromised or goes offline, many users and other apps are affected.

On a blockchain, anyone can set up a node that replicates the necessary data for all nodes to reach an agreement and be compensated by users and app developers. This allows user data to remain private and apps to be decentralized like the Internet was supposed to work.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our 12th Module, Part IV

Oracle’s implementation of blockchain is the general topic of discussion for this post. We are continuing to quote from the Oracle sponsored IDC whitepaper that we introduced yesterday. Within that paper there is a summary that captures Oracle’s product and service offerings, and to some extent their commitment to blockchain.

Oracle Blockchain Cloud Service (BCS) is an enterprise-grade, distributed ledger platform designed to support new DLT applications and extend ERP, supply chain management (SCM), and other enterprise software-as-a-service (SaaS) and on-premise applications by enabling enterprises to conduct business-to-business transactions securely and at scale across a trusted network with tamper-proof digital records (see Figure 2). Oracle SaaS and on-premise application suites are used in many industries as a backbone of the enterprise's information system. Extending these systems with blockchain capabilities through BCS provides significant value to Oracle's customers and can lower many of the risks inherent in adopting new technology.

Oracle was chosen as our technology partner as we believe they have the best technologies in the marketplace. And that is not by a slim margin. Oracle’s Database 18C is in my opinion well beyond what the competition are offering. It would seem to me that IBM, Microsoft and others are unable to keep pace with the developments that Oracle has been making in their database. The same goes for Java. Since their purchase of Sun Microsystems, Java has become ever more popular as the programming language for business. Particularly from a database developer point of view. And no one can stand close to the commitments that Oracle has made in the ERP marketspace. With the purchase of PeopleSoft, Siebel and JD Edwards Oracle spent $18 billion in market acquisitions for these companies. Still not satisfied they undertook a $4 billion, from the ground up, writing of an ERP system based on the Java Programming Language to produce their Fusion Middleware and Fusion Applications. I’m seeing the same level of commitment in their blockchain offering and feel that Oracle will be using their services in this area to further differentiate themselves in the ERP and other market spaces.

Pushing the concept of fair use to its extreme, I now want to quote from the IDC paper extensively. The following are their recommendations on how to proceed with the Oracle blockchain technology within the organizations that are adopting them.

Oracle's Blockchain Offering Provides Several Benefits to Enterprise Customers

▪ Faster transactions with greater resilience: Enterprise customers need distributed ledger platforms that can scale to handle increasingly large volumes of transactions. They also need resilient, highly available, and high-performance platforms to reduce transaction latency and ensure stable and secure connections.

▪Enhanced data privacy: Enterprises are concerned about the privacy and confidentiality of ledgers and limiting access to transaction details, especially in regulated industries. For example, in financial services, keeping the terms and conditions of contract details such as counterparty identities, pricing, and quantity data confidential is always a concern. In healthcare, the privacy of patient health records, patient identification, and health insurance details is paramount. Oracle's cloud services help firms build and maintain secure ledgers and smart contracts with features such as identity management with secure defense, in-depth data-in-transit and data-at-rest encryption, and multiple confidentiality domains within a single blockchain network.

▪ Simplified operations through managed services: Managed services are gaining momentum as enterprises look to get up and running faster with new leaders and new blockchain smart contract projects. Enterprises can launch pilots, run experiments, and work with production- ready ledgers on production-ready Oracle-managed servers, storage, and network infrastructure, leaving backups, upgrades, and other infrastructure management considerations to Oracle software and operations. Oracle's cloud services also support rapid onboarding of new members and governance frameworks that help enterprises maintain control and security of the ledgers.

▪ Integration with Oracle SaaS and on-premise application suites: Oracle provides integration accelerators through the adapters in its Integration Cloud Service and Java Cloud Service for SaaS. These solutions enable enterprise processes in ERP, SCM, and other application suites to rapidly integrate and connect with blockchain transactions and access distributed ledger information. The applications integration toolkits will provide samples, design patterns, and templates for specific business processes.

▪ New business models and revenue streams: BCS provides application development accelerators that help enterprise customers integrate their blockchain transactions and ledger records with new and existing applications. Oracle wrapped blockchain transactions with REST APIs, which can accelerate application development and integration and make transactions accessible both inside and outside the cloud. Oracle Cloud also offers sandbox capabilities that can support corporate IT developers and independent software vendors (ISVs) with application development environments, integrated CI/CD tooling, and prebuilt integration adapters for Oracle and third-party applications. These resources enable firms to quickly build and run experiments and proof of concepts to address specific use cases. These experiments enable enterprises to develop, test, and engage in new business models and revenue streams from deploying DLT and smart contracts. Oracle has also announced integration of blockchain APIs in Oracle NetSuite Suite Cloud Platform and Digital Innovation Platform for Open Banking. This can provide blockchain on-ramps to NetSuite customers and partners and to financial institutions looking to innovate with blockchain and fintech APIs orchestrated by Oracle API management services.

▪ Deployment flexibility and choice: Oracle's Cloud Machine can deliver enterprise-grade PaaS to enterprise customers' datacenters with deployment options behind the firewall. This can enable enterprises to develop cloud-native blockchain applications on-premise with modern platform services. On-premise options are especially important in regulated industries such as healthcare and financial services. The Oracle blockchain solution enables firms to use the private cloud option to retain complete control over their data and applications and fully manage application services behind their firewall, or deploy in the Oracle Public Cloud, or mix and match private and public cloud options in a hybrid deployment. In the future, Oracle plans to allow its BCS-based blockchain networks to accommodate members joining from outside of Oracle Cloud, as long as they are using a compatible version of Hyperledger Fabric, enabling more open network models across the broader Hyperledger community.

We’ll be discussing the Hyperledger community in a future post. We see here what I would call an explosion of the capabilities necessary to integrate the blockchain with in Oracle’s technology. Oracle is providing these services on behalf of their customers, which include People, Ideas & Objects, our user community and service providers. There’s also an offer here that no producer can refuse. Imagine each producer incurring the time and energy to develop these IT capabilities. The value that will do for each of their bottom lines. Or, alternatively, they could use the software development capabilities that People, Ideas & Objects are providing with the Preliminary Specification. Specialization and the division of labor dictate what businesses choose to be involved in the tasks that generate value. And only those tasks that provide us with the most profitable means of operations. Is IT something that each and every producer is able to differentiate themselves on? Is this where the oil and gas producers build their value? With the scope and scale of the Information Technologies available today, the pace of change, and these capabilities providing no competitive advantage other than to function in an advanced economy. Why would each of the producers continue down this road?

With People, Ideas & Objects our budget includes over $100 million in development dollars to the CPA firms to ensure compliance to the regulations are established and maintained in the Preliminary Specification during development. This provides an independent third party review of the activities undertaken during development, and a baseline for each of the accounting firms to commence their oil and gas producers annual audits. These are a check and balance on the software’s developments from a compliance and governance point of view. They are provided to ensure that the software that is developed is consistent with the regulatory and accounting needs of the producers and does not contain any inconsistent anomalies. Blockchain will also provide these assurances to the producers when the technologies are fully integrated as the user community determines. I don’t personally see any alternative providing the oil and gas producer with the most profitable means of oil and gas operations, on an ongoing basis for the next 25 years, in this complex technical environment.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our 12th Module, Part III

Our next step in defining our 12th module, The Blockchain, is the implementation of the technology by Oracle Corporation. Oracle Fusion Middleware and Applications are the base financial ERP application of the Preliminary Specification. These are now generally called Oracle ERP Cloud. It was soon after the publication of the Preliminary Specification that we amended our budget to move to the cloud for both development and deployment purposes. The ability to build and maintain physical hardware for our needs was a capability that we no longer needed to adopt as a result of Oracle’s cloud offerings. It has been decisions such as these that we have reviewed the entire process of what were doing in oil and gas. The question we are seeking to answer at all times is how can we deliver our product to market at a faster pace than what will be expected. By moving to the cloud we are able to shift the budget dollars from physical hardware to Oracle services and speed up our implementation substantially. Speed being the critical competitive factor in all businesses today. We see the implementation of the blockchain as a critical element in the reduction of the time we need to develop our solution. Although conceptually our offering does not change, the ability to acquire the security and integrity that the blockchain provides will mitigate much of the software development work that needed to be done to build those features ourselves on behalf of the producers and industry. That our technology provider is taking a leadership role in implementing blockchain within their ERP solution is also of great benefit to People, Ideas & Objects, our user community, service providers, producers and industries.

In this the first of two blog posts concerning Oracles involvement with blockchain we have an Oracle sponsored IDC whitepaper. I highly recommend registering for the download and reviewing this document. Oracle is looking to blockchain to differentiate their product in the marketplace and we as well as the producers are the benefactors of that. It is with that in mind that we now shift our attention to our next concern. Now that blockchain resolves much of the security and integrity of the industries transactions, with much work left to be done. Our concern is the Access Control capabilities of the People, Ideas & Objects Preliminary Specification. To suggest that we offer a unique situation would be an understatement here. Having a cloud based, industry wide solution that has the needs of a proprietary access control system such as an ERP demands is to say unique. When we introduce the Joint Operating Committee where multiple producers need access to the same data we have our work cut out for us. Which leaves me with a rather perplexed look on my face when I read the following from this IDC whitepaper.

Our research suggests that most enterprise customers are looking to build permissioned or private ledgers that only allow those with specific permission to access distributed ledgers.

I am unaware if or how the blockchain would provide this capability at this point. However we are not providing a solution that is available today. We are taking today’s Information Technologies and applying them to the business issues and opportunities that exist in oil and gas. Ours is a industry wide software development based on the Oracle ERP Cloud and focused on the needs of our user community. This focus on the user community has been our priority since the publication of the Preliminary Specification and is the only manner in which we will commence software developments. User community based developments are the only quality and usable systems in use today. Therefore with that in context, IDC notes the nature of the blockchain is somewhat in the same state. That adoption of the technology by providers like Oracle are at the very beginning and will be developing over the next few years. Which is consistent with our plans and needs.

Connectivity to existing systems is often a challenge because many blockchain and distributed ledger technology platforms available today are early-generation solutions. For example, capabilities for enterprise plug-and-play with enterprise resource planning (ERP) solutions and integration with enterprise-class system of record (SOR) are not available in most blockchain offerings. Because many solutions are early versions, multiple features that are required for enterprise deployments such as systems availability; business continuity/disaster recovery (BC/DR); and platform security are still under development.

And

The interconnectedness of enterprises with their customers, suppliers, and intermediaries is another challenge faced by business and technology teams looking to develop blockchain solutions. As a result, the distributed nature of blockchain ledgers can make it hard to provide the privacy that some customers and counterparties expect. For example, transaction records contained in buy and sell transactions and details contained in shipping instructions in the supply chain may need to be segregated into different domains to provide privacy and confidentiality. Great care must be taken to provide advanced levels of security to prevent employees or bad actors from committing fraud by posting misleading information or gaining inappropriate access to customer transaction information.

People, Ideas & Objects are a research and software development firm driven by our user communities needs. We are beginning our developments on the basis of the Preliminary Specification. These efforts are a specialization and division of labor that fills the gap between the oil and gas industry and the Information Technology providers. For each producer to have the requisite capabilities to build and deliver software of the Preliminary Specifications scope and scale is untenable based on their budget and limited resources. Aggregating the industries efforts within this new sub-industry, that we are creating between oil & gas and the Information Technology providers, is the only solution to the business and technical difficulties the producers face today. To me, having 150 producers each researching and developing the blockchain technologies and integrations into their ERP systems independently, is ludicrous. As would any aspect of our offering, which does not fall within the producers competitive advantages of its land and asset base, or earth science and engineering capabilities.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our 12th Module, Part II

We now begin with a description of the blockchain technology and its integration into oil and gas. Within the Preliminary Specification we’ll have many interactions and transactions that currently do not exist in the industry. The volume of transactions that will be processed through our system will be substantially higher than what is currently experienced in the industry. This would be the case with the same producers involved and the same production volumes. When using the Joint Operating Committee as the key organizational construct we are taking the data at its lowest possible value obtainable. Today many ERP systems are capturing aggregated data from spreadsheets. In addition there is an increase in transaction throughput as a result of each participant within the Joint Operating Committee being active in the property as opposed to receiving one set of accounting reports from the operator each month. This volume of increased data and transaction throughput is then extended as a result of the 3,000 administrative and accounting service providers each processing their billings for their services to each of the identifiable Joint Operating Committees. These increase the volume of transactions, and hence the quality of the data, by substantial numbers.

Blockchain is a pure Information Technology solution within the Preliminary Specification. The other eleven modules are designed around the business issues and opportunities that are currently being experienced by the producer firms and industry. Those primarily being the chronic lack of profitability and the cultural capacity to accept they have a problem with profitability. With the business models that are contained within the Preliminary Specification, producers gain our value proposition which is valued in the region of $25.7 to $45.7 trillion over the next 25 years. This differential from the status quo is the Preliminary Specifications decentralized production model’s price maker strategy that enables producers to produce only profitable production. Enabling them to pursue the oil and gas business with the appropriate cash flow to fund their capital expenditures, pay down their bank debts and return capital to their shareholders. Currently producers expect shareholders to fund their capital spending as a subsidy to the energy consumer, leaving them with disgruntled shareholders and high levels of bank debt as a result of the lack of real profitability and cash flow. These business issues are our focus, blockchain is a pure technological application that provides our systems with enhanced security and integrity for the industry and producer. Adding to the dynamic nature of our software development capability, user community and the Oracle Cloud ERP offerings we use as the base of our system.

What is blockchain and how does it work. A good description of the technology of Distributed Ledger Technology (DLT) is as follows. This summary is provided by White Hat Security.

Every time a new transaction is initiated, a block is created with the transactions details and broadcast to all the nodes. Every block carries a timestamp, and a reference to the previous block in the chain, to help establish a sequence of events. Once the authenticity of the transaction is established, that block is linked to the previous block, which is linked to the previous block, creating a chain called blockchain. This chain of blocks is replicated across the entire network, and all cryptographically secured which makes it not only challenging, but almost impossible to hack. I say almost impossible because it would take some significant computational power to even attempt something like that.

In the context of security, both transparency of the system and immutability of the data stored on blockchain comes into play. Immutability in computer science refers to something that cannot be changed. Once data has been written to a blockchain, it becomes virtually immutable. This doesn’t mean that the data cannot be changed – it just means that it would require extreme computational effort and collaboration to change it and then also, it would be very difficult to cloak it.

Finally there is a TED talk from June 2016 with Don Tapscott. In this video he gets into the details a little more than yesterday’s video and calls blockchain an Internet of Value that supplements the current Internet of Information. A good description in my opinion. Which brings up one of the areas of the blockchain and their use as coins or tokens. I’ve mentioned this before and this relates to the centralization of value in the current Internet space. The example I’ve used is of YouTube which was sold to Google for about $4 billion. That transaction is now worth probably in the area of $150 billion for Google’s shareholders, which is a good thing. However, what if the owners of YouTube were able to hang on to their company and realize the value that they generated without having to give away the store. They may have been able to realize that $150 billion themselves. Issuing a coin would have enabled them to enjoy a liquidity at all times during their ownership of YouTube and removed the need to sell the company in the long term. Enabling them to realize the full value of their ideas. What has happened is the larger Information Technology providers have been able to poach the promising ideas and incorporate them within their offerings inside Google, FaceBook, Twitter etc. and leave the owners, although financially satisfied, without their ideas and the work they wanted to do. We may be seeing the downside of this concentration of value with just a handful of companies and the privacy concerns regarding FaceBook.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our 12th Module, Part I

People, Ideas & Objects Preliminary Specification is almost four and one half years old. During the time that we’ve discussed the specification, the user community and service providers and all the other elements that are needed for the dynamic, innovative, accountable and profitable oil and gas producers. There were no changes to the specification, establishing it as a baseline in which the user community would begin their work. Today we begin the definition of what will be our 12th module of the Preliminary Specification. After researching the topic and grasping an understanding of the Information Technology that underlies the blockchain, today we can begin the integration of that technology into all aspects of the other eleven modules of the Preliminary Specification.

If there was one weakness in the Preliminary Specification it may have been in its ambitiousness. The ability to implement some of the technologies in the manner as described would have been difficult. Areas such as the Material Balance Report where the industry wide reconciliation process is conducted from the field data capture through to the financial statements was going to be difficult. The area of concern was in ensuring the integrity of the data and its reporting when dealing with Joint Operating Committees, amendments and the complexity of the system as described in the Material Balance Reports specification. By adopting blockchain technologies, which I find best described as distributed ledgers, the Preliminary Specification doesn’t seem all that ambitious anymore. What I knew was doable and could be implemented with the technologies that existed in 2013 when the Preliminary Specification was published, are now far easier and in many ways the only way in which the industry should proceed in terms of their ERP systems development.

The best video I found describing what the blockchain provides is from its biggest proponent, Don Tapscott author of the book “Blockchain Revolution.” This video has a number of interesting catch phrases that I think help people understand the technology.

The first quote that I would point out from Mr. Tapscott is “so what that means is the nature of a corporation and the nature of competitiveness is going to change. This is a time of great transformation. First of all, every industry will go through huge convulsions not just financial services. Resources, … Secondly, it means that every business function will change.”

The phrase that I found resonated the most with the Preliminary Specification was at around 3:35 of the video. Mr. Tapscott said “everyone has a “shared network state” where they can “look real time at everything that’s happening.” Once we’ve moved to the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producers. We take on what could be described as “a shared network state” within the industry. The Joint Operating Committees are / could be standalone investments or would be held together as a network of assets within an oil and gas producer as a firm or corporation. Joint Operating Committees are in many ways independent as a result of this “shared network state” and the manner in which they are managed in the Preliminary Specification. The concept of operator is gone and each working interest owner is an active participant at all times.

Recall we are moving the compliance and governance frameworks of the hierarchy to the Joint Operating Committees legal, financial, operational decision making, cultural, communications, innovation and strategic frameworks. Transactions between the owners of the Joint Operating Committee either in terms of the land that they lease, both mineral and surface, the capital assets deployed, the production and sales of commodities, the service industry representatives they engage, the producers earth science and engineering capabilities, our user community and service providers or coin holders will be able to operate within this “shared network state” we understand to be the oil and gas industry and service industry.

The integrity of the transactions that are undertaken in oil and gas are always the subject of heavy documentation and verification. As we move to a software driven world, yes even oil and gas, this integrity, documentation and verification can’t be ignored. With blockchain we are gaining highly secure systems by implementing the blockchain as our 12th module in the Preliminary Specification. Where it will engage with each of the other modules and provide the transaction security that is necessary. There may be one blockchain within the Preliminary Specification or there maybe many. It’s too early to determine the best implementation of the technology at this point. What is known is it will be used in at least 50 different ways that I can think of off the top of my head to provide that integrity and security that is necessary in today’s systems. Anywhere that there are interactions or transactions between producers and Joint Operating Committees there will be the blockchain securing the transaction.

We’ll be discussing the 12th module and some of the technologies around the blockchain in the next few weeks. We will be taking a short break some time after May 9th to review the first quarter’s financial performance of the producers. It’s important to understand the difference at this point between the blockchain as our 12th module of the Preliminary Specification is fundamentally different to our implementation of the blockchain for our Initial Coin Offering. They are for all intents and purposes two mutually exclusive events. One is the technology integration into the Preliminary Specification, the other is the means we are using to raise the financial resources to build the Preliminary Specification. Our coin offering will be based on the rights that are distributed through the coin to its holder that provides them with the exclusive access to the software that will be built from the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.