Partnership accounting Part II.

[Partnership accounting] [Java programming language]

I want to raise one of the major problems that Genesys needs to solve. This issue, I think is unique to the accounting for operations in the joint operating committee. The issue is the partnership or joint venture accounting, as discussed here and here, and focuses on the way the functionality and process is written. The way the system needs to be designed will use concepts that are not present in oil and gas accounting systems available today. I would also assert that these issues could not be addressed in prior programming languages. Java opens up many opportunities to handle and solve these types of problems, and I can see how it would be very effective in solving this issue.

The current systems, SAP in particular, focus almost exclusively on the accounting of the company of interest. The joint account is cleared monthly to the appropriate working interest owners, and from that point, little if anything is done other then from an internal perspective. With the change in organizational focus to the joint operating committee, this internal focus is maintained, and from an accountability point of view increased, however the partnership focus begins to take on a more substantial component of the interests of the collective organizations as represented by the joint operating committee.

I have discussed that many of the participants of the JOC will be more active in the day to day of each JOC. Micro Specialization is something that will have to come about as a result of the demands for so much work to be done by the existing and possibly declining population of oil and gas workers. I have also detailed here the use of personnel from various participants will be called upon to conduct activities, whereas currently, the operator and chairman undertook most of these tasks.

This point will help to mitigate the redundant and unproductive duplication of capabilities of the competitive oil and gas marketplace today. As Dr. Giovanni Dosi has suggested, the capabilities and qualities of each individual producer are currently being mirrored and this mirroring is constraining the understanding of the advancement of the sciences and engineering and their application in innovative ways. A more cooperative mindset is required to fulfill the markets demand for energy.

Currently the direction of data and information is from the operator to the non-operators. This by nature was a simple programming issue to overcome, and there will be some elements of this simple method in the Genesys system. The difficulty comes when all participants of the joint operating committee have each been contributing people, financial and technical resources, and direct costs on behalf of themselves, and / or, other members of the joint account. All the producers collective resources are pooled to attain the highest level of technical capability, management and tactical deployment available.

These costs and resources are being incurred on each producers behalf, or, their own behalf and not initially shared, but may be eligible to offset their obligations to other partners or need to be recognized irrespective. This is further complicated by the fact that many of the internal charges and overhead allowances that have been traditionally charged to the joint account also become redundant. These overhead style of costs are replaced by the specific costs and attributes that were directly incurred by each producer represented in the joint operating committee. The Genesys system will capture these components as they are incurred by the employee / worker / investor / consultant in an active job costing state as the user / worker is logged on.

What is therefore required in order to determine the 100% costs attributable to the JOC is a "pooling" of all the eligible associated costs and revenues involved in the property. Once these costs have been aggregated from each producer, then and only then, can the appropriate costs of each producer be determined, recognized and billed.

To only make things more complicated for the developers, this cost data should be compiled into its usable form at least daily and ideally on a live basis. The elimination of the month end process is one of the objectives of this system, and things need to be dealt with on a more current basis. Cash redistribution based on contributions would remain on a clearing basis at the end of the month or when reasonable.

When a cost is incurred, the system is required to be able to denote that transaction as an operated or non-operated cost and if it is eligible. These two attributes are telling the system that these costs are incurred on behalf of all of the participants of the joint operating committee, on behalf of the producer itself and if it should be recognized in the joint account or not. Therefore reflecting that their may be unique costing components of each producer represented by the joint operating committee.

Technorati Tags: Energy, Genesys, Partnership-Accounting, Technical Vision

Maven "Project Object Model" POM

[Development]

The title of this blog will take you to the February 20, 2006 blog entry regarding the technical architecture of the Genesys system. I highlight this entry as it received a comment from Milos Kleint. Milos is a regular contributor to the Maven project at the codehaus.

I am publicly asking Milos if he would be so kind as to write the POM for the Genesys architecture so that interested developers could build their own sandbox for work on the Genesys system. If Milos is still viewing this blog, I would also have him and his group at the codehaus and Apache review the licensing preamble to see if their are any areas of interest in this new community source project.

Petro-Canada's reserve report.

Working for the past week on the licensing has made this blog / project / solution for innovative oil and gas producers real. I challenge the large oil and gas producers to get involved financially and be a part of defining and building this solution. Harvard University, McKinsey Consulting and Dr. Carlota Perez are only 3 instances of the same message and there will be more. If you want to continue to ostracize me then that is fine, but I would suggest you start picking on someone your own size. This community will be busy on productive things.

One of the areas that is a key attribute of oil and gas people is their ability to understand, find and develop reserves. Seeing the real scientists go about their jobs in oil and gas is absolutely fascinating. It is also a very difficult science. A science that is one of the most advanced thinking processes that I have ever been exposed to, and I would suggest the most advanced in a commercial setting.

I have to say at the start, I don't share Petro-Canada's optimistic point of view regarding its fourth quarter report and particularly their reassessment of their reserves. Specifically the statement "195% reserves replacement" concerns me. It appears to me that these numbers may not be as represented.

An upward revision of reserve estimates based on current market prices should be eliminated from the terms of the discussion about reserve increases. This seems almost unfair to represent these as additions as opposed to what they are, old reserves that became economic as a result of higher prices. They therefore are not additions are they.

The extension of your heavy oil reserves to 50 years is inconsistent with standard discounting practices. But then again, based on your report, your able to prepare your own reserve estimates. (See quotation below) How can you count reserves from something that may be producing in 50 years as an addition to your reserves? The present value of anything in 50 years is nothing, ridiculous. Your warning about forward looking statements takes on a greater meaning than I think your readers and investors accept.

My suggestion would be to possibly have noted that 26.4 / 155.3 = 16.99% of your production was replaced.

Looking critically at the $2.495 billion in upstream capital expenditures, one has to ask, with only 26.4 million barrels of additions, the value or faith that shareholders have placed on your firms capabilities is shocking. By my calculations that is a replacement cost of $94.50 per barrel. Why would you continue to sell oil at $60?

As the current custodian of your investors properties, I am writing to assert that the methods and means of management that are employed by your organization are self serving. By not pursuing alternate forms of organizational structure, you are indeed maintaining the long term security of your pension and salary. What do the investor get out of this? 2005 style of performance?

From the fourth quarter report;

"Petro-Canada's staff of qualified reserves evaluators generates the reserves estimates used by the Company. Our reserves staff and management are not considered independent of the Company for purposes of the Canadian provincial securities commissions. Petro-Canada has obtained an exemption from certain Canadian reserves disclosure requirements to permit it to make disclosure in accordance with Securities and Exchange Commission (SEC) standards in order to provide comparability with U.S. and other international issuers. Therefore, Petro-Canada's reserves data and other oil and gas formal disclosure is made in accordance with U.S. disclosure requirements and practices and may differ from Canadian domestic standards and practices. Where the term barrel of oil equivalent (boe) is used in this quarterly report it may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf: one bbl is based on an energequivalencecy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead."

"The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The use of terms such as "probable," "possible," "recoverable," or "potential" reserves and resources in this quarterly report does not meet the guidelines of the SEC for inclusion in documents filed with the SEC."

As I said in the initial paragraph of this entry. This community is moving forward and want's to be all inclusive. We wish to have the large producers involved and playing nice with everyone, so, as I said, if you want to pick on this theory, Harvard, McKinsey and others are more your size. All in all subscribing to support of this community would certainly be a smarter place to put your investors cash.

