The Preliminary Specifications 13th Module, Artificial Intelligence (AI)

 With People, Ideas & Objects, our user community and their service provider organizations we have a powerful combination of proposed capacities and capabilities available for the dynamic, innovative, accountable and profitable oil and gas industry and producers. Assuming our budget is financed at some point in the future. Which I can only conclude at this time will occur as long as the associated difficulties in oil and gas persist. And therefore our funding is a certainty. When we add to this the incomprehensible list of capacities and capabilities of the products and services of Oracle Corporation. Add to these the models and markets that are built upon the use of the Joint Operating Committee in the Preliminary Specification. We will have a strong foundation in which to begin the resolution of industry issues and ensure that real profitability is earned everywhere and always throughout North America. I dare ask what the bureaucrats are offering? And will the cost of their option be any less than the trillions of dollars irretrievably lost so far?

People, Ideas & Objects have chosen our distinct competitive advantages to be our user community, Intellectual Property and research as the three areas of our domain to focus upon. These are how we earn our profits. We are a commercial operation and we will always be one as we’ve learned, as has everyone else in oil and gas, what the meaning and value of real profitability is. Without real profitability there is nothing. Within the Preliminary Specification there is the Security & Access Control module that sets out the necessary security and data access to those in the industry. Providing access to the right information at the right time to the right people with the right authority at the right location. Two other modules are the Performance Evaluation for the Joint Operating Committee and the Analytics & Statistics module for the producer firm. These modules are tools that build upon the basic data within the greater Preliminary Specification and Oracle applications in order to provide value to users. Organizing this data in an integrated matter and permitting two different perspectives of that same data. One perspective from the point of view of the Joint Operating Committee, accessible by each of the members of that committee. And the other perspective of the producer overseeing their entire proprietary accounting and administrative data. 

Recently we announced that People, Ideas & Objects would be developing as part of the Preliminary Specification, our own data model as a core part of our Intellectual Property. Our data model will be unique to our user communities needs and accommodate the data models used within the Oracle ERP Cloud products. In addition, another aspect of People, Ideas & Objects is the Technological Vision we set out on August 26, 2006 of this blog. It has four components that are in place today, and we feel they provide us with significant differentiation of our product and service offering and will provide real value to the oil and gas industry and producers, enhancing their profitability once implemented. These four technologies consist of Java, Wireless Networks, IPv6 and the application of what we describe as Asynchronous Process Management. A term that we developed that we won’t be getting into today, but will soon. We are wirelessly capable today with both WiFi and Cellular networks. Soon we’ll have the addition of space based networks such as Elon Musk's SpaceX StarLink network. As background these four technologies enable the Internet of Things (IoT) in an industry that is based on the earth sciences and the applied science of engineering. Where the chemical components of oil and gas are measured and monitored in terms of pressure and temperature. The capacity and capability to monitor and control an unlimited means of devices throughout the producers domain. Java and IPv6 enable the addressing capabilities to ensure that the device that is being sought to monitor and control, is the precise device that is being accessed. Java is a typed language which doesn’t confuse itself as to which variable is which, etc. IPv6 networks may appear as if they’ve not been implemented, but that is not the case. They are available through Oracle’s ERP Cloud offering. And the most significant IPv6 implementation to date has to be the cellular phone networks since 4G or LTE. Cellular phones such as Apple and Android devices are IPv6 based devices accessing network voice and data over an IPv6 network.

Therefore it is here we will have the total data set of the historical and proprietary data for the producer firm. The historical data of each Joint Operating Committee. Analytical tools to enhance the meaning of that data and generate the necessary ad-hoc information that the producer may find of value for their unique competitive advantages of their land and asset base, earth science and engineering capabilities. Although these will be used in ways that are unique and value generating in each of the producer firms. And within each of the members of the Joint Operating Committee. There will be a base infrastructure that’ll be prepared and provided to each of the producers on a continuous basis through the People, Ideas & Objects et al infrastructure that I’ve defined here. 

Let's talk about that data. The reason there is no production discipline in the oil and gas industry is that every producer is a spending machine focused on the “great science experiment” as I call it. Therefore it’s not a business and never will be a business with business objectives as long as the bureaucrats remain in place. Production discipline could be imposed by forming a North American cartel, (illegal) government production mandates where no one is ever satisfied with their allocation or implementing the Preliminary Specification. Only the Preliminary Specifications method of production allocation based on “real” profitability provides for fair and equitable means of production discipline. If the property continues to produce a profit then it continues to produce. Otherwise why would you continue to produce if a properties loss reduces the overall profitability of the producer firm, effectively destroying the value of the properties reserves, adding the cost of the ongoing incremental losses to the costs of the reserves and removing the marginal, or unprofitable, production from the commodities market so that they may find their marginal prices. Marginal prices not just for the unprofitable property but all properties across the North American continent. Markets provide one thing and only one thing, their price and bureaucrats refuse to listen to prices even when it's negative $40. They claim our method of production allocation is collusion which is laughable. If making independent business decisions based on detailed, actual, factual accounting that determines the state of the properties profitability is collusion, then bureaucrats belong back in the former Soviet Union. 

