OCI Blockchain, Part II

 Security & Access Control

We’ll now walk through each of the thirteen other modules of the Preliminary Specification and discuss the Blockchain implementation in each. The first is the Preliminary Specifications Security & Access Control module. This seeks to ensure that “the right people have the right access to the right information with the right authority at the right time and at the right place, on the right device.” Which is one of the more difficult aspects of the Preliminary Specification. This requirement is complicated by unique elements introduced through use of the Joint Operating Committee as the key organizational construct. It is also expected that producers, and the service industries dependent on producers, will be required to expand their throughput through enhanced specialization and division of labor. This is as a result of the natural demand for more engineering and earth science effort for each incremental barrel of oil or gas produced. And the reduction in market availability of earth science and engineering resources due to the recent downturn. This is due to the anticipated retirement of large percentages of those professions. Triggering the need for technical resources pooling of each producer participating in the Joint Operating Committee. Imposing a temporary compliance and governance structure over this pooling through the Preliminary Specifications Industrial Command & Control, a feature of the Security & Access Control module. 

The majority of the information contained within each producer firm regarding the Joint Operating Committee is the same. Each producer shares all of the data and information pertinent to the Joint Operating Committee. They will be party to the service providers' billings for the administrative and accounting services rendered for that Joint Operating Committee. One clarifying aspect of using the Joint Operating Committee is that the data and information created and used within that organizational construct is unique to the partnership. The sharing of this data within the Joint Operating Committee is standard in the industry and has always been. This contrasts with the unique and proprietary nature of producer firms' data and information. Segregating these two distinct types of data from each other would and should be the first order of business during our development. That way members of a Joint Operating Committee, of which a producer firm may have an interest in several thousands of, won't leak any proprietary firm data. 

Continuing with the discussion of blockchain integration in the Security & Access Control module. At this point, the implementation of blockchain technologies opens up a number of possibilities. There are many possibilities, and there are too many to list and document all of them here. The need for our user community to fully identify and explore the issues and opportunities of each of these possibilities will be their responsibility during development. Producers' needs in the area of confidentiality and their specific concerns regarding the cloud, encryption and security, as are many other areas, need to be addressed through their active involvement with our user community. Otherwise decisions will be made without producer involvement. There will be little opportunity, after the fact, for them to make the substantial changes that the Preliminary Specification development provides. User community-based systems are the only development methodology worth pursuing. Our user community understands oil & gas, and can implement that understanding within the software on their own. Without producer involvement, only producers will suffer. It is in their own self-interest interests to participate by interacting with our user community. 

The key area that producers will suffer from is that their perception is that these developments are a one-way street. That the users absorb what the producers want and deliver that to them. Today, producers need to keep on top of the changes in the software and how those developments impact their organization. Implementation of the software will have to be done with significant consideration to its impact on the producer firm. Changes will need to be made during development and implementation. Sitting out the first round of software development with our user community may preclude the producer's organization from benefiting from the software. As the ability for a producer to assimilate the first round of changes alone while iterations are being made upon those in the second round of developments may render the producer unable to keep up with the industry's updated standard of profitable organizational performance. 

People, Ideas & Objects use Oracle's cloud implementation to host the software derivative of the Preliminary Specification. Oracle Autonomous Database provides Multi-Tenancy. Each “tenant” or producer in our case will have its own database instance, its data is separate and distinct from all other instances (producers)' data. Each instance of the database uses the same database for its functionality. From a software development and deployment point of view this significantly reduces our costs and difficulties in deploying the Preliminary Specification as conceived. Each producer will have their own, for all intents and purposes, database and applications that are distinct and independent to each and every other producer. In prior databases, and in other vendors currently, the need for cloud implementations of those databases was either separate containers for each or we would have had to use a producer ID to identify the data belonging to one producer in a pooled database of all of the other producers in the industry. Either of these last two options would have been unacceptable or costly from a licensing and support perspective. 

When we look at the decentralized nature of the blockchain we see a further separation of the data and information of the producer from each of the other producers in the industry. The addition of decentralized ledger technology which is the blockchain will enhance this Multi-Tenant effect of the Oracle database. It is difficult, in my opinion, to justify the use of hardware and software for ERP purposes within the producer firm itself. The feature that we want to maintain by using the cloud is the overall feature of Security & Access Control of “the right people having the right access to the right information with the right authority at the right time and at the right place.” For these purposes the “right place” is the cloud and whatever the location of the user. It is my understanding that blockchain has a feature called Blockchain Access Control. The blockchain's individual blocks are accessed via public / private key encryption technology. Eliminating passwords and providing the level of security and overall access control that not only the producers' data and information needs but also the Joint Operating Committee.

Resource Marketplace

“A marketplace to support contracting from A to Z.” The issue that People, Ideas & Objects takes to the industry's operation is that producers appear unaware and uncaring that they are the benefactors of being a primary industry. They feel the secondary industries they rely on to complete the work they need done are “greedy and lazy” and leeches off of their revenue stream. It is simplistic to view the world from this perspective when producers collect 100% of the cash from oil & gas commodity sales. The problem is that it is difficult to understand that those revenues were not earned 100% by producers. And slashing activity levels, cutting the service industry's “costs” during times of difficulties, extending the time when accounts payable are paid by producers from 6 to 18 months can be done when everyone does it. Puts the service industry in severe financial jeopardy. And everyone does it when no one pays attention to the fact that producers' overproduction of oil & gas commodities is chronic and systemic. Which mitigates the impact to the producers and leverages it towards the service industry. The Resource Marketplace changes this. It also identifies the source of the innovations that producers first claim as theirs. These innovations are really those of individuals who have worked hard for decades in the service industry. Who have had their Intellectual Property disrespected by the producers and ignored until the producers desperately need the innovation from the service provider and they finally begin to approach the situation responsibly. 

Innovation in oil & gas will not withstand decades in which coiled tubing developers beg producers to try their product to see what the possibilities are. Or Packers Plus is abused for their ball-dropping and packer developments. People, Ideas & Objects can speak of these things as we’re only the most recent example of the abuse that people have to endure to deal with oil & gas producers. Nothing in the industry would have happened in the shale industry if it weren’t for a number of individuals who brought those technologies to life in the service industry. These innovations took decades for producers to accept as common sense. People, Ideas & Objects can assume that it’s only a short period of time from now when producers realize that producing only profitable production with our decentralized production model’s price maker strategy is considered common sense. 

A more cooperative and collaborative environment is created within the Resource Marketplace. This is to ensure the innovations the industry needs in the next few decades are brought to market in a timely manner. An environment where ideas are respected, supported and developed with the understanding that producers will benefit. What other purpose could coiled tubing or ball dropping serve? The service industry is not the producer's enemy and is not greedy or lazy.  

Blockchain is most valuable in this area of the Resource Marketplace module. We will implement distributed technologies to support the recording of transactions and reporting of them. Specifics of what and how will hopefully be done through collaborations between our user community and the producers. Even if it is just our user community that determines the details of the Resource Marketplace and its blockchain use, we’ll be more than satisfied with that. With the Resource Marketplace module there is the implementation of the Marketplace Interface. This is shared with the Petroleum Lease Marketplace and Financial Marketplace modules. There is also from a transaction processing perspective Accounting Voucher and Partnership Accounting modules. In addition the Resource Marketplace module feeds critical data and information into the Research & Capabilities, and therefore the Knowledge & Learning modules. It is the focal point, the point where much of the transaction history will be reflected on the blockchain. 

One of the markets blockchain is uniquely qualified to address is Intellectual Property. Particularly from the point of view of the smart contract technologies included in the Ethereum blockchain. As we noted the innovations and IP of oil & gas field operations mostly resides within the service industry. And those people or companies have ample protection from three forms of Intellectual Property, including copyright, patent and trademark protections. What I’m suggesting here in the Resource Marketplace module is that we have an element of the Marketplace Interface that is a registry of that industry specific Intellectual Property. This registry would be implemented within the blockchain and therefore be available for people to view and see when and where the ideas were created. In addition it could be used as a marketing tool by those who are behind the idea to recruit producer participation and active involvement in the funding and deployment of those IP-based technologies. The focus would be on innovation and ideas within the oil and gas industry. Concentrating the service and oil & gas industries on these innovations and developments.