Technorati Tags: Conflict, Dosi, Genesys, Petro-Canada

Start your IDE's...

Everything is now in place to start the development process. Please review the preamble, the license and note the location of the project on java.net by clicking on this blogs title.

I have established 5 mailing lists and entered a few comments for discussion in the forum's. There is also copies of the "Plurality" thesis there available for download.

Acceptance of the Genesys Community Source License requires the text of the license to be copied and pasted into an email, note your acceptance, and emailed to me at paul.cox@gmail.com. Registration at java.net is also required.

Genesys Community Source License.

GENESYS COMMUNITY SOURCE LICENSE
Version 3.0

I. DEFINITIONS.

"Community Code" means Reference Code, Contributed Code, and any combination thereof.

"Community Member" means You and any other party that has entered into and has in effect a version of this License (or who is similarly authorized and obligated by Original Contributor) for the Technology with Original Contributor.

"Contributed Code" means (a) Error Corrections, (b) Shared Modifications and (c) any other code other than Reference Code made available by Community Members in accordance with this License.

"Contributed Code Specifications" means the functional, interface and operational specifications and documentation for Contributed Code.

"Covered Code" means Community Code and Modifications.

"Error Corrections" mean Modifications which correct any failure of Covered Code to conform to any aspect of the Technology Specifications.

"Interfaces" means classes or other programming code or specifications designed for use with the Technology comprising a means or link for invoking functionality, operations or protocols and which are additional to or extend the interfaces designated in the Technology Specifications.

"Modifications" means any (a) change or addition to Covered Code, or (b) new source or object code implementing any portion of the Technology Specifications, but (c) excluding any incorporated Reference Code.

"Original Contributor" means Paul D. Cox and its licensee (Genesys), successors and assigns.

"Reference Code" means source code for the Technology designated by Original Contributor at the Technology Site from time to time.

"Research Use" means research, evaluation, development, educational or personal and individual use, excluding use or distribution for direct or indirect commercial (including strategic) gain or advantage.

"Shared Modifications" means those Modifications which Community Members elect to share with other Community Members pursuant to Section III.B.

"Technology Specifications" means the functional, interface and operational specifications and documentation for the Technology designated by Original Contributor at the Technology Site from time to time.

"Technology" means the technology described in and contemplated by the Technology Specifications and which You have received pursuant to this License.

"Technology Site" means the website designated by Original Contributor for accessing Community Code and Technology Specifications. "https://genesys.dev.java.net/"

"You" means the individual executing this License or the legal entity or entities represented by the individual executing this License. "Your" is the possessive of "You."

II. PURPOSE.

Original Contributor is licensing the Reference Code and Technology Specifications and is permitting implementation of Technology under and subject to this Genesys Community Source License (the "License") to promote research, education, innovation and product development using the Technology.

COMMERCIAL USE AND DISTRIBUTION OF TECHNOLOGY IS PERMITTED ONLY UNDER OPTIONAL SUPPLEMENTS/ATTACHMENTS TO THIS LICENSE.

III. RESEARCH USE RIGHTS.

A. From Original Contributor. Subject to and conditioned upon Your full compliance with the terms and conditions of this License, including Sections IV (Restrictions and Community Responsibilities) and V.E.7 (International Use), Original Contributor:

1. grants to You a non-exclusive, worldwide and royalty-free license to the extent of Original Contributor's intellectual property rights in and covering the Reference Code and Technology Specifications to do the following for Your Research Use only:
a) reproduce, prepare derivative works of, display and perform the Reference Code, in whole or in part, alone or as part of Covered Code;
b) reproduce, prepare derivative works of and display the Technology Specifications;
c) distribute source or object code copies of Reference Code, in whole or in part, alone or as part Covered Code, to other Community Members or to students;
d) distribute object code copies of Reference Code, in whole or in part, alone or as part of object code copies of Covered Code, to third parties;
e) use Original Contributor's class, interface and package names only insofar as necessary to accurately reference or invoke Your Modifications for Research Use; and
f) use any associated software tools (excluding Compliance Materials), documents and information provided by Original Contributor at the Technology Site for use in exercising the above license rights.

B. Contributed Code. Subject to and conditioned upon compliance with the terms and conditions of this License, including Sections IV (Restrictions and Community Responsibilities) and V.E.7 (International Use), each Community Member:

1. grants to each Community Member a non-exclusive, perpetual, irrevocable, worldwide and royalty-free license to the extent of such Community Member's intellectual property rights in and covering its Contributed Code, to reproduce, modify, display and distribute its Contributed Code, in whole or in part, in source code and object code form, to the same extent as permitted under such Community Member's License with Original Contributor (including all supplements/attachments thereto).

2. grants to Original Contributor a non-exclusive, perpetual, irrevocable, worldwide and royalty-free license to the extent of such Community Member's intellectual property rights in and covering its Contributed Code and Contributed Code Specifications, to (a) use, reproduce, modify, display, prepare derivative works of and distribute Contributed Code and modifications and derivative works thereof, in whole or in part, in source code and object code form, as part of Reference Code or other technologies based in whole or in part on Reference Code or Technology; (b) prepare, use, reproduce, modify, display, prepare derivative works of and distribute Contributed Code Specifications, and modifications and derivative works thereof, in whole or in part, in connection with the exercise of such rights; and (c) sublicense any of the foregoing through multiple tiers of distribution.

C. Subcontracting. You may provide Covered Code to a contractor for the sole purpose of providing development services exclusively to You consistent with Your rights under this License. Such Contractor must be a Community Member or have executed an agreement with You that is consistent with Your rights and obligations under this License. Such subcontractor must assign exclusive rights in all work product to You. You agree that such work product is to be treated as Covered Code.

D. No Implied Licenses. Neither party is granted any right or license other than the licenses and covenants expressly set out herein. Other than the licenses and covenants expressly set out herein, Original Contributor retains all right, title and interest in Reference Code and Technology Specifications and You retain all right, title and interest in Your Modifications and associated specifications. Except as expressly permitted herein, You must not otherwise use any package, class or interface naming conventions that appear to originate from Original Contributor.

IV. RESTRICTIONS AND COMMUNITY RESPONSIBILITIES.

As a condition to Your license and other rights, You must comply with the restrictions and responsibilities set forth below, as modified or supplemented, if at all, in Attachment B, Additional Requirements and Responsibilities.

A. Source Code Availability. You must provide source code and any specifications for Your Error Corrections to Original Contributor as soon as practicable. You may provide other Contributed Code to Original Contributor at any time, in Your discretion. Original Contributor may, in its discretion, post Your Contributed Code and Contributed Code Specifications on the Technology Site. Additionally, You may post Your Contributed Code and/or Contributed Code Specifications for Research Use on another website of Your choice; provided, however that You may distribute or display source code of Covered Code and the Technology Specifications only for Research Use and only to: (i) Community Members from whom You have first obtained a certification of status in the form set forth in Attachment A-1, and (ii) students from whom You have first obtained an executed acknowledgment in the form set forth in Attachment A-2. You must keep a copy of each such certificate and acknowledgment You obtain and provide a copy to Original Contributor, if requested.

