Revisions to the Accounting Voucher Part 1

 Introduction

We now shift our attention to the Accounting Voucher module. The interactions between the Accounting Voucher and the Partnership Accounting modules of the Preliminary Specification are naturally quite significant. They both being accounting modules, it is natural that they have high levels of integration. The Accounting Voucher is unique in that it brings to the producer the ability to design transactions and specific accounting voucher templates such as the Material Balance Report. These are not innovations that the producer will use to become more innovative but are provided to ensure that the innovative producer's processes are actively defined and supported throughout the People, Ideas & Objects application modules.  When the business is a science, as it is in oil & gas, it would be in the producer's interest to remain open and flexible in both its scientific and business approach. The Accounting Voucher and Partnership Accounting modules provide this organizational flexibility.

The manner in which these two modules operate is as follows. The Accounting Voucher captures the transactions. Partnership Accounting reports on the transactions. Accounting Vouchers remain open for one accounting period and are subject to the same closing process that’s familiar and traditional in the accounting world.

We noted in the Partnership Accounting module how our Work Order provided producers with the ability to form and participate in working groups. Providing flexibility in participating and accounting for these working groups. This flexibility is what is being sought after in the rest of the producer firm and Joint Operating Committee from these accounting modules. Elimination of the bureaucratic inertia that impedes these activities today makes these modules critical to a producer's innovation as much as the Research & Capabilities or Knowledge & Learning modules provide.

The People, Ideas & Objects Accounting Voucher module will provide the means for the application to “manage the disparate inter-dependencies of modularity theory and Transaction Cost Economics.” That is a summary application of Professor Baldwin's comments and theories. And therefore this Accounting Voucher is one of the key cross roads to all other modules in the People, Ideas & Objects application. What this means is it’s necessary for people to cease just processing transactions, by way of automation, and move toward the definition and design of transactions to optimize the business of the producer and Joint Operating Committees performance.

Vouchers, Open To All Within the Partnership

One of the implications of using the People, Ideas & Objects system is that each partner within each Joint Operating Committee will have authorized access to the pertinent Accounting Voucher during the time that a Voucher is either open or closed. Each of the producers involved in the Joint Operating Committee are therefore able to access the Accounting Voucher and have costs / revenues distributed to the other partners involved in the Joint Operating Committee based on the AFE or operations budget. This is one of the key differences that we discussed in the Petroleum Lease, and Resource Marketplace modules. Partners are all contributing to the joint account as equal participants with the role of “operator” being relegated to a thing of the past. (Note too of course, that each participant is able to charge their own account with their own 100% charges. These charges are to their private accounts and therefore not seen by any of the other participants.)

Cost control becomes an issue when everyone is able to charge freely to the joint account. A careful reading of the previous paragraph reflects that I didn’t state “charge freely." Cost control comes about as a result of the traditional budgetary control of AFE and the Work Order system that we’ve discussed in the Partnership Accounting module. Without pre-approval by the partnership nothing is able to be processed by the People, Ideas & Objects software applications. And as we’ve seen in the discussion of the Security & Access Control module, few will have the authorization to “charge freely” to the joint account in any form or fashion. With the traditional ability to charge to an AFE or Cost Center, and possibly during the development of the People, Ideas & Objects Preliminary Specification, our user community determines there’s a need to have a purchase order system, ensuring that an appropriate bidding and contracting process is in place, no unauthorized amount will be accepted in the system. There is also the fact that each voucher needs to be approved for payment before any money is expended and that approval would need to consider the budget authority of the Joint Operating Committee.

As one can envision these Joint Operating Committee - Accounting Vouchers can become large as they include the entire month's business of the property. Accountants would be frustrated at month-end trying to get these Vouchers closed if they had to seek approvals and close each of the transactions within the appropriate small window of time of their month end. Needless to say that each transaction within the Accounting Voucher is a small subset of the larger Accounting Voucher and can be dealt with as a stand alone individual item. Seeking its own approvals and authorizations that deal with just the domain of the specific transaction.

What is different in the People, Ideas & Objects Accounting Voucher system vs what exists today is the elimination of the designation of operator. The capabilities for each producer to house the state of the art earth science and engineering resources necessary to run all of their properties within one oil & gas firm is believed to be beyond the scope of what is possible in the future. Our solution in the Preliminary Specification is the further specialization and division of labor of the earth science and engineering capabilities of each producer firm and the pooling of these resources of the partnership within the Joint Operating Committee.

The Material Balance Report

The Material Balance Report is an Accounting Voucher that is unique and has the following characteristics. It is designed to provide automation to the production, revenue, royalties, marketing and other processes of the producer firms and Joint Operating Committees. It is this type of specialized use of an Accounting Voucher that our user community should consider applying to other situations when contributing to the Preliminary Specification.

What is proposed in People, Ideas & Objects Material Balance Report is that for an Accounting Voucher to close it must balance the financial debits and credits, but must also from a volumetric perspective material balance, system balance and partnership balance. Each of these volumetric perspectives are accessed through a different “mode” within the voucher to make the necessary changes to correct any volumetric imbalances or errors from that specific perspective.

The Joint Operating Committee is a thing that exists as a result of legal agreements and in the minds of oil men and women. It therefore doesn’t “own” anything or incur any costs. All of the charges to the joint account must clear in the month they’re incurred to the producers involved. It is the same situation for the volumetric information. The Joint Operating Committee "Accounting Voucher" balances to zero in terms of costs and volumes each month by clearing its charges to the partnership and royalty owners of the property. Clearings are done after the balance. That does not guarantee that the facility will remain in balance. Adjustments and amendments to the Accounting Voucher may occur. These may happen and they can be subsequently balanced and cleared to the partnership accounts in the same manner as before. And that is on an automated basis. The point of the exercise is that you have the business of the Joint Operating Committee captured in the Material Balance Report which is an integral part of the Accounting Voucher. Essentially all three are the same thing, the Joint Operating Committee, Accounting Voucher, and Material Balance Report. An integrity of reporting that is embedded within the accounting systems that are as rigid as debits must equal credits.

We now discuss the contracts regarding the petroleum products produced from a specific Joint Operating Committee. Contracts that would include marketing for gas, oil, natural gas liquids, or contracts for charges for gathering, processing etc. If a stream of product was flowing through a facility, then a contract for processing or sale would be attached to it. The ability to attach the contract to the stream would enable the Accounting Voucher to establish the associated accounting for the gathering or processing of charges / sales for that stream. These charges (invoices) or sales (receipts) are generated in automated fashion by the Preliminary Specification.

The Accounting Voucher is for lack of a better term a template that is built upon as time passes. Each month as the property changes, these changes are captured within each Accounting Voucher and the template is renewed each month with the accumulation of the properties history, the data from the Petroleum Lease Marketplace and other modules. If a new contract was added for the production from a new well, then that contract stream and the new well would be represented in the next and every month's Accounting Vouchers. The Accounting Voucher template documents the changes in the property over time. Providing the base for the subsequent automation of the business processes to be established, tested, debugged and deployed.

Critical to the “definition and design” of transactions is the fact that these transactions are balancing themselves out. If the debits and credits were not in balance at the end of the day, then the automation of the systems and the accountants would not be doing their jobs. The same could be said for the volumetric reporting. If in the Material Balance Reports was out of balance (call this material balance), or were not balancing the inputs and outputs to other Material Balance Reports (call this system balance), or the internal accounting of those volumes to the partners, royalty holders and others were out of balance (call this partnership balance) the accountants and systems would not be doing their jobs. Simply the process of closing the Accounting Voucher will need to consider not only the balancing of the debits and credits from a financial point of view. They will also need to ensure that the material, system and partnership volumes reported in the Material Balance Report are also in balance. Without these systems in balance, the Accounting Voucher will not clear or close.

This imposes another rather strict provision on the quality of the information that is accepted into the People, Ideas & Objects Accounting Voucher module. Precluding the acceptance of a voucher due to the inability to balance a volumetric requirement holds the system up for what is a common occurrence. What if the volumetric information is unavailable in a timely fashion? What if the information is part of the normal amendment process? Then we are left with the traditional accounting methods of dealing with these types of issues. An accrual of the volumes in order to achieve the balancing necessary should be able to be processed in the current month. Most production processes are amended for up to 90 days. These accruals would then be automatically reversed in the following accounting months Material Balance Report. What is different from existing systems is that we are enforcing the systems to volumetrically balance. Not just inputting key variables but imposing and enforcing the facts of what actually happened at the Joint Operating Committee, and if it is subject to a comprehensive Construction, Ownership and Operation agreement, what is agreed to be accounted for before the close of the Accounting Voucher. And by that I mean specifically, from the point of view of either dealing with the contractual arrangement as dictated by the governing agreements as the determining factor for the means of production allocation. Or if the agreement refers to the chemical composition as the basis of production allocation, both of these methods will be available in the Material Balance Report of the Accounting Voucher in an either, or and mixed environment.

The difference may be subtle but the implication is significant. Locking the volumetric balancing, over the long term, into the Accounting Voucher itself enforces the system to follow the volumes as produced and processed. Once this is achieved a certain level of unimpeachable integrity is achieved regarding the production data and the automation of detailed processes based on those volumes can begin and be assured to be based on the facts of the facilities and assets data and information captured in other modules. Any subsequent amendments will correct the record.

There are many aspects of this system's management of these processes that are unique and necessary. The reason they have not been undertaken has been the broad scope and scale of the development undertaken is comprehensive and beyond what the technology could have provided. It is certainly from a budgetary perspective beyond the scale of what any individual major producer would undertake as the value gained would not be there for the individual producer to incur the entire cost, and most certainly well beyond the standard approach of an oil & gas ERP software development solution provider. People, Ideas & Objects are aggregating the North American producers budgets to make these available through our ERP software and the service provider organizations. Turning the cost of oil & gas administration and accounting, which includes the ERP systems development, into a Cloud Administration & Accounting capability for North American based producers. Those with a comprehensive understanding of these processes will fully appreciate the points that I’m making and the implications involved. My understanding of these processes is comprehensive, I know it can be done and we’ll do this correctly. That this undertaking may be one of the most comprehensive features of the Preliminary Specification. Therefore it is done on the basis where the costs of development are shared and shareable, or non-rival, and driven by a user community vision such as we have. Therefore there is substantial value in terms of cost savings to each producer with untold value through application of the specific attributes of People, Ideas & Objects value proposition. 

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 Artificial Intelligence Module

Summary

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

People, Ideas & Objects have chosen our distinct competitive advantages to be our user community, Intellectual Property and research as the three areas of our domain to focus upon. These are how we earn our profits. We are a commercial operation and we will always be one as we’ve learned, just as everyone in oil & gas has, what the meaning and value of real profitability is. Without real profitability there is nothing but waste and atrophy. To do anything in business the first question should be where does the money come from? It must come from a steady stream of profitability to support, maintain and manage the operation. There is no other sustainable source of capital capable of doing so. To spend others' money on a continuous basis is child’s play in comparison to the challenge of developing and maintaining a profitable business. A culture of profitability has been lost through four decades of today’s methods of oil & gas management.

Introduction to the Artificial Intelligence Module

Within the Preliminary Specification there is the Security & Access Control module that sets out the necessary security and data access to those in the industry. Providing access to the right information at the right time to the right people with the right authority at the right location and on the right device. Two other modules are the Performance Evaluation for the Joint Operating Committee and the Analytics & Statistics module for the producer firm. These modules are tools that build upon the basic data within the greater Preliminary Specification and Oracle applications that will provide value to users. Organizing this data in an integrated manner and permitting two different perspectives of that same data, one from the point of view of the Joint Operating Committee, accessible by each of the authorized members of that property, and the other perspective from the producer firm providing their users with access to their proprietary accounting and administrative data for subsequent analysis. 

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

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

There is no production discipline in the oil & gas industry. Therefore it’s not a business and never will be a business without profitable business objectives as long as the bureaucrats remain in place. Production discipline could be imposed by forming a North American cartel, (illegal) or government production mandates where no one is ever satisfied with their allocation or implementing the Preliminary Specification. Only the Preliminary Specifications method of production allocation, based on “real” profitability, provides for a legal, fair and equitable means of production discipline. If the property continues to produce a profit then it continues to produce. Otherwise why would you continue to produce if a properties loss reduces the overall profitability of the producer firm, effectively destroying the value of the properties reserves, adding the cost of the ongoing incremental losses to the costs of the reserves, incurring the costs of production and storage of surplus production instead of holding it as reserves and keeping the marginal, or unprofitable, production off the commodities market to ensure they’ll find their marginal prices. Marginal prices not just for the unprofitable property but all the properties across the North American continent. Markets provide one thing and only one thing, their price and bureaucrats refuse to listen to prices even when they're negative $40. They claim our method of production allocation is collusion. If making independent business decisions based on detailed, actual, factual accounting that determines the state of the individual properties profitability is collusion, then bureaucrats belong back in the former Soviet Union. 

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

In summary, once again this infrastructure we’re building is to provide the North American oil & gas industry with the most profitable means of oil & gas production, everywhere and always. As mentioned, on top of this data we have two modules, the Performance Evaluation, and Analytics & Statistics modules that will provide enhanced tools to analyze this framework for their competitive advantage. Building off the detailed, actual, factual financial data of the operation. Not operational or engineering data that has been massaged or allocated and has no historical basis of financial performance. Each producer as a single entity has nowhere near the resources, capabilities or capacity in which they need to be able to begin developing the automation of their business processes, specialization and demands of this environment. An environment that will be a given from a technological architecture point of view. However, we do know bureaucrats are more than capable of muddling through these technical changes. Deliberately maintaining poor quality ERP systems that produce specious accounting with obscure transparency and no accountability have fulfilled their purpose in bureaucratic nirvana.

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

Artificial Intelligence

Our user community and their service provider organizations are the intellectual framework of the oil & gas industry in terms of accounting and administration. It would be my hope, my anticipation and expectation that one day our user community would provide the industry with the software and services that anticipated the business needs, issues and opportunities that oil & gas faced on a proactive basis. The Preliminary Specifications software would be dealing with what it is that’s concerning the industry. Taking a leadership role in the development of the administrative and accounting of the industry. Therefore leveraging this framework as I’ve described earlier as a natural extension of what it could, but most importantly should be doing. Ensuring that oil & gas remained dynamic, innovative, accountable and profitable everywhere and always. 

Artificial Intelligence always sounds ominous and a highly advanced Information Technology that will be the next solution to all the world's problems. I generally agree with this and believe we should employ it towards resolving the ominous Y2K issue. But seriously, Artificial Intelligence is really nothing more than advanced automation. Breaking a problem down to its simplest form that is definable and manageable in a reasonable scope can be determined through this tool to automate the decision making and other higher level processes. Which is a valuable tool in the right hands, and with the appropriate base of data from a historical accounting point of view. If you Google “baby formula” be prepared to be inundated with ads for baby formula from local and online stores. This is a preliminary application of AI and we see the benefits of such actions in the form of Google’s quarterly profitability. The use of AI is highly dependent on the quality of the data being used. As we’re aware the financial information of the producers isn’t worth the paper it’s written upon. The first priority therefore must be the implementation of the Preliminary Specification in order that the financial data is being captured appropriately and in a manner that will be usable. Providing the base level tools for analytical and statistical analysis as groundwork for the feeding of this Artificial Intelligence module. There is a need to expand this by stating the data, analytical and AI framework of the Preliminary Specification will be a necessity for implementation and use of the Internet of Things (IoT). Where they’ll be able to be working together as a future architecture.

Moving the Artificial Intelligence for ERP domain within the user community and service provider domain therefore is a natural and necessary fit. My thinking on this began as a result of the announcement by Mr. Thomas Siebel and his Artificial Intelligence firm C3.ai Inc. Thomas Siebel sold Siebel Systems to Oracle Corporation a number of years ago. The purpose behind C3.ai Inc is consistent with the theme that is present in the ERP marketplace. Individual companies can spend vast amounts of money and time internally on ERP systems or Artificial Intelligence with no benefit, wasting investment and unnecessary demand on critical AI and ERP resources. Mr. Siebel suggests that there is a 99% failure rate of internal corporate AI initiatives. I would suggest that the level of destruction we’re witnessing in oil & gas today is a result of the inability of bureaucrats to understand their business due to their deliberate atrophy of the ERP systems provider marketplace. If their ERP systems were operating as they conceptually should, would the industry be in the condition it’s in today?

Centralizing the resources of the industry into Artificial Intelligence based ERP developments which will be developed and deployed through the People, Ideas & Objects et al framework is an efficiency that is consistent with our theme of ERP developments. The demands of software development are no longer a capability that can be attained in-house in order to ensure the full scope of the organization's needs are covered. The same applies to AI. Therefore the Preliminary Specifications consolidation of the industries resources on one focused development in an objective, standard and compliant manner offers better functionality and capability at considerably less cost to each producer. Oracle has AI initiatives with their Oracle ERP Cloud, the base of our solution, and we will therefore be adopting those tools. I believe that the addition of this thirteenth module's AI capabilities is a natural extension of our user community and their service provider organizations and an efficient use of industry AI resources. Enabling producers to focus on their key competitive advantages of their land and asset base, earth science and engineering capabilities and to do so profitably. Incurring the time and energy to build the capacity and capability of ERP based AI once, and sharing the cost of development and this initiative's success across the industry. 

But there's more, the demand on AI resources in terms of the practitioners would be too high to ensure that any individual producer was able to attain any level of AI competency or competitive advantage in the industry for ERP based AI. It would duplicate the capability of our user community in this area and therefore answer the question, why is there that 99% failure rate? In a highly risk oriented Information Technological environment, the ability to share that risk and mitigate the failure rate should appeal. 

Yet producers would be realizing AI’s value based on their intuition and creative application of these business capabilities towards their asset base. This ERP based AI module is not distributing the AI to each producer. We are providing the organization and implementation of successful data integration with statistical and analytical tools and standard, packaged Artificial Intelligence frameworks that will have been proven to be valuable in the ERP domain of an oil & gas producer. It will therefore be incumbent upon the producers to take these tools and use them in their interpretation and application against their own proprietary data and business makeup. 

One of the aspects of the Preliminary Specification is that the administrative and accounting burden of each individual producer is substantially reduced as a result of the changes we’ll be instituting. These changes are a result of the burden of the producers' fixed, unshared and unshareable, administrative and accounting capabilities being reallocated to the variable and shared administrative and accounting capabilities of the industry. Variable based on production. Another key attribute that we’re using to reduce the costs of administrative and accounting, yet increase the performance and quality of our offering is by using specialization and the division of labor to be distributed across our service providers. These two elements of the Preliminary Specification will work to enhance the cost performance of the producers as we believe that overhead costs are substantial, and are one of the secondary reasons responsible for producers’ chronic unprofitability. Specialization increases the performance trajectory of the service providers' administrative and accounting resources by increasing their capacity with the same or even fewer resources. We also apply this principle in the area of software development. More importantly is the unshared nature of the current, bureaucratic and redundant spending of the same overhead costs within each siloed producer organization, in areas that are not distinct competitive advantages of producer firms. It is People, Ideas & Objects that are using Professor Paul Romer's “Endogenous Technical Change” and the treatment of non-rival goods. As represented in our application of the Cloud Computing paradigm in offering our Cloud Administration and Accounting for Oil & Gas service.  

A key difference between what People, Ideas & Objects have proposed is that the Artificial Intelligence module is properly constructed after the business models, markets, architecture, infrastructure, functionality, organization and data are assembled. Bureaucrats have been using Artificial Intelligence to enhance their thinking for the past number of years. It has provided no results that we can see or are aware of. In fact it seems to People, Ideas & Objects that AI may have been another viable scapegoat at the time to ensure their investors knew the bureaucrats were on the job. Except they have no usable data. Without that data being organized and managed appropriately what purpose is AI? Oracle has recently stated that IoT may increase a firm's volume of data five fold by the year 2025. It may be a good time for the industry to start concerning themselves with such issues as data and profits. Secondly, each producer spending money on a new initiative that is the “next great thing” is a consistent criticism of ours with respect to the behavior we’ve seen of bureaucrats.

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 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.