Petroleum Lease Marketplace

Don Tapscott defines blockchain technologies as the Internet of value. In terms of value, land and mineral rights are the area where producers secure oil & gas reserves. Having a registry of land titles on blockchain is a logical direction for the industry to pursue. Most of these registries are managed by federal, state or provincial governments who lease mineral rights. Would they, or are they considering this as an area of service development? Nonetheless our user community should fully explore the opportunities and issues of using the blockchain to manage land titles for the industry. Is that feasible within a timeline that is consistent with our initiative for triggering governments to act. Otherwise we will depend on developing the Petroleum Lease Marketplace on the basis of the Preliminary Specification as it stands today. That is not an issue as I see it as a necessary part of our system. It would be an advancement compared to current market offerings. Subsequent developments to incorporate blockchain within the module would be enabled once jurisdictions enabled their registries to use blockchain technology. People, Ideas & Objects' software development capabilities facilitate subsequent developments.

Petroleum Lease is a marketplace module, which means that it is the place where buyers and sellers interact to transact for things of value. This marketplace would be populated by producers seeking to acquire and divest of oil & gas assets. They would make arrangements with partners in Joint Operating Committees, post and bid on available leases and engage with the market as a whole. As with the Resource Marketplace module the Petroleum Lease Marketplace module is a source of transaction origination. Therefore, administrative and accounting service providers, producers’ legal representatives and others would also be in touch with the principles behind the transactions. Ensuring that the transaction details were understood and implemented on that basis. As has been mentioned in the Marketplace Interface both “tiles” and contextual menus would be available to support these transactions and their principal users. Embedding these within the blockchain, even if it may not initially involve the issuing jurisdiction's registry, would still provide value with a history of the transaction. This would also provide integrity achieved over the property history. 

One of the advantages of blockchain is the immutable nature of the data contained within the blocks. However, due to the checks and balances inherent in the technology, it is nearly impossible to change the data within the block. Any changes to the data are written to subsequent blocks. The user can therefore see the result of the two blocks of data which provide them with the information they're looking for. This YouTube video describes it.

Using the Ethereum blockchain throughout the Preliminary Specification would be the preferred technology at this time. Blockchain technologies are being innovated. For instance, blockchain technology has now processed 2.5 million transactions per second. What People, Ideas & Objects and our user communities needs will be and the capabilities that will ultimately be provided by Oracle’s Cloud Blockchain offering will need to be determined by our user community after consideration of all of the industries needs and technical requirements.  

As the Petroleum Lease Marketplace describes there are a number of data elements, mostly attributable to the Joint Operating Committee, that come into play as a result. What is necessary is that the data captured by the Preliminary Specification in any module must be unimpeachable in quality and integrity. Searching for data elements to ensure they're the correct data is a known time-consuming and wasteful process. With blockchain the nature of the data within the Petroleum Lease Marketplace can achieve this unimpeachable level of integrity. This will save the industry time and effort checking information that's correct or should have been correct. The level of effort necessary to achieve this assurance consistently is the job of our user community. Doing the research, design and development once, then defining the process management in the software, and the data source that provides these levels of assurance can be done by our user community during our development. This level of examination and review is what is necessary for the oil & gas industry to move forward to the next level in systems quality.

OCI Blockchain, Part I

 People, Ideas & Objects are implementing a Blockchain module within the Preliminary Specification. There are several unique and valuable applications of the technology in other modules and they'll be discussed here. Blockchain technologies can also be considered the next revolutionary technology that changes the world we live in. This is not our approach at any point in our solution. We are resolving business issues in North American oil & gas producers. Not selling the latest technologies.

The first quote from Mr. Don Tapscott is “so what that means is the nature of a corporation and the nature of competitiveness is going to change. This is a time of great transformation. First of all, every industry will go through huge convulsions, not just financial services, resources, … Secondly, it means that every business function will change.”

The phrase that resonated the most with the Preliminary Specification is around 3:35 in the video. Mr. Tapscott said “everyone has a “shared network state” where they can “look real time at everything that’s happening.” Once we’ve moved to the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil & gas producers. We discuss what is “a shared network state” within the industry. The Joint Operating Committees are / could be standalone investments or held together as a network of assets within an oil & gas producer as a firm or corporation. Joint Operating Committees are independent due to this “shared network state” and the manner in which they are managed in the Preliminary Specification. The concept of operator is replaced by our Pooling concept and each working interest owner is an active participant at all times.

Recall we are moving the compliance and governance frameworks of the hierarchy to the Joint Operating Committees legal, financial, operational decision making, cultural, communications, innovation and strategic frameworks. Transactions between the owners of the Joint Operating Committee either in terms of the land that they lease, both mineral and surface, the capital assets deployed, the production and sales of commodities, the service industry representatives they engage, the producers' earth science and engineering capabilities, our user community and service providers will be able to operate within this “shared network state” we understand to be the oil & gas industry and service industry. 

Oil & gas transactions are always the subject of heavy documentation and verification. As we move to a software driven era, integrity, documentation and verification can’t be ignored. With blockchain we gain highly secure systems by implementing blockchain as our 12th module in the Preliminary Specification. Where it will interact with other modules and provide the transaction security necessary. Oracle Autonomous Database has introduced a Blockchain table which for our purposes is highly effective. We'll discuss this implementation later in this module. What is known is that it will be used in at least 50 different ways that I can think of. This will provide integrity and security necessary in today’s systems. Anywhere there are interactions or transactions between producers and Joint Operating Committees there will be the opportunity to implement blockchain for securing the transaction. 

We now describe blockchain technology and its integration into oil & gas. Within the Preliminary Specification we’ll have many interactions and transactions that currently do not exist in the industry. The volume of transactions processed through our system will be substantially higher than currently experienced in the industry. This would be the case with the same producers and with the same production volumes. When using the Joint Operating Committee as the key organizational construct we take the data at its lowest possible value obtainable. Today many ERP systems capture aggregated data from spreadsheets. In addition there is an increase in transaction throughput as a result of each participant within the Joint Operating Committee being active on the property as opposed to receiving one set of accounting reports from the operator each month. This volume of increased data and transaction throughput is then extended by the 3,000 administrative and accounting service providers each processing their billings for their services for each Joint Operating Committee. These increase the volume of transactions, and hence the quality of the data, by substantial numbers. 

Blockchain is a pure Information Technology solution within the Preliminary Specification. The other twelve modules are designed around business issues and opportunities currently being experienced by producer firms and industry. Those primarily being the chronic lack of profitability and the cultural capacity to accept they have a profitability problem. With the business models contained within the Preliminary Specification, producers will gain our value proposition valued at $25.7 to $45.7 trillion over the next 25 years. Our Preliminary Specifications decentralized production model's price maker strategy ensures that producers produce only profitable products. Enabling them to pursue the oil & gas business with the appropriate cash flow to fund their capital expenditures, pay down their bank debts and return capital to their shareholders. Currently producers expect shareholders to fund their capital spending as a subsidy to the energy consumer. This leaves them with disgruntled shareholders and high bank debt due to lack of real profitability and cash flow. Producers should be able to cover all three cash requirements adequately at all times. The blockchain is a pure technological application that provides the industry and producers with enhanced security and integrity. Added to the dynamic nature of our software development capability, user community and the Oracle Cloud ERP offerings we use as the base of our system. 

What is blockchain and how does it work? A brief description of Distributed Ledger Technology (DLT) is as follows. White Hat Security provides this summary.

Every time a transaction is initiated, a block is created with the transaction details and broadcast to all nodes. Every block carries a timestamp, and a reference to the previous block in the chain, to establish a sequence of events. Once the transaction authenticity is established, that block is linked to the previous block, which is linked to the previous block. This creates a chain called a blockchain. This chain of blocks is replicated across the entire network, and is cryptographically secured. This makes it challenging, but almost impossible to hack. I say almost impossible because it would take significant computational power to attempt.

In the context of security, both system transparency and immutability of blockchain data comes into play. Immutability in computer science refers to something that cannot be altered. Once data is written to a blockchain, it becomes virtually immutable. This doesn’t mean that the data cannot be changed – it just means that it would require extreme computational effort and collaboration to change it. In addition, it would be very difficult to cloak it.

There is a TED talk from June 2016 with Don Tapscott. In this video he gets into the details a bit more than the prior video. He calls blockchain an "Internet of Value" that supplements the current Internet of Information. A suitable description in my opinion.

Our next step in defining our 12th module, The Blockchain, is the implementation of the technology by Oracle Corporation. Oracle Fusion Middleware and Applications are the base financial ERP applications in the Preliminary Specification. These are now called Oracle ERP Cloud. Soon after the publication of the Preliminary Specification, we amended our budget to move to the cloud for both development and deployment purposes. Oracle's cloud offerings no longer require us to build and maintain physical hardware for our needs. It has been through decisions such as these that we reviewed the entire process of oil & gas. The question we seek to answer is how can we deliver our product to market at a faster pace than expected. By moving to the cloud we can shift budget dollars from physical hardware to Oracle services and speed up our implementation substantially. Speed is a critical competitive factor for all businesses today. We see the implementation of blockchain as a critical element in the reduction of the time we need to develop our solution. Although conceptually our offering does not change, the ability to acquire the security and integrity that blockchain provides will mitigate much of the software development work that needs to be done to build those features ourselves on behalf of producers and industry. That our technology provider is taking a leadership role in implementing blockchain within their ERP solution is also of significant benefit to People, Ideas & Objects, our user community, service providers, producers and subsidiary industries. 