B. Notices. You must reproduce without alteration copyright and other proprietary notices in any Covered Code that You distribute. The statement, "Use and Distribution is subject to the Genesys Community Source License available at "http://innovation-in-oil-and-gas.blogspot.com/2006/03/development-license.html#links" must appear prominently in Your Modifications and, in all cases, in the same file as all Your copyright and other proprietary notices.

C. Modifications. You must include a "diff" file with Your Contributed Code that identifies and details the changes or additions You made, the version of Reference Code or Contributed Code You used and the date of such changes or additions. In addition, You must provide any Contributed Code Specifications for Your Contributed Code. Your Modifications, whenever created, are Covered Code and You expressly agree that use and distribution, in whole or in part, of Your Modifications shall only be done in accordance with and subject to this License.

D. Distribution Requirements. You may distribute object code of Covered Code to third parties for Research Use only pursuant to a license of Your choice which is consistent with this License.

E. Extensions.

1. You may create and add Interfaces but, unless expressly permitted at the Technology Site, You must not incorporate any Reference Code in Your Interfaces. If You choose to disclose or permit disclosure of Your Interfaces to even a single third party for the purposes of enabling such third party to independently develop and distribute (directly or indirectly) technology which invokes such Interfaces, You must then make the Interfaces open by (a) promptly following completion thereof, publishing to the industry, on a non-confidential basis and free of all copyright restrictions, a reasonably detailed, current and accurate specification for the Interfaces, and (b) as soon as reasonably possible, but in no event more than thirty (30) days following publication of Your specification, making available on reasonable terms and without discrimination, a reasonably complete and practicable test suite and methodology adequate to create and test implementations of the Interfaces by a reasonably skilled technologist.

2. You shall not assert any intellectual property rights You may have covering Your Interfaces which would necessarily be infringed by the creation, use or distribution of all reasonable independent implementations of Your specification of such Interfaces by Original Contributor or a Community Member. Nothing herein is intended to prevent You from enforcing any of Your intellectual property rights covering Your specific implementation of Your Interfaces, or functionality using such Interfaces, other than as specifically set forth in this Section IV.E.2.

V. GENERAL TERMS.

A. License Versions.

Only Original Contributor may promulgate new versions of this License. New code and specifications which You may subsequently choose to accept will be subject to any new License in effect at the time of Your acceptance of such code and specifications. Once You have accepted Reference Code, Technology Specifications, Contributed Code and/or Contributed Code Specifications under a version of this License, You may continue to use such version of Reference Code, Technology Specifications, Contributed Code and/or Contributed Code Specifications under that version of the License.

B. Disclaimer Of Warranties.

1. COVERED CODE, ALL TECHNOLOGY SPECIFICATIONS AND CONTRIBUTED CODE SPECIFICATIONS ARE PROVIDED "AS IS", WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION, WARRANTIES THAT ANY SUCH COVERED CODE, TECHNOLOGY SPECIFICATIONS AND CONTRIBUTED CODE SPECIFICATIONS ARE FREE OF DEFECTS, MERCHANTABLE, FIT FOR A PARTICULAR PURPOSE OR NON-INFRINGING OF THIRD PARTY RIGHTS. YOU AGREE THAT YOU BEAR THE ENTIRE RISK IN CONNECTION WITH YOUR USE AND DISTRIBUTION OF ANY AND ALL COVERED CODE, TECHNOLOGY SPECIFICATIONS AND CONTRIBUTED CODE SPECIFICATIONS UNDER THIS LICENSE. NO USE OF ANY COVERED CODE, TECHNOLOGY SPECIFICATIONS OR CONTRIBUTED CODE SPECIFICATIONS IS AUTHORIZED EXCEPT SUBJECT TO AND IN CONSIDERATION FOR THIS DISCLAIMER.

2. You understand that, although Original Contributor and each Community Member grant the licenses set forth in the License and any supplements/attachments hereto, no assurances are provided by Original Contributor or any Community Member that Covered Code or any specifications do not infringe the intellectual property rights of any third party.

3. You acknowledge that Reference Code and Technology Specifications are neither designed nor intended for use in the design, construction, operation or maintenance of any nuclear facility.

C. Infringement; Limitation Of Liability.

1. Original Contributor and each Community Member disclaim any liability to all Community Members for claims brought by any third party based on infringement of intellectual property rights.

2. If any portion of, or functionality implemented by, the Community Code, Technology or Technology Specifications becomes the subject of a claim or threatened claim of infringement ("Affected Materials"), Original Contributor may, in its unrestricted discretion, suspend Your rights to use and distribute the Affected Materials under this License. Such suspension of rights will be effective immediately upon Original Contributor's posting of notice of suspension on the Technology Site. Original Contributor has no obligation to lift the suspension of rights relative to the Affected Materials until a final, non-appealable determination is made by a court or governmental agency of competent jurisdiction that Original Contributor is legally able, without the payment of a fee or royalty, to reinstate Your rights to the Affected Materials to the full extent contemplated hereunder. Upon such determination, Original Contributor will lift the suspension by posting a notice to such effect on the Technology Site. Nothing herein shall be construed to prevent You, at Your option and expense, and subject to applicable law and the restrictions and responsibilities set forth in this License and any supplements/attachments, from replacing Community Code in Affected Materials with non-infringing code or independently negotiating, without compromising or prejudicing Original Contributor's position, to obtain the rights necessary to use Affected Materials as herein permitted.

4. ORIGINAL CONTRIBUTOR'S LIABILITY TO YOU FOR ALL CLAIMS RELATING TO THIS LICENSE OR ANY SUPPLEMENT/ATTACHMENT HERETO, WHETHER FOR BREACH OR TORT, IS LIMITED TO THE GREATER OF ONE THOUSAND DOLLARS (US$1,000.00) OR THE FULL AMOUNT PAID BY YOU FOR THE MATERIALS GIVING RISE TO THE CLAIM, IF ANY. IN NO EVENT WILL ORIGINAL CONTRIBUTOR BE LIABLE FOR ANY INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THIS LICENSE (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, USE, DATA OR ECONOMIC ADVANTAGE OF ANY SORT), HOWEVER IT ARISES AND ON ANY THEORY OF LIABILITY (including negligence), WHETHER OR NOT ORIGINAL CONTRIBUTOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. LIABILITY UNDER THIS SECTION V.C.3 SHALL BE SO LIMITED AND EXCLUDED, NOTWITHSTANDING FAILURE OF THE ESSENTIAL PURPOSE OF ANY REMEDY.

D. Termination.

1. You may terminate this License at any time by notifying Original Contributor in writing.

2. All Your rights will terminate under this License (including any supplements/attachments hereto) if You fail to comply with any of the material terms or conditions of this License (including any supplements/attachments hereto) and do not cure such failure within thirty (30) days after becoming aware of such noncompliance.

3. If You institute patent litigation against any Community Member with respect to a patent applicable to Community Code, then any patent licenses granted by such Community Member to You under this License shall terminate as of the date such litigation is filed. If You institute patent litigation against Original Contributor or any Community Member alleging that Covered Code, Technology or Technology Specifications infringe Your patent(s), then Original Contributor may in its sole discretion terminate all rights granted to You under this License (including any supplements/attachments hereto) immediately upon written notice.

