Operations Management Module, Part VI

 Performance Management

To resolve many of the difficulties that are present in oil & gas today. It is necessary to add financial performance based on the actual, factual accounting information of the property to the operational and technical data that’s aggregated within this Operations Management module. Then delivering it to those decision makers within the producer firms and Joint Operating Committees. To be able to rely on this information as the unimpeachable truth of the performance of the property will add clarity and precision to the decisions being made in the industry. With the implementation of the Internet of Things (IoT), as discussed earlier in this module, monitoring and controlling the operation will be considerably more remote. Therefore, based on the decisions made from these three distinct sources of information it will make the producers dynamic in ways that were never imagined before. 

Partnership Accounting

There are two distinct accounting based modules within the Preliminary Specification. Partnership Accounting and the Accounting Voucher work to report for the producers and Joint Operating Committees, and to capture the data and transactions. The two critical aspects that differentiate the accounting between what is done today and what is proposed in the Preliminary Specification is that financial statements are provided for each and every Joint Operating Committee and overhead costs have been converted to variable as opposed to fixed. These financial statements are based on the actual costs of the property and include an allocation of capital in the form of depletion that provides for the property to compete for capital in the North American capital markets. Secondly the overhead is the actual overhead that’s incurred by the property. There are no overhead allowances as the Preliminary Specification has converted the producers' fixed costs of accounting and administrative capacities and capabilities into the industries variable costs of accounting and administrative capabilities and capacities. Variable based on profitable production. Providing the producer with the ability to shut-in any unprofitable production, as determined by the detailed financial statements for the property, which if it is shut-in it will incur a null operation, no profit but also no loss, to maximize their corporate profitability and achieve the many other monetary benefits.

What may become obvious to many readers is that this is a different environment for the accounting resources to be occupied in. We no longer just record transactions and report on them. If we go back to the beginning of this module's description we find that the “pull of data” and “push of instruction” from the Internet of Things will have severe implications on the accounting of oil & gas. The volume of data will be tidal waves larger than what it has been at any point in the history of the industry. If we’re to obtain the benefits of automation and turn the computers to begin working for us then we’ll need to be grasping this opportunity on a holistic scale and implementing it broadly. Not everyone fits into this redefinition, however the future of the dynamic, innovative, accountable and profitable oil & gas industry depends upon it. 

It is this vision that can not be left to spontaneously appear. Spontaneous order has ceased to function in a world where software and global markets operate. The Information Technology infrastructure exists and is incumbent upon businesses and industries to ensure that they’re the ones that implement and realize the benefits. Otherwise others who are capable of operating in this environment will be the ones that leverage the opportunity to their benefit. The officers and directors' obstinance has already cost them the overall Intellectual Property and ERP software arena to People, Ideas & Objects and our user community. As we claim we are the only ones capable of providing North American producers with the most profitable means of oil & gas operations. How else could anyone do so? It would take, as I did, a decade of research to figure out another method to do so, and whomever would have the additional difficulty of having to avoid the Intellectual Property that exists within the Preliminary Specification. The fun part would come about when the officers and directors obstinance takes hold for another dozen years or more to be convinced they need the new technology.

Financial Statements

For purposes of the Operations Management module the producer will be able to view the makeup of their organization in any perspective they need. Having the ability to aggregate the specific Joint Operating Committees they desire to get a more holistic view of the larger asset to evaluate. These Financial Statements will enable the user to analyze the costs incurred against what was planned and expected in their operational and technical sources of information. Reconciliation of these three sources of data and information may lead to previously unknown unknowns. 

While marginal commodity prices may occur these financial statements would show the progression towards any unprofitable operations. It therefore provides a window for the Joint Operating Committees where the threshold of potentially falling into a period of non-production due to the lack of any commercial operations begins. The early foresight provided will enable those to look at their costs and determine with these three rich sources of data what an appropriate and innovative plan may be when and if the property is shut-in. To return it to profitable production by increasing its production, reducing its costs or enhancing its reserves. Limiting the time in which the property is shut-in and providing the time to more effectively plan and consider what may be the most effective method to return it to production. 

Pro-forma Worksheet

Having the ability to sketch out a what-if scenario based on the actual historical situation is the general purpose of any pro-forma worksheet. “What-if we changed this” and would that make a material enough change to make the property commercially viable again? Will provide historical data that sets the scenario in a factual basis that will ensure that guessing is eliminated. The implication of any changes to the financial statements can at times be difficult to understand the full scope. This is due to the pro-forma following the accounting methodology as set out in the preparation of the financial statements, the implementation of any pro-forma changes will follow and show the full implications of these accounting methods and therefore mitigate any surprises that the accounting world springs onto its users. 

The breadth and depth of the accounting information provided through the Partnership Accounting module is comprehensive. Whether it is the Oracle Cloud ERP related information or what People, Ideas & Objects have built in to accommodate oil & gas. This information is available to authorized users of the Operations Management module. It is structured in a way to provide the performance of the producer firm and drilled down to the individual Joint Operating Committees or any combination of those. I hesitate to suggest that this information can be catered to in revised formats that meet any specific user's needs. That runs counter to its purpose. We are striving to represent the financial performance from the perspective of the capital markets. To have ad-hoc reporting would be of an advantage if it does not distort the financial performance to make things appear better than they actually are. It is therefore necessary that the Operations Management modules users will have their enhancements addressed by our user community to ensure they’ve implemented and prepared the software and services they wish to see but also to ensure that the financial integrity is maintained in any ad-hoc reporting. This will ensure the capital markets focus is the priority of the properties financial performance.

Accounting Voucher

The second of the two pure accounting modules of the Preliminary Specification, the Accounting Voucher brings about several new dynamics into the oil & gas industries accounting. Introducing the Accounting Voucher as an encapsulated document that holds the information that supports transactional information captured, approved and recorded in the accounting system of the producer or Joint Operating Committee. To deal with the resource constraints in the earth science and engineering disciplines People, Ideas & Objects have used a variety of methods to resolve the issue. These are listed in the Organizational Construct section of our wiki. The predominant Organizational Construct affecting this change in the Accounting Voucher is specialization and the division of labor. In order to resolve any technical resource shortfall, specialization and the division of labor are the only proven method to resolve organizational productivity. Therefore each producer will need to be contributing their highly specialized technical resources to the Joint Operating Committee in order to provide for the full set of necessary resources. These may also be augmented through outside consultants who are specializing in the lower level skills of these disciplines. Allowing for producers to specialize on their distinct competitive advantage. 

Therefore what People, Ideas & Objects have done in the Accounting Voucher is provide a “role” in Oracle Cloud ERP which provides for the authorization necessary to incur costs on behalf of the producer or Joint Operating Committee. And therefore within a Joint Operating Committee there may be multiple technical resources that have authorized expenditure authority on their behalf. Therefore an Accounting Voucher in this instance is a Joint Operating Committee based voucher with overall budgetary authorization granted through the AFE process. However multiple firms may have this secondary or tertiary authorization, within the scope of the AFE to authorize specific expenditures to be purchased and payments authorized. That Accounting Voucher is therefore part of each of the Accounting systems of the working interest owners of the Joint Operating Committee. 

The Work Order mentioned earlier is also an Accounting Voucher that has been modified and enhanced to conduct processes in generic ways that fit the described purpose. As it is incurring costs and allocating them in either of the two scenarios of its operation, it has to inherit the capabilities of the Accounting Voucher first and foremost. Then our developers will, at our user communities direction, build the necessary infrastructure to meet the needs as defined to instill the Work Order as a permanent industry wide Accounting Voucher Template for use to manage their costs. 

Data, Information and Performance

If we could step back for a moment and ask ourselves how much time, and more importantly, how much frustration is consumed in the process of collecting data and information, moving it from one location to another, interpreting and recalculating it which is conducted on a daily basis. Why are we still doing this and what can we do to stop this financial drain that no one can support continuing? Would we be able to isolate the actual, factual information necessary, store that data in one location and have the system interpret it in the manner necessary for each of its users. Relational Database theory is designed for this purpose. Does the potential explosion of data as a result of the oncoming identified technologies demand we look at these issues and address them? The development of the Preliminary Specification, our user community and the reorganization of the administrative and accounting resources into their service provider organizations brings about this opportunity to set the foundation for realizing a more constructive basis of understanding the producer firm. And possibly the most valuable aspect of this information change for producers would be the quality of the decisions being made are more precise, reliable and factual. 

There is one more critical aspect to the reorganization of the data and information that needs to be discussed and that is the performance of the producer firm. How does a producer accelerate their performance, their trajectory and their velocity in terms of throughput? Would clean data and information, that was the foundation of the industry, standardized and objective, where everyone knew and understood the origins and its purpose accelerate the producers performance and throughput?