In Oracle's involvement with blockchain we have an Oracle sponsored IDC white paper. I highly recommend registering for the download and reviewing this document. Oracle is looking to blockchain to differentiate their product in the marketplace and producers benefit. It is with that in mind that we now shift our attention to our next concern. Now that blockchain has resolved much of the industry's security and integrity, much work is left to be done. Our concern is the Access Control capabilities of the People, Ideas & Objects Preliminary Specification. The fact that we offer a unique scenario would be an understatement. Having a cloud-based, industry-wide solution that meets the needs of a proprietary access control system such as ERP. When we introduce the Joint Operating Committee where multiple producers need access to the same data we have our work cut out for us. The following paragraph from this IDC white paper leaves me perplexed. 

Our research suggests that most enterprise customers are looking to build permissioned or private ledgers that only allow those with specific permissions to access distributed ledgers.

I am unaware of if or how blockchain would provide this capability. However we are not providing a solution available today. We are taking today’s Information Technologies and applying them to oil & gas business issues and opportunities. A software development company focused on the needs of our users based on Oracle Cloud ERP. This focus on our user community has been our priority since the Preliminary Specification publication. User community-based developments are the only quality and usable systems today. Therefore with that in context, IDC notes the nature of the blockchain is in a similar state. The adoption of technology by providers like Oracle is at the beginning and will continue to grow over the next few years. Which is consistent with our plans and needs. 

Connectivity to existing systems is often a challenge because many blockchain and distributed ledger technology platforms available today are early-generation solutions. For example, capabilities for enterprise plug-and-play with enterprise resource planning (ERP) solutions and integration with enterprise-class system of record (SOR) are not available in most blockchain offerings. Because many solutions are early versions, multiple features that are required for enterprise deployments such as systems availability; business continuity/disaster recovery (BC/DR); and platform security are still under development.

And 

The interconnectedness of enterprises with their customers, suppliers, and intermediaries is another challenge faced by business and technology teams looking to develop blockchain solutions. As a result, the distributed nature of blockchain ledgers can make it hard to provide the privacy that some customers and counterparties expect. For example, transaction records contained in buy and sell transactions and details contained in shipping instructions in the supply chain may need to be segregated into different domains to provide privacy and confidentiality. Great care must be taken to provide advanced levels of security to prevent employees or bad actors from committing fraud by posting misleading information or gaining inappropriate access to customer transaction information.

People, Ideas & Objects is a research and software development firm driven by our user communities' needs. We are beginning our developments based on the Preliminary Specification. It is a specialization and division of labor that fills the gap between the oil and gas industry and the Information Technology industry. For each producer to have the requisite capabilities to build and deliver software of the Preliminary Specifications scope and scale is untenable based on their budget and limited resources. Aggregating the industry's efforts within this new sub-industry is the only solution to the business and technical difficulties producers face today. The idea of 150 producers researching and developing blockchain technologies and integrating them into their ERP systems independently is absurd. As would any aspect of our offering, which does not fall within the producers competitive advantages of its land & asset base, or earth science & engineering capabilities.

Oracle's blockchain implementation is the general topic of discussion. We continue to quote from the Oracle sponsored IDC whitepaper. Within that paper there is a summary that captures Oracle’s product and service offerings, and to some extent their commitment to blockchain.

Oracle Blockchain Cloud Service (BCS) is an enterprise-grade, distributed ledger platform designed to support new DLT applications and extend ERP, supply chain management (SCM), and other enterprise software-as-a-service (SaaS) and on-premise applications by enabling enterprises to conduct business-to-business transactions securely and at scale across a trusted network with tamper-proof digital records (see Figure 2). Oracle SaaS and on-premise application suites are used in many industries as the backbone of an enterprise's information system. Extending these systems with blockchain capabilities through BCS provides significant value to Oracle's customers and lowers many risks inherent in adopting new technology.

Oracle is our technology partner as we believe they have the most advanced technologies in the marketplace. And that is not by a slim margin. Oracle’s Database 23c is well beyond what the competition offers. It seems that IBM, Microsoft and others cannot keep pace with Oracle's database developments. Java is no exception. Since their purchase of Sun Microsystems, Java has become ever more popular as a programming language for business. Particularly from a database developer's point of view. And no one can match Oracle's commitments in the ERP marketspace. With the purchase of PeopleSoft, Siebel and JD Edwards, Oracle spent $18 billion in market acquisitions for these companies. Still not satisfied they undertook $4 billion, from the ground up, development of an ERP system based on the Java Programming Language. This was to produce their Fusion Middleware and Fusion Applications. I’m seeing the same level of commitment in their blockchain offering. I feel that Oracle will use their services in this area to further differentiate themselves in ERP and other market spaces. All of these investments total over $56 billion as of 2022. 

Pushing the concept of fair use to its extreme, I now want to quote from the IDC paper extensively. The following are their recommendations on how to proceed with Oracle blockchain technology within organizations that adopt it.

Oracle's Blockchain Offering Provides Several Benefits to Enterprise Customers

▪ Faster transactions with greater resilience: Enterprise customers need distributed ledger platforms that can scale to handle increasingly large volumes of transactions. They also need resilient, highly available, and high-performance platforms to reduce transaction latency and ensure stable and secure connections.

▪Enhanced data privacy: Enterprises are concerned about the privacy and confidentiality of ledgers and limiting access to transaction details, especially in regulated industries. For example, in financial services, keeping the terms and conditions of contract details such as counterparty identities, pricing, and quantity data confidential is always a concern. In healthcare, the privacy of patient health records, patient identification, and health insurance details is paramount. Oracle's cloud services help firms build and maintain secure ledgers and smart contracts with features such as identity management with secure defense, in-depth data-in-transit and data-at-rest encryption, and multiple confidentiality domains within a single blockchain network.

▪ Simplified operations through managed services: Managed services are gaining momentum as enterprises look to get up and running faster with new leaders and upcoming blockchain smart contract projects. Enterprises can launch pilots, run experiments, and work with production-ready ledgers on production-ready Oracle-managed servers, storage, and network infrastructure, leaving backups, upgrades, and other infrastructure management considerations to Oracle software and operations. Oracle's cloud services also support rapid onboarding of new members and governance frameworks that help enterprises maintain control and security of the ledgers.

▪ Integration with Oracle SaaS and on-premise application suites: Oracle provides integration accelerators through the adapters in its Integration Cloud Service and Java Cloud Service for SaaS. These solutions enable enterprise processes in ERP, SCM, and other application suites to rapidly integrate and connect with blockchain transactions and access distributed ledger information. The application integration toolkits will provide samples, design patterns, and templates for specific business processes.

▪ New business models and revenue streams: BCS provides application development accelerators that help enterprise customers integrate their blockchain transactions and ledger records with new and existing applications. Oracle wrapped blockchain transactions with REST APIs, which can accelerate application development and integration and make transactions accessible both inside and outside the cloud. Oracle Cloud also offers sandbox capabilities that can support corporate IT developers and independent software vendors (ISVs) with application development environments, integrated CI/CD tooling, and prebuilt integration adapters for Oracle and third-party applications. These resources enable firms to quickly build and run experiments and proof of concepts to address specific use cases. These experiments enable enterprises to develop, test, and engage in new business models and revenue streams from deploying DLT and smart contracts. Oracle has also announced integration of blockchain APIs in Oracle NetSuite Suite Cloud Platform and Digital Innovation Platform for Open Banking. This can provide blockchain on-ramps to NetSuite customers and partners and to financial institutions looking to innovate with blockchain and fintech APIs orchestrated by Oracle API management services.

▪ Deployment flexibility and choice: Oracle's Cloud Machine can deliver enterprise-grade PaaS to enterprise customers' datacenters with deployment options behind the firewall. This can enable enterprises to develop cloud-native blockchain applications on-premise with modern platform services. On-premise options are especially important in regulated industries such as healthcare and financial services. The Oracle blockchain solution enables firms to use the private cloud option to retain complete control over their data and applications and fully manage application services behind their firewall, or deploy in the Oracle Public Cloud, or mix and match private and public cloud options in a hybrid deployment. In the future, Oracle plans to allow its BCS-based blockchain networks to accommodate members joining from outside of Oracle Cloud, as long as they are using a compatible version of Hyperledger Fabric, enabling more open network models across the broader Hyperledger community.