It is our user communities service provider organizations that provide the means to instill the production discipline across the North American oil and gas producers. Service providers are a reallocation of the existing producers administrative and accounting resources into approximately 3,000 individual companies. There the service provider will focus on one process and apply that process across the entire industry's data set. It will be at each of the service providers where the application of the individual process will be conducted on a standard, objective, actual and factual basis across the industry. This will be done as a result of each of these processes will be highly engineered during the development of the Preliminary Specification and continuously improved by the user community members in order to meet the requirements of the industry, regulators and all other stakeholders. And of course the producers and Joint Operating Committees needs. Therefore when the time comes to review the Joint Operating Committees individual, complete and comprehensive financial statements for the month, a feature of the Preliminary Specification. And they find that a property, for whatever reason, is no longer profitable they can confidently conclude the property needs to be shut-in. They’ll know that every other property in the industry has been assessed on the same objective, standard, actual and factual accounting basis and as a result each producer can accept that the accounting treatment they received on that property was no different in terms of being better or worse than any other property of theirs or any other producers. And therefore knowing that the focus of the producer is to maximize profits everywhere and always, any unprofitable properties only dilute their overall corporate profitability as well as collapse the commodity prices across their production profile and therefore will appreciate the value of this objective accounting information. They will be able to move the property to their inventory of shut-in properties where their earth science and engineering capabilities can be innovatively applied to rehabilitate the property in some manner to bring it back to profitability. All net positives for the producer and industry overall. 

In summary once again this infrastructure we’re building is to provide the North American oil and gas industry with the most profitable means of oil and gas production, everywhere and always. As discussed, on top of this data we have two modules, the Performance Evaluation, and Analytics & Statistics modules that will provide enhanced tools to analyze this framework for their competitive advantage. The Preliminary Specifications thirteenth module that we’re announcing today is to simply enhance this ERP framework with Artificial Intelligence and that is the name we will be applying to our thirteenth module. Why would producers and the industry be satisfied to continue with low grade and failing ERP systems and specious accounting practices? Each producer as a single entity has nowhere near the resources, capabilities or capacity in which they need to be able to begin developing the automation of their business processes, specialization and demands of this environment. An environment that will be a given from a technological architecture point of view. However, we do know bureaucrats are more than capable of muddling through these technical changes. Maintaining poor quality systems and specious accounting have fulfilled their purpose in oil and gas. Allowing the bureaucrats to continue with their charade will only take the industry into further jeopardy.

The structure of our user community is the means in which the producer firms enhance their ERP software. If they want or need changes to their existing systems, who do they go to in today’s environment, who has authority at the producer, who has authority at the software vendor? Good luck with that question. In the Preliminary Specification people will only need to speak to the relevant user community member(s). Only the user community is licensed to make changes and prepare derivative works of the Intellectual Property of the Preliminary Specification and any additions. Our developers are licensed to take directions only from user community members in terms of what to develop. They are blind, deaf and dumb to all others. User community members population is approximately the same as the service provider organizations they lead. They are focused on their area of expertise and are applying their specialization, division of labor, quality, automation, innovation, integration, leadership, issue identification and resolution, creativity, collaboration, ideas, design, planning, thinking, negotiating, compromising and using conflict and contradictions to get to the source of the issues as their key competitive advantages throughout their organization. User community members are the principles of the service providers whose role it is to provide their tacit knowledge as a service, in addition to the explicit knowledge that is captured in the People, Ideas & Objects Preliminary Specifications software, by the user community member, of which their service providers are using and providing to the industry.

This user community and their service provider organizations are the intellectual framework of the oil and gas industry in terms of accounting and administration. It would be my hope, my anticipation and expectation that one day this would provide the industry with the software and services that anticipated the needs, issues and opportunities that oil and gas would face. The Preliminary Specifications software would be dealing with what it is that’s concerning the industry. Taking a leadership role in the development of the administrative and accounting of the industry. Therefore leveraging this framework as I described it earlier would be a natural extension of what it could, but most importantly should be doing. Moving the Artificial Intelligence for ERP domain within the user community and service provider domain therefore is a natural and necessary fit. My thinking on this began as a result of the announcement by Mr. Thomas Siebel and his Artificial Intelligence firm C3.ai Inc. Thomas Siebel sold Siebel Systems to Oracle Corporation a number of years ago. The purpose behind C3.ai Inc is consistent with the theme that is present in the ERP marketplace. Individual companies can spend vast amounts of money and time internally on ERP systems or Artificial Intelligence with no benefit, wasted investment and unnecessary demand on critical AI and ERP resources. Mr. Siebel suggests that there is a 99% failure rate of internal corporate AI initiatives. We’ve seen this in oil and gas with their announced AI initiatives of a number of years ago being applied at the time to their chronic lack of profitability. The results of those initiatives are forthcoming, I guess. 

Centralizing the resources of the industry into Artificial Intelligence based ERP developments which will be developed and deployed through the People, Ideas & Objects et al framework that I’ve described in this post. Is an efficiency that is consistent with the theme of ERP developments. The demands of software development are no longer a capability that can be attained in-house in order to ensure the full scope of the organizations needs are covered. The same applies to AI. Therefore the Preliminary Specifications consolidation of the industries resources on one focused development in an objective, standard and compliant manner offers better functionality and capability at considerably less cost. Oracle has AI initiatives with their Oracle ERP Cloud, the base of our solution, and we will therefore be adopting those tools. I believe that the addition of the thirteenth modules AI capabilities is a natural extension of our user community and their service provider organizations and an efficient use of industry resources. Enabling producers to focus on their key competitive advantages of their land and asset base, earth science and engineering capabilities profitably. Incurring the time and energy to build the capacity and capability of ERP based AI once, and sharing the cost and this initiatives success across the industry. But there's more, the demand on the AI resources in terms of the practitioners would be too high to ensure that any producer was able to attain any level of AI competitive advantage or even competency in the industry in ERP based AI. It would also be duplicating the capability of the user community in this area. Just asking for a friend, why is there that 99% failure rate? What’s that saying; garbage in, garbage out. 