Or is “muddle through,” “do nothing,” apparently knowing and understanding nothing appropriate for the next generation of oil & gas officers and directors. They have their model and we should understand what that is now. We’ve seen them embrace Artificial Intelligence, digital twins and I can guarantee the next three buzz words coming out of the Information Technology industry will be immediately heralded as “the savior of the industry that’s already providing huge gains in performance.” Yes, it is that bad. When do we address this, the Preliminary Specification is the time in which to do so.

Material Balance Report

Another implementation of the Accounting Voucher is the Material Balance Report which is a comprehensive approach to the reporting and balancing of production through to its ultimate disposition. The Material Balance Report is an Accounting Voucher Template that is augmented to deal with a Joint Operating Committees unique needs. And then saved as its own specific Accounting Voucher Template to be reused each month. As changes occur and additional production, facilities or dispositions are added to the specific Accounting Voucher its Template is updated to accommodate those changes for that and subsequent months.  

The key overall objective of the Material Balance Report is to achieve the reconciliation of the oil & gas reporting volumes on the continent in unimpeachable form. It is at that point that we have the basis in which to automate the subsequent processes throughout their production months lifecycle. Whether that is production, accounting, administration, marketing, regulatory reporting or royalties. These are all subsequently dependent on the data and information that is derived in some way from the industry standard Material Balance Report. 

Undertaking this from the global perspective of an industry initiative is possible, valuable and necessary. The costs are too great for one firm and the net benefit is not the continental reconciliation as the base of automation. Again, this may be conceived as being too ambitious overall. However it can be done and done far easier than it sounds. In 1994 the Alberta government introduced their Royalty Simplification system that reconciled the entire province's monthly volumetric natural gas and liquids production on this basis. To the satisfaction where the government was confident enough to assess royalty shortfalls based on volumetric reporting anomalies. What could be done three decades later is unknown, however improvement is assumed. To not undertake this will leave the industry at the behest of manual processes that consume human resources in redundant processes that should be deemed unnecessary. These people are needed in the area of making the appropriate decisions as to where and what needs to be done to earn profitability. 

Production

There is an abundance of opportunities in terms of combining, comparing and reconciling the three sources of data and information that producers and Joint Operating Committees are dependent upon. Financial, technical and operational sources that are unimpeachable is a lofty objective, however one that is necessary to base the accuracy of future decisions upon. To be consumed with data in the future may be the operative word for the unprepared producers. If we do not spend the time to organize and ensure that the data and information we are using and preparing is of this high quality, then it’s a simple manner that’s well known by most of “garbage in, garbage out.” Decisions need to be made at a scale that will be logarithmic to what’s done today. These are the areas that people will be spending their time. If we are in an endless paper chase looking for the source of the actual data, that will be the eventual outcome of the current officers and directors' obstinance. These may be the two possible scenarios that people may be pursuing in the future oil & gas. An endless paper chase, or leaving the processing and storage to the computers and we’ll make decisions based on the understanding that everyone in industry participated in building the Preliminary Specification and understand what the sources and disposition of the data are.

Production data is the most interesting challenge and we have set out to engineer the appropriate solution in the form of the Material Balance Report of the Preliminary Specification. The ability to balance the Joint Operating Committees volumetric activity, gathering, processing facilities, pipeline, tank car or truck deliveries etc for the up-stream oil & gas business is more than possible. It is well beyond the scope of what is possible for one producer to undertake as the cost would be horrendous and the value would be quite limited. On an industrial scale however it makes sense and is the foundation of the critical value generation as a result of the specialization and division of labor between people and computers. Instead of feeding differing systems with the same data and occupying our time reconciling these we can engineer the appropriate solution and establish the appropriate roles for people to pursue. Roles such as enabling automation, innovation, leadership, integration, negotiating, financing, observing, reasoning, judgment, thinking, planning, ideas, researching, collaborating, creativity, issue identification and resolution to name just a few. 

Field Data Capture

Could this be the area of focus in terms of the implementation of the Internet of Things and the rebuilding of oil & gas through implementation of the Preliminary Specification? SCADA systems have worked well for large, integrated producers and independents. Their costs are unnecessarily high and the technology is, I would imagine, coming to an end of life situation. An area that will be critical to capture the production data and an area that is the foundation of securing the production data in unimpeachable form. 

It will be a matter of perception whether I’ve opened Pandora’s box or the world of opportunity. The reality is with much of the acceptance of the Preliminary Specification. We stand at a crossroads where the bureaucracy has ruled and their domain is crumbling. They’ll continue to fight for the last few pennies of value they can extract at whatever cost to others. However, we have to move forward. It is this vision, as incomplete as is stated here, and more broadly articulated in the Preliminary Specification itself that needs to be undertaken.

Operations Management Module, Part V

 Petroleum Lease Marketplace

Petroleum Leases are the legal foundation of the land and asset base of producers and Joint Operating Committees and therefore a distinct element of their competitive advantage. As with our other two marketplace modules, participation within our virtual marketplace of Petroleum Leases are of interest to producers and Joint Operating Committees. Those people, vendors, governments and producers that operate within this marketplace are actively engaged in creating the data and information that is represented in the Petroleum Lease Marketplace module. Through the Operations Management module, the producer or Joint Operating Committee are able to engage in this marketplace to exercise their strategy and employ their competitive advantages. It is here that the operations and participation within the marketplace can be enacted with the decisions and actions they deem necessary. 

The objective of the module is to organize the unimpeachable, standardized, objective, business, operational and technical data into one location for the purpose of making decisions and undertaking appropriate actions. There are many sources of information both public and private that are currently scattered through producer organizations, the same data resides in disparate systems and accessibility is not necessarily available as expected. The purpose of this module is to eliminate the redundant and / or incorrect data being produced, where the right people have access to the right information, with the right authority at the right time, in the right location and on the right device. To approach this from a system wide perspective of the industry, where each individual producer's makeup is fundamentally different, with different systems, containing different information, serving different needs would be an impossibility. What is similar in this Operations Management module is the data, information and systems needs of each producer are all consistent and not part of their distinct competitive advantage. Therefore to approach this from a rebuilding of the industry perspective as People, Ideas & Objects et al are, standardization of the data and information, but also the systems becomes a possibility that would otherwise be unattainable and certainly untenable. A rebuilding that uses the administrative and accounting resources of the industry on a shared and shareable basis. Where the costs to build this infrastructure are shared across the industry and standard, objective systems are available in return.

Which brings us to the larger question of what it is that People, Ideas & Objects are doing? What is necessary in order to mitigate the issues in oil & gas? What is necessary to resolve the high overhead costs of the industry and to present a platform that can be what the industry needs to rebuild itself into the dynamic, innovative, accountable and profitable industry it needs to be? Ensuring that profitable energy independence is attained in North America, everywhere and always. This is certainly not going to be done on the basis of what the systems approach has been in the past. And to further that point, what is operating within industry today that can be considered of value and worth saving? An industry that has summarily destroyed itself. The arm’s length distance that we’re able to maintain by making the Preliminary Specification the necessary rebuilding of the industry into the dynamic, innovative, accountable and profitable industry that we need. Will be far simpler and more consequentially, quicker to do from a clean slate. Uncontaminated by its past failed culture and its legacy of “muddle through.”

From my perspective active producer participation is not an option but there will be many who may choose not to participate. Whether that is individuals or producers they’ll have their reasons and we can’t please everyone. If they’re towards the end of their career or their firm is facing difficulties it would be understandable. What we’ve done is introduced mechanisms where everyone can participate and yield some monetary benefit as a result of their participation in this effort. From our Profitable Production Rights, our user community and their service provider organizations, producers attain far lower overheads through the sharing of administrative and accounting infrastructure through our Cloud Administrative & Accounting for Oil & Gas software and service. Secondly they’ll have the price maker strategy ensuring that the marginal cost on any production will be covered and therefore only produce profitable oil & gas production everywhere, and always. Each of these have substantial monetary and value benefits to those participating producers. Participating in benefits from both the oil & gas and the Information Technologies industries. Alternatively what reason will be provided to producers investors as to why a producer is not participating in enhanced organizational profitability? 

Therefore the Operations Management module is the core of where a producer will be able to manage and implement their distinct competitive advantages of their land & asset base and the coordination of the markets earth science & engineering resources. This demands that both feet be placed firmly in this future so that the sinking of the current industry doesn’t pull everything down with it. To hedge one's bets may be possible, and to await the results of others efforts may also be possible. However, I think those producers that hedge may be put in jeopardy of being left a laggard as the industry's trajectory accelerates and those that hedge would not be able to comprehend the new dynamics or compete. 

