The Preliminary Specification Part XVII (PA Part III)
Picking up from our Friday discussion on the use of the material balance report in the Partnership Accounting module. We discussed the geographical and operational scope of the module and you may recall that it included the entire upstream oil and gas operations infrastructure. I want to highlight the importance of this discussion about the material balance report and note that it is to be continued on in a number of future posts in the Accounting Voucher module. I wanted to introduce the scope of the oil and gas operations that we are dealing with in the Partnership Accounting module, and deal with some of the partner accounting issues first before we get into the Accounting Voucher module which is the next module we will be reviewing.
The first Partnership Accounting issue is related to the fact that the earth science and engineering resources that are of such value in the industry are of a finite number. It is asserted here in People, Ideas & Objects (PI&O) that the “operator” classification may become a thing of the past as firms will find it difficult to staff the engineering and earth science capabilities necessary to meet all of the needs of their firm. PI&O enables producers in a Joint Operating Committee to pool their human resources to ensure they have the required technical needs. The pooling wont be a convenience or nice to have at the Joint Operating Committee level. It will be a necessity for the partners within a property to ensure that adequate staffing of the technical resources are secured. That it will become commonplace that each of the partners are contributing technical resources to the property.
If partners are contributing human resources to the Joint Operating Committee then the systems that the partners use should be able to cost these resources, charge them to the joint account, and have their costs recovered by the firm providing the resource. This also brings up the point that if the operator classification has ceased to be valid, the charges for operator overhead, where the recovery of these costs are realized today, the operator overhead charges should also cease to be valid. If three different producers are providing engineers and geologists to the Joint Operating Committee each should be able to recover the direct or standard costs of these individuals for the time they spent working on the property.
What has been included in the Draft Specification and will be discussed here later in the Preliminary Specification is the Military Command & Control Metaphor (MCCM). The MCCM provides a means in which the resources within the producer companies represented within the Joint Operating Committee, can organize a chain of command through the pooled resources to deal with the governance of the property. This governance along with the ability to cost these resources enables producers to allocate the finite earth science and engineering resources more efficiently. This also assumes that during the building of the Preliminary Specification, that the community is able to determine a somewhat standard chain of command for all members of the industry, standard rates for the people in the industry, and detailed job descriptions for the work that each role within that chain of command are responsible for.
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 and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.