One of the aspects of the Preliminary Specification is that the administrative and accounting burden of each individual producer is substantially reduced as a result of the changes we will be instituting. These changes are a result of the burden of the producers' fixed, unshared and unshareable, administrative and accounting capabilities are reallocated to the variable and shared administrative and accounting capabilities of the industry. Variable based on production. Another key attribute that we’re using to reduce the costs of administrative and accounting, yet increase the performance and quality of our offering is by using specialization and the division of labor to be distributed across our service providers. These two elements of the Preliminary Specification will work to enhance the cost performance of the producers as we believe that overhead costs are substantial, and are one of the reasons responsible for their chronic unprofitability. Specialization increases the performance trajectory of the service providers administrative and accounting resources by increasing their capacity with the same or even fewer resources. We also apply this principle in the area of software development. More importantly is the unshared nature of the current, bureaucratic and redundant spending of the same overhead costs within each siloed producer organization in areas that are not distinct competitive advantages of the producers.

A key difference between what People, Ideas & Objects have proposed is the Artificial Intelligence module is properly constructed after the models, markets, architecture, infrastructure, functionality, organization and data is assembled. Bureaucrats have been using Artificial Intelligence to enhance their thinking for the past number of years. It has provided no results that we can see or are aware of. In fact it seems to People, Ideas & Objects that AI may have just been another viable scapegoat at the time to ensure their investors knew the bureaucrats were on the job. Except they haven’t any data that is usable. Without that data being organized and managed appropriately what purpose is AI? Oracle has recently stated that IoT may increase the volumes of data five fold by the year 2025. It may be a good time for the industry to start concerning themselves with such petty and annoying things like data and profits, but then I’m biased. Secondly each producer running around spending money on a new initiative that is the next great thing is consistent with the phenomenon we’ve seen repeatedly in the industry and have tagged with the “Keystone Cops” label. 

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, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

A Call to Action

It was during these past 24 years that we have been able to conceive of a better way in which to operate the oil and gas industry. Something that would enable the dynamic, innovative and profitable oil and gas producer to deal with the issue and opportunities of the 21st century. In August 2003 we developed the use of the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. By aligning the compliance and governance frameworks of the hierarchy with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee. We achieve a speed, innovativeness, accountability and profitability in the oil and gas producer. It is within the administrative and accounting domains that we realized this was valid. However we soon learned that it also applied within the operational domain.

Upon the realization of the value that developing software for the Joint Operating Committee provided the oil and gas industry. We then embarked on a “quick sprint” of research to determine what the industry and the producer would look like if we adopted the Joint Operating Committee as the key organizational construct. Developing the “what” and “how” things would need to be in order to operate the industry and the producer with all of the frameworks aligned. This research was completed in December 2013 with the edited publication of the Preliminary Specification. So much for quick sprints! Of note and interest is it is these two attributes of our offering that the industry does not have to go through, the development of a new method and the research of how that method would work. I would suggest they would need to spend as much time as I have in order to develop an alternative to the Preliminary Specification. The full 24 years. If they have that much time and money available then they certainly have every right to do their own thing. However, People, Ideas & Objects are offering an effective short cut in time. I also started this in 1991 on the basis that I knew something was not working in the industry. It took me until August of 2003 to discover the solution is the Joint Operating Committee and then ten years of research to figure it all out. The Preliminary Specification exists, and it functions. Now that they see the problems they should congratulate themselves. Now those industry representatives can take the time and effort to find other alternatives, or, raise the budget for these developments, either way just leave my family out of it. Your in-direct approach only demeans you further.

The Preliminary Specification now needs to be developed. Like the San Francisco bridge it's expensive. But it also builds value as it solves the issues in the marketplace today. And those that will arise in the future. With all of the Joint Operating Committees frameworks in alignment with the compliance and governance frameworks. With the user community defining the needs of the software. With People, Ideas & Objects providing the software development capability. The industry will be able to have their issues resolved in a timely manner. Big issues and little issues. Making small and large changes. It won't matter, the ways and means of the industry will be accommodated in a timely fashion.

The bureaucracy have begun their migration to the retirement cabin. That the bureaucrats would leave their post when the industry issues are so prevalent is something that we have been stating, based on our research, for many years. It has now begun, and on the one hand the scope of the problems in the oil and gas producers are so big, there is no ambition that will overcome them. It is time to remove and replace the bureaucracy. However, the clock is ticking. The bureaucrats are leaving and that means they are putting the industry in greater jeopardy. Action on having our budget funded is necessary. I don't know who, and I don't know where but someone has to step up quickly and fund these developments.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

The Preliminary Specification Part CCCXXX (General Part VI)

Although Oracle lists two other modules in their Oracle Fusion Applications, Governance, Risk & Compliance Suite I am unable to find any information on either of these modules. The two are Issue & Risk Manager, and Financial Compliance, the latter being of most interest. As soon as I am able to find any information about these products I will add them to the Compliance & Governance module of the Preliminary Specification. Other then that we have come to the end of the road in terms of the fifth or Oracle pass through the Preliminary Specification. This is also the end of the original content section of the Preliminary Specification as there are no plans for a sixth pass. Instead I will begin a review and edit of the content that we have so far, and attempt to summarize the content of each module. This will help in clarifying the message and getting it out to a larger audience.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.  

The Preliminary Specification Part CCCXXIX (C&G Part XXVII)

Today we take a look at Oracle Fusion Applications, Governance, Risk & Compliance Suite, Access Controls Governor module. This will be an important element of the Compliance & Governance module in the Preliminary Specification as segregation of duties (SOD) has taken on an heightened importance in the firm. Whether that is as a result of the regulation or from the need for better governance, SOD offers many advantages to the innovative oil and gas producer. Having multiple people involved in the process from beginning to end ensures that no one individual can manipulate resources of the firm for their own benefit. Oracle’s Access Controls Governor module provides this functionality in the following manner.

Oracle notes the following is also part of the Access Controls Governor modules functionality.

Global regulations are driving organizations to improve the transparency and accountability of financial data, processes, and transactions. Controlling, tracking, and reporting on user activity within the application environment are critical components of compliance.