To suggest that a wait and see strategy might be best to determine if this initiative is successful will be a mistake. There won’t be anything that will or could be tried again. Officers and directors of the producer firms have left it far too long for me to have established the Intellectual Property of the Preliminary Specification as the only viable option within the industry. 2023s natural gas prices have proven they have no alternative plans and no idea what it is they’re even doing. Any future initiative will need to preclude the Intellectual Property contained within the Preliminary Specification and its derivative works. Time has been consumed that could have been used more productively. All as a result of their “muddle through” and “do nothing” strategy and operating procedure. 

Profitable Production Rights

As with the service industry experience during COVID. Producers have shown their understanding of business extends to the closest group to them that has money to pay their costs. At one point the service industry became the select choice and was hollowed out by the actions of producers. SLB and Halliburton left the continent to pursue global opportunities. Domestic suppliers were relegated to cutting up their equipment for scrap metal to pay their bills. Investment capital and banking are as foreign a concept in the service industry as one could imagine. The reputation of the producers has been sealed and the need for capital in the service industry will have to be undertaken by them on the basis of the “producers broke it, producers will need to fix it” out of the goodness of their hearts, philanthropically. This is the experience of the ERP systems vendors of the early 1990s. And since then the industry has been unable to raise capital as we’re incapable of proving how earnings could come about with the producers operating in the manner that they do. 

People, Ideas & Objects have always looked to source our revenues from the production of oil & gas. This has been a futile exercise that we’ve been unable to overcome as we are at the same time actively disintermediating the industry. The upside has been that we’ve been able to prove that the industry has existential issues associated with the current form of organizational structure and management. And the only method forward is to terminate the methods used today. The Preliminary Specification is the only oil & gas specific ERP application that is proposed to be built on a tier 1 provider, Oracle Cloud ERP and distributed to all producers through our Cloud Administration & Accounting for Oil & Gas software and service. Therefore new methods of funding needed to be developed to finance the development of the Preliminary Specification in order to have it built. Profitable Production Rights maintain the direct or indirect source of its proceeds from the oil & gas production. 

We therefore developed the Profitable Production Right which provides its rights holder with the ability to license a producer with exclusive access to the People, Ideas & Objects et al Cloud Administration & Accounting for Oil & Gas software and service for one boe /day. Profitable Production Rights hold exclusive access to these services as they are the ones that are financing and building the facility. We believe that the Preliminary Specification when built provides the Profitable Production Rights holder with two advantages. To participate in the oil & gas and IT industries simultaneously by providing access to the Preliminary Specification which is the only system that offers the means to produce oil & gas profitably, everywhere and always. It’s not enough to own the oil & gas asset anymore, it's also necessary to have access to the software that makes the oil & gas asset profitable. Secondly we believe that as a result of our Intellectual Property and the market situation we are the only system alternative that has identified these issues and built a solution to them. Therefore the Profitable Production Rights gains a material value proposition which they hold in the form of the production right that allows a producer to have the contracted boe / day processed through the Cloud Administration & Accounting for Oil & Gas software and service. Only Profitable Production Rights owners have access to the software and service. They’ll be able to license, transfer, assign and market their Profitable Production Rights based on the market that is established here for those rights. Rights holders will negotiate with producer firms their share of this value proposition.

It is incumbent therefore that each producer in their Operations Management module has the means in which to secure the appropriate amount of Profitable Production Rights in order to manage their production profile. This will be part of the Petroleum Lease Marketplace section of the Operation Module as an element of that market. 

Areas of Mutual Interests

Defining the producers or Joint Operating Committees agreed to commitments in terms of their Areas of Mutual Interests in a graphical form. Where the producer can see within the Petroleum Lease Marketplace the ability to monitor and control their land position with their working interest partners. If an AMI is established in an area that is expanding they need to know what their obligations are and what the consequences of participation will be. 

Bringing these to the attention of those with the roles, responsibilities and authority in the Operations Management module from the Petroleum Lease Marketplace module is appropriate. To maintain operational control with high quality, unimpeachable information on future obligations and opportunities will ensure that producers are not extended or exposed to unwanted consequences or commitments. 

Lease posting, bidding, rentals etc.

What is the status of the Petroleum Leases that are held by the producers? Although not an active part of the processes involved in securing or managing these leases. Providing the unimpeachable data and information of the producers land holdings is necessary for a clear understanding of their competitive advantage. 

In addition to the producers information access to the public land information will be provided. Determining the land position of others, what are the posting and bidding positions of adjoining lands to the producer properties and what are the opportunities in areas of general interest of other producers. 

Market Acquisitions and Divestitures 

What would it take for our user community and their service provider organizations to provide for the ability to build a market of all publicly announced properties and divestitures of firms and agents in the industry. To have this data and information organized as a single source of searchable information, where discovery, serendipity and spontaneous order would bring about new opportunities on top of what was already available and conducted in the industry? As a shared resource the robustness of this service would be exceptional. What could be undertaken from a systems development point of view by one individual producer would not be worthwhile as the costs would outweigh the benefit and make the expenditure uneconomic. Spontaneous order and serendipity need to be restored in order to increase the dynamic nature of the industry. When people are able to find one another through sales and purchases that were unknown and previously unknowable, then new business and innovations will develop. New markets can be created and value generated in innovative ways.

Operations Management Module, Part IV

 Producer Operations

It is through the Producer Operations interface of the Operations Management module that the user will be able to access the aggregate data of the entirety of their interests in their various Joint Operating Committees. This view contrasts with the similar interface available when the user drills down to an individual Joint Operating Committee. It is here that we see the two distinct and operationally diverse perspectives of how the Operations Management module prepares for both the producers as corporations and as participants in a Joint Operating Committee. 

Access to the Operations Management module within the producer, would be tightly assigned and applicable to those that are concerned with ensuring that they attain the highest level of profitability everywhere and always from their operations. Exposure of the firm's data and information contents under Producer Operations shows the majority of the modules of the Preliminary Specification reporting through this portal view. The purpose in this module is to combine the business of the oil & gas business with the operational control and technical areas and the deployment of their resources etc. Populating the appropriate decision makers with the actual, factual data and information that is the basis of their performance. Determining from these factors what decisions are that need to be made, when and how they’re to be implemented. 

Please note that People, Ideas & Objects have determined that the data and information of the producer firm demands a higher classification of security than what the Joint Operating Committee does. The difference is the producer information is contained for their eyes only, and only to a small subset of authorized individuals. The Joint Operating Committee in many cases deals in publicly available information and any proprietary data that it may have is shared amongst the members of the Joint Operating Committee. It is also recognized that the Joint Operating Committee information will reflect the gross expenditures and revenues of the property as well as the specific producers interest share of those costs and revenues. 

People, Ideas & Objects have been critical of the fact that “recycle costs” and independent engineering reports are depended upon far too heavily to make business decisions. However, what is it that they’ll use when the business information provided to them is more corporate in nature, reflects estimates of the costs of overhead and does not represent any allocation of the capital costs as a monthly cost, or ever. Combining the business, operations and technical data, information and resources of the producer firm is what is needed to be achieved in order to resolve the issues that have manifested themselves into the damage and destruction that’s been caused. If there is a culprit in this it is the inadequacy and poor quality of the accounting data and information, producer ERP systems and the organizational structure which is predominately derivative of what existed in the 1960s. And as we’ve repeatedly stated, the obscure and opaque nature of this has been deliberate and orchestrated by the producer officers and directors for their personal financial advantage. When such damage is done to an industry, where nothing is done to remediate these issues, where the calling is to muddle through, where only scapegoats, dishonesty and blaming are provided and the one specific group who have the fiduciary responsibility, authority, accountability and resources to deal with the issues. And it is only that group that benefits financially over all others? If you were in that group, what level of accountability would you seek to instill within the organization you’re responsible for?

We should take a moment here and understand that the source of this issue and the lack of accountability is the cultural means of oil & gas operations throughout North America. It is therefore going to be the point of greatest resistance in terms of the pushback and force applied by the status quo to maintain their turf. We need to take note and understand the significance of the Operations Management module in terms of the need to forcefully amend this culture of oil & gas and eliminate what exists culturally today. This will be one of the points of greatest resistance during developments of the Preliminary Specification. McKinsey notes in a February 28, 2014 article Change Leader, Change Thyself.