Here we see what I would call an explosion of capabilities necessary to integrate blockchain into Oracle’s technology. Oracle provides these services on behalf of their customers, including People, Ideas & Objects, our user community and service providers. There’s also an offer here that no producer can refuse. Imagine each producer spending the time and energy developing these IT capabilities. The value that will contribute to each bottom line. Or, alternatively, they could use the software development capabilities People, Ideas & Objects provide in the Preliminary Specification. Specialization and labor division dictate what businesses choose to do for tasks that generate value. And only those tasks provide us with the most profitable means of operations. Is administrative and accounting IT something that producers can differentiate themselves on? Is this where oil & gas producers build their value? With the scope and scale of Information Technologies available today, the pace of change, and these capabilities offer no competitive advantage other than to function in an advanced economy. Why would each producer continue down this road? 

To ensure compliance to the regulations is established and maintained during development of People, Ideas & Objects, our budget allocates financial resources to CPA firms. This provides an independent third party review of the activities undertaken during development. It also provides a baseline for each accounting firm to begin their oil & gas producers' annual audits. These are a check and balance on software developments from a compliance and governance point of view. They are designed to ensure that the software is consistent with the regulatory and accounting needs of the producers. It contains no inconsistent anomalies. As our user community determines, blockchain will also provide these assurances to producers. I am unable to see any alternative to providing the oil & gas producer with the most profitable means of oil & gas operations. This is on an ongoing basis for the next 25 years, in this complex technical environment.

Implementing blockchain technologies within the Preliminary Specification is mandatory for the oil & gas industry and producers. With the predicted volume of transactions managed through the People, Ideas & Objects system as a means to provide the safety, security and documentary evidence that the blockchain offers is the only reasonable way for the industry to proceed. We are not providing a solution that is available tomorrow but one that will build value for the industry in the mid to long term. Therefore the adoption of Oracle's technologies including their Oracle Blockchain Cloud Service (BCS) and Oracle ERP Cloud in combination with People, Ideas & Objects Preliminary Specification, our software development capabilities, our user community driven development and service providers fits well with the needs, opportunities and issues that the industry and producers face today and in this time frame. 

It is clear from evaluating the producers' financial statements that accounting is still conducted as it has for four decades. In addition, the industry lacks cash. No cash is generated from operations. Nothing is being provided by the investment community and no banks are jumping back on the bandwagon. Consequently, no one’s buying the industry's story. Producers continue to manage as if the status quo is the only operational choice they have. I would therefore ask, what would happen if the industry proceeded with the development of the Preliminary Specification by providing funding for our budget? The future that is defined by People, Ideas & Objects Preliminary Specification will prove to investors and bankers that the industry is a viable investment option?

One of the areas benefiting most from blockchain technologies is our Material Balance Report. It resolves the processes involved in the measurement and reporting of oil and gas production on a monthly basis. Capturing production data in the field through field data capture and automating the subsequent processes all the way to financial statements. Within this broad definition we have introduced the Material Balance Report as the means in which producers within a Joint Operating Committee can balance the reporting of the various disparate groups involved in these processes between field data capture and financial statements. Introducing the ability through the report to material, system and partnership balance production. Our user community through their work will need to determine at what point and where the production volumes within the Joint Operating Committee for a property, plant or gathering system can then be recorded within the blockchain that supports these transactions. Once production data has been captured, verified and protected, the processes and automation in the Accounting Voucher and Partnership Accounting modules commence. 

Within those modules we address the never ending amendment process that plagues this area of reporting. This is a natural part of the oil & gas business and will continue for some time. What needs to be done in the case of volumetric amendments is that they are written in a similar fashion to the blockchain. Accordingly, there is a specific blockchain for the industries production volumes. Which would aid significantly in the global reconciliation processes that are instituted within the Preliminary Specification through the material, system and partnership balance reconciliation process to ensure the integrity of the reporting is either consistent with the facts of production, or the agreements that govern the Joint Operating Committee. Whichever of those two is in effect. As I noted before it will be our user community that determines how, why and for what purpose the Preliminary Specification will implement the blockchain. 

In traditional server architectures, every application has to set up its own servers that run their own code in isolated silos, making data sharing hard. If a single app is compromised or taken offline, many users and other apps are affected.

On a blockchain, anyone can set up a node that replicates the necessary data for all nodes to reach an agreement. This node can be compensated by users and app developers. This allows user data to remain private and apps to be decentralized like the Internet is supposed to work.

I want to clarify a seeming contradiction. Producers focus on “where the money is" finding and producing reserves. This is consistent with their competitive advantages of their land & asset base, and their earth science & engineering capabilities. Therefore their current focus is appropriate. My criticism is that they don’t understand that they’re a primary industry and the secondary industries that support oil & gas, the service industry, pipelines and software etc. need to be a part of the business and producers' concerns. Producers can’t just leave these activities to fate. They have to be involved in making them happen and ensuring these businesses are compensated appropriately. If investors see that the service industry, pipelines and software businesses are treated disrespectfully and financially abused, they will hesitate to invest in those businesses. This is the case today. Leaving producers unable to get the job done. Which is the case today. They need to focus on the things they can compete in. And they need to understand that as a primary industry it’s not just the producers who’ve earned, need or are entitled to those oil & gas revenues.

OCI Security & Access Control, Part II

 People, Ideas & Objects and Oracle Corporation

Starting with the Security & Access Control module we find that Oracle Corporation has a comprehensive suite of applications that provide the security and access control that we are looking for falling under the Oracle Identity Management brand name. These products include tools for Access Management, Identity Administration, Directory Services and Governance. These product classifications come in a variety of different products and are configured in some specialty industry and management suites. 

Two areas in the Preliminary Specification that will be challenging to develop are the Industrial Command & Control (ICC) and the inter-relatedness of the Joint Operating Committee and service industry representatives. Early on in the specification we noted a number of research areas that needed to be conducted. These are two areas that will take research dollars to resolve. To have the ICC recognize members of different organizations will not be a challenge. To engage them and have them interact in the manner we expect them to when we expect them to, will. 

Oracle Identity Management resides within the Oracle Fusion Middleware product layer. As we indicated earlier in the Preliminary Specification this is Oracle’s Java Enterprise Server. Therefore these applications are open to tailoring to our users' needs through the process of “additions” as Oracle calls them. When we sit down with Oracle and define the Security & Access Control module based on our user needs. These needs can be accommodated by the technologies we have selected. 

And it is through our user community that we will resolve these issues. It is one of the reasons People, Ideas & Objects software developments budgets are where they are. We will have challenges to resolve in delivering these innovative systems to the industry. I would remind producers that our value proposition sees the one-time costs of these developments amortized over our producer base. Yet each producer receives the full scope of that development effort in terms of the software application. 

We now look at the Oracle product classification for Access Management. Included in the Access Management classification are the following products: Oracle Access Manager, Oracle Adaptive Access Manager, Oracle Entitlements Server, Oracle Identity Federation and Oracle Enterprise Single Sign-On Suite. Each of these products will be included in the Preliminary Specification as they have components required for day to day use by our users, service providers, producers and Joint Operating Committees.

One area Oracle had been working on was working with partners, vendors and suppliers. Within Oracle Access Manager it is noted that they provide... “Building federated user communities that span company boundaries.” These are the beginnings of both pooling and Industrial Command & Control (ICC) that are critical to resolving many of the issues that the oil & gas industry faces. 

On the heels of Oracle Access Manager is their Adaptive Access Manager which takes the concept of intra-partner interactions further with “Oracle Adaptive Access Manager makes exposing sensitive data, transactions and business processes to consumers, remote employees or partners via your intranet and extranet safer.” This is the nature of business in the future. Working with partners, as is done by the Joint Operating Committee, is an effective means of reducing costs and increasing innovation in any industry. It’s only reasonable that technologies emulate these needs. In addition Oracle Adaptive Access Manager takes security and authentication to another level. As a result, our demands regarding the pooling concept and the ICC, I feel, will be less of a technical risk for the People, Ideas & Objects Preliminary Specification and subsequent developments. 

The next application is the Oracle Entitlement Server which provides a dynamic access control element to the applications that use the server. Instead of manually wiring access control privileges into each application and user, they can be dynamically generated using the Oracle Entitlement Server. “The solution can manage complex entitlement policies with a standalone server or with a distributed approach that embeds information at the application level.” When it needs to be determined if user X has access to Joint Operating Committee Y, a decision from the entitlement server, based on criteria within the application, can be made. If this information is changed, our user would be denied access. This provides enhanced security based on policies and reduces the amount of detailed specific software development that is difficult, time consuming, and costly to maintain. 