4. Upon termination, You must discontinue all uses and distribution of Covered Code, except that You may continue to use, reproduce, prepare derivative works of, display and perform Your Modifications, so long as the license grants of this license are not required to do so, for purposes other than to implement functionality designated in any portion of the Technology Specifications. Properly granted sublicenses to third parties will survive termination. Provisions which, by their nature, should remain in effect following termination survive.

E. Miscellaneous.

1. Trademark. You agree to comply with Original Contributor's Trademark & Logo Usage Requirements, as modified from time to time, available at the Technology Site. Except as expressly provided in this License, You are granted no rights in or to any Genesys, or Genesys Software, trademarks now or hereafter used or licensed by Original Contributor (the "Genesys Trademarks"). You agree not to (a) challenge Original Contributor's ownership or use of Genesys Trademarks; (b) attempt to register any Genesys Trademarks, or any mark or logo substantially similar thereto; or (c) incorporate any Genesys Trademarks into Your own trademarks, product names, service marks, company names or domain names.

2. Integration and Assignment. Original Contributor may assign this License (and any supplements/attachments) to another by written notification to You. This License (and executed supplements/attachments) represents the complete agreement of the parties concerning the subject matter hereof.

3. Severability. If any provision of this License is held unenforceable, such provision shall be reformed to the extent necessary to make it enforceable unless to do so would defeat the intent of the parties, in which case, this License shall terminate.

4. Governing Law. This License is governed by the laws of Canada and the Province of Alberta, as applied to contracts entered into and performed in Alberta between Alberta residents. The choice of law rules of any jurisdiction and the United Nations Convention on Contracts for the International Sale of Goods shall not apply, nor shall any law or regulation which provides that a contract be construed against the drafter.

5. Dispute Resolution. (SUBJECT TO CHANGE)
a) Any dispute arising out of or relating to this License shall be finally settled by arbitration as set forth in this Section V.E.5, except that either party may bring an action in a court of competent jurisdiction (which jurisdiction shall be exclusive), relative to any dispute relating to such party's intellectual property rights or Your compliance with Original Contributor's compatibility requirements. Arbitration will be administered (i) by the American Arbitration Association (AAA), (ii) in accordance with the rules of the United Nations Commission on International Trade Law (UNCITRAL) (the "Rules") in effect at the time of arbitration, modified as set forth herein, and (iii) by an arbitrator described in Section V.E.5.b who shall apply the governing laws required under Section V.E.4 above. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction to enforce such award. The arbitrator must not award damages in excess of or of a different type than those permitted by this License and any such award is void.
b) All proceedings will be in English and conducted by a single arbitrator selected in accordance with the Rules who is fluent in English, familiar with technology matters pertinent in the dispute and is either a retired judge or practicing attorney having at least ten (10) years litigation experience. Venue for arbitration will be in San Francisco, California, unless the parties agree otherwise. Each party will be required to produce documents relied upon in the arbitration and to respond to no more than twenty-five single question interrogatories. All awards are payable in US dollars and may include for the prevailing party (i) pre-judgment interest, (ii) reasonable attorneys' fees incurred in connection with the arbitration, and (iii) reasonable costs and expenses incurred in enforcing the award.
c) Nothing herein shall limit either party's right to seek injunctive or other provisional or equitable relief at any time.

6. U.S. Government. If this Software is being acquired by or on behalf of the U.S. Government or by a U.S. Government prime contractor or subcontractor (at any tier), the Government's rights in this Software and accompanying documentation shall be only as set forth in this license, in accordance with 48 CFR 227.7201 through 227.7202-4 (for Department of Defense acquisitions) and with 48 CFR 2.101 and 12.212 (for non-DoD acquisitions).

7. International Use.
a) Covered Code is subject to US export control laws and may be subject to export or import regulations in other countries. Each party shall comply fully with all such laws and regulations and acknowledges its responsibility to obtain such licenses to export, re-export or import as may be required. You must pass through these obligations to all Your licensees.
b) You must not distribute Reference Code or Technology Specifications into countries other than those listed on the Technology Site by Original Contributor, from time to time.

READ ALL THE TERMS OF THIS LICENSE CAREFULLY BEFORE ACCEPTING.

BY COMPLETING THIS FORM, YOU ARE ACCEPTING AND AGREEING TO ABIDE BY THE TERMS AND CONDITIONS OF THIS LICENSE.

YOU REPRESENT THAT YOU ARE legally entitled to grant the licenses set forth herein and that you have sufficient copyrights to allow each Community Member and Original Contributor to use and distribute Your Shared Modifications and Error Corrections as herein permitted (including as permitted in any supplements/attachments to this License).

IF YOU ARE AGREEING TO THIS LICENSE IN AN EMPLOYEE OR AGENT CAPACITY, YOU REPRESENT THAT YOU ARE AUTHORIZED TO BIND YOUR EMPLOYER OR PRINCIPAL TO THE LICENSE.

WHETHER YOU ARE ACTING ON YOUR OWN BEHALF OR THAT OF YOUR EMPLOYER OR PRINCIPAL, YOU MUST BE OF MAJORITY AGE AND OTHERWISE COMPETENT TO ENTER INTO CONTRACTS.

IF YOU DO NOT MEET THESE CRITERIA, OR YOU DO NOT AGREE TO ANY OF THE TERMS OF THIS LICENSE, CLICK ON THE REJECT BUTTON AND EXIT NOW.

ACCEPT LICENSE

Completion of this form by noted your acceptance, and send a completed copy of this license to Paul D. Cox at the following address.

paul.cox@gmail.com

Acceptance will also require registration on "https://genesys.dev.java.net".

Pre-amble for the development license.

Licensing for the development of the Core Genesys system will be based on the Sun Community Source Licensing discussed here. For purposes of these developments I have prepared a blog entry located here for the actual license and am referencing such in the copyright notice on this blog.

What I foresee and expect to happen is the core of this system will be Genesys. That use of the core and the copyright that I own in making the joint operating committee the central organizational focus will remain the intellectual property of myself and Genesys. The derivitave work of preparing the Genesys core software will be purchased from the community that's involved in building this core.

What the community will gain in participating in building this core, in addition to the software development revenues they earn, is the core platform that oil and gas producers will access and use for interactions within the individual countries, states and provinces.

It is the domain of the community to provide the unique aspects of the geographical location they are specializing in, and that will use much of the core to interact and drive their business. It will be the core community of developers that form the ISV's that build the geographical interactions. This will be their business model, their strategies and their domain. The joint operating committee is involved in every aspect of oil and gas operations, therefore, each ISV's domain of application will be very rich and highly dependent on a solid core.

The specific geographical functionality will be dependent on the core for the interaction and functionality within and between other countries, states and provinces. And independent software vendors that are intimately part of the community that built the core, will therefore, develop their own systems for the producers involved in the various countries such as Saudi Arabia, Russia, Texas, Alberta or Alaska.

It will then be for the individual energy producer to select from the geographical software components that are necessary to deal with each partner, property or supplier located in whatever jurisdiction. The implied need to co-operate and provide the core with the majority of the functionality is therefore inherent in this community license.

Therefore in summary:

• The core (Genesys) provides the organizational focus of the joint operating committee.
• The core (Genesys) provides the interactions between producers.
  
• The core (Genesys) provides the interface between individual jurisdictions.
• The independent software vendors (ISV's) leverage the core to provide the unique requirements of their specific geographical jurisdiction.