The Producer Operations are the portal for producer firms to have the actual, factual, timely and accurate data and information brought together in one area. It is not an original source of any of this information, all of it is drawn from other modules of the Preliminary Specification, other systems of the producer firms, Joint Operating Committees and public sources. A source of unimpeachable facts of the state of affairs that can be relied upon and decisions based upon. It is also a means to control the operation with our Industrial Command & Control and implementation of IoT to conduct any of the actions necessary to remediate issues, exercise opportunities, to innovate and ensure profitability is earned. 

If we look to the future and the changes being implemented and opportunities created through the development and implementation of the Preliminary Specification. As noted with the Internet of Things, Swarm network and Oracle’s comprehensive and mature technologies, the shared and shareable nature of the administrative and accounting capabilities and capacities of the service providers, their implementation of an advanced specialization and division of labor and the challenging and difficult future that the oil & gas industry faces in the next 25 years. We see the need for these changes first and foremost. The demand to organize these in order to capture them. However what we also see is an exponential increase in the volumes of data and an order of magnitude of complexity. If natural gas prices are subject to overproduction in early 2023, after all that we have been through, after all that is happening in the marketplace at that time, after all the assurances they had things under control, we find the Officers and Directors do not have a capacity, capability, willingness or desire to even admit they have an issue. Change is inevitable in some form. We can orchestrate it constructively with deliberate actions such as what People, Ideas & Objects et al describe. Or we can accept what the foreign sources of oil & gas will define as the limits to our economy. 

When our service providers are providing objective, standardized data and processes they provide industry with a method of measurement, understanding, assurance, accuracy and timeliness that would not be possible without them. As a shared resource the costs of the service providers will be substantially less than what is required to build and maintain similar internal capabilities for each individual producer. Standardized and objective administrative and accounting doesn’t affect the competitiveness of the producer firm. What will be the producer's competitive nature is the strategy, land & assets and coordination of the markets earth science & engineering capacities and capabilities and how they’re profitably implemented. 

Standardized, objective data and information in the administrative and accounting components across the industry will assist producers to resolve performance and innovativeness on that shared understanding. A necessity if only for the fact that, when the determination of the standardized, objective accounting states that a Joint Operating Committee is not producing a profit. The producer will know that it is in their best interest to shut-in that production to maximize their corporate profitability, save their reserves for the time when they can be produced profitably, ensure the costs of their reserves do not have to incur the additional costs of any future losses, minimize the production and storage costs and remove the marginal production from the commodity markets. That indeed the assessment it was unprofitable was on the same standard, objective method that all of North American production was. 

Financial Marketplace

The purpose of the Operations Management module is to provide producer staff in the areas of the business access to the information they need to operate. This will include the standardized, objective financial, operations and technical information. Access to the necessary information may be limited here as the Financial Marketplace module, from the producer perspective, is focused more towards the corporation's cash and financing needs. It is not, as it is conceived here, an accounting information module. There will be a greater role for this section of the module in the individual Joint Operating Committee sections as the cash balances, inventories and cash calls for their information. The ability to execute transactions such as cash calls should be a feature.

The Financial Marketplace module, just as the Resource and Petroleum Lease Marketplace modules use the Marketplace Interface. The Marketplace Interface is a virtual representation of these three markets in a simulation with individuals participating as avatars of themselves. The ability to conduct and engage participants within the various marketplaces to conduct business is fully supported by the Marketplace Interface and is part of the ERP capabilities provided by the Preliminary Specification. The importance of the Marketplace Interface is not necessarily fully understood and comprehended at this point in time and place. I see this as a new opportunity and medium in which people are able to engage with the full support of a business environment available to them. Something that falls within the immediacy of a telephone conversation with another individual and a meeting arranged next week with all hands. The Marketplace Interface provides a more dynamic environment that is able to fulfill immediate needs with many supported by that business environment. 

The most valuable and important aspect of our Marketplace Interface is in the form of the two critical elements of economic development that we’ve lost as a result of software deployment across the globe in the form of the Internet. Serendipity and spontaneous order are unable to happen when participants are located in remote locations thousands of miles away from each other. With the Marketplace Interface, virtual real estate can be established by vendors and participants to demo their products and services, participants at those demos may discover one another and find similar needs. Either provide feedback to the vendor to their needs or innovate upon products that are different from what is demonstrated, but can use some conceptual difference that the vendor has demonstrated in their own product or service. Innovation is iterative and the foundations of the organizations and facilities of those organizations are critical to the success and failure of their innovativeness. 

Resource Marketplace

How are operations to be conducted? Who is available? Who is selected? These are the questions that are asked and answered through the Resource Marketplace module. Having a global view of the producer's operating environment the user will be able to engage tactically and strategically to ensure profitability is first and foremost in the minds of everyone involved including the service industry, within the producer firm, Joint Operating Committee and elsewhere.

The Resource Marketplace module has strong connections with both of the Preliminary Specifications Research & Capabilities and Knowledge & Learning modules. The two modules that are involved in the development, in this case, of the producers competitive advantage of their coordination of the markets earth science & engineering capacities and capabilities. And the deployment of those resources into the Joint Operating Committees they participate in. To innovate efficiently. Which means they don’t repeat mistakes repeatedly throughout the organization and then again two years later. That not everyone in the organization is involved in chasing ideas. And deployment of resources in new and innovative ways is only conducted in tried and tested developments. 

Oil & gas has a resource constraint problem in the engineering and geological sciences that has been identified but remains unresolved. The age of the current mind trust is rapidly retiring and the intake from universities is inadequate to replace them. There is also the fact that each incremental barrel of oil & gas produced demands more engineering and geology in order to produce it. The expectation that we will sustain energy independence. Rebuilding and refurbishing are also demands on these technical resources. However, first we have to overcome the difficulties in the industry today and engineers and geologists will be at the forefront of the future of the industry and its innovations. 

The Preliminary Specification has solved the issue in the following ways. Specialization and the division of labor are both the solution and the aggravating factor in the future. To resolve the issue, specialization is the only method capable of satisfying the type of resource issue industry faces. That, we believe, will only lead to the point where each producer will be uncommercial in their attempt to maintain their just-in-time earth science and engineering capacities and capabilities. The scope and scale of these needs will outweigh their commercial viability. Therefore the deployment of specialized providers through the industry to fill out the generic processes involved in the sciences will need to be established. These will be sourced as required by each Joint Operating Committee and cost into the program. The producer will in turn be able to become highly specialized in an area that they will be able to build value for their land & asset base. And in addition, able to deploy their capacity and capability as a resource back into the industry as a service provider to defer the costs of maintaining, enhancing and expanding that capability. 

Industrial Command & Control

Superimposed across the producer and service industry population are generic classifications of roles and responsibilities of the professions involved in the exploration and production process. These generic roles, responsibilities, authorities and accountabilities can be assigned to those that qualify and are therefore able to undertake that task within a producer firm or Joint Operating Committee. Using the additional facilities of the Work Order and Job Orders documentation of the work, its assignment and completion will be available. 

Additional features such as delegation of authority and other enhancements are included in the Industrial Command & Control system of the Preliminary Specification. Consistent with the method People, Ideas & Objects has chosen to deal with the resource constraints in the engineering and geological fields. The ability to augment and deploy a producer or Joint Operating Committees capacities and capabilities through the markets of specialized resources is another stated use of the Industrial Command & Control. 

AFE

Authority for Expenditures is the standard fare method of establishing budgets for capital outlays, documenting approvals of all participants in the Joint Operating Committees and reporting of those expenditures based on the agreed to budgeted amounts. Supplementals and other features are also included in these processes. 

As with all the other processes detailed in the Operations Management module. These are dynamic in nature and populated with live data, or from a business perspective can be easily rolled back by the user to reported data, representing the last accounting periods close or production month information. 

Work Order

The Work Order has a dual-role feature and process managed and developed in the Preliminary Specification. The first role is to facilitate working groups within the producer population to conduct research and development on various science and engineering based principles. These working groups have waned in the past few decades and will soon be needed in massive volumes in order to establish a higher level of iteration between the underlying sciences and technologies that are developed, and the market innovations derived from them which will then form the basis of new science, etc. What our Work Order provides is the ability to establish an ad-hoc organizational structure that is flexible enough to consider the various forms of contributions during participation in a working group. To manage these without the bureaucratic legacy that has defeated the purpose in establishing these working groups. When those individuals who participate are audited for vastly longer periods of time than their participation.

The second role of the Work Order is directly related to the deployment of resources in the manner necessary for the producer to acquire and deploy the engineering, geological and service industry resources that are necessary to conduct such work. To budget, to record and accumulate the costs of these deployed resources and to source and coordinate the market for incremental engineering and geological resources.