So apparently big brother needs to be watching. And as good as your internal controls may be, there will always be ways in which the system might be “hacked” in ways that were unknown before. Thankfully Oracle’s Access Controls Governor module is automated and implements the policies based on management's understanding. There is also a library of controls that can be implemented that was developed by Oracle in collaboration with leading audit and consulting firms. As with the libraries that were mentioned yesterday, People, Ideas & Objects will maintain a library of these policies for the innovative oil and gas producer. And the system is not just reporting on violations, it is actively stopping and enforcing SOD when they occur based on those policies. And they can be somewhat dynamic and proactive in their enforcement, stating that no user can be involved in more than two steps of a five step process, and disallowing the user to sign on to another process at the time of assignment.

When preparing policies for implementation the Oracle Access Controls Governor provides a tool for simulating the new policies. Using the historical record of user access as the base of information it can run the new policy against that data to determine what the outcome of that new policy will be. Would there be any new violations, and / or false positives etc. Then they can tune the policy based on the feedback that they get from the tool to ensure that it is catching only the desired situations. Saving costly resources in the future.

From a People, Ideas & Objects perspective the Oracle “Governance” applications that we have discussed yesterday and today help to bring 21st Century internal controls to the Preliminary Specification. When we think of the manner in which the industry will operate with large portions of the existing producers overhead being provided by service providers. And those service providers accessing their work through the People, Ideas & Objects Preliminary Specification. Extension of these internal controls to those individuals will be needed as well. The producer will need to know that these controls are effective in their firm, their Joint Operating Committees and the service providers they hire to maintain their firm.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.

The Preliminary Specification Part CCCXXVIII (C&G Part XXVI)

Continuing on with our look at the Oracle Fusion Applications, Governance Risk & Compliance Suite of modules. Today we will be discussing the Performance Operational Control tools that consist of Transaction Controls Governor, Configuration Controls Governor and Preventive Controls Governor. As we indicated yesterday, these have all been adopted into the Compliance & Governance module of the Preliminary Specification and provide the innovative oil and gas producer with internal controls and governance over a variety of processes. They offer the detailed governance, in an automated fashion, necessary for the insatiable energy era.

The Transaction Controls Governor is an application that is designed to continuously monitor key transactions. It also provides monitoring of data and application modifications. In terms of reviewing transactions, much of the application is programmable and can be set to look for certain criteria. This is done through an interface that is intuitive and easy to set up a control that will monitor all transactions for certain behavior. Oracle also provides a library of internal controls that can be deployed if the producer finds them of value. People, Ideas & Objects, working on behalf of our subscribing producers, should also provide a library of these controls that are specific to the innovative oil and gas producer. These controls output can then be directed to the appropriate individual within the firm to have them dealt with.

Oracle’s Configuration Controls Governor is an Oracle Fusion Application that provides Sarbane’s Oxley compliance to the producer for IT infrastructure configuration changes. When there is a change to your IT environment, the who, what, where and when of the change is sent to the appropriate people within your organization. There they can review the changes to ensure that they were carried out in compliance with the companies policies. The Configuration Control Governor also provides the ability to establish tolerances on fields. So if a user entered a number that exceeded the value of the fields tolerance, the transaction would be rejected.

During our discussion of the Compliance & Governance module we discussed the need for more internal controls. And these transaction and configuration controls will bring an element of the internal controls under appropriate governance. That these are automated helps to provide a strong understanding of the appropriateness of the global transaction base the producer firm has based their financial reports upon. However, they are not the whole picture when it comes to internal controls. And that is where the Oracle Preventive Controls Governor comes into play. Using configurable workflows, Oracle Preventive Controls Governor enables the user to design  and implement appropriate internal controls for their firm. This tool provides both contextual and intrinsic policy applications to business processes.

Tomorrow we will discuss the Oracle Access & Segregation of Duties Controls application.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXXVII (C&G Part XXV)

Where to begin, lets start off with a high level summary of the Oracle Governance, Risk & Compliance Management Suite of modules. There are three groupings in which the modules are organized, they are Risk & Financial Governance, Performance & Financial Controls and Access & Segregation of Duties Controls. Within these three groups you will find the modules that Oracle has developed in the Oracle Fusion Applications, Oracle Governance, Risk & Compliance Management Suite. Today we will be discussing the Risk & Financial Governance module with the Performance & Financial Controls being discussed tomorrow and Access & Segregation the next day. Needless to say these modules have all been adopted within the Compliance & Governance module of the Preliminary Specification.

To the larger issue of compliance and governance and how a firm gets a firm handle on the growing demand for more regulation. Oracle and People, Ideas & Objects have similar ideas as to how to keep ahead in this difficult area. Oracle asks the following.

No one expects that this is the end of new industry and legislative requirements, so business executives continue to struggle with questions such as: How can we stay on top of regulatory demands while controlling costs? Can we better manage risk to prevent business and compliance failures? How do we achieve better performance while ensuring accountability and integrity?

And it is through automation, Information Technologies and the use of standardization and the division of labor that the innovative oil and gas producer can achieve these objectives of getting ahead of the regulations. As we have proposed in the Preliminary Specification, the producer that participates in the user community has the opportunity to shape the software that they will use. People, Ideas & Objects is user defined software based on the Joint Operating Committee. Giving the producer the ability to remake their organization into an innovative, profitable and performance oriented oil and gas producer.

In terms of Oracle’s Risk & Financial Governance module producers will be able to increase the efficiency of compliance processes, improve the reliability of the financial reporting and anticipate and respond to risk. We discussed the element of risk in the Financial Marketplace module and the assessment of all of the investments based on their anticipated returns. Each of the potential investments have to be “risked” in order to bring the return on to comparable terms that considers the risk. It is here that the the two modules, the Oracle Risk & Financial Governance, and the Financial Marketplace modules will have some cross over. It is also at this point that our two firms have similar attitudes, again, with respect to how the producer attains value. Oracle states.

