Revisions to the Budget and Implemention Part 9

Service Providers

The area in which we’ll see the greatest level of change in the industry is with the service providers which our user community members own and operate. They are the reallocation of the accounting and administrative resources of the producers after the Preliminary Specification is implemented that provides the decentralized production model. This is the critical change necessary to solve the industry's profitability issues, enabling the producers to produce oil & gas profitably everywhere and always, and turning the producers fixed overhead costs to variable, variable based on profitable production. The service providers deliver the People, Ideas & Objects et al Cloud Administration & Accounting for oil & gas service to the producers in a full service offering. 

Our user community will determine the processes managed by their service provider organizations. Taking all of the processes within the industry and determining the appropriate manner in which they should be reorganized and managed in a standard, objective manner. Using a variety of different tools, but most particularly specialization, the division of labor and automation, they will be able to identify the optimal solutions and design the way a process should be managed in the industry under the Preliminary Specification. They’ll then work with our developers and develop the software on the basis of the processes that they’ve designed. A substantial portion of this User Budget is being allocated to this area as the number of service providers is substantial, their role in the industry is new, is without any prior organizational definition before this reorganization and has no software process definition. Each user community member will need to define the process under management by their service provider and ensure that the scope and scale of that service covers the entire North American producer population and domain of their processes responsibilities. Service providers will need to ensure comprehensive coverage from the global, industry wide perspective. Although the application for the specific process they develop, implement and operate will be of limited scope, managed through a microservice, the scale of their involvement in the industry will be substantial. 

The revenue streams of the service providers will be a reallocation of the G&A expenditures that are currently incurred by today's oil & gas producers. These are estimated in the range of $40 to 60 billion per year for the North American producer marketplace. The majority of these costs will be carved out and used to establish the service provider's revenue base on a go forward basis. These revenues will be generated by the service providers when they assess the individual Joint Operating Committees for their process fees. The question becomes how does an individual position themselves to acquire the ability to manage processes in this new sub-industry? Please review the User Community and Service Provider sections of the wiki in order to determine the details of participation and possibly joining this community. 

Contingencies

People, Ideas & Objects, our user community and service providers are exercising wholesale changes everywhere and on everything in the oil & gas industry, the service industry and creating the service provider sub-industry. The prototypical producer is changed and how people are engaged with them. It is this level of change that needs to be analyzed and designed by our user community with the resources in these User Budget Categories. It will be our users that determine the actual makeup and means of the industry when the People, Ideas & Objects Preliminary Specification goes operational in the industry. 

Developer

We move on from our User Budget Categories to the Developer Budget Category. What we’ve done is assumed there is an hour to hour, dollar for dollar relationship between our user community members and software developers. 

User community based software developments are the only worthwhile method of developing software in the 21st century. To assume that developers would understand the principles of their discipline and be able to determine the needs of the industry without user assistance is the impossible expectation that leads to failure. People, Ideas & Objects et al, and more specifically the greater oil & gas economy can not risk any form of continued failure. 

People, Ideas & Objects as an organization was reorganized to focus on our competitive advantages of Intellectual Property, our user community and research as the three categories of our offering. As part of our Intellectual Properties development, software developments will be contracted out to Oracle Corporation for the purpose of speed of product delivery. For People, Ideas & Objects to contemplate assembling the team of developers capable of this scope and scale of application development would demand anywhere from 5 to 10 years. Subsequent time would be spent turning it into a high performing team. This time is unavailable to the oil & gas producers and greater oil & gas economy. Therefore the ability to contract this development to Oracle will cut the majority of this team assembly time down to zero and save the industry the continued losses during this period. 

People, Ideas & Objects began our user community developments in March 2014 and have therefore offset much of the time that is necessary to communicate the conceptual model within the market, appeal to our targeted audience of those who aspire to the user community, actively identify and recruit them. These long lead times are necessary to cobble together a user community and to do so with a viable vision which are the two major stumbling blocks that impede their use in software developments today. We have been able to cut these time requirements down to what I would suggest is close to zero.

People, Ideas & Objects spent the prior decade before August 2012 researching the “what, how and why” the industry and producer firm would need to operate when using the Joint Operating Committee as the key organizational construct. It is here that sizable amounts of time, the time necessary to paint the overall vision that our user community is using and benefiting from, are being offset from the industry. To lose this time advantage by organizing and tuning a software development team for the better part of a decade seems too wasteful to contemplate. Particularly when it’s clear that Oracle have spent over $55 billion in their Oracle Cloud ERP offering which is a cornerstone of their organization. Their software development service has what we expect to be over 15,000 developers available in their consulting division and in excess of 50,000 developers in their organization in total. Together these three elements, the advanced nature of our user communities development, the overall vision of the Preliminary Specification, Oracle’s market leading tier 1 ERP system and consulting division, make for a formidable offering for producers in terms of capturing the value that People, Ideas & Objects have secured and are offering through this Budget and Implementation.