There is a feature in the Preliminary Specification that is described in the Security & Access Control module that sets out to define the organization's Industrial Command & Control. It is here that the Oracle role system of their database is defined to designate the authority and capabilities of each individual role and or responsibility within the organization and how those are conducted. These roles and their responsibilities are established and standardized on an industry wide basis through our user community. Adopting these in the Work Order we are therefore able to impose an organizational structure over these tactical organizations that will be established in the producer firm’s or Joint Operating Committees being deployed to complete a task. Cobbling together and assigning the appropriate roles, responsibilities and authority of the individuals during their tenure on the specific Work Order.

Purchase Order

This is standard fare purchase order processing that has developed over the past 75 years or more. Oracle Cloud ERP has facilities for these with the ability to be augmented as we need them to fit the oil & gas industry. Changes are included in the area of the Joint Operating Committees capabilities which will include enhanced holdbacks etc.

Job Order

Is another development in the Preliminary Specification. If we looked at the Work Order from the perspective of sourcing and deploying the resources, managing the budget and recording hours for internal and consulting roles being sourced. Then the Job Order is purely a tool to tactically document the execution of commands to fulfill operational tasks in an authorized manner. Simply nothing can be conducted without the appropriate Job Order in hand. It will be complete with the appropriate persons being informed of the Job Order and the ability to designate authorities etc. It is based on its own email system that manages only Job Orders and is established for the documentation and implementation of them.

General 

Lastly People, Ideas & Objects are user community based software developments. These are able to develop as the need arises and may include additional features, functions and processes being managed to enhance the Operations Management module. I am only attempting to define the broader picture here, not the specific details. 

Operations Management Module, Part III

 Enabling Technologies

Internet of Things (IOT)

There are three inherent characteristics of the IoT that mark the changes in “what and how” the Internet is operated. The first is the ability to acquire unique individual addressing through predominately IPv6, the next iteration of the Internet. Enabling an addressing capability that is 2 to the power of 128. Which is a sizable volume higher than the current IPv4 addressing capability of 2 to the power of 32. Therefore each device on the Internet has the ability to have its own unique addressable location. Therefore it is identifiable and accessing that one specific device in that one location in that one factory in that country… There are current workarounds being offered where IPv4 is masking IPv6 addressing which is adequate for some purposes, however for IoT it is inadequate. IPv4 addressing is quickly running out of unique addressing and the costs to acquire an address reflects its rarity. The second and third enabling capabilities of IoT are the capacity to therefore monitor, or as Oracle describes “Pull of Data” and control, or Oracle’s term of “Push of Instruction” those devices that are connected and easily identified through their unique addressing.

The Internet has changed business in exceptional ways that today appears quite advanced from the prehistoric age of only a decade ago. Yet the implementation of Information Technology is poor as the maturation of the underlying technologies have come of age. What appear to be dramatic developments and improvements have done little to affect the productivity and performance of organizations and its personnel. Issues and opportunities that existed then, remain unresolved and unrealized today. The promise that Information Technology provided has never been realized and I think it’s a false expectation when it comes to business. Having a new version of the Windows operating system will do little to increase anyones productivity. It is the application of Information Technology through the business model, the business strategy and making it work for us beyond the install script is where the value proposition lies. IT is not the solution but a tool to be used to prepare the business solution.

In saying that, this next phase of the Internet will be difficult to ignore in my opinion. The Internet of Things (IoT) is one of three of the underlying technologies that provide oil & gas with People, Ideas & Objects Operations Management module opportunities. With the disparate nature of its geographical regions and locations, process based manufacturing that uses a highly sophisticated infrastructure. This complexity and control has been well managed to this point by the producer firms. Questioning its continuation of being well managed is reasonable when the service industry's capacities and capabilities, the beginning of this process, have experienced such severe destruction. The recent strategy of the producers to focus on clean energy is disconcerting and reflects the uncaring nature of its officers and directors in approaching the business of the oil & gas business. 

Applying IoT to the business model of the Preliminary Specification where the Joint Operating Committee is the key organizational construct. One of seven distinct Organizational Constructs that form the culture of the new oil & gas industry we’re building. It’s the natural consequence of a reasonable approach due to the value that can be gained. Automation, specialization and the division of labor would need to be redefined as a result of optimizing these three enabling technologies of the Operations Management module. A process that we’ve proposed and are applying throughout our developments. It would be redundant to undertake the process of developing the Preliminary Specification only to then immediately return upon its completion to implement the IoT opportunity. Therefore it is within our budget that we are undertaking the Operations Management module at the time of our user communities discretion and during our initial developments. 

Communications

Starlink

A technology has recently become available to enable this Operations Management Module. Elon Musk’s Starlink is a product launched by SpaceX and although operational at the moment with 3,000 satellites, it has not been completed at its full deployment of 42,000 satellites. What we are witnessing is the deployment of a new technology that enables the Internet to be available anywhere within the domain of our proposed North American marketplace. The speed at which this technology is being deployed is remarkable.

Currently there are a variety of means in which to connect to the Internet. With North America being the domain of People, Ideas & Objects concern, we are undertaking a large geographical area. Producers will have operations that are remote and may have a variety of methods to connect to the Internet at some of their operations. None of these will be standard across the continent. With SpaceX People, Ideas & Objects will be able to standardize the connectivity of all locations and enhance the data and reporting capabilities of all producers through our Cloud Administration & Accounting for Oil & Gas. The advantages of doing so are substantial and they fall within the objectives of what we seek to achieve here throughout the Preliminary Specification. Although complex in its makeup, the Operations Management module is a contributor to the producer's automation, innovation and profitability.

Swarm

LOW COST GLOBAL DATA FOR IOT

Swarm provides low-bandwidth satellite connectivity for only $5/month using ultra-small satellites in a low orbit. Swarm satellites cover every point on Earth, enabling IoT devices to affordably operate in any location.

In direct response to the high cost of Starlink, SpaceX purchased a dedicated IoT network provider. The Swarm network is a configuration of 160 lower orbit satellites. Although the bandwidth is lower than what Starlink provides, that is not an issue when it comes to the Internet of Things. Whether the need to capture small numbers of data variables on a real time basis throughout the day, or to gain the real advantage of the IoT, which is the ability to “Pull of Data” and “Push of Instruction” devices. Network requirements are substantially less demanding than what is experienced when dealing with typical users data requirements. No one will be watching videos or browsing the web on Swarm. The Swarm network is also the means in which Starlink is beginning to offer text based cellular phone coverage in areas where there is none.

The Cost of using Swarm in comparison to Starlink is telling. Starlink is $2,500 for the equipment and $500 / month for the service. Swarm is capable of bringing these costs down by as much as 96%. To have each Joint Operating Committee connected, no matter how remote, which is what I believe would be the requirement, would be far less costly to achieve a full implementation of IoT through SpaceX’ Swarm network. At $100 for the hardware and $5 / month for the service it would be incidental as a cost. What this purchases in terms of network configuration and number of IP addresses is unknown to me at this time. 

As an example of the possible use of the Swarm network’s use in the Preliminary Specification and application of IoT. People, Ideas & Objects have expanded the functions and process management of the Material Balance Report to the highly engineered document that it always should have been. The issue has always been the value generated for one company was limited in comparison to the significant costs to engineer it appropriately. With our budget aggregation and distribution of the application across the industry makes this value add a critical feature of the Preliminary Specification. Information Technology has now also matured to undertake a task of this nature. As it was initially written in 2012 the Material Balance Report used the monthly production numbers. Now with IoT and the Swarm network the ability to capture daily production volumes and re-engineer the field data capture process away from SCADA would be attainable, in time. This would not only be possible but may be of advantage. It’s not that daily production volumes are used for any financial calculation today. They could be used in the Material Balance Report to calculate the estimate of next month's revenue and royalty accruals based on the reported daily volumes, on the known characteristics of the production and the prices of those products. Increasing the accuracy of the accrual with no man hours being incurred in any aspect of the accrual process. 

The use and value of IoT, both Starlink and Swarm networks would be determined through our user communities' innovativeness and their interactions with the dynamic, innovative, accountable and profitable oil & gas producer firms. To suggest anything other than this obvious accounting accrual possibility is limiting the value of the IoT in terms of the Preliminary Specification. In terms of what the engineering possibilities are is certainly unknown to me and we can only assume that better information on a timely basis with remote Pull of Data and Push of Instruction is a benefit to that discipline. As I’m certain there would be much more our user community would be able to generate in terms of value.