Genesys will assess every and all producers that use the core, ISV's will assess the producers for use within their jurisdiction. Each jurisdiction is available to any and all ISV's who actively participate in this community and can establish an appropriate business plan for the jurisdiction that they are interested in. It is assumed that this community will naturally form in this fashion and these business plans will depend on cooperation within the community and participation from those interested parties. Genesys will continue as the ISV for Alberta, however, representations for other jurisdictions within Canada are open for the ISV's consideration.

That in a nutshell is the plan of how we go forward. I think it strikes a healthy balance between opportunity and risk and does much to mitigate the demand for a global system that will deal with the issues in oil and gas. I have to say that Mr. Bill Joy and Mr. Richard Gabriel have conceived a brilliant strategy on how to put these communities to work effectively. As a result I think it is inherently well understood where the dividing line between the core and the jurisdictions is and therefore meets the primary requirement of community license creators.

This is the vision and the plan that I will work to secure. Modifications and changes to the license are not foreseen at this time, however, could occur. However, only within the spirit of the principles noted in the Sun website referenced earlier. One side note is, I continue to endeavor to have the producers see my way in these developments and financially support the core. This will also require the ISV's to also access the producers for their own jurisdictional budgets. It is with this point that I will note that the core's intellectual property will be purchased from the ISV's by Genesys as development proceeds and financial resources are secured.

Copies of this license are immediately available above this preamble. Interested developers wishing to accept the terms and conditions of this license will cut and paste the text of the agreement, note their agreement and email this to me at paul.cox@gmail.com. Developers will also have to have an account on java.net in order to access the Genesys community. Copies of the Plurality thesis are there for your download, review and understanding.

The core system, as mentioned elsewhere, will operate on the Sun grid, and that is upto the ISV's to choose how they will provide these solutions to their individual jurisdictions. The Alberta operation will also reside with the core on the Sun Grid.

Scott McNealy says this is the participation age, this is participation.

Professor Carlota Perez

Strategy + Business, a magazine of Booz Allen and Hamilton have published a very interesting article in which the editor interviews Dr. Carlota Perez, visiting Senior Research Fellow at Cambridge University. Billed as a long term strategist of the same mold of Russian theorist Nikolai Kondratiev and Joseph Schumpeter, Dr. Perez provides an interesting read on the current economic situation and globalization. Click on the title of this entry for the .pdf.

The substance of the interview focuses around what Professor Perez calls the fifth surge. A surge of information technologies and communications that began in 1971 with the Intel processor's development. Noting the duration of these surges are 45 to 60 years long and comprised of three distinct phases within the time span of the surge.

The first phase, what she calls the installation phase is when excessive capital investments are made to push the infrastructure to a much larger level then would normally be expected to be required. Professor Perez believes that we now have the information technology and communication infrastructure in place, and are moving into the early stages of the "turning", a phase of prolonged pain as the old economy is replaced by a new one based on information technology and communications.

The third or final phase of this surge is referred to as the golden age, much like the 1950's and 1960's, when the focus was on a quality of life for the long term. Dr Perez feels that we have more pain to endure before we get to this golden age and noted the additional role that government and business may have in making the golden age a reality sooner rather then later.

The substance of this expanded role for government and business is unknown at this time, however, Dr. Perez believes that the transition to the golden phase will be restrained until such time as their is some serious consideration of the needs to get there are determined. Much like governments rediscovered their role in creating demand after WWII.

I think that Dr. Perez is clear about the situation the global economy is in. The short term aspect of anything is fairly perilous. The North American lifestyle appears to me to be the area where most of the pain will be realized, and this is only natural based on what Dr. Perez says. The most advanced economies have the most to lose in the "turning" phase to the newer economy of information technology and communications.

Targeted marketing, with a new spin.

Petro-Canada is it! Congratulation's to all those that were not selected.

I won't get into the selection criteria here, however, I can assure you that Petro-Canada is as pleased as punch that they were selected. Of particular interest will be Mr. Ron Brennaman, President and CEO.

Petro Canada is the former political arm of the Canadian federal government and they have been awarded with "One of Canada's Most Respected Corporations" according to their website.

What do I want from Petro-Canada and Mr. Brenneman? I want the company to fund the first six months budget of our developments based on our proposed budget in the February Business Report of $184,000. All in all pretty simple.

Next up, I'll do some analysis of the financial statements and provide my review on this blog. Note, this analysis may not be as favourable as the management percieves their performance to have been, so stay tuned this could be interesting.

Technorati Tags: Conflict, Genesys, Petro-Canada

Web Office Applications

[Web 2.0]

An excellent blog I would highly recommend that you review it on a regular basis. The discussion around the WebOffice applications is happening now, and these tools are required for anyone operating in a long term context.

Separation of users

In the past I have provided an understanding of what the concepts of work would be like in the Genesys system. The specific entry is located here. This documented that an individual would have a working inventory of possibly 50 joint operating committees, representative of 100 different oil and gas companies and at least 1,000 wells. All of which requires attention daily, weekly or monthly.

Access to all this data and information in the Genesys system is virtually accessible so that the "worker" could conduct their tasks when and where they were required. The Genesys system will depend heavily on the asynchronous nature of the Java system, as this form of communications provide the most effective means of having large groups of people working together. Recall that further specialization is possible through this system and the focus of the tasks becomes greater. The difficulty is that the developers jobs have become more involved and difficult, but that in itself is another blog entry or more.

We have also spoken of the unique ways that most of the security of the Genesys system, noted here and here, is implemented. This entry is also to discuss the security implications, and, how this scenario of the oil and gas engineer, geologist or accountant is implemented in the Genesys system through the use of my understanding(1) of domains present in Glassfish and Sun Java System Enterprise Server. I also need to further define the client side architecture and interaction of the users with the Genesys system. The client side architecture is provided through the use of Java Webstart.

Domains have been a standard feature of Unix operating systems and relational databases for many years. Sun takes the relatively same concept of domains and applies it to Java. Domains therefore run as essentially separate servers for each user, company, or joint operating committee and even each well if so desired, or, required. This feature is characteristic in both Glassfish and the Sun Java System Enterprise Server.

Domains enable and restrict access to data, information or processing based on the definition of what the domain is. Accountants responsible for reconciliation may be provided access only to the accounting related information regarding certain authorized accounts and JOC's. This level of control is absolute when the systems, such as Genesys, are conceived in domains from the start. Retrofitting this feature to an existing system, I suggest can not be done.

The other benefit of domains is the assurance that all the necessary domains, or areas of responsibility, are assigned to the appropriate individual for that JOC. The engineer or geologist that is the chairperson of the committee is able to find the status of all his domains assigned in a certain JOC or whatever he/she needs. A good example would be that the revenue accountant for the Unit that you participate in has not been replaced for those tasks at this time. This becomes a notice to the domain owner, a user or company, that specific tasks are unassigned. And the engineer or geologist can quickly turn to an open market of qualified people to assign any outstanding tasks to the appropriate people.

Java Webstart's client side architecture needs also to be defined at this point. Use of the secure sandbox feature of this is required and mandatory. This is to enable greater control over the asynchronous process' and access privileges. Genesys faces some critical security and reliability issues and to have a consistent and current Java Runtime Environment (JRE) established mitigates many of the issues and provides the developers the understanding of what and how things would need to be implemented.