Budget Dollars

I would challenge producer directors and officers with the question of where would they invest their capital more effectively than with People, Ideas & Objects, our user community, their service providers on top of Oracle Cloud ERP with their software developers? Providing producers with the most profitable means of oil & gas operations and making effective their oil & gas assets by having access to the software and services that make those assets profitable. There is a specific ask by the investment community that the need for tier 1 ERP systems be implemented before they return. If you can’t support the need to invest, develop and implement the Preliminary Specification on Oracles tier 1 ERP system, to enhance your profitability then your investors will need to understand more than just the questions they’re asking regarding your past performance and accountability record. People, Ideas & Objects comment is premised on their exit in 2015 and expressed distaste for the bureaucratic means of management of oil & gas producers. Absolutely nothing has been done about the investor actions of withholding support, which is the most direct statement of dissatisfaction that investors can make. And these investor demands have been replaced by the “alleged” investor actions to turn the oil & gas producer into clean energy providers. Which is something that received immediate attention and crisis level action in transforming the business focus. 

As significant as the damage and destruction that has been conducted by producers upon themselves. What they’ve been able to do to the service industry is much more significant. People, Ideas & Objects have chronicled the abuse leveled at the service industry by producers over the past decades. As difficult as it seems in oil & gas, the service industry is realizing far worse consequences in terms of the financial fallout of the cumulative effect of those producer actions. Griping about the cost increases and availability of the field operations is the method producers have chosen to deal with this issue. The reality is that defined long term remedial efforts will need to be taken by producers in order to rebuild the service industry before the capacity and capabilities are established at the level necessary for energy independence in North America. 

In addition to the disgruntled investor and bankers of oil & gas producers and the service industry, there is now the disgruntled consumer. One who sees through the clean energy distraction and the risks that the chronic lack of producer performance has brought to them in today's market. If it is that the producer's officer or director left the scene to pursue the goal of saving the planet with the teenagers and congresswomen, then go. At least have the decency to put these industries back into a condition that they can survive and prosper by funding the Preliminary Specification. However, bureaucrats will have to leave the oil & gas revenues to the investors that built them, those revenues are theirs. 

I’ll also mention the people who work in oil & gas but this applies to those that work in the service industry too. Everyone is tired of the boom / bust cycle. It doesn’t exist in other industries as it does in oil & gas. This is due to the fact that after the great depression we learned the consequences of overproduction. People realize there are better ways in which they can be employed to pay the mortgage and raise a family than to risk being laid off for 18 month cycles at a time. Will bureaucrats continue to be able to secure the best and brightest when their cyclical record of employment is as well known as it is now known? In an advanced science and applied science industry using pressures and temperatures on volatile commodities, is this the appropriate 21st century approach?

We see a new level of change taking place in North America. It appears to me that you can push people quite far in terms of what they’ll accept. Then the proverbial straw that breaks the camel's back causes the people to roll back what was previously pushed upon them. 

In terms of the cost of the budget to develop the Preliminary Specification, and this covers the developers and our user community, we have set it at $15 billion U.S. until the end of 2022. Inflation may cause future difficulties. Due to producer bureaucrats' lack of experience in terms of ERP software project completion, and the risk to all concerned if producers decided to cancel the funding mid-stream for the development of the Preliminary Specification, this money is paid upfront and in its entirety. The development costs of People, Ideas & Objects Preliminary Specification are estimated to be one third of those revenues, I have Intellectual Property royalties of one third and we are a profitable operation with net margins of one third. We also believe that if oil & gas producers don’t have some skin in this game, they’ll have difficulty holding their interest in ensuring this project is successful. It's a lot of money and we share industries' concerns regarding the size and makeup of this budget. While at the same time ask where their concern has been regarding the size and makeup of the damage that has been caused by their management. 

Producer bureaucrats have a legacy of viable scapegoats to place the blame on others for their responsibilities and inactions. It is this budget mechanism that I’m using to insulate myself from the blame, blaming and viable scapegoating exercise of this project's failure. I will have earned my compensation and will be insulated from that point of view. However, if they want to hang the failure of this initiative on one individual, an initiative that is dependent on so many from this point forward, then they’ll certainly have the failure that they probably desire in order to maintain their bureaucratic franchise. These are larger points of view and issues far greater than I’m able to deal with. I’m ensuring that the financial resources necessary to complete the project are in hand before anyone will have to commit to this project. Avoiding the wrath of the bureaucrats. Participation by the producers through the user community is mandatory to make this a successful initiative. Precluding the bureaucrats, specifically the officers and directors of these producers, from these developments and possibly their role in the producer is also mandatory. 

People, Ideas & Objects proposed the development of the Preliminary Specification when it was completed in August 2012 after a full decade of research. It is an innovative solution to the age-old problem of overproduction in oil & gas. The issue of overproduction was discovered during the great depression and has been worked out of all industries but not oil & gas. Overproduction began in North American oil & gas in the late 1970s and was clearly evident with the initial commodity price collapse during the summer of 1986 in the global oil prices. Since that time there has been only one group that has prospered from their participation in the industry. The producer bureaucrats as represented exclusively by the officers and directors of those firms. The uncaring they’ve shown throughout this time has been testament to the methods and means of their administration throughout the past number of decades. “They’ll muddle through,” “we’re building balance sheets,” “you have to put cash in the ground” and “it’s a difficult business” have been their symphonic responses to any questions. 