KPMG's Assurance & Advisory Service Center understood early that value and risk go hand in hand and that performance and risk management should converge to create, enhance and protect stakeholder value. In May 2007, the Institute of Management Accounting further characterized Enterprise Risk Management as aligning strategy, processes, technology, and knowledge with the purpose of evaluating and managing the uncertainties the enterprise faces as it creates value. It considers ERM to be a truly holistic, integrated, forward-looking, and process oriented approach to managing all key business risks and opportunities—not just financial ones—with the intent of maximizing stakeholder value as a whole.  

This will be a key insight that the user community will be able to build off of the People, Ideas & Objects Financial Marketplace and Oracle’s Risk & Financial Governance modules.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXXVI (C&G Part XXIV)

We’ve made it to the fifth or Oracle pass through to the Compliance & Governance module of Preliminary Specification. It is here that we will find a substantial amount of material to add to the specification. Two things are noticeable when you read the twenty three parts of the module so far. And that is the embedded nature of the compliance functionality and the high levels of automation of the compliance process. You will notice that these are two characteristics of the Oracle compliance and governance as well. There is a large symmetry between People, Ideas & Objects and Oracle with respect to how we perceive the topic of compliance, and the innovative oil and gas producer will be the beneficiary.

We know that innovation does not arise from firms or Joint Operating Committees that have sloppy compliance and governance. Although innovation seems to be as far removed from compliance and governance. It’s companies like Apple that prove that innovation comes from firms that run a tight ship. And it is in the Compliance & Governance module that we introduce high levels of what we call “operational governance”. Ensuring that the firm stays on course and delivers on the objectives of the firm.

In the twenty three parts of the Compliance & Governance module we also discuss the centralized nature of software development and its impact on compliance. How the impact of standardization and the division of labor can be used to make compliance for all producers increase in quality through better organization. The time when each producer can have the necessary staff that knows all of the compliance requirements is quickly diminishing. The need to use specialized service providers to provide for the producers with their compliance needs is how the software will assist the producer in meeting these requirements. Having specialized service providers who are focused in only one area of compliance, and familiar with People, Ideas & Objects, and working with many producers, will reduce the costs of compliance and increase the quality of that compliance.

Oracle has many compliance and governance tools that we will discuss in the next few days. Under their Oracle Fusion Applications they have a suite called Governance, Risk and Compliance. Included in that suite are the following modules. Financial Compliance, Issue & Risk Manager, Access Controls, Transaction Controls and Configuration Controls. We will look into these modules in the next few days and get a better understanding of how they fit into the Compliance & Governance module of the Preliminary Specification.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry. 

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXXV (A&S Part XVI)

For the third straight module we are going to pass over any real discussion of the Oracle products in the Performance Evaluation and Analytics & Statistics modules. It would require us to discuss too much about the overall technologies and that is inconsistent with the objectives of the Preliminary Specification. We are attempting to focus on the modules, functionality and process management that the Oracle product suites provide us, not the detailed technological attributes of their products. Starting tomorrow there will be an extensive list of things to discuss as Oracle has an entire suite of modules called Oracle Fusion Application, Governance, Risk and Compliance which will be adopted in the Compliance & Governance module.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.

The Preliminary Specification Part CCCXXIV (K&L Part XXXIX)

As with the Research & Capabilities module, I am very satisfied with the content of the Knowledge & Learning module of the Preliminary Specification. It is through this module that we are moving the knowledge to where the decision rights reside, the Joint Operating Committee. In the latter part of the modules specification we take the opportunity to isolate and berate the management of the current oil and gas companies. The bureaucracy have a unique characteristic that is easily identified and criticized. I for one am only happy to be the one that offers up the discussion. But the larger point of discussion is the war that rages between the bureaucracy that exists in every industry and the Information Technologies as represented by the Internet. As I have stated I’ve placed my bet on who will win this war, as I would suggest everyone else should determine which side they are on.

The role of software in society is becoming more pronounced. Today we are still in the beginning stages of what can be done. For an industry such as oil and gas to continue on without the software development capabilities that People, Ideas & Objects is proposing, and the organizational structure focused on the Joint Operating Committee, the prospects look dim. It is our claim that we provide the oil and gas producer with the most profitable means of oil and gas production. And we do. First by providing our software through the most cost effective manner. That is charging our subscriber base for the costs of developments once. And secondly, that in order to attain a higher level of economic output requires that the industry employ higher levels of specialization and division of labor. In order to organize that specialization and division of labor requires the use of the software specified in the Preliminary Specification. There is no other means in which to organize a higher level of specialization and division of labor. The bureaucracy is tapped out. Therefore our claim is valid.

When it comes to undertaking a large project such as People, Ideas & Objects Preliminary Specification. And we have costed the project in the area of $1 to 2 billion in its first commercial release. Is the need to maintain a sense of urgency for the people involved through to the end of the project. As we know, most of the people will remain motivated as long as the money keeps flowing. So how do we ensure that the money keeps flowing. It is through the fact that the we provide the most profitable means of oil and gas production that we can motivate the producers to maintain their sense of urgency in keeping this project funded and moving forward to its conclusion. Their alternative is the bureaucracy and we see how well they’re doing. In the future it may not be enough to own the oil and gas asset. It will also be required to access the software that makes the oil and gas asset profitable, that is the importance of software in tomorrow’s society.

Tomorrow we will look at the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXXIII (R&C Part LII)

I have read through the fifty one posts of the Research & Capabilities module of the Preliminary Specification. And have to say that I am satisfied that I have captured the substance of what the module should be. That is to say at this point in time I have nothing more to add. And I am certain that the user community will have a lot to add. With regard to the Research & Capabilities module it can be stated that it will be built with the Oracle Fusion Middleware’s Business Process Management Suite.