Federated Identities are a major part of how the pooling concept and ICC are implemented in the Preliminary Specification. We have specified in many modules, such as the Resource Marketplace module, Federated Identities. Situations such as where the vendor maintains contact and other information. That information is comprehensive and includes key organizational contacts, calendars and scheduling information. Working with the partners in the Joint Operating Committee and the representatives of the service industry in this way will effectively mitigate many technical software development issues we have. These data elements are maintained by each producer / service industry company and available globally throughout the People, Ideas & Objects applications.

One area that we will continue to face a challenge is in the Work Order. Putting together a working group to study earth science or engineering research is critical to innovative oil & gas producers and the industry in general. These are ad-hoc organizations formed with partners that may have no past history to draw from. Federated Identities will provide users with some of the information they need to establish the partnership and grant application access. However, there is still the pooling of and sourcing of costs, and budgets. Costs and their contributions are traditionally what invoke the bureaucratic nightmare that mitigates and destroys the motivation for these working groups to form. We need to ensure these roadblocks do not get in the way. We have proposed to overcome these issues by developing an intuitive interface for our users involved in organizing the working group. 

We don't want our users to experience a mindless security access maze. Oracle Enterprise Single Sign-On Suite Plus promises to keep this from happening. Logging onto and off of systems as our user proceeds through the various modules and components of the applications is a must have. This product promises this level of service seamlessly and remotely. Which is needed. And considered a must have feature in today’s software offerings.

Oracle Identity Manager which will be used as the base product for role and identity management. This will be the base of the Industrial Command & Control for People, Ideas & Objects Preliminary Specification. It is part of the Oracle Fusion Middleware product offering and part of their Java Enterprise Server. Therefore we can build off the functionality existing and enhance it with our user community's needs. Building off of the functionality will be somewhat limited as many of the concepts inherent in the ICC are already captured in Oracle Identity Manager. 

Oracle Identity Manager is a highly flexible and scalable enterprise identity administration system that enhances operational and business efficiency. It provides centralized administration & complete automation of identity and user provisioning events across the enterprise and extranet applications. It manages the entire identity and role lifecycle to meet changing business and regulatory requirements and provides essential reporting and compliance functionalities. By applying business rules, roles, and audit policies, it ensures consistent enforcement of identity-based controls and reduces ongoing operational and compliance costs.

Oracle Internet Directory and Oracle Virtual Directory product offerings follow. A bit off topic but Oracle Internet Directory is a relational database-derived directory server. That Oracle is providing the marketplace with a directory server based on relational database technology speaks to the power of their relational database. They claim they have performance for two billion users. I see the advantages of using this product over their traditional directory server and have selected it for the Preliminary Specification. It will provide us with some flexibility when we ask some of the most comprehensive and demanding questions of these technologies. 

Oracle Internet Directory could be deployed as an industry wide directory server. In this case, I am referring to a directory server for the oil & gas and service industries. There it can integrate with other Oracle products, such as Oracle Identity Manager, which would be deployed at the producer firm, Joint Operating Committee and service industry representative level. This being a relational database we have some interesting opportunities here. 

Oracle Virtual Directory may be the first step toward optimizing relational databases. What we will have is a global database of names within the Oracle Internet Directory. These will relate to the information contained in Oracle Identity Manager and other applications. Oracle Virtual Directory will provide us with a seamless way to browse, and applications will see these datastores as one. 

Within the Preliminary Specification we want to access the contact information of the people or firms that provide services or products to the producers or Joint Operating Committees. Individuals and service industry members are expected to maintain their own contact and basic information. These will be maintained in the Oracle Internet Directory for each and every producer or Joint Operating Committee to access the latest and up to date information. This will save an immense amount of time for producers and Joint Operating Committees, as well as individuals and service industry providers. When looking for someone the search capabilities will be significant as we have added the “Vendor / Supplier Contact Database” and the “Actionable Information Interface” to this base data in the Resource Marketplace module. 

Now we want to look at Oracle Identity Analytics as part of the Security & Access Control module of the Preliminary Specification. This application provides governance over the access privileges granted to our users of the People, Ideas & Objects application modules. Many of the functions and processes provided in Oracle Identity Analytics are either necessary or of significant value included in the Preliminary Specification. 

A key area of our strategy is to understand the "why" and "how" our users access our services. Providing documentation of what information was accessed by what users and if any of the access violates any of the established policies. Ensuring that data access by users is compliant with corporate and application policies. This is to ensure that users are not unnecessarily abused by overtly secure systems and overall efficient corporate governance is achieved. All of the data collected during data access, that is the “why and how” of our users' access. Is compiled in a “Data Warehouse” for further analytical analysis and querying. This will help to show trends and usage patterns that will form updated policies and procedures and security provisions. 

Another useful function within the Oracle Identity Analytics application is the Segregation of Duties feature. In many areas of a corporation, certain process functions must be undertaken by specific and sometimes different individuals. This feature provides for that assurance. It is Sarbanes-Oxley compliant. This is particularly relevant when the Joint Operating Committee is small, as we mentioned the other day. And we have assigned many roles to a few people. By segregating the roles that need to be kept separate for compliance purposes, this application ensures that the appropriate governance is maintained. 

There is a comprehensive and customizable dashboard interface for our Oracle Identity Analytics users to analyze the data and particularly the data warehouse. Filled with reports and data that an effective user can use to determine where and how the People, Ideas & Objects producer client might be susceptible to access control violations. 

The last feature I want to highlight is what Oracle calls Role Lifecycle Management. This provides the Oracle Identity Analytics user with the ability to do “what if” analysis in terms of the implications for identities and roles within the People, Ideas & Objects application. It contains a role change approval process, role versioning and role rollback. These will be needed in determining and maintaining the Industrial Command & Control. 

We now step down from the Oracle Fusion Middleware layer to the actual Oracle Database for some security features. The first product in this stack is Oracle Advanced Security. It provides authentication, encryption, and encryption of database and network activity. It is possible, and I highly recommend that all the data and information used in the People, Ideas & Objects application modules be encrypted in the database and on the network. This increases the load on the systems and requires additional effort in terms of key management. However, I think the nature of the data and information and the manner in which the applications are provided as Cloud Administration & Accounting for Oil & Gas, this level of security is necessary. 

Oracle Audit Vault is another product I recommend for the Preliminary Specification. It provides central location and management of audit information for compliance purposes. The ability to manage data, information, privacy policies, and security for our users. Oracle Audit Vault is Sarbanes Oxley compliant. 

This next Oracle product adds to the Preliminary Specification. Oracle Label Security will work in many different ways within the modules however here are just two examples. The application designates specific individuals with higher security clearances. It designates specific data fields with certain security clearance. Those with high enough security clearances and appropriate authorizations can read these database fields. Within the People, Ideas & Objects application we want to ensure that the reserves, accounting information and strategy discussions of each producer firm remain confidential to a select group of individuals within that firm. With Oracle Label Security that is possible. We want to ensure that the appropriate people within the chain of command in Industrial Command & Control have access to the appropriate materials to make the appropriate decisions. This will allow those individuals to have access to these materials without making them available to everyone in the chain of command. 

Although not that pertinent to our users of the People, Ideas & Objects applications we have included Oracle Configuration Management, Oracle Database Firewall and Oracle Database Vault as part of the Preliminary Specification. These will help keep the applications and the Oracle Database running as they should. Oracle Configuration Management will determine if there is a change in the configuration, either through a patch, or if something has been done wrong it will correct itself back to the specified configuration. Ensuring that what is promised to our users of People, Ideas & Objects is provided. Oracle Database Firewall ensures no SQL statements inconsistent with our users' or applications are passed through to the database. Oracle Database Vault allows you to restrict certain IP addresses or users to running certain SQL commands. It also locks databases from having any operations conducted on them. 

Backing up data and information is two of Oracle’s strengths. Oracle Secure Backup provides excellent tools for this. Because the database is encrypted, the backup is encrypted as well. What we will need to do in the Preliminary Specification is to determine in extensive detail what precisely will be the backup strategy used for the People, Ideas & Objects application. 

Lastly there is Oracle Total Recall. A product that helps access historical data. Oracle Fusion Applications provides some interesting solutions for how they handle legacy applications. We will get into those as we proceed through the Preliminary Specification.

Conclusion

It is important to remember that here in the Security & Access Control module of the Preliminary Specification. That the role and identity-based Industrial Command & Control (ICC) as conceived here has not been implemented, developed or conceived anywhere else before. We are taking role and identity-based management to the next level with the ICC. This is done through the usage of the Joint Operating Committee, through pooling and taking advantage of specialization and the division of labor in the oil & gas industry. 