The facts still remain however that throughout this period when the Preliminary Specification was available, their ostracization of People, Ideas & Objects continued, and it is only these officers and directors who’ve had the authority, responsibility, accountability and financial resources to avoid the disaster identified in the Preliminary Specification and we’re all realizing today. Personal financial aggrandizement was the officer and directors first and only priority. A consequence that has put society in jeopardy when each barrel of oil generates up to 25,000 man hours of mechanical leverage. Making it evident to everyone the risk of what a lack of abundant, affordable energy will have on our economy and our way of life. 

Producers have placed themselves in an untenable position. Action is needed. To implement a tier 1 ERP system that identifies and resolves these issues outside of the Preliminary Specification is not available as far as I am aware. If there is it will need to preclude any of the Intellectual Property contained here. It will need to show the legacy of its research and development of any of its Intellectual Property. Choices are therefore limited and producers' continued failure is no longer an option. 

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

Revisions to the Budget and Implementation Part 8

Engineering & Earth Science

This is a unique area for an ERP system to consider and one that we pay appropriate attention to. Using the Joint Operating Committee brings about an operations focus for all that are involved. That is also reflected in the Resource Marketplace, Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. This operations focus brings the earth sciences and engineering disciplines into the ERP software of the oil & gas producers. It is therefore necessary that we allocate an appropriate amount of our budget to the earth science and engineering areas to ensure that we’ve included all of the necessary elements that a producer and Joint Operating Committee will need. 

Our research produced the Research & Capabilities and Knowledge & Learning modules. Which enables a producer to focus on the development and deployment of their scientific capabilities. And to conduct specific tasks such as moving the knowledge to where the decision rights are held and appropriately manage the processes of innovation. These elements arise more from the business side than they do from the science. I am not familiar with the geological sciences and applied science of engineering from the point of view of the processes that are used in the day to day use and development, outside of their capabilities development and deployment. This budget is for the development of those items. 

We are not recreating the engineering or geological applications that exist in the marketplace today. We are looking to manage the processes that are prevalent within an oil & gas producer that can be more effectively managed in user driven ERP applications. We’ve reorganized oil & gas producers through the decentralized production model, where the producer is a highly focused unit consisting of the C class executives, the earth science and engineering resources, some land and legal and support staff. With the remainder of the resources being relocated into service providers. The manner in which these earth science and engineering resources operate will therefore have changed materially as a result. Both production and exploration administration are located in service providers. Therefore the processes that the producers will rely upon will need to be redefined, redeveloped and the ERP software built. 

The oil & gas producer will have changed in material ways and we are unaware of how those affect the earth science and engineering resources of the producer firm. At the same time this area is fully one half of the critical competitive advantage of the producer. And we should be able to take this opportunity to move the processes of the producer firms and move them to a higher trajectory of performance. These are the objectives of these User Budgets. 

Compliance (Tax, Royalty, SEC)

The objective of the Compliance (Tax, Royalty, SEC) user budget category in terms of output is to ensure that the systems that we build are in compliance with the various regulations that the producers and Joint Operating Committees are required to comply with. Of particular concern are the various royalty requirements that are in place in the various jurisdictions the producers produce from. It is People, Ideas & Objects et al’s competitive advantage that we provide the oil & gas producers with the most profitable means of oil & gas operations. With royalties being the largest cost component of an oil & gas operation, it would be incumbent upon us that we ensure that the producers and Joint Operating Committees pay the lowest possible royalties. And that is our objective, to ensure that the royalties are calculated in the manner that provides the lowest possible royalty to all the producer organizations. Demanding an unimpeachable integrity that can be defended through the high standards of accountability throughout the Preliminary Specification.

A large part of the costs incurred in this budget category will be for the royalty component. There will be many that feel that the various governments and administrations that collect royalties should provide us some relief of those costs to help in dealing with these high development costs. To accept this money would be a betrayal to the producers we represent. We are financed by the producers, or more directly from the production itself, and provide them with the most profitable means of oil & gas operations. If we accept money from the royalty administrations then we’ve compromised and conflicted ourselves and cannot guarantee that we’re working in the best interests of the producers. I would extend this conflict of interest to our user community and the service providers at large. We have a duty to the producers to maintain our competitive advantage of providing the most profitable means of oil & gas operations and there are many of these situations that could potentially put us in a conflict of interest with our customers, the oil & gas producer. Please be aware of this and avoid them at all costs, if users find themselves in a conflict they should deal with it immediately. Review of the discussion regarding any conflict of interest can be found in the User Community Vision of this wiki.

To deal with the tax, royalty, SEC and other requirements in the North American marketplace will require more than just the financial resources that have been allocated under this budget category. And People, Ideas & Objects have made these budget allocations. In almost all cases the royalty administrations have established high levels of technical frameworks and regulations that can be implemented. The hard work from a systems point of view in many instances may already be done. In terms of the SEC and tax the same situation applies. The XBRL syntax is used by the SEC for its reporting purposes and there are comprehensive resources available throughout Oracle Cloud ERP that are the base of the Preliminary Specification. What we need to undertake as developers, users and service providers in the development and implementation of the Preliminary Specification is to break these processes of compliance and governance into their individual processes. Develop the specific software to manage that individual process in innovative ways using these resources within the other modules developments. Establish the means and methods to implement them across the industry through their service provider firm and support that process for the long term. 