Each Joint Operating Committee would likely be subscribed to the Swarm network. The issue in defining the allocation of the number of nodes to the Swarm network is the monthly demand for data. The monthly maximum use of the network is limited to 600 kb, or .6 MB or 300 pages of text. Reflecting that only small packets of data are being transported across the network. Whether that is Pull of Data or Push of Instruction, the IoT device, it is reasonable to assume that a small Joint Operating Committee would only demand one node and distribute the service to a number of addresses, whereas larger ones would need several to accommodate the higher bandwidth requirements. Standardization and deployment of these technologies across the industry would bring about an infrastructure that innovation would be built upon. When it becomes standard practice, a part of the business and available for reasonable costs through our user communities service providers the industry would be operational at a higher capacity.

A proof of concept of the Swarm network, and an endorsement of its much lower cost model, is the fact that Swarm networks are currently deployed in oil & gas. 

Moving to the key Organizational Construct of the Joint Operating Committee we’ve also made a fundamental change in recognizing and aligning the administrative and accounting to the operational culture of the industry. With these three enabling technologies of IoT, Swarm network and Oracle we’re seeing an explosion not only in the data, the processes and the number of service industry firms being used by the producer firms but also in the opportunities. Much the same as our user community service providers will be leveraging such value from their work.

Operations Management Module, Part II

 Oracle

People, Ideas & Objects have selected Oracle as the base Information Technology provider of the Preliminary Specification. Using Oracle Cloud ERP as the foundation, with all of their underlying technologies, which holds the premier spot in terms of enterprise technology providers. Oracle recently began moving towards heavily automating the processes to build substantial value for organizations throughout the business world. Taking advantage of their comprehensive solutions to partner with J.P. Morgan Chase to use their credit card in the recording of corporate expenses throughout the expense reporting process. When an employee uses this credit card they can designate the charges destination and Oracle will process it to ensure it fits within the companies eligibility policies. The individual will not have to spend the many hours filling out expense reports. Others won’t need to review them and the payment of charges will be handled appropriately. Eliminating the many thousands of hours consumed in the yearly process of expense reporting to a few milliseconds of processor time. Additional process automations are being undertaken for logistics with providers in those industries. 

These automations will be comprehensive in nature and will build upon themselves as users realize the combinations and permutations of the various processes and how they’re related. The value earned by those firms that are able to move to this architecture and organize themselves in this manner will be able to reap substantial rewards in performance, productivity and profitability.

This is the same undertaking that People, Ideas & Objects, our user community and their service provider organizations are conducting with the development and implementation of the Preliminary Specification. The difference between what we are proposing with the Preliminary Specification and what Oracle are doing is they are providing the generic business processes and we are proposing to tackle the North American producers specific oil & gas attributes. Having the full stack of unique oil & gas and generic business process automation being handled and constantly iterated upon for the purpose of enhanced productivity and profitability. 

People, Ideas & Objects et al have targeted the North American oil & gas producers as the market for our Cloud Administration & Accounting for Oil & Gas software and service. We have further defined this market to include Exxon Mobil and Chevron down to the startup that began at the breakfast table this morning. This appears to be an impossible and misguided ambition when we consider that Oracle Cloud ERP and their underlying technologies are amongst the most comprehensive and technically difficult Information Technologies to support and use. Which we would agree. However we would note that the configuration of our user community and their service provider organizations provide the software and services to support the producers. We would ask under the basis of this configuration, what would preclude the small startup oil & gas organization from realizing the benefits of using People, Ideas & Objects for the management of their expense reporting with the Oracle / J.P. Morgan Chase credit card integration we just highlighted?

Such was the theme that was evident and became abundantly clear during Oracles CloudWorld 2022 conference. It was there they unveiled the comprehensive nature of their offering and the drive to move in this direction. A drive that has prompted this rewrite of the Preliminary Specification and the inclusion of the Operations Management module. People, Ideas & Objects believes that the promise of Information Technology has never been fulfilled as a result of the lack of maturity in the underlying base of the technologies. Oracle has worked diligently since its founding to put that architecture together and to make it robust. And are now able to turn it towards what everyone expected Information Technology to provide. It would be a shame for those companies that have become disenchanted with Facebook to believe that Information Technology is a false promise and will never deliver. Now is not the time to question the technologies but to understand the time that we are in and to act.   

Oracle CloudWorld 2022

Being bold is the way to win, that being timid could wipe you out.

 - Safra Catz, CEO Oracle 

End to end transformation is another common theme that I frequently saw throughout this conference. What purpose would it make to trim around the edges and try to resolve what are truly existential issues to the oil & gas organizational methodology used today. One of the many points that this conference reflected is that now is the time to act. Bold action at this point will enable organizations to realize the benefits of the disruption from Information Technology. It was stated in Safra Catz’s Keynote Presentation that it is not the time to issue a White Paper. In my self-interest, I see this as the time necessary to evaluate options will be too costly in terms of the long lead times to consider the opportunities and research the issues have passed. The time to implement a “plan” is now. The Producer's plan needs to be bold, it needs to address the issues that are causing significant difficulties throughout the greater oil & gas economy in North America. The plan needs to address the existential issues that challenge the current method of producer organization, the one that has summarily failed, has no support or future. And the only plan available is the one from Oracle, People, Ideas & Objects, our user community and their service provider organizations in the form of the Preliminary Specification. 

Oracle is the Premier, Tier 1 ERP Provider

What has been difficult to express in the Preliminary Specification is the robust platform that it is built upon. Oracle Cloud ERP is the premier tier 1 ERP solution in the marketplace. Which is easy to state and difficult to understand if you’ve never seen it in action. The nature of their product, the maturity of their technology and that easy to use Redwood interface has to be seen to understand that it is People, Ideas & Objects et al purpose to stand on the shoulders of this absolute giant. This referenced url will take you to Oracle’s Best Practice Demo Series where you can select a number of different videos to gain a basic understanding of the quality, fit and feel of Oracle Cloud ERP. I can not recommend highly enough that everyone should view the “Simplify Your Month-End Close by Automating Joint Venture Management” to learn the details of how comprehensive and high quality Oracle’s Joint Venture Management product is. It is by far the most comprehensive and the best Joint Venture Management system that is available in the marketplace today. And I am not aware of any North American producer using it. 

The Preliminary Specification has defined seven distinct Organizational Constructs. Our key Organizational Construct is the Joint Operating Committee which is the organizational structure that exists to deal with Joint Ventures, the cultural method to represent the partnership organizations established in oil & gas. When we move the current corporate models culture into alignment with the Joint Operating Committee, everything within the producer and industry changes. Nothing in oil & gas remains consistent with the way management operates the industry today. We are aligning the business directly on to the operational and technical cultures of how the industry operates for the past 100 years. This is a culture that is derivative of the partnerships that are represented in oil & gas operations everywhere. 

It is our hypothesis that in the 1960s when computers were introduced accounting became one of its uses. Soon after the tax, royalty and regulatory environments were added and soon the ERP systems only recognized the corporate organization and nothing to do with the oil & gas business of the business. A separation between the business vs the technical and operational areas grew and became a source of conflict that precipitated a lack of communications and two independent islands competing for control. Operations dominated out of necessity and the corporate elements were left to satisfy their demands for cash. That is what we’ve eliminated in the Preliminary Specification by aligning the business to the operations and technical culture and the Operations Management module is what and how that will be accomplished.

We are using Oracle’s recommended architectural method of “additions” to the base of all of the Oracle products that we will use. This way none of the code between their efforts and ours will cause any difficulties being released into commercial software if there are changes in either environment. Exploiting full use and value of the object oriented programming model. At the same time I can state unequivocally that both Oracle and People, Ideas & Objects are relational database developers first and foremost. 

Recently Oracle implemented a quarterly update schedule for Oracle Cloud ERP where incremental changes and upgrades are scheduled for release each quarter. People, Ideas & Objects will be participating in this quarterly release schedule for our own updates and have noted an added benefit as a result of the Preliminary Specifications structure benefiting from the Organizational Construct under the title “New Growth Theory.” That we are sharing the “non-rival” costs of the infrastructure of accounting and administration across the North American producer population. Therefore the need for each producer CFO to be heavily involved in these ERP changes each quarter can be reduced to a less onerous task when the industry can plan and implement the upgrades on a shared or non-rival basis. Innovation is incrementally increased through iterative developments. They are not big bang changes unless the organization is challenged by existential threats such as the oil & gas producer organizations are today, or through disintermediation.

We are not rebuilding an ERP system from scratch to bring about the Preliminary Specification. We are defining and catering specific oil & gas related software developments that are necessary to deal with the issues and opportunities in oil & gas today and the future. Configuring and augmenting Oracle Cloud ERP to do so. Reorganizing the industry to function on a performant and profitable basis. The Operations Management module combines the business, operations and technical groups into one functioning organization using the same data. Establishing the team environment necessary to collaborate within the producer organization as well at each individual Joint Operating Committee. Which is deemed a necessity to proceed into the difficult and challenging future where the most dynamic, innovative, accountable and profitable producers are provided with the most profitable means of oil & gas operations.