So it is with that being said, that I recommend that everyone sit down and read the Research & Capabilities module in its entirety. I hope you’ll appreciate it as much as I do. Tomorrow we will begin the fifth pass of the Knowledge & Learning module. However, I don’t expect much in the way of discussion from an Oracle point of view there either.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.

The Preliminary Specification Part CCCXXII (AV Part XVIII)

We discussed the Material Balance Report in the Partnership Accounting module a few days ago. The overall discussion regarding the Material Balance Report can be aggregated by selecting its label. What we want to discuss today is the specific attributes of the Material Balance Report in the Accounting Voucher of the Preliminary Specification.

Simply the process of closing the Accounting Voucher will need to consider not only the balancing of the debits and credits from a financial point of view. They will also need to ensure that the material, system and partnership volumes reported in the Material Balance Report are also in balance. Without these systems in balance, the Accounting Voucher will not close.

This imposes another rather strict provision on the quality of the information that is accepted into the People, Ideas & Objects Accounting Voucher module. Precluding the acceptance of a voucher due to the inability to balance a volumetric requirement holds the system up for what could be a fairly common occurrence. What if the volumetric information is unavailable in a timely fashion? What if the information is part of the normal amendment process? Then we are left with the traditional accounting methods of dealing with these types of issues. An accrual of the volumes in order to achieve the balancing necessary should be able to be processed in the current month. These accruals would then be automatically reversed in the following months Material Balance Report. What is different from existing systems is that we are enforcing the systems to balance. Not just inputting key variables, imposing the facts of what actually happened at the facility, or if the facility is subject to a comprehensive Construction, Ownership and Operation agreement, what is agreed to.

The difference may be subtle but the implication is significant. Locking the volumetric balancing, over the long term, into the Accounting Voucher itself enforces the system to follow the volumes as produced and processed. Once this is achieved a certain level of integrity is achieved and then the automation of detailed processes based on those volumes can begin.

Tomorrow we will begin with our fifth pass through the Research & Capabilities module.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.

The Preliminary Specification Part CCCXXI (AV Part XVII)

One thing that we have not been able to discuss regarding the Accounting Voucher module of the Preliminary Specification, is the module is used for entry of all transactions for accounting purposes. Whether it is through the Material Balance Report, which is encapsulated within its own voucher, or a simple accounts payable voucher, everything that will be entered into the People, Ideas & Objects system is through an Accounting Voucher. And there will be different types of vouchers for different types of charges. Each with their own voucher series numbering. (For example all Material Balance Reports will be 200,000 series.) This also imposing somewhat of a strict Prepared By and Approved By process where everything that is entered into the system has high levels of accuracy, timeliness and authorization. This is somewhat contrary to the open and freewheeling style of data entry in Oracle Fusion Applications Financial Management Suite of modules. We will need to enhance their applications methods of accepting our view of Accounting Vouchers and the way they work.

Business is also in many cases, repetitive. The ability to reuse an Accounting Voucher as a template for subsequent months should be a feature of the People, Ideas & Objects Preliminary Specification. This could include the use of firm wide forms such as expense accounts and petty cash. What is being intimated here is that the user interface of the Accounting Voucher needs to be highly user friendly. With high levels of intelligence and multiple ways of interacting with it.

Some of the Accounting Vouchers will be open to charges from multiple producers represented in the Joint Operating Committees that your producer firm is a participant in. We have discussed this in other posts that the revenue, capital and operations of each of the Joint Operating Committees accounts are open to the direct debit and credit charges of all of the participants in the JOC. This is a result of the pooling concept that is a basic assumption of the People, Ideas & Objects Preliminary Specification.

The pooling concept has been developed as a replacement to the “operator” designation that currently exists. The ability for each producer to have the just-in-time capabilities available for all the properties they manage requires, on an industry wide basis, to have unused and unusable earth science and engineering capabilities. The ability to pool these critical resources from participating producers into the Joint Operating Committee releases these unused and unusable capabilities. The pooling concept also implies that some producers will provide other resources to the property in disproportionate amounts to their working interests. All producers need to contribute the skills, knowledge, experience and ideas that they have in an innovative oil and gas industry. Therefore for each of these producers the need to have the ability to charge for these resources to the joint account in the current month for administrative ease and to unleash these capabilities is necessary. All charges are subject to the AFE or Work Orders budget requirements and cost control remains the domain of the Joint Operating Committees.

There is also the producers need to earn a return on their investment in their capabilities which is an aspect regarding the pooling concept. We have detailed the ability for a producer to offset the costs of their earth science and engineering capabilities, and their development, to the various Joint Operating Committees that they participate in. With the expected increase in the earth science and engineering effort in each barrel of oil produced. And the difficulty in increasing the supply of geologists and engineers to meet the demands of the business. The pooling concept was also developed within the People, Ideas & Objects application to deal with the supply and demand of these finite technical resources. It is within the Accounting Voucher of the Preliminary Specification that the automation of the charging for these resources to the joint account enables the producer to earn a return on their investment in their earth science and engineering capabilities.

Needless to say we will be relying heavily on the Oracle Fusion Middleware layers Business Process Management Suite to provide us with this functionality in the Accounting Voucher. The base level General Ledger, Accounts Payable and Accounts Receivable are there and we need to build these specific functions within the module.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXX (AV Part XVI)

The Accounting Voucher presents some difficult conceptual problems that I think I have begun to identify. The most difficult is the concept of designing transactions and what purpose it fills in the Preliminary Specification. This post will be a summary of designing transactions that will hopefully clarify what it is that we are trying to accomplish in the Accounting Voucher.

Essentially we have discussed the detailed information that the service industry providers will provide in the “Vendor / Supplier Contact Database”. This will include general contact information that everyone is familiar with however there are three important distinctions regarding this information. One is it’s maintained by the vendor / supplier themselves. Two it is located in the People, Ideas & Objects Preliminary Specification. And three it contains details which includes their banking information, their field staff and representatives and their calendars, which are able to be committed to projects of specific producers. Producers understand that having the field staff committed to their projects reflects quality, and in turn reflects additional costs for that commitment.