Specifically that involves integrating these technological frameworks within the DNA of the Preliminary Specification. So that they are an inherent part of the application, not an add-on that is used after the fact. The service providers will be providing the services of the actual process management on behalf of the industry. It is our user community who will be actually using the applications in the service provider organizations and we need to define what it is to ensure that the management of the process is the most efficient and effective for the producer firms. If a service provider is managing the eligible capital costs for gas cost allowance for the Texas Railroad Commission. What is it that they’ll want and need in order to manage that process on behalf of all of the Texas based producers? Or if they’re managing a duplicate payment verification process for the entire North American based producer population, what is it that they’ll need and want? Are there additional internal controls to be developed in the changes and reorganization through the decentralized production model?

As we indicated during the Preliminary Specification user budget categories discussion noted above, there would be synergies between the budgets allocated here and elsewhere. The user budget category for the Compliance & Governance module has an allocation of its own budget dollars, a separate budget allocation for the Accounting Firms which is to provide for them with the ability to sign off on the compliance and governance elements of the People, Ideas & Objects applications integrity on behalf of their statutory audits. And to provide industry wide software automation, Machine Learning and Artificial Intelligence of the audit process itself that will alleviate the time and cost of these annual audits. There are significant features in Oracle Cloud ERP offering in terms of compliance and governance. Therefore with these resources I feel these tasks can be undertaken by People, Ideas & Objects, our user community and service providers for the dynamic, innovative, accountable and profitable producers and provide them with the most profitable means of oil & gas operations. 

Accounting Firms

The objective in this budget category is to have the accounting firms sign off on the People, Ideas & Objects systems development and implementation in terms of its integrity on behalf of the oil & gas producers. This work is done in the normal course of an audit, however, with the establishment of People, Ideas & Objects there will be a sizable burden that the producers will have to undertake in order to achieve this sign off. By inviting the accounting firms into the development process, where we’ve aggregated the producers resources in the manner that we have, we can mitigate their total audit costs through the appropriate treatment of these non-rival development costs, achieve the accounting firms sign off at an earlier time and achieve a compliant system for all producers in the process. 

Allocating this workload across the accounting firms that are present in the U.S. and Canadian regions will make it possible for them to acquire the talent necessary for these purposes. No one firm will be asked to deal with this exclusively as that would slow our development work. The need for these people to keep pace with the developers and our user community would be their responsibility and obligation. Our responsibility would be to implement their recommendations and achieve their sign off. 

These funds have synergies with a variety of other pools of funds that are within other User Budget Categories. The Compliance & Governance module holds the coordination and application design roles over the compliance and governance of the producer and Joint Operating Committee in the Preliminary Specification. Its budget is looking at this as the overall check and balance of the Compliance & Governance module. Other funds are coming from the Compliance (Tax, Royalty, SEC) category which will be relying heavily on the work that has been done in the compliance areas of the SEC, royalties and tax regimes in publishing technical frameworks. Other miscellaneous resources have been allocated such as the development of royalties in the Partnership Accounting Module. In other words the accounting firms will not be alone in their task.

There are significant resources being allocated to compliance and governance in the Preliminary Specification. When one considers our application relies on Oracle Cloud ERP which has the compliance and governance area covered well, we will provide the producer with an effective compliance and governance product. The service providers who will be providing the software and services to the producers will be well versed in the ways that the application operates. This is due to the fact that they’ll be participants in our user community that are involved in these developments. Moving on after initial and continuous software development to provide the software and services implementation and services on the basis of our decentralized production models reorganization. 

By having the accounting firms provide the compliance and governance sign off. They preclude themselves from participating in our user community in any other capacity. Which also precludes them from any participation in the service provider community. Accounting firms have a distinct competitive advantage in the work that they’ll be doing here. Which also defines the distinct conflict of interest they’ll have throughout the lifecycle of People, Ideas & Objects. Therefore, noting the accounting firms conflict in this regard will maintain our user community and their service provider marketplace open to those with the experience, skills, knowledge and ideas of the people from the oil & gas producers and Joint Operating Committees. 

Service Industry

Within the Preliminary Specification the oil & gas producer recognizes their enhanced reliance and dependence on the service industry. They are the secondary industry which provide the technical and geographical diversity of their operations. These funds will be used in combination with the resources that are designated for the Resource Marketplace, Research & Capabilities, Knowledge & Learning and Security & Access Control modules that we discussed in the Preliminary Specifications user budget category. 

When we talk about the service industry we are talking about the organizations that provide the field services to the oil & gas producers and Joint Operating Committees. Specifically we are concerned with how they do their accounting, their billing, their contact information etc, and the interaction of that business information with the producers and Joint Operating Committees. We will provide the oil & gas producers with the most profitable means of oil & gas operations and that requires that the administration of their operation be as efficient as possible. In order to achieve that efficiency the service industry that services the producers in the field must interact with the producer at high levels of technical efficiency. 