Why are we bothering with the ICC and the Joint Operating Committee pooling of resources? The issue we are resolving is the finite number of earth science & engineering resources available to the industry. With the anticipated retirement levels in the next 20 years. With the time requirements to bring on increased levels of resources. And most importantly with the demands for more energy, and the demands for more earth science & engineering in each barrel of oil equivalent produced. We face long-term shortages of critical resources. The need to organize the industry, exploit specialization and division of labor, and Professor Paul Romer's theory of non-rival costs is necessary to increase the output from the same number of resources. Doing this without pooling the resources in the Joint Operating Committee will cause the producer firm to broaden the scale of their earth science & engineering capabilities beyond what would be a commercially viable concern. The Preliminary Specification notes that we have contributions from earth scientists and engineers from multiple producers working together to meet the objectives of the Joint Operating Committee. Therefore we need a means to organize themselves and that is the Industrial Command & Control of the Security & Access Control module. 

How the ICC will be implemented will be determined by our user community. However, I can speculate that the Joint Operating Committee will have standard roles and identities used throughout the industry. Standardization provides many benefits and will be necessary in this instance to make technology work. One of the key benefits of standardization is enhanced innovation. The need to have the various areas "covered" in terms of compliance and other requirements will require a standard template used by everyone. Everyone will know that that position is responsible for that role and responsibility. When Joint Operating Committees are small and have only a few people assigned, multiple roles can be assigned to one individual. 

There are security and access control issues associated with the service industry and particularly service providers accessing People, Ideas & Objects systems and data. Removing administrative and accounting resources from the producer firms and organizing them in their own service providers provides significant operational flexibility to the innovative and profitable oil & gas producer. The Security & Access Control module ties these disparate organizations into highly organized replacements for the current bureaucracy. Contributing substantially to People, Ideas & Objects' overall tangible portion of our value proposition.

With the natural division in the types of information held within a producer and Joint Operating Committee. Producers will know that the Preliminary Specification can deliver the right information to the right people at the right time. Leakage of proprietary information can be mitigated by isolating company data. This is due to its unique nature and Oracle Label Securities' ability to restrict access to database fields. 

Oracle’s products provide a strong layer of mission critical capabilities in the Security & Access Control module. Oracle provides comprehensive coverage of security, access control, audit, back up and roll management to name just a few of the highlights provided. Although this comes with additional costs, I am certain that no one will argue with the quality and peace of mind that these products bring. 

OCI Security & Access Control, Part I

 Introduction

Joint Operating Committees are the key Organizational Construct of a dynamic, innovative, accountable and profitable oil & gas company. It is the interactions of many producers, service providers and suppliers who are involved in the day to day commercial and strategic concerns of that Joint Operating Committee that we need to concern ourselves with. The Security & Access Control module's focus is to ensure the right people have the right access to the right information with the right authority. This is at the right time at the right place and through the right device. 

Throughout the Preliminary Specification we discuss two of the most pressing operational issues in the oil & gas industry. Those being the demand for earth science & engineering effort is increasing with each barrel produced. This is best represented by the steep escalation of oil & gas exploration and production costs. At the same time, critical earth science & engineering resources are fixed and difficult to expand. And with the anticipated retirement of this brain trust in the next twenty years, the problem becomes critical. The second issue regards the manner in which the administrative and accounting resources are organized within the industry. With the Preliminary Specification the need for each producer to develop their own administrative and accounting capabilities internally is replaced by an overall industry capability. Then each producer can access those resources on a variable cost basis with direct charges to the Joint Operating Committee. This provides operational flexibility in how a producer approaches its strategic and tactical needs. 

There are few short-term solutions to the shortfall in geologists and engineers over the next twenty years. It takes the better part of that time to train them to operate in the industry. What we do know are several "things" being applied in the People, Ideas & Objects Preliminary Specification. Many of these concepts are based on what we call Industrial Command and Control. Which is a method developed in the Security & Access Control module of imposing command and control over any and all Joint Operating Committees, working groups, producer firms, service providers or organizations the producer may need to add structure to. The concepts are the further specialization and division of labor, and a reduction in the redundant building of capabilities within each oil & gas producer, or as we describe it, a pooling of resources in the Joint Operating Committee.

The first concept of specialization and division of labor is well known as a principle of economics that brings about greater economic productivity from the same volume of resources. Given that the volume of earth science & engineering resources is known for the foreseeable future. Specialization and the division of labor will provide us with a tangible means to deal with oil & gas industry productivity. In today’s marketplace, approaching a heightened level of specialization and division of labor without software to define and support it would be foolish.

The pooling concept is the solution to the current desire that each producer firm acquires the earth science & engineering capabilities necessary to deal with all the needs of their “operated” properties. This creates unneeded “just-in-time” capabilities for scarce scientific resources. When each producer within the industry pursues this same strategy substantial redundancies are built into the industry's capabilities. Redundancies that are left unused and unusable. What is proposed through the People, Ideas & Objects software application modules is that the producer's operational strategy avoids the “operator” concept. Instead, it pools their specialized technical resources through the Joint Operating Committee partnership. That way the redundancies that would have been present in the industry can be made available to the producers and used by the producers through hyper-specialization and division of labor.

These same principles are present in the second issue noted above. The administrative and accounting capabilities acquired through industry-wide capabilities provide the producer with the flexibility to address operational concerns. Issues such as today’s low natural gas prices can be addressed through this revised structure. By having administrative and accounting service providers charge their service fees directly to the Joint Operating Committee. The producer gains the ability to shut-in unprofitable production with only positive effects on their financial performance. Administrative, accounting, and production costs are eliminated during shut-in production. Providing the most profitable means of oil & gas operations when unprofitable properties no longer dilute profitable properties. Producers can save their reserves for the time when they can be produced profitably. Reserves costs don't have to carry additional losses if unprofitable production continues. Reserves can be seen as a low-cost solution to production and storage. Commodity prices will have less volatility due to producers removing marginal production from the marketplace. 

Being able to provide service providers with access to and security during these day-to-day operations will be a unique situation for the oil & gas producer. Service providers will aggregate data industry wide. And there will be many service providers involved in providing administrative and accounting services to the producer firm and Joint Operating Committees. Consideration of the proprietary nature of the information and security will be priorities for the Preliminary Specification. 

A quick note on mobility. People are provided with new devices that enable them to work anywhere. These phones and tablets, in addition to laptop computers, open up security and access control concerns for the innovative and profitable oil & gas producer. Some producers enable their staff with policies that allow them to bring their own devices to work. The fact is these devices provide enhanced productivity and are appropriate for an innovative and profitable oil & gas producer. People, Ideas & Objects Preliminary Specification includes an understanding that these devices will be part of the day to day used in the oil & gas industry. 

What these concepts require is what the Security & Access Control module is designed to provide. The system must provide access to the right person at the right time and at the right place with the right authority to the right information. With the Industrial Command & Control there will be a manner in which the technical, and all the resources, that have been pooled from the producers, interact with an appropriate governance and chain of command.

Two Types of Data

When we talk about the various people within the producer firms affiliated with a Joint Operating Committee. And the number of Joint Operating Committees that a firm may have an interest in. And the number of people a firm employs. Access control becomes challenging. It becomes a challenge when we consider that people certainly should have the access required, but the level of trust they may have with respect to other partner organizations is probably not as strong. That is to say, does using the Joint Operating Committee as the key Organizational Construct of a dynamic, innovative, accountable and profitable oil & gas producer, open the producer firm to data loss? This is how People, Ideas & Objects deal with the access and trust issue in the Security & Access Control module.

When we concern ourselves with the data and information of the producer firm. We also concern ourselves with the information cleared by the various Joint Operating Committees that the oil & gas producer has an interest in. We can all agree that this information is proprietary and subject to each producer firm's internal policies. (Information such as reserves data, accounting information, internal reports and correspondence, strategy documents.) What we're concerned about is the information and data held in the Accounting Voucher module and the associated data common to the joint account. (well file, agreements, production data, capital and operating costs, revenue and royalties.) 

Close analysis of these two types of data and information held within the firm and the Joint Operating Committee falls within the proprietary and partnership domains. In Canada at least, most data and information regarding well operations can be freely obtained through various regulatory agencies. Nonetheless, the majority of the data is shared through the partnership who have an interest in the data and information. Which is not the case with the producer firm's data. Most of the information is kept close at hand and reported through filtered reserve report summaries and annual reports. Therefore keeping a handle on proprietary data, while operating the Joint Operating Committee as the key Organizational Construct of the innovative oil & gas producer, as proposed by People, Ideas & Objects, does not present any data leakage.