Additional advantages from Java Webstart are as follows:

• Application performance is improved due to caching of the client on the local machine.
• Clear definition of where asynchronous persistence is established.
• All Java Archive's (JAR's) are signed. Ensuring that no rogue code is introduced or acted upon. And that no authorization to use alternate server's is available.
• No native dependencies. Restricting the focus of application functionality within the domain of the server.
• Use of Java Networking Launch Protocol (JNLP) for some system preferences.
• Java Webstart can also provide the producers that access to data is not being accessed through unauthorized hardware. (Elimination of the use of Public Machines).

Use of these features in Java provide for mitigation of many of the concerns that users, producers and Genesys will have with the use of the system. That this level of control would be left out of Genesys would be in my opinion, irresponsible.

(1) If I am incorrect in my understanding I would appreciate being pointed in the right direction. Even confirmation would be appreciated by some of the developers that may be reading this blog. My concern is the server requirements of running so many instances. Thank you.

Technorati Tags: Genesys, Glass-Fish, Java, Java-WebStart, Sun

The Wharton School of Business podcast

[Innovation] (Click on the title to link to the podcast through Apple's iTunes)

I've listened to the podcast's and find them to be of very high quality and on topic. From an innovation point of view the internal aspects of the podcast were during a special Ben Franklin conference. With more on the way this is one that should be added to your list of podcasts.
In cooperation with the Boston Consulting Group and Infosys.
The Ben Franklin series on innovation notes.

• A number of organizational barriers or inertia exist against the innovation.
• A companies capacity to put the business model at risk.
• Employee responsibility, as in who is it that brings the innovations, who builds the capability to be innovative within the organization.
  
• Personal creativity and capability need to be matched to an organization that rewards the creative efforts.
  
• Innovation is messy and is in essence, the antithesis of organization.
  
• The energy that is consumed in fighting innovation and ideas within the organization may not be explicitly reflected.
  
• The author asks an interesting question is it;
• Necessity, the mother of invention?
• or, Desperation, the mother of invention? Reflecting on lack of risk eventually leads to decline.
• Innovation is not a process of "luck" or "chance". It is a capability that can be built within an organization.
• Building this capability can be started through measuring.
  
• Outputs of the innovation process.
• Input measurements.
• Effectiveness of the process.
  
• How can an innovative culture be built.
  
• Realize that it is a substantial cultural change.
  
• The choice of the right people.
  
• What is the future of innovation.
• The demands for growth on a global scale demand innovations.
  
• Half of all participants in a Boston Consulting Group study were dissatisfied with the results of their innovative efforts. Reflecting that it is a difficult task.
  
• Innovation is the key to creating value.
  
• Increases growth and productivity.
• By not being innovative indeed loses value by not being the first to realize a competitive advantage.
  
• The idea is the beginning, implementing it is what is difficult.
  
• If you have no innovation, eventually you will go out of business in this global world.

So have a look and see what you think. Wharton has scored in the top ten of global business schools for the past decade. I am not certain but I think they were #1 a couple of years during that time.

Dr. Giovanni Dosi, "Sources" Parts III, D.

[Innovation]

D. How Organizations Build Knowledge Bases

Continuing on with section III of the "Sources" document, Dosi notes that in this past century the focus of research and development has been as a result of dedicated organizational scope and size. Also noting the relative decline of opportunities for individuals to conduct research and file for patents. It really has been a century better suited to the larger institutions than it has been for the individuals.

An interesting point is raised by Dosi. He refers to Adam Smith and notes

"Adam Smith who first emphasized the possible dichotomy between "system learning" on the one hand and the degrading brutality which repetitive and mindless tasks could imply for some groups of workers, on the other."

In addition to the organizational focus and repetitive brutality of which they operate, Dosi notes that;

"For example, the emergence of the modern factory has also implied "de-skilling of particular categories of craftsman; the abilities of several groups of artisan-like workers became redundant, the skills of making particular machines became increasingly separated for the skills involved in using them; the introduction of automated mass production in big plants has further reduced the knowledge required of significant portions of the work force."

We have to recall that Dosi wrote this paper in 1988. If I remember correctly by that time, hard drives in PC's were still a fairly new item, and had recently expanded their capacity all the way to 10 MB. I note this because of the age and quality of the document may on the whole be pertinent in today's environment, this particular section may not necessarily be as valid in the 21st century.

That companies can out innovate and out produce individuals in terms of research and development are things of the past. Certainly there are exceptions to the rule like Steve Jobs and Dean Kamen. However they are the superstars of the research and development world these days. It is also well known that these people are still responsible for the products that are produced by their respective organizations.

We also see that the people that are constructively idealized as heroes are not necessarily the business leaders, lawyers and bureaucrats but people like Jobs, Wozniak, Kamen, Moore and unfortunately Gates. This I think is a result of the ability of individuals to overcome the dominance of the organization of the past century and that is why we look up to them. I also feel this is a trend that is only beginning.

Today with the Internet their is no possible way that a company can out innovate an individual. Working in isolation with a handful of ideas. The resources at the disposal of individuals is in many ways superior in terms of performance then most of today's organizations. I hesitate to even mention the motivation of the individual vs. the organization. That we, may I suggest, regress to the 19th century in terms of the ability of craftsmen to build their own tools would be a far superior world than in which we live in now. How many times has someone stated in the last 40 years that "the people in the design division just don't get it. I wish they would only listen to us."

That an individual can outperform a classic hierarchical bureaucratic research and development division is a given, and the "Plurality" document is evidence of this trend. I only state this fact to contrast the poor performance of our hierarchically based organizations of today. When individuals meet other individuals and groups with similar desires and passions through the wonders of the Internet, these people can organize and collaborate and the world is far better off.

Referring back to the Ray Kurzweil's blog entry that I wrote, located here, provides an understanding of how there could be 200 times as many changes in the 21st as opposed to the 20th century. And if that is too much to believe at this time, I think that we can all agree that irrespective of the size of the exponential growth, or the number of times the changes occur over the previous century, we know it won't be the hierarchical bureaucracy that brings any of it to us.

In the next entry, section IV "Opportunities incentives and the inter-sectoral patterns of innovation."

February Business Report

[business report]

Effective March 1, 2006 we will be launching our marketing strategy in the Calgary area. Our resources are limited so this will be a low key, but highly effective local 4 month program. The purpose will be to build off the entries in the blog, and get some people commenting. Although it has only been two months I feel that the content value is high and we need to start raising the profile with the producers.

This higher profile, I expect, will start the flow of some donations and this experiment will become a defacto operating company. We are more or less limited to the local market at this time due to financial resources. Hopefully we will have some good news soon in which we are able to expand our geographical scope, because Genesys is a global oil and gas solution.

Some time during the month of March we will begin to see the blog fall within the google search results. I will also report the site to yahoo! and other major search engines to build traffic that way as well.

I am very pleased with the quality of the topics being discussed. I foresee no change in this quality as there are many things that need to be decided upon, discussed, researched and communicated through this very effective medium. In terms of content we have only begun. The source of interesting things happening in oil and gas, and in technology, are providing ample writing material.

We have now made some additional decisions regarding the technical architecture. Please review the data located here; some further justification of those changes are as follows.

• Moved to the Ingres Open Source database. I was concerned with Oracle and IBM's commitment to BPEL. I don't think BPEL should be used in a service oriented architecture.
  