What I am suggesting here is that we establish a technical framework in which the service industry will comply. By providing Cloud Administration & Accounting for oil & gas, we are able to provide the accounting and administrative software and the service providers to the service industry. The service industry would have their own accounting and administrative systems which would then interface with the cloud computing services that we provide. 

Throughout the Preliminary Specification we have highlighted the areas where the service industry is represented and the interactions they will have with the producers and Joint Operating Committees. And it is a much more involved relationship. The current situation between the two industries is unsustainable and inconsistent with what is required for a dynamic, innovative, accountable, productive, proactive and profitable oil & gas producer. In all areas, from the creation and securing the Intellectual Property, to the participation in the Security & Access Controls Industrial Command & Control, Job Order etc. The need for the producer to operate their field operations with military precision requires that the service industry has the type of systems that we’re considering here. That our user community and service providers are active in providing those systems to the service industry through the budget allocation made here.

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

Revisions to the Budget and Implementation Part 7

Blockchain

People, Ideas & Objects Blockchain module is the fourth and final module that is purely Information Technology in nature. It is an implementation of this technology that is being applied to the information, data, processes and management conducted throughout the Preliminary Specification. Our user community and service providers will provide the leadership in this module's development much as those user community members will be doing in the Artificial Intelligence module. Blockchain is a technology that brings about new opportunities in an ERP environment based on the Joint Operating Committee. We are moving the industry forward into a decentralized marketplace where security and trust are of greater concern than they are in today's producer firm. This is however the nature of the world that we live in and to achieve productive and profitable energy exploration and production on the North American continent we need to begin to live and operate in the real world. It is therefore incumbent upon our user community to lead this software’s development and its implementation in order to establish the foundation, requirements, methods and means for North American producers to obtain this security and trust through this new technology of the blockchain. 

The software that our user community builds will take many of the characteristics of the Blockchain module as I’ve defined and described in the Preliminary Specification. The module currently reads as a scattergun approach and needs to be refined and focused based on our user communities' study of what is available, what is needed and what can be done. Application of blockchain technology in the limited sphere of one Joint Operating Committee presents an interesting opportunity from the perspective of that limited scope. Securing the data and information in Oracle Blockchain that will be dedicated to a single Joint Operating Committee. Once we accept this premise we begin to see the necessity of my scattergun approach in currently defining the Blockchain module. There are potentially many other applications of the technology beyond the Joint Operating Committee in the Preliminary Specification.

Much as in the AI module, the Blockchain module as it is contemplated here can not be implemented in any other manner than through the Preliminary Specification. If the producers seek to build these capabilities in-house the burden of their high overhead costs, which are already the secondary reason for their chronic lack of profitability, will only become more apparent, difficult to resolve and overcome. Although I’ve been criticized for decades regarding my global approach to resolving the business issues in oil & gas through these comprehensive solutions in the Preliminary Specification. Having individual producers cobble together their widgets and train their staff in the highly detailed requirements of the 21st century corporation to solve today’s business problems which are destroying the industry, and to deal with the future just hasn’t happened yet. 

Compliance & Governance

There are many differing attitudes in business regarding the value and cost of Compliance & Governance. As a somewhat reformed auditor I have seen the understanding of the many differing approaches taken by corporations regarding these topics. They operate on two axes one of which is of aggressive or passive non-compliance, and the other is the expression of high standards of unimpeachable integrity. In my experience the latter is by far the most difficult to attain and demands the most from the accounting and administrative resources. They need to implement the compliance and governance requirements at the highest level, based on their interpretation of how that affects their business and what is consistent with their businesses policies. Then defend them from all comers. This may appear as the high cost approach however I would argue that it’s not based on what I’ve seen and known about what has quite obviously slipped past the producers in oil & gas these past decades. More or less it comes down to are you running the business or are others running you and your business. 

Conflict and contradiction exist in People, Ideas & Objects desire to implement such a framework as documented throughout our blog. And the perception of producers' that accounting, compliance and governance diminish their drilling budget. I will say that many also feel or interpret this as a fundamental desire to be unaccountable and to lack transparency. Which I’ve certainly been a vocal proponent of and accused producers of undertaking on a deliberate basis. Having ERP vendors atrophy to the level that they have in oil & gas can only occur on a deliberate basis, in my opinion. They then provide producers with the viable scapegoat for all those being questioned that it is therefore “not their fault.”

It is here in Compliance & Governance, that People, Ideas & Objects, our user community and service providers can make a difference by first making these costs shared and shareable across the industry. Secondly producers will benefit when specialization, the division of labor and automation are applied on a continuous go forward basis to alleviate the excess drain of hard working smart people to the level that these areas unnecessarily consume.

We therefore come to the final module of the Preliminary Specifications User Budget category. The Compliance & Governance module is able to rely heavily on other budget allocations for the pooling of resources. First there is the extensive work that is done in Oracle Cloud ERP. Next there is significant pooling of budget dollars done between the two additional and separate Accounting Firms and Compliance (Tax, Royalty, SEC) budget categories. It may appear that these numbers are skewed toward the accounting firms and away from the focus of the producers themselves. And I would agree that it appears that way. We should also remember that the legislation that defines the regulations for taxes, royalties and SEC requirements have developed frameworks that are robust and include XBRL syntaxes and other technical frameworks already developed for our user community to adopt. The task isn’t so much defining what the compliance and governance requirements are but integrating the Compliance & Governance module within the Preliminary Specification in an integrated and innovative manner. And it is in this latter point that we have good news in that the development budgets will precisely map what our user budgets are. 

When we look at the scope and scale of the undertaking of what is being done in the Compliance & Governance module, and the global scope of the budgets that are available. These objectives are the reasonable approach and raise the demands in terms of quality and value that Compliance & Governance has in oil & gas. A demand echoed throughout the capital markets. The purpose of any element of this Compliance & Governance should never be that the “tax tail wagging the dog.” Which will remain; however, we look to integrate these compliance and governance requirements in a manner that they’re not second nature to the other modules of the Preliminary Specification. They must be integrated and an inherent part of the product.

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

Revisions to the Budget and Implementation Part 6

Performance Evaluation and Analytics & Statistics

We turn now to four highly technologically focused modules of the Preliminary Specification. Three of these are catering to the analytical aspects of accessing and understanding the accounting and administration information of the producer firm and Joint Operating Committee. How to ensure that business decisions are based on the actual, factual, detailed and historical accounting information that is used to evaluate performance. 

Each of these modules provides access to one of the two data sets of either the producer firm or Joint Operating Committee. It is necessary to continue to separate the two modules as the data sets are unique and have different access requirements as the Joint Operating Committee data will be available to each of its producer participants. Access to these modules will be universal throughout the industry population, the features and functions will be similar and their purpose is to aggregate for each user of the Preliminary Specification with the means to analyze the data within their authorized domain. Detailed, actual, factual financial statements at the Joint Operating Committee will be prepared each month. These will determine the profitability of the property and provide the basis for determining the subsequent business decisions that need to be made. If we assume that a property was unprofitable and subsequently shut-in, an engineer tasked with returning it to profitability would want to know if the changes they’re considering will have a material impact on the historical performance of the Joint Operating Committee and it is here in these modules that will provide the means in which to determine the outcome of any changes would be, based on actual historical financial data and facts. 

Oracle has compiled comprehensive tools to prepare this type of analysis and access to their database through their specialized product called Oracle Fusion Analytics for ERP. Here they have unified this analytics framework with the Oracle Cloud ERP offering that People, Ideas & Objects, our user community and their service providers base the Preliminary Specification upon. Of interest is the access privileges from Oracle Cloud ERP are inherited directly to Oracle Fusion Analytics, and therefore this applies to any user of any aspect of the Preliminary Specification. Oracle and People, Ideas & Objects have similar thoughts on the future of these types of tools and the purpose behind them. If I had to pick one element of these modules that will provide the greatest level of difficulty. And at the same time creates the greatest value for the end user community. It would be the collaborative nature of these non-rival tools that need to be developed into both modules. Having stand alone tools is one thing, having them operate in a collaborative environment through the producer firms and Joint Operating Committees brings them to a new level. Oracle Fusion Analytics for ERP comes prepackaged with over 200 purpose built “best practice KPI’s, metrics, dashboards, cards and reports” and these can be built upon to specific oil & gas attributes and features. 

Artificial Intelligence

In many ways the Artificial Intelligence module of the Preliminary Specification asks a number of simple questions. From a Cloud Administration & Accounting service for oil & gas… 

• Where are we in terms of AI for ERP? 
• Where are we going? 
• Are we there yet?
• If not, what will we need to get there when the opportunity presents itself? 
• How do we prepare ourselves today for what may be available down the road? 
• Why are we concerned about AI for ERP?

We are concentrating these AI resources for Cloud Administration & Accounting on a shared and shareable basis for all of the same reasons we’re doing this for all the North American producers' administrative and accounting functions. The demands on each producer to replicate these same, non-competitive capabilities in-house is the secondary reason for a chronic lack of profitability. As society becomes more complex, having each producer firm manage everything in-house has become untenable. By moving these capabilities from the producer firms to create People, Ideas & Objects Cloud Administration & Accounting service managed by our user community and service providers, we turn the producers' fixed overhead costs into an industry based capability that is a variable overhead cost, variable based on profitable production that is shared and shareable throughout the North American producer population. In addition to being non-rival goods these services are able to create incremental value by applying specialization and division of labor to these resources in ways that are unlimited in their application and unavailable today. With the configuration of our user community vision there is the use and deployment of automation as the third means of generating substantial value. 

Inherent in the Preliminary Specifications Artificial Intelligence module is what Mr. Thomas Siebel of C3.ai stated about AI framework implementations in general. 99% of them are unsuccessful. The demand on these resources and the capabilities to generate frameworks that are effective and efficient are beyond what the market would be able to achieve if each producer attempted to establish these capabilities in-house. These are non-rival goods that lend themselves to being shared and shareable across the industry as Professor Paul Romer described in his 1990 paper Endogenous Technical Change which won him the 2018 Nobel Prize in Economic Sciences. Therefore, without the ability to build the Preliminary Specifications Artificial Intelligence module on Oracle’s Cloud ERP environment, there will never be a successful AI implementation in the ERP marketplace for North American oil & gas. 

It is here that we introduce the Oracle Artificial Intelligence framework that alleviates the many difficulties that producers would face in implementing such a capability in-house. Although this provides the algorithms and software that is necessary, it is the associated software and service of implementing both the implicit and tacit knowledge of People, Ideas & Objects, our user community and service providers offering through our Cloud Administration & Accounting for oil & gas.

Oil & gas is based on the difficult sciences of dealing with volatile commodities subject to pressures and temperatures that are operated in remote locations. Monitoring and control of this environment for safety, environmental and profitable reasons is a demand that becomes more complex each day. The Internet of Things (IoT) promises many opportunities to deal with these, and to do so from a monitoring point of view especially. Where is the industry in terms of making this transition, where is this framework where we could and should be building upon in terms of Artificial Intelligence for ERP? All of the technologies that we see as necessary to make this vision real are in place and operational. The value would be there to make this a worthwhile investment, if it was cooperatively developed across the industry from the point of view of a Cloud Administration & Accounting for oil & gas point of view. Is there an operational AI initiative of similar thinking being undertaken now? Should there be? 

It is here where those of our user community who are prepared to take this initiative of developing the Artificial Intelligence module of the Preliminary Specification, and drive these issues and opportunities forward can do so with the budget allocation for this module. This would also see cooperative work being done with other modules and other groups such as the service industry, the engineering and earth sciences which have their own defined budget allocations. It should be incumbent on our user communities leadership that the minimum objective necessary would be to establish the necessary standards for these to work within the Preliminary Specifications modules and data model including the Oracle AI offering as the minimum. And in that way move forward the time that the industry does implement this Artificial Intelligence module.

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

Revisions to the Budget and Implementation Part 5

Research & Capabilities

One of the key objectives of the Research & Capabilities and Knowledge & Learning modules is to move the earth science and engineering knowledge to where the decision rights are held. The operational decision rights are culturally held with the Joint Operating Committee and the knowledge is held within the producer firms designated as operator. The Preliminary Specifications Pooling replaces the operator role, and demands we therefore move the knowledge to the Joint Operating Committee. This reverses the flow that is currently in place as the industry moves the operational decision rights to where the knowledge is held. This current practice is in conflict with the culture of the Joint Operating Committee and leads to a fundamental and complete lack of awareness and accountability for the performance by the decision makers. Which has created the culture of pursuing the “next great thing” instead of any remedial effort to rehabilitate any assets performance. Saying shale will never be profitable is easier than trying to do so. This situation is inconsistent with the needs of an innovative and profitable oil & gas producer. Specifically, accountability suffers when operational decision making authority resides at the Joint Operating Committee, which the oil & gas industry does culturally, and is overridden by the producer firms designated operators, who are implementing the decisions without the awareness of their impact on performance due to their lack of actual, factual and detailed financial information being prepared at the Joint Operating Committee level. The Preliminary Specification provides these detailed financial statements at the Joint Operating Committee and moves the knowledge to where the decision rights are held through the Research & Capabilities and Knowledge & Learning modules. Ensuring accountability for the assets performance by those who make the decisions and how they’re implemented. 

The actual process of capturing the capabilities and populating them within the various Joint Operating Committees seems to be rather simple when first introduced. However, it becomes incredibly complex when the proprietary nature of the capabilities contained within the module, and their security, are taken into account. This contrasts with the need to have the right access to the right information to the right people at the right time in the right location      and on the right device in order for it to have value. And that precision in the information deployment is what we are seeking to attain in these modules. The myriad of issues that surround these two modules introduce a level of conflict and contradiction that will have our user community heavily occupied. The Intellectual Property surrounding the “knowledge” is believed to be proprietary and confidential, a distinct competitive advantage of the producer firm. And therefore to be protected. The capabilities described in the explicit knowledge listed in the Research & Capabilities and Knowledge & Learning modules is not the competitive advantage, the ability to do the task described is. In addition to other political influences that will have concerns as to the implementation of these modules. Again user community members need to be wise to these and deploy their budget effectively and deal with these issues. There is an inherent motivation in having this industry wide knowledge populated in the Research & Capabilities module that People, Ideas & Objects documented under the Intellectual Property Organizational Construct on this wiki. 

If an engineer updates a capability within the Research & Capabilities module that is specific to their proprietary knowledge about fracing. And they know that the capability provides value to the firm when it is used. It is imperative that that capability is populated to the pertinent Joint Operating Committees that they’re participating in and have a demand for that fracing capability. That the capabilities information is released to those Joint Operating Committees and to only those Joint Operating Committees. Understanding also that there are partners within those Joint Operating Committees who will have access to the knowledge of those capabilities and will be able to elect to deploy them for that property from the specific producers developed competitive capability. This does not lead to any proprietary leakage of capabilities through the Joint Operating Committee or the greater oil & gas industry. The capabilities that are developed within the firm are proprietary to the firm and are for its exclusive use. Listing them in the Research & Capabilities module should be seen as advertising and promotion of what the firm is capable of. Explicit knowledge doesn’t leak, it's the tacit deployment of the capability. Others can attempt to copy the capability from your firm however they’ll find that it’s as costly and difficult as it would be to develop the capability on their own. Capabilities are not transferable from one firm to another on the basis of copying. If you watch a surgeon conduct open heart surgery, or read his procedure, does that make you a heart surgeon? Having the knowledge within the Joint Operating Committee that one of your partners is capable of conducting extensive multilateral fracing, and the ability to review that capability through the Knowledge & Learning module opens up the “opportunity” to expand the horizon of what is possible through access to the Joint Operating Committees participating producer capabilities for deployment. 

In the hands of our user community we can achieve the precision that this module demands. Maintain the security and proprietary nature of the capabilities of the producer firm. Yet expose these capabilities by deploying the producer's capacities and capabilities to the properties that it owns to let it fully understand and appreciate what is possible and probable. And that is just one aspect of the module. There is also the research area where there are a variety of interfaces that lead to the further development of capabilities in the innovative and profitable oil & gas producer. A means in which to ensure that the producer remains focused on moving forward on developing its chosen specialized capabilities. Not repeating mistakes made over there, last year or by that team.

Blockchain is the underlying technology that will be used to record the capabilities. These modules will operate under the Oracle Blockchain Platform Enterprise Edition. When initiated the capability of the producer will be recorded in the blockchain that is a database field. Any revisions to the capability will simply be written to another block on the chain. Therefore to view the entire capability will only require the need to aggregate all the blocks of that capability on the chain. Having each revision to the blockchain will provide a means to view the version of the capabilities development and status. Making this aspect of the Research & Capabilities module demand less of the budget from a development point of view. Our user community will have this reliable tool to build upon.  

Knowledge & Learning

The Knowledge & Learning module picks up from the Research & Capabilities module and continues with the objective of getting the right access to the right information to the right people at the right time at the right location and on the right device. As with the Research & Capabilities module, pooling of some of our User Budgets with the Service Industry, Service Providers, Engineering and Earth Science budget allocations will help to offset some of the requirements of both of these modules. 

In addition to the ability to move the knowledge to the Joint Operating Committee where the operational decision rights reside. The Knowledge & Learning module provides the ability to focus the users of our software on the capabilities that are pertinent to the property held by the Joint Operating Committee. Only those capabilities from the Research & Capabilities module that are tagged for the relevant attributes which are pertinent to those specific Joint Operating Committee are being published and populated there. And that relates to each one of the producer firms that are participants in the Joint Operating Committee. The Preliminary Specifications Pooling concept sees each producer contributing their highly specialized capabilities to the Joint Operating Committee Therefore our softwares user will be provided with a focused view of the capabilities that are available from all of the participating producers. And will be able to pick and choose based on which capabilities provide the best opportunity for innovativeness and profitability. 

This interdependency between the producers is necessary as the Preliminary Specification implements the pooling concept. Where the earth science and engineering resources of the producers are highly specialized and the division of labor between the producers is relied upon. Therefore the ability to pool the technical capabilities of the Joint Operating Committees producers, and to bring in resources from the market as necessary to cover off all of the capabilities of the operation, are provided in these modules. 

Our user community members involved in both the Research & Capabilities and Knowledge & Learning modules will be heavily populated with earth science and engineering resources. This is to be expected as this is predominantly a module that they’ll use. It is however a module that will rely heavily on the ERP elements. When they are working within a Joint Operating Committee and find a capability that meets their needs they’ll be able to invoke the full suite of ERP capabilities at that point. To raise an AFE, or Work Order, or process some payment, issue a Purchase Order or some other commercial operation that is the domain of an ERP system such as People, Ideas & Objects. To have these capabilities invoked with a simple right click of the mouse and then have a reasonably populated AFE template appear to invoke that capabilities data and information from the property, with a chart of accounts classification of the operation etc. 

It is the capabilities development and deployment of the tacit knowledge that makes or breaks an oil & gas entity. It is fully one half of the producers competitive advantage and these reside in the difficult science of geology, geophysics and applied science of engineering. Making oil & gas one of the most technically demanding of all industries. There are certainly more to these two modules than what has been discussed here. I think however that our user community, with the budgets that are established here, can develop these modules into the components that make the producer and Joint Operating Committee the innovative and profitable entities that they need to be. It is capabilities that are the defining act that make the oil & gas industry what it is. It is not supply chains or cross docks as in other industries. It is here that our user community can make a difference in the future of the oil & gas producer. Ensuring enhanced accountability will provide substantial value when the commitment and drive of those that are involved in the hands on, day to day exploration and development of oil & gas can see that their actions are being rewarded with the performance impact they expect. 

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

Revisions to the Budget and Implementation Part 4

Partnership Accounting

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

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

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

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

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

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

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

Accounting Voucher

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

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

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

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

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

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

Revisions to the Budget and Implementation Part 3

Budget Detail

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

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

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

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

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

User

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

Preliminary Specification

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

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

Security & Access Control

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

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

Resource Marketplace

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

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

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

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

Petroleum Lease Marketplace

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

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

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

Financial Marketplace

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

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

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