Access control can therefore be limited by restricting any company personnel from viewing other companies' files. Which is a given. While in People, Ideas & Objects access control is restricted to the firm's Joint Operating Committees and the firm's files only. To extend this further, we would limit access to the appropriate roles within the firm. Then it is up to our user community to define a standard set of generic roles in which access is required to certain data types. This would apply to the types of operations handled by that role, for example, read, insert, update, delete. These generic roles could then be assigned to each individual within the organization based on their needs. Assigning multiple roles for more complex access. Access to proprietary data would be restricted to company personnel only.

More on the ICC

Throughout the Preliminary Specification we've discussed our solution to one of the premier issues the oil & gas industry faces. That is the demand for earth science & engineering effort per barrel of oil increases with each barrel produced. This is best represented by the steep escalation of oil & gas exploration and production costs over time. At the same time, critical earth science & engineering resources are fixed and difficult to expand in the short or medium term. Add to that the anticipated retirement over the next twenty years of the current brain trust of the industry and the problem becomes a critical concern.

There are few short-term solutions to the status quo volume of geologists and engineers. It takes the better part of that time to train them to operate in the industry. Our resolution in the People, Ideas & Objects software applications modules involves what we’ve developed and called “Industrial Command & Control” (ICC) and the application of specialization and division of labor. Specialization and the division of labor are well known principles of economics that bring about greater economic productivity from the same volume of resources. Given that the volume of earth science & engineering resources is known for the foreseeable future, specialization and the division of labor will provide us with a tangible means to potentially increase the capability, capacity and productivity of the oil & gas industry, yielding multiples of today’s performance over the long term. With software defining and supporting organizations, today’s producers must approach a heightened level of specialization and division of labor through software in broadly dispersed North American markets.

People, Ideas & Objects ICC involves the implementation of specialization and the division of labor in the fields of geology and engineering. It is currently necessary for each producer firm to acquire all the earth science & engineering capabilities necessary to deal with the needs of the properties they "operate". Which allows the full scope of these sciences to be deployed "just-in-time". When each producer within the industry pursues this same strategy, organizational inefficiencies in these critical resources are introduced. This is due to the method of organization built into the industry's overall capacity and capabilities. Leaving resource utilization rates lower due to the volume of unused and unusable resources locked in each producer firm. 

What is proposed through the People, Ideas & Objects software application modules ICC is that the producer's operational strategy avoids the “operator” concept. Instead, it pools these technical resources through each of their partnerships represented in their Joint Operating Committees. That way the inefficiencies that would have been present in the industry can be made available and used through industry wide, producer focused, advanced and advancing specialization and division of labor. Where many of the lower end processes are offloaded to service providers who specialize in that basic skill on behalf of many producers. This is done in a geographical area or other specialization. And each individual producer focuses on a specialized element of science as it develops and innovates upon that. People, Ideas & Objects believe producers will soon be unable to commercially support the full scale of engineering & earth science disciplines tasks and responsibilities as they have in house. This will be due to the shortages of resources, the cost escalation of these resources in the market due to their shortages, the expansion of demand from higher production volumes to achieve energy independence, the demands for more science in each incremental barrel of oil produced, the anticipated, substantial expansion of the sciences and the need to innovate upon that expanding science. For producers to maintain a broadened division of labor to deal with these issues and “operatorship” capabilities, it will extend them beyond any producer's commercial capacity.

What these concepts demand is what the Security & Access Control module is designed to provide through the ICC. The People, Ideas & Objects system must provide access to the right person at the right time and at the right place. This is with the right authority and the right information. With the ICC there will be a manner in which the technical and all the resources pooled from the producers, interact with the appropriate governance, compliance and industry standard chain of command.

Before the hierarchy which was a commercial development of the 20th century, there was only the military structure in terms of large organizations. The main difference between the two is subtle but significant. Military structures are broader and flatter than hierarchy. That is one of the ideals we are seeking, but the more significant feature is the ability for the chain of command to span multiple internal and external organizational structures and to move resources from different areas of the military through standardization.

The nature of people working through the industry-standard chain of command layered over the Joint Operating Committee will include all oil & gas disciplines. The contributions of staff, financial and technical resources will include all those employed by the industry today. I could foresee many office buildings being refurbished to accommodate the staff of a single Joint Operating Committee of a large property. There, staff from the different producers may be seconded to provide support for the Joint Operating Committee. They may work for a single Joint Operating Committee, not for any particular producer firm.

As background we should recall that each individual would have different access levels and authorizations in terms of access to People, Ideas & Objects ERP systems. Assuming different roles and responsibilities, they would impose different access levels to data, information, processes and functionality. People, Ideas & Objects application modules rely on the Security & Access Control module to implement Industrial Command & Control. This structure, particularly in a Joint Operating Committee, would weave multiple producer firms under one industry standard chain of command. The interface ensures that all processes are monitored for compliance, governance, and overall completeness.

Access, Roles and Responsibilities

This topic discusses the way authorizations, roles and responsibilities are handled in the Security & Access Control module of the Preliminary Specification. We should discuss the topic of delegating authority and responsibility during absences, which can come up from time to time.

As background we should recall that each individual would have different access levels and authorizations in terms of access to the People, Ideas & Objects systems. Assuming various roles and responsibilities, they would impose different access levels to data, information, processes and functionality. In addition, Security & Access Control is the key module for implementing Industrial Command & Control across People, Ideas & Objects. This structure, particularly in a Joint Operating Committee, would weave multiple producer firms under one chain of command. To ensure compliance, governance, and overall process completeness, it will need to provide an interface to ensure all processes are monitored.

Throughout the Preliminary Specification there is the perception of a heightened role for technology in terms of enabling authorization to conduct operations. Thus, the ability to do things and get things done depends on collaborating with partners and authorizing actions through processes managed by the systems. This participation dictates that the designation of the roles in the Security & Access Control module “means” more than just data access; it imposes authority and responsibility to undertake actions on behalf of Joint Operating Committees and / or producer firms.

It is necessary to assign this authority within the Security & Access Control module during any absence. If someone with authority and responsibility was away for whatever reason, they should be able to assign their authority to another person. This will enable them to fill that role while away. This will ensure that the process isn’t held up during their absence. Delegations of authority have been used for years in large firms and with a system that imposes authorizations and responsibilities on specific roles, the ability to temporarily move them down, across or up the chain of command is a necessity to keep the organization functioning.

Lastly we should talk about the interface that helps to identify missing elements in a process. It would simply show the command structure of the people assigned to a Joint Operating Committee or a process. It would also show their related role, authorizations and responsibilities. If someone was away, it would indicate who took over their role. It would help to identify how they could impose a chain of command to fill any vacancies. This would be particularly helpful if the role or process needed to be documented for compliance purposes.

Talk is Cheap

 What producer officers and directors fail to understand, repeatedly and consistently, is that their investors know they can talk an impressive game. Officers and directors say whatever comes to mind at the moment. In terms of implementation of what they said back in 1987, investors are still waiting and tired of this behavior. They ceased supporting the industry in 2015. Investors want performance in the form of profits. “Real” profits, not fake ones posted based on how officers and directors "feel" at the moment. If producers were making “real” money they could conduct themselves in what is considered normal commercial operations. Which is defined as generating the financial resources necessary to ensure their future was secure, investors and bankers were satisfied and customers knew they had a secure, reliable and affordable supply of oil & gas. Rarely have producers prioritized even one of these objectives over the sacrifice of the other two. Today, what is normally considered a "commercial operation" is far from a reasonable expectation.

There is a decided engineering aspect to everything discussed in the industry. Just as the next version of Windows will make your business more efficient, oil & gas producers are selling some cutting-edge engineering theories about how they're increasing oil & gas production. Ask them if it's profitable and they say sure. Look at the financial statements. That these statements are deemed unacceptable and have been the source of their investors' frustration is disregarded. It’s an engineering culture that dominates the industry and I'm not saying there’s anything wrong with that. Based on science the industry is complex and difficult. However it is a business and that is what the producer firms are unable to appreciate, understand or incorporate into their organizations. 

When every activity they’ve conducted is reported to be profitable due to specious accounting methods. There is no understanding of performance criteria. Simple field activity becomes profitable. Thereby creating a culture and competitive landscape that is systemically uncommercial. 

The oil & gas economy needs rehabilitation. A culture of talking up their game is the distinct value add of those within the industry. Exxon CEO Darren Woods was in the Wall Street Journal on Saturday and stated. 