Oracle Supply Chain Management

As was just mentioned above, the underlying use of Oracle’s Joint Venture Management solution will form the base of what we develop in the overall Preliminary Specification. Each module of the Preliminary Specification has significant elements of the Oracle Cloud ERP suite of applications that provide the starting point for the work we’ll be doing for oil & gas. We are not recreating the wheel, only building upon it. And using Oracle’s defined method of development architecture that has their Oracle Cloud Fusion Applications and Fusion Middleware as the tools to enhance our additions and not through individual stand alone applications. We can accept this architecture as Intellectual Property is one of People, Ideas & Objects three competitive advantages. Our proprietary content is secured in published form. Therefore in terms of the Operations Management module we’ll be using Oracle Supply Chain Management as the primary base offering and include many other Oracle applications and features being carried through the connections with other modules of the Preliminary Specification. 

To gain an understanding of Oracle’s Supply Chain Management offering, it is a good start to review the following YouTube videos. 

Oracle developed their cloud based Supply Chain Management solution through the development and integration of their enterprise hardware manufacturing business that they purchased from Sun Microsystems. This development was also used to bring about a Supply Chain Management capability into the Oracle Fusion Middleware and ERP Applications which were and are the source of Oracle Cloud ERP today. One of the unique characteristics of Oracle’s hardware manufacturing process is that each order is Configure to Order (CTO) and delivery is made to 156 countries. Approaching the development of their Supply Chain Management module in this manner is consistent with Oracle’s past methodologies. What is commonly referred to in the software development industry as “eating your own dog food,” or using the software that you develop yourself, Oracle Cloud ERP is used throughout Oracle’s organization. 

At People, Ideas & Objects our user community provides for the most profitable means of oil & gas operations, everywhere and always. That is the motivation that drives what it is that we’re doing. Are producer profits from a “real” sense an adequate motivation for our user community to maintain their focus and commitment during the development, implementation, service and maintenance of the greater oil & gas economy? I believe they’ll only need to reflect back on this period and understand that the disaster that is oil & gas, service and tertiary industries, and what will become of the industry in the next decade is a result, and is wholly attributable to the lack of real profitability at these producer firms of a primary industry. Therefore it is reasonable to suggest that our user community is motivated. But there’s more. Our user community are the only people licensed to make changes to the software and services that are derivative of the Preliminary Specification. They are the principles in the service provider organizations they own and operate which service and support the producer firms with the People, Ideas & Objects software they’ve developed. Therefore, they too will be “eating their own dog food.” 

Innovation is one of our major initiatives and one of the seven Organizational Constructs of the Preliminary Specification. Innovation needs to be constructed within the organization before it’ll be realized. Therefore much of the design and development of People, Ideas & Objects et al is focused on that organization for both the producer and the greater oil & gas industry. Dynamic, innovative, accountable and profitable producers will approach the dichotomy of their profitability vs affordable, abundant and reliable energy which they’ve innovatively provided to the consumer. 

It is here in innovativeness that Oracle presents a previously unrealized and otherwise unavailable benefit of Oracle Cloud ERP. The feature is the quarterly upgrade cycle of Oracle Cloud ERP. A feature in which People, Ideas & Objects have architected the Preliminary Specification and therefore oil & gas producers will fully realize. What we know of innovation is iteration and user involvement go hand in hand to make progress. 

It was in Sources, Procedures & Macroeconomic Effects of Innovation by Professor Giovanni Dosi that we learned.

… the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulations, tax codes, patent and trademark laws and public procurement.) (p. 1121) 

As Dosi notes, having a firm's financial facilities enhanced provides real value for producers in the 21st century. Iteration on the integrated and aligned business, operations and technical ends of the producer and Joint Operating Committee is where the Operations Management module seeks to bring the disparate elements of the Preliminary Specification together for active management and control. 

This next point ties into our earlier quote from Safra Catz regarding now is the time to be bold. The Operations Management module is a new type of application being envisioned that is a necessity when the Internet of Things (IoT) begins the process of comprehensive automation. What People, Ideas & Objects have traditionally called the ability to monitor and control devices. We now prefer to use Oracle’s classifications of “Pull of Data” and “Push of Instruction.” This is a world of exponential data and complexity, risk and uncertainty with unimaginable rewards and opportunities. As the title states it is a journey not a destination. The journey begins with Operations Management and finishes there with the assistance of People, Ideas & Objects, our user community and their service provider organizations and Oracle established as a permanent ERP software development and integration capacity and capability within the oil & gas and tertiary industries.

The nature of unanticipated and foreseeable catastrophes is documented in the next slide. To the far right is the anticipated frequency of these and the time necessary to prepare for the catastrophic event. I’m unable to categorize the oil & gas industry into any of these situations. A four decade run of destruction, fueled by investor capital sourced through specious means and no action reflects to me that this industry has been built on the basis of catastrophes (boom / bust cycles) where the culture has accepted and accommodated the “hair on fire” situation as normal. Yet when we review a number of producer financial statements. A random sample of 10 or more producers. Can anyone point out the hero and which ones are the zero’s? Over the course of a decade try to determine from these financial statements what the state of the industry was in? Was it boom or bust and did the company win or lose? 

People, Ideas & Objects have painted a radically different vision of how the administrative and accounting processes are managed throughout the North American oil & gas producers. Turning their overhead cost structures from fixed to variable based on profitable production. Enabling producers to shut-in any unprofitable production and therefore reaping a substantial value proposition from our software and service provider organizations. 

The question becomes how is this opportunity realized? Will a strategy of “muddle through” get us there? Or do these need to be undertaken on a purpose built basis? Much as these fourteen modules of the Preliminary Specification establish and enhance Oracle Cloud ERP to deal with data, the processes and the increase in the number and volume of firms in which it interacts with. And builds value in dynamic, innovative, accountable and profitable ways, everywhere and always, for the North American oil & gas producer.

People, Ideas & Objects are pleased to note the broader Oracle community of developers and users in the Oracle Cloud ERP, Oracle Autonomous Database and Java environments. This is a resource pool that we’ll be able to draw upon during our developments, implementations and during operations that will provide further value and performance to the North American oil & gas producers. We would hope to contribute to this community through the challenges that we’re faced with and need to resolve during this process. And the overall task of seeing an industry rebuild itself on the basis of performance and profitability. 

Operations Management Module, Part I

 Operations Management

I am pleased to present the 14th module of our Preliminary Specification. Operations Management should be seen as a new and different type of module in the Preliminary Specification. The other modules enable producers to capture their data, analyze it, report on it, gain insight from them and in turn make the appropriate decisions. The Operations Management module enables producers to actively engage with their producer and Joint Operating Committee organizations. To conduct their operations based on the decisions that it will make, strategies it employs and to deploy their distinct competitive advantages of their land & asset bases and the coordination of the markets earth science & engineering capacities & capabilities. 

The Operations Management module is the crossroads between the two separate and distinct operations and corporate groups that have developed over the past decades in oil & gas. These two groups work at opposite ends of the producer firm where the corporate silo is interested in the SEC, regulatory and tax requirements and have not been fulfilling their role in providing valuable operations information on an overall producer basis or to each of the Joint Operating Committee. The operations and technical environments have been seeking to mitigate the lack of this business knowledge, understanding and information being passed over into operations which in many ways has created the broad industry issues that have manifest themselves. 

In the oil & gas industry that we’re rebuilding through the development of the Preliminary Specification and Cloud Administration & Accounting for Oil & Gas. The need to have the means to conduct end to end planning, implementation and optimization of the exploration and production process needs to be undertaken and implemented. That will be done through the producer and Joint Operating Committee in this Operation Management module. This more than any of the other modules is a producer facing module. The key difference between what may exist today is the Preliminary Specifications version will be populated with actual, factual accounting and administrative data and information. Not the recycle costs or other estimates from reserve reports or elsewhere. We’re replacing what exists today in industry and the producer firms in terms of culture. The replacement of what has been done is necessary in order to rebuild the industry’s culture on the basis of profitability and performance.

Preamble

How does the producer firm focus on innovatively producing profitable oil & gas. The Preliminary Specification relieves them of their non-competitive tasks of administration and accounting. Supported by our user community and their service provider organizations, producers will no longer need to build and maintain their unshared and unshareable capacities and capabilities to meet the requirements of those aspects of their business. The engineering and geology of the producer and running of the business in terms of exploration and development are their domain of expertise that they are able to develop and deploy their distinct competitive advantages of their land & asset base and coordinate the markets earth science & engineering capacities and capabilities. 