Now this situation provides the opportunity to define some service industry systems integration that would be complementary to the Accounting Voucher of the People, Ideas & Objects application. The service industry provider could have their people populated into the Work Order system that we discussed earlier. Or, the Purchase Order system could also be used as a means of direct communication between the producers represented in the Joint Operating Committee in the Accounting Voucher, and the service industry providers. As well as other interfaces.

Therefore, according to the research of Professor Richard Langlois the transaction costs will be an immaterial item in comparison between suppliers and producers or Joint Operating Committees. That is to say the cost of processing these transactions will be the same in all instances. And People, Ideas & Objects have asserted that they will be immaterial due to the application of Information Technologies. However the differentiating costs between suppliers and producers and JOC’s will be the costs of coordinating the market. Making the Accounting Voucher module a critical tool in the ability to offer the producer firm and JOC the most profitable means of oil and gas operations.

... while transaction cost consideration undoubtedly explain why firms come into existence, once most production is carried out within firms and most transactions are firm-firm transactions and not factor-factor transactions, the level of transaction costs will be greatly reduced and the dominant factor determining the institutional structure of production will in general no longer be transaction costs but the relative costs of different firms in organizing particular activities. p 19

and

Here again, I think the problem is one of conceptual imprecision. It is perfectly common, and often unobjectionable, to contrast a market and an organization, that is, to contrast the institution called a market and the institution called an organization (such as, notably, a firm). But the opposite of “organization” in the abstract sense is not “market” but disorganization. More helpfully, the opposite of conscious organization is unplanned or spontaneous coordination. In this sense the market-organization spectrum (and similar spectra one could imagine) are arguably orthogonal to the planned-spontaneous spectrum. One could well wonder, as I have (Langlois 1995), whether large organizations do not in fact grow far more as the unplanned consequence of many individual decisions than as the result of the conscious planning of any individual or small group of individuals. And it is certainly the case that, as Alfred Marshall understood, both firms and markets “are structures for promoting the growth of knowledge, and both require conscious organization” (Loasby 1990, p. 120).

In this day and age, with such large distances, geographic, size, language and other, between vendors and producers leaving the coordination of the markets to “spontaneous order” is asking too much of human ingenuity. Particularly with the focus of the industry to a further division of labor and specialization, where the risk and reward of oil and gas operations are so great, market coordination or transaction design will be a critical and necessary task to be carried out. Each operation may be the result of more people being involved. Once again it is not from an operations point of view that we are attempting to influence the operation, it is from the business point of view. How will the transactions and business be captured in such a manner that the firm and Joint Operating Committee are incurring the lowest possible costs of the most efficient methods of these business transactions. That is what is intended when we talk about “transaction design” in the Accounting Voucher.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.

The Preliminary Specification Part CCCXIX (PA Part XXXIX)

One of the key differences in the use of the Joint Operating Committee is the ability to use the “Decentralized Production” model and discard the “High Throughput Production” model that has been traditionally used throughout the industry. When the partnership represented in the Joint Operating Committee is able to agree, and subsequently decides to implement the plans to scale back production due to commodity price declines. Having the production and overhead costs associated with that production to also decline is a necessary part of the innovative oil and gas producers capabilities. People, Ideas & Objects Preliminary Specification provides this opportunity to remove the marginal production from the market until market prices recover. Allowing the producer to limit their losses and indirectly control the prices that the markets attain.

Managing price declines through reductions in capital expenditures is a very blunt instrument. The impact of reducing your spending plans on the natural gas prices might make changes years from now, however, the need to change the natural gas prices in the current market is sometimes necessary. Having the ability to agree and curtail production through the Joint Operating Committee is something that is possible today, yet it is not done due to the bureaucratic ways within the “operator”. Who is going to make the decision. Let me be clear that the need to reduce capital expenditures in a market that is similar to the current natural gas marketplace is sometimes necessary. What is also required is the need to have the ability to curtail the production. And to have this done on an industry wide basis.

Through the specialization and division of labor that we discussed yesterday. The costs associated with the production and royalty accounting service providers, as with all the service providers, is dependent on there being production. Without any production the overhead costs of production and royalty accounting costs are not incurred. Leaving the costs of capital as the only cost that is incurred during times of shut-in production for the innovative oil and gas producer. And if it can be found that there are ways in which the Joint Operating Committee can apply new capabilities through the Knowledge & Learning module, to reduce the overall costs of production, then the shut-in production might be able to return to production sooner due to having the lower costs of production.

The Partnership Accounting module has a role in this process. First to determine if the production has become nominal and should be a candidate to be shut-in until market prices return to a higher level. Operational decisions of this nature are made at the Joint Operating Committee and each partner will be receiving the same bad news regarding their property from their statements in the Partnership Accounting module. Included in the monthly reporting for each Joint Operating Committee is a complete set of financial statements of the property. These include Balance Sheet, Income Statement and Statement of Changes. Recall that banking may be represented as a claim against a specific property. And please note that because the royalties are unique to each producer only the partners share of these reports are calculated. These financial statements will include the detailed overhead charges and other accounts that were once charged as overhead items. In all, the Joint Operating Committee looks more like a stand alone enterprise, which is what it truly is.

When these reports show that the property is marginal the decision can be made through the “Marginal Production Threshold Interface” of the Petroleum Lease Marketplace module. There the partners in the Joint Operating Committee can make the decision to curtail the production. The subsequent reports through the Partnership Accounting module would show what would be required in terms of commodity prices and volumes of production to make the property profitable again. Looking at this situation in terms of what new capabilities were available through the various working interest partners, as represented in the Knowledge & Learning module of the Preliminary Specification, could trigger some additional work be done in the Joint Operating Committee to enhance its profitability and return it to production sooner.