Woods explained a high-level plan to investors for Exxon to do something companies have unsuccessfully striven to do for years: boost the amount of oil they can recover from individual shale wells.

Investors had little appetite for boosting investments to increase shale production, but Woods was talking about a way to use technological advances to wring more oil out of stubborn shale rock, according to people familiar with the meeting. Woods said he had directed employees to make it happen, and seemed confident in the plan.

Ultimately, that became one reason Exxon snapped up a large oil producer in the Permian Basin of West Texas and New Mexico: It needed a bigger sandbox for its experiments, and expected to extract more oil than its smaller rivals would on their own.

Exxon CEO Darren Woods also stated in a WorldOil article on Friday that Pioneer would reduce their annual costs by $2 billion dollars, post consolidation. I questioned the numbers on X and asked for further information. However accountability in oil & gas is notoriously flawed and as I've stated many times, purposefully so. What we are told is that Exxon is waging a $60 billion bet on needing a bigger sandbox for its experiments. It expects to extract more oil than its smaller rivals alone. In oil & gas these are believed to be the actions that will lead to profitability. At least that is implied. 

What I stated in an October 22, 2021 blog post entitled "Misguided Angel’s or Devil’s Incarnate.” Within my quote I refer to a Forbes article that has a similar take on Exxon’s 2020 Annual General Meeting. 

Therefore it needs to be asked why did Exxon management vote to have Engine No. 1 directors put in place? Or alternatively show me the vote count. For practical purposes Exxon’s share distribution is 53.47% of the float is held by 3,213 institutional investors. These shares are normally voted prior to the meeting and they’re known by management. Read the dialog of the Exxon meeting from this Forbes article and explain to me why you would think it wasn’t “play acting,” that it didn't have a “banana republic feel to it” or just good old “comic relief.” I highly recommend reviewing it.

The Vote’ is a monumental and innovative theatrical achievement. This compelling human drama is Shakespearean in its depth and breadth while also being part musical, part improv, part comedy, and part theater of the absurd. It even has some western partner dancing. At its heart, the play is a classic Greek tragedy with Darren Woods as the protagonist. He delivers a breathtaking and memorable performance as director and lead actor. ‘The Vote’ gets my vote as the best play of a shareholder meeting I’ve ever seen.”

The point I’m making is that Exxon’s management, as was Shell’s loss in its court case, will see them “forced” to reduce theirs and their suppliers environmental footprint. Appears to conveniently be directed to support clean energy investments. No discussion of performance. No expectation of performance from clean energy. Just the fact that all of the oil and gas bureaucrats can now hang their hats on this one vote and judgment. This was their day of environmental reckoning. Oil and gas has collapsed to the point where the press is actively mocking their attempts to deceive us.

What I recall about that meeting was the suddenness of the action by Engine No. 1. Seemingly overnight they accumulated 1% of Exxon to force a vote on their resolution. They also have three newly appointed directors installed. A successful proxy fight during an annual meeting at a large organization is about as common as a meteor ending civilization. This ultimately saw Exxon commit $17 billion to environmental and clean energy spending. Nonetheless we know producers, officers and directors are now focusing on oil & gas this quarter. Moving into other industries has been well established and done legitimately through proxy wars, if necessary. Having written off shale, and therefore every other method of oil & gas extraction when they sauntered off, they can’t jump back in immediately. I think Pioneer is realizing the winds are howling and as has been the case in previous situations, management and the executive are the first to abandon ship. They’ve opted for the sale of the company as the method to do so.

Now that we’ve established all of this discussion I can get down to the point I want to make. How would the Preliminary Specification work if Exxon adopted it? If Exxon could invest $60 billion to generate $2 billion / year in synergies and a sandbox to try some novel ideas. Or $17 billion in far off industries. It sounds to me that the lunatics are in control. An all-stock deal for Pioneer shows that investors have distaste for this industry. The scope of this deal indicates they're right to keep their distance. It was during 2017 that these producers told investors that the Preliminary Specification would never work. They couldn’t shut-in production without damaging their formations. April 2020 proved this to be untrue when 25% of world production was shut-in and no damage had occurred to any formation anywhere. It was during 2017 that these producers said I was a lunatic. Therefore I feel fully qualified to call them when I see them now. (It’s out of my system now.) These are only some of the highlights of using the Preliminary Specification.

• The Preliminary Specifications decentralized production models price maker strategy cures the industry of its chronic, systemic, overproduction disease. So many trillions of dollars and valuable resources have been wasted at the hands of those that didn’t care and couldn’t be bothered to respond to common sense or their investors since our publication in August 2012. 
• Actual, factual, detailed, standardized and objective financial statements are prepared by the Preliminary Specification for each Joint Operating Committee. By our revised business model all producers' costs are variable based on profitability. 
• Allowing producers to discern which properties are making money and which is not. 
• Enabling them to shut-in unprofitable production to optimize corporate profitability. 
• Save their reserves for when they can be produced profitably. 
• Reducing the cost of their reserves by not adding incremental losses. 
• Keeping the commodity as reserves is the lowest cost alternative to production and storage. 
• Removing marginal production from commodity markets. 
• While shut-in producers can innovatively work the property over to return it to profitable production. 
• When all costs are variable and recognized appropriately. Including the capital costs of a capital intensive industry. All of these costs are passed on to the consumer at the point of sale if the product is produced profitably. Therefore the cash incurred for these costs in the production month is returned as cash in the subsequent month. This provides the financial resources to pay for the following month's costs.
• Today, contrary to common sense producers capitalize overhead costs. Maintain them on the balance sheet for decades and return the cash used during the production process years and decades later. 
• “Building balance sheets” and “putting cash in the ground” is what they’ve told us they were doing. We just should have believed them. And why they were so dependent on outside investors to replenish their capital expenditure budgets each year. Producers drain cash monthly.

The Preliminary Specification establishes an organizational culture based on seven Organizational Constructs to replace the stale, bureaucratic and failed culture of today. Using these market supporting institutions to create and support a dynamic, innovative, accountable and profitable oil & gas producer and industry. A revised culture and roadmap for people to see, understand and apply how, what and why they need to do things in the profitable oil & gas industry.

• Division of labor and specialization increase producers and industries' throughput from the same resource base.
• Application of Professor Paul Romer's theory of non-rival costs. Where a sharing of infrastructure such as accounting and administration is based on industry-wide, variable cost capabilities and capacities. Eliminating duplication of non-competitive capabilities among producers. 
• The Joint Operating Committee which is the legal, financial, operational decision making, cultural, communication, innovation and strategic framework of the industry. By moving the compliance and governance framework of the hierarchy into alignment with the seven frameworks of the Joint Operating Committee we achieve speed, accountability and profitability.
• Three specific oil & gas related markets are recognized with their own modules in the Preliminary Specification. Resource, Petroleum Lease, and Financial Marketplace modules. Providing the means for producers and individuals to engage in oil & gas business resources. 
• Intellectual Property is a poorly managed resource in oil & gas. This law has been abused and needs to be recognized and respected by producers to achieve the level of innovation and development necessary. No one will break their brains to have their IP stolen by their customers, the oil & gas producers. 
• Information Technology, and specifically the ERP systems that are the Preliminary Specification and Oracle Cloud ERP. Are provided through our Cloud Administration & Accounting for Oil & Gas software and service. Organizations are defined and supported by software. In order to change the organization, you must change the software first. 
• Innovation is the basis of the Preliminary Specification. Firms such as Apple are purpose-built innovators. It is not a happenstance occurrence. Exxon will not innovate because they have an idea. Ideas are the easy part. Particularly for organizations, innovation is inherent in all aspects of the Preliminary Specification. 

Lastly the organization of People, Ideas & Objects, our user community and their service providers. Designed to enable the business models in the Preliminary Specification that release substantial trillion dollar value propositions over the next 25 years. These are only the value propositions we can quantify. There are other intangible value propositions such as the increased performance from specialization and the division of labor used throughout. In addition, there is the sharing of non-competitive attributes of the producers on an industry-wide basis.

These points are just a summary of the highlights of a comprehensive business model for oil & gas. This model consists of almost 400,000 words in the Preliminary Specification. Which spells out in detail how, what and why the industry needs to change to attain real performance and profitability. There are over 4 million words on this blog, most of them reviewing primary research. Is this the level of effort necessary to prove to those in the industry that business value needs to be considered? Or will they continue to spend $60 billion on a “sandbox” to try more “experiments” that might work, or $17 billion in environmental and clean energy on the basis of poorly performed Shakespearean plays? The one thing I can assure everyone of is that Exxon CEO Darren Woods is about to win the biggest, well built balance sheet contest in the industry this year. Wow!