• Elimination of AJAX and all but one dynamic language used in non-production code.
  

One area that I have spent time on is with the PPDM data model and ontology. I have come to the conclusion that these products are not usable for our purposes due to the unique nature of the organizational perspective we use. The JOC does not lend itself to the same manner of dealing with partners, many of the data elements affected as well.

It is therefore necessary to continue with defining the architecture as a pure system. Moving the PPDM into our design alleviates many hours of excellent work done by those people. However, the joint operating committee is just to unique to retrofit a design that was prepared for silo'd organizations. The financial resources budget for the PPDM membership has therefore been moved under the w3c standard, and will be investigated as to what the cost implications of this move involve.

As in February's report, the objective of this months report is to start the development process with some tools and infrastructure.

• Revenue to the end of February: $0.00
  

March 1, 2006 budget items. (All costs are in U.S. dollars and include a 33% premium for the development copyright fee.)

• Sun Grid The first thing we need is a home for the code. The grid provides everything we need in this instance, and the Grid that I selected was Sun's. At $1 per processor hour, a very affordable way to secure the resources we need. I think that our first years requirements would be amply satisfied with 10,000 hours of processing for the remainder of 2006 calendar year. Total requirement = $13,300
• PPDM (Public Petroleum Data Model) Makes our development life a little easier through a standard database model. Fortunately we have projected revenues of < $1 million, therefore, our fees for membership to access the data model are small. Total requirement = $CANCELLED see note above.
• Ingres Open Source database and part time DBA, Total requirements = $57,500.
• Collabnet. I would like to have a generous budget for this critical tool. Provides the code management, community process, project management and issue management. Budget includes tools, appropriate setup and consulting services. Total requirements = $34,500
• General and Administrative, first 6 months of operation Total requirements = $69,000
• Membership in W3C Total requirements = $9,500
• Total Capital and Operating costs estimate, first half 2006... $184,000
  

Notes:

• Sponsor, producer, and user commitments are all accepted.
  
• Please recall that this community is and will be supported by the producers. Based on an annual $ assessment per barrel of oil.
• For 2006 the assessment was fixed at $1 per boe per day per year.
  
• A company such as Encana in Canada would therefore be expected to support the community to the tune of $700,000 for the 2006 calendar year.
  
• These Monthly Business Report budgets are being proposed as a pay as you go basis for 2006 to support the community and ensure the community develops in the manner that is expected.
  
• Your donations are greatly appreciated, no donations means no work is being done.

"The future of digital commons" on MIT video

[intellectual property] (Click on the title of this entry for the excellent MIT video)

Two librarians provide some of the most thought provoking discussion on the topic of copyright law, access to information and the impact these items have on users and creators of intellectual property. Users should understand the key attributes of copyright law and this is a good place to start. Understanding copyright law may become as basic of knowledge as how you now drive to work in the morning. Although the video is a little over two hours, it will be an investment of time that will pay users dividends for many years.

They refer to Larry Lessig's definition of a what a commons is:

• The character of the resource. (A physical asset is consumed, a commons can be shared.)
  
• How the resource relates to a community.

Much of the work that I am doing in this blog and elsewhere can only be done due to the pristine nature of my copyright. My ability to write in open forums and speeches is unconstrained by publishers, academia, employer or any other group claiming ownership rights. This was a difficult exercise for me to complete, and I am not aware of any other industry that is so positioned. I can say and do what I need with the copyright as I please. No one paid for the information, I funded the research myself and therefore no one else has a say, and therefore this community can develop in a completely unconstrained manner in the best interests of its users, developers and the oil and gas producers.

One of the presenters, Ms. Nancy Kranich has published a pamphlet entitled "The Information Commons, A Public Policy Report" that is available here. This is a comprehensive review of the copyright law, information commons and particularly the Internet. It should be read and understood by all those that are active on the Internet. Additional time should be spent reviewing the links on that website for further information.

"The source and origin of copyright law is ingrained in the U.S. constitution. As Ms Kranich says; Two provisions of the U.S. Constitution are specifically directed toward serving this need for information that is so crucial to democracy. The Copyright Clause does so both by giving authors "the exclusive right" to profit by their writings "for limited times," and by providing that after the limited term of copyright expires, works enter the public domain, where they are freely available to all. The First Amendment prohibits government from abridging "the freedom of speech, or of the press."

Yes this is important, and the internet makes it all the more valuable and dangerous. If you scroll down to the bottom of each and every page of this blog you'll note that all these entries are copyrighted. I am extending the work that was done in 2004 to a broader audience, yet able to maintain the copyright by doing this. Therefore all the information contained within this blog is provided with free access, but the ability to prepare a derivative work is forbidden. The only license that will be provided will be to develop the code, and this will be strictly open source but the copyright remains with me and hence the code, but free access is provided. I have placed this notice on every entry of the blog.

"Until further notice visitors providing comments and information to this blog should assume that all information becomes the property of Paul D. Cox and its licensees. This blog represents a derivative work of the research concepts discovered in 2004. All rights revert to the copyright holder Paul D. Cox. This is consistent with the purposes of blogs as identified in google blogger '6.a content ownership'."

The point of this entry is to highlight that the blog comments and entries are copyrighted. The same opportunities exists today as a result of the power of computers, networks and commons principles for any other area of sciences or engineering. I encourage readers to determine their own futures in this new information age.

Dr. Giovanni Dosi, "Sources" Parts III, C.

[Innovation] (click on the title to get a summary of all of Dr. Giovanni Dosi's books in publication.)

What we learned from the first installment of this paper I think is significant. The scope and quality of Dosi's research is unparalleled in the field of innovation. His recognition in Europe, and particularly in Italy reflect the somewhat local nature of his work. However, Dr. Dosi is still very young and is highly involved in the community. I believe his work will be better known the world over as innovation becomes more of a competitive advantage.

C. Technology: Freely Available Information or Specific Knowledge

Dosi notes that a firms focus is placed on the capabilities of the firms. That a firm will apply incremental improvements based on the unique competitive advantages that they use to differentiate their products.

"What the firm can hope to do technologically in the future is narrowly constrained by what it has been capable of doing in the past."

Dosi goes on to identify a key analytical point in the difference between technology and information. Noting that information is a subset of technology. Stating that much of the tacit and specific knowledge regarding what a firm does can not be captured either as the firms proprietary data or publicly available knowledge. It is however mobile in the form of the competitive nature that may draw staff away from a producer, or in the form of copying or reverse engineering, which suggests that information travels quite quickly between firms.

From the point of view of this blog, we see that the oil and gas producers are not oriented culturally to a "sharing" mindset. One that this blog suggests as the key requirement of innovation and expansion of their internal capabilities, and hence production base. The focus is on building this internal capability that provides them with the competitive advantages they are then able to exploit. Clearly this is the manner in which they have been successful in the past.

Nonetheless the oil and gas industry has two anomalies they've never faced before.

• Substantially higher prices for their product.
• Greater difficulty in maintaining their production volumes, and most importantly, the production volume demands of the marketplace.
  

Clearly the elasticity of supply is not what was assumed to be true by economists.