North American oil & gas producers are in a state of organizational collapse which is proving to be a catastrophic failure. With internal and field capacities and capabilities that are severely deprecated, producers are incapable of maintaining their activity levels, assets and productive deliverability for the mid to long term. Their capital structures are and have been unsupported for almost a decade. The amplification by the accelerated shale decline curve has placed the North American economy and society in a situation where the status quo is proving incapable of even recognizing their difficulties. Leaving what will become a long term consequence of their inaction to be detrimental to the most powerful economy ever known to man if it's dependent on foreign sources of oil & gas. The opportunity to mitigate this is through the active disintermediation and rebuilding of the industry by way of the development of the Preliminary Specification, our user community, their service provider in People, Ideas & Objects Cloud Administration & Accounting for Oil & Gas software and service.

2023s natural gas price shows the one thing that producers assured us they had under control. Production discipline doesn’t and has never existed under their current culture of “muddle through.” To them, producing unprofitable production is considered a right and a privilege. To identify unprofitable properties is impossible for producers to determine. Their ERP systems are not structured to capture their data at the property level, mostly overhead and depletion. And the costs of capital are intended to build balance sheets, not to pass these costs onto consumers. The issue that People, Ideas & Objects Preliminary Specification is designed to resolve, of chronic, systemic overproduction of oil & gas since at least July 1986. Continues even when natural gas has become a political weapon of war and shale decline curves have begun to appear in individual producers.

People, Ideas & Objects propose the vision of the Preliminary Specification and its 14 modules built upon Oracle Cloud ERP. Designed, developed, supported and serviced for the long term through our user community and their service provider organizations. A rebuilt industry that provides for the most profitable means of oil & gas operations everywhere and always. Profitable operations are the only source and means of capital that is large enough to satisfy the demands of what oil & gas will require throughout the greater oil & gas economy up to the year 2050. What we know and understand of the current administration's is that when they’re pressed they never listen or act, they’ll say anything to satisfy the present concern, do absolutely nothing, eventually regressing back to their cultural norm. Which is consistent with and part of their dedicated strategy of “muddle through.” 

Review of this Operations Management module will leave most people thinking that the scope and scale of the application is well beyond the scope of what’s possible or practical. I would certainly understand that commentary and ask to view this in a different perspective. It is the 21st century and we are building the applications for the next generation on to the future. I see the Operations Management Module using the base of the Preliminary Specification and leveraging it in ways that are the basis of the type of innovation that Oracle, People, Ideas & Objects, our user community and their service providers will be able conduct with producers and Joint Operating Committees in the future. We are leveraging this opportunity to integrate a monitoring and control system for the producers to manage their Joint Operating Committees as the dynamic, innovative, accountable and profitable properties and producers they’ll need to be. 

The perspective that I see in these types of applications delivery, such as our Operations Management module provides to the producers. Will no longer contain a box of diskettes, digitized manuals available on the world wide web and supported through a help desk Monday’s to Friday’s from 8 - 5. It’s not the early 1990s, is not of any value today and is one of the reasons that we’ve focused on our user community as our key competitive advantage and their service provider organizations. They’ll need to be available 7/24 supporting the Preliminary Specification, ensuring they’re operational and troubleshooting issues prior to any producer calling or having discovered the issue. Capable of resolving the difficulties that may occur in the operational, technical, administrative or accounting domains of the industry. 

People, Ideas & Objects find the producers current expectations of our competitors to be quite surreal. Paying for nothing, expecting miracles, casting aspersions when expectations in their Service Level Agreement, are not achieved and with zero producer participation beyond execution of the SLA. My expectations of our user community are for it to undertake the leadership of the business models development of the industry and the value proposition that the Cloud Administration & Accounting for Oil & Gas software and service is designed to provide. Where our user community is making proactive changes to lead the industry through its issues and opportunities to ensure they’re providing the North American dynamic, innovative, accountable and profitable oil & gas producers with the most profitable means of oil & gas operations. This role has been capitulated by producers through their culturally systemic “muddle through” strategy and must be undertaken.

We see this as the future of enterprise software. The dynamic nature of business can’t be managed through a generic configuration that was conceived decades ago and has not been amended. The demands of software to manage the enterprise on its own is foolhardy and an outright dangerous assumption. Nothing of complexity, substance or significance works in that way. People, Ideas & Objects is a comprehensive software and service offering that is a permanent capacity and capability of the North American producers. This is the level at which the software industry has come about and needs to be, it is the promise that it has always had. The untenable assumption from officers and directors was that it would be available by flipping a switch. Conversely this does not imply that producers will continue to define the terms of what it is they expect in a Service Level Agreement, then sit back and criticize any deficiencies. Softwares influence in business is too significant to settle for these old failed processes. It’s no longer enough to just own the oil & gas asset, it’s also necessary to have access to the ERP software and services of People, Ideas & Objects et al’s Cloud Administration & Accounting for Oil & Gas, which makes the oil & gas assets profitable. This must be an all hands on deck commitment by all for success to be achieved. That is Oracle Cloud ERP, People, Ideas & Objects, our user community, and their service provider organizations development, implementation, service and support of the Preliminary Specification. Dynamic, innovative, accountable and profitable producers and the service industry will all need to be actively participating.

With the Preliminary Specification we are seeking a transformation in the profitability, performance and culture of the producer organization and Joint Operating Committees as we’ve detailed throughout. These will need to undergo a transformation that is far more radical than what the status quo culture is capable of comprehending. How this transformation will happen will be through their efforts in this Operations Management module to reduce their process and activity timelines, increase their performance criteria and expectations consistently throughout the remainder of this century. Tighten up the interactions between the tier 2 and 3 sub-industries to optimize the producers and Joint Operating Committees production and exploration processes. An industry wide rebuilding process that will need to be and can only be conducted and funded through the profitability earned from oil & gas production. Where producers will be able to compete effectively in the North American capital markets and maintain affordable, reliable, abundant and secure domestic sources of oil & gas for consumers. 

People, Ideas & Objects

We are Enterprise Resource Planning software developers for oil & gas. Our competitive advantages consist of our user community, Intellectual Property and research. Delivered through our Cloud Administration & Accounting for Oil & Gas software and services. It’s no longer adequate to just own the oil & gas asset, it’s also necessary to have access to the ERP software and services of People, Ideas & Objects et al’s Cloud Administration & Accounting for Oil & Gas that makes the oil & gas asset profitable. 

Our user community

People, Ideas & Objects user community is our priority and focus. We have established our user community with a comprehensive user community vision that ensures that they’re able to make the changes that provide for the most profitable means of oil & gas operations, everywhere and always. Three significant attributes of their structure provide them with the means in which they can do so. 

• Only user community members are licensed to make changes and prepare derivative works to the underlying Intellectual Property of the Preliminary Specification. 
• Our developers are licensed to take their instruction and input from only user community members. They are deaf, dumb and blind to all others. Producers are able to therefore have their issues and opportunities discussed directly with the user community members. 
• Our user community has control of their own budget.

The method and means of communication that the producers, Joint Operating Committees and service industry representatives will use to engage our user community will be through this Operations Management module. This communication and collaboration portal will simply be a representation of a stand alone, dedicated, collaborative module that is established throughout the Preliminary Specification for enhanced and focused communications.

Service provider

Each user community member is licensed to establish one or participate in the ownership and operation of many service provider organizations. The service providers enable the change that People, Ideas & Objects et al are able to make to the oil & gas producers cost structure. Moving from a fixed overhead producer based accounting and administrative capacity and capability to the variable overhead industry based accounting and administrative capacity and capability. Variable based on profitable production. Service providers are the unique organizations owned and operated by the user community members that manage an individual process operation within the Preliminary Specification. Applying their services and competitive advantages in the form of quality, specialization and the division of labor, automation, innovation, leadership, integration, deployment of their tacit knowledge, issue identification and resolution, creativity, research, ideas, design, planing, thinking, financing, observing, judgment, reasoning, conflict and contradictions, collaboration and compromising.

Using these unique skills and their understanding of the industry to apply their process across the industry data set. Populated through a reallocation of the producers current accounting and administrative resources these people will be the ones that deliver the software and services of the Cloud Administration & Accounting for Oil & Gas to North American based producers and those they interact and transact with. 

As with our user community the service providers staff will use the Operations Management module as a portal for communication between themselves and the larger oil & gas community. Collaborating on issues and opportunities of concern and information that is pertinent to the various stakeholders identified in this module. Communications for the purposes of enhanced developments of the software and services, integration, issues and opportunities.