Tomorrow we will start our fifth pass through the Accounting Voucher module.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXVIII (PA Part XXXVIII)

Today’s topic of discussion is about one of our favorite tools, specialization and the division of labor. We have used these to carve up the traditional oil and gas producer to a slimmed down earth science and engineering focused team. It is here in the Partnership Accounting module that the implications of many of these changes are managed and dealt with. It is also here where we have the Oracle Financial Management Suite of modules open to providing accounting service providers access to the producers and Joint Operating Committees systems to process their data.

The reason we are using specialization and the division of labor so extensively in the Preliminary Specification is that it is the one proven method of expanding the economic output of a given resource base. By reorganizing the accounting, land, production and exploration administration functions. And by enabling the producer to specialize on their earth science and engineering capabilities, more can be done from the same resources. And we are not talking about small changes, we are talking about very large volumes of increases that are possible as a result of relying on these tools.

We have discussed the need to have a variety of accounting service providers who replace the traditional accounting department in the oil and gas concern. Having all of the capabilities, from an accounting point of view, necessary to meet the needs of the producer is difficult to do. Possibly Exxon can achieve this scale. The rest of the industry needs to make do with what they have and in the complex accounting regulatory environment that exists, that may be an unwise strategy. The ability to hire accounting service providers who specialize in certain domains to undertake the specific tasks of the producers is the manner that specialization and the division of labor suggests that we approach the problem. The two examples we have used are the production accounting service provider who is located at the gas plant, and the royalty accounting service provider who has specialized in Texas state royalty administration. Other examples could include tax administration, accounts payable processing, accounts receivable collection, SEC regulations and many more. The volume in the number of service providers generally offsetting the need to source these services within the firm at some point. Assuming healthy markets for these service providers, a reasonable assumption given that producers are no longer directly employing accountants, an abundance of service providers would be available to meet the demands of the producer.

There is another assumption that is made in the People, Ideas & Objects Preliminary Specification regarding specialization and the division of labor. And that is the division of labor between computers and humans. I suggest we cease operating in large part, from an accounting point of view, as quasi computers and let the computers handle the work that computers do best. Storage and process management are their domain and the sooner we leave these tasks to computers I think the better off we will be. The things that we are better at are the decisions, the ideas, the innovations, the change management, the planning, the creative process among many other things. These are the elements of our work that we should be focusing on and leave the computers to do the work that they do best.

Access privileges regarding these service providers is therefore a must have in order to make this situation productive and worthwhile for the producer and the service provider. The Security & Access Control module considers these remote access considerations and the user community should be involved in making certain that this need becomes reality. Don’t come to me after the Preliminary Specification and say the security system is not strong enough, this is your system and you have to make it what you need for it to be. The access requirements of the service provider would be limited to their domain of specialization. For example if the royalty accounting service provider was working only in Texas then they could be limited to those accounts and Joint Operating Committees that are pertinent to their domain. The CFO of the producer firm, in the process of hiring the service providers, would enable the access to the service provider. This contract could then be managed on the basis of a service level agreement and provide both parties with a clear understanding of what is required.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects. 

The Preliminary Specification Part CCCXVII (PA Part XXXVII)

Our discussion turns to the Work Order system contained within the Partnership Accounting module of the Preliminary Specification. We have different elements of the Work Order system working within the Partnership Accounting module. One is to ensure that no work is being done within the producer firm or Joint Operating Committee that is not authorized by a Work Order. And the other is the ability to form working groups with other producers, who may or may not be partners, to study and research areas of interest. Both of these elements contain similar objectives of cost control and reporting, however have differing stakeholders.

With respect to the internal reporting you want to make sure that all of your staff are charging their time to an authorized Work Order. A Work Order can source its budget from either an internal departmental account or an AFE and be for any purpose that the originator desires. Each employee needs to ensure that their time is being charged to a Work Order at all times.

The other element of the Work Order system involves multiple producers working together in a project or working group. These are formed to study or research items of interest in the geological or engineering disciplines and are critical to an innovative oil and gas industry. The difficulty in these working groups is the complexity and cumbersome administration in dealing with the accounting for them. This has led to the situation where few working groups are being participating in. The industry needs an abundance of these working groups to increase the knowledge and understanding of the underlying sciences and therefore we need to remove the bureaucracy from impeding their being formed.

People, Ideas & Objects will develop an interface that enables the producers, who may have had no working relationship, to form and contribute any manner of consideration towards a working group. As long as the producer has a budget in which they can allocate resources to the working group the interface will enable the producer to commit to the other producers these resources and the working group can form. The key to the working groups formation is to have the system capture the “what and how” of the agreement when it is formed, and not try to recreate it two months down the road.

What we will use to develop the Work Order system will be the Oracle Fusion Middleware Business Process Management Suite. It will provide us with the ability to work with the user groups to detail all the permutations and combinations of what these working groups might look like. From there we will be able to develop the application to meet the needs of the user groups and make sure that the user interface provides the working group with the ability to capture the deal as it is conceived. This will also involve the use of the Oracle Fusion Applications Financial Management Suite General Ledger, Accounts Payable, and Accounts Receivable which are already part of the Preliminary Specification.

Whether it is an internal or external study, the innovative oil and gas producer needs to participate in increasing their knowledge and understanding of the underlying sciences. We learned that “knowledge begets capability, and capability begets action”. How these working groups are formed is the easy part. It's the bureaucracy that gets in the way. We need to eliminate that bureaucracy with these systems and have the sciences expand.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry. 

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle (private circle, accessible by members only) and begin building the community for the development of the Preliminary Specification.

The Preliminary Specification is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for People, Ideas & Objects products remains at the sole discretion of People, Ideas & Objects.