This forms a paradox where the firms technology or information, which has traditionally proven adequate, is no longer capable of sustaining the organization or the market demand. (drawing on reserves faster, over the long term, eliminates the firm)

The paradox, contradiction or conflict is the source of the answer so say the great philosophers. Each producer is building their internal capabilities in isolation. This leads to augmenting the capability by increasing the personnel necessary to conduct the science and engineering. This situation is mirrored throughout the industry with extensive, yet relatively specific capabilities silo'd in each organization. As I noted in the Partnership entry here, the resources, specialization and capabilities of each member of the joint operating committee are not necessarily participating. In fact very little if any knowledge is shared.

I believe this cultural difficulty in sharing is the definition of the problem that the paradox identifies. Holding all of the capability as secret only leads to isolated events in which the science is moved. The collaborative environment in other scientific and academic communities recognizes the value of peer reviews and collaboration. Without them there would be no new discoveries.

But there is a bigger issue here. No one in oil and gas is necessarily able to lay claim to the discovery. If things are kept secret, then for the most part they will stay that way for a short period of time. Eventually being exposed to the rest of the industry the discoverer has no legal protection regarding the efforts that went into the discovery. Copyright law establishes a mechanism that allows the author to claim the discovery, but the idea has to be published to secure the copyright. The purpose of the copyright law is to permit society to build off the basis of the ideas of its citizens.

With the global economy quickly becoming an era of commercialization of intellectual property. It is intellectual property that provides the real tangible value that is necessary for any long term sustainable competitive advantage. This value is not being realized through the secretive means of these oil and gas organizations, and is not providing any value for the global economy because of constrained production volumes and high energy prices.

Dosi goes on to state:

"Once the cumulative and firm specific nature of technology is recognized, its development over time ceases to be random, but is constrained to zones closely related technologically and economically to existing activities." page 1131

leading to,

"Each technological paradigm entails a specific balance between exogenous determinants of innovation and determinants that are endogenous to the process of competition and technological accumulation of particular firm and industries. Moreover, each paradigm involves specific search modes, knowledge bases, and combinations between proprietary and public forms of technological knowledge." page 1131

This isolationism is leading to failure on an industry wide scale. When producers can not replace the production they've produced, that is a failure in the largest sense I can imagine. This industry needs to revisit the means of their capabilities on the basis of this information. Are their economic benefits derived from a hand full of employees, or the world wide oil and gas technology, engineering and scientific understandings.

I can not imagine what the world would look like if Dr. Giovanni Dosi kept his works secret.

In the next entry I will finish off section III with "D. How Organizations Build Knowledge Bases."

What is a joint operating committee?

[Definition] [Joint Operating Committee (JOC)]

An excellent question for those, and particularly the developers, with no first hand experience in oil and gas.

Traditionally the oil and gas industry has formed partnerships to mitigate the capital risk involved in the exploration and production business. These partnerships have also formed as a result of the scope of their facilities growing in terms of land and that land may have been leased by another producer. At which time in all cases, the producers adopt the joint operating committee as the method of management of the physical facility and appoint a Chairman as the operator.

After almost a century, the joint operating committee has become the defacto global organization that is responsible for the operations and control of the facilities. All the agreements and documents are executed between all parties, all financial operations from budgets to costs and capital are controlled by the joint operating committee. This forms the majority of the culture of the global oil and gas industry. And this culture is defined through various industry groups of accounting, land, geological and others that have defined the terminology, business rules etc.

During the 1940's and 1950's oil and gas operations were approaching the size that we all know and love them as today. These required different management and organizational structures to specifically deal with a more efficient manner of management. Hence the hierarchy was formed and grew to deal with the business oriented legal and finance issues associated with their share of the physical properties. Over the years the SEC, accounting boards, and Sarbane's Oxeley layered on more requirements and the joint operating committee became less and less the focus of the organization.

Today the focus of the organization is now more on the quarterly performance and the production volumes predictions of the CEO / CFO. The ability of an organization to focus on the operations requires a consensus between the partners represented through the joint operating committee. It is necessary to vote on the manner of, and approve each phase of the operations at every detail through the JOC and these are done more on an annual calendar or when the paper work gets done.

As you can imagine the confusion and conflicting orientation within the firm leads to more pressing needs and the SEC rules. The joint operating committee languishes with all the authority and power to make a difference, but stagnates due to the nature of the fire alarms at head office.

By moving the accountability of the hierarchy to the joint operating committee. Alignment with the legal, financial, cultural, and operational decision making frameworks eliminates the redundant nature of how oil and gas is currently managed. In addition the focus will fall on the production facilities and the opportunities to innovate.

The Genesys system will provide the collaborative environment for the earth scientists and engineers to innovate. These critical skills can also be sourced from the entire population of producers represented on the JOC and enable the firms to meet the markets demands.

How this move of the hierarchy is orchestrated is really the easy part. The SEC, government and other royalty holders, taxing authorities and Sarbane's Oxeley provide the same thing. Compliance is sought through the publication of business rules. And as most developers will tell you, business rules are the type of work that computers do very well. That is why they are published. As the larger population of engineers and scientists collaborate, discover and innovate, the Genesys system will follow along to provide the compliance through the systems business rules.

In a nutshell that is the joint operating committee and how it operates in the global oil and gas industry and the substance of the copyright that I hold. These research findings have been reflected upon by industry leaders as;

"Solving the largest administrative problem for the past fifty years."

or,

"A new discipline."

So join me here and start this revolutionary way of organizing oil and gas. If you have any questions or comments please post them here for all to benefit.

Ray Kurzweil on MIT video.

[Community]

This video provides a clear picture of our future and is entitled:

Innovation Everywhere How the Acceleration of GNR (genetics, nanotechnology, robotics) Will Create a Flat and Equitable World

By Mr. Ray Kurzweil, who is also the author of the book "The Singularity is Near" the bestseller from 2005 that suggested the convergence of information technologies, genetics, nanotechnology, and robotics are leading to substantially different lives. Among his many unique awards is his recognition and acceptance in the inventors hall of fame. A very entertaining video, one that I highly recommend.

In point form here are the highlights of his speech;

• Timing is a critical component of success in today's business environment. Noting that Google is in the right place at the right time.
  
• Mr. Ray Kurzweil has over time developed a number of mathematic models that he uses to support his discussion.
• His conclusions / findings.
  
• Technology evolves exponentially, non-linearly. However, people perceive technology linearly. This is an important point to remember as people assume the dot com meltdown is only resurfacing. What is happening now is exponentially larger then the run up to 2000.
  
• RNAi, (interference RNA) in 5 to 10 years, the benefits should provide longer and higher quality of lives.
• The paradigm shift rate is accelerating. The shift is achieving 100 years of progress in just the first 14 years of this century (2000 - 2014). We are also going to see 200 times the changes that occurred during the 20th century during this the 21st century.
  
• Certain technological trends are predictable and correct. Which wireless standard will become the predominate technology, can not be predicted, however, the impact that wireless will have is very predictable.
  
• Applying these attributes to economic principles and specifically to the US debt and GDP provides some interesting perspectives on how today's economic issues are not tomorrow's problems.
  
• Information technology will achieve emulation of the human brain in 2013.
  
• Exponential growth in the volume of information technologies used will offset the costs. The economy will be predominately based on information technologies in 2020.
  
• An intersection of technical disciplines of biology and information technology is happening.
  
• "Every form of communications technology is doubling its price-performance, bandwidth, capacity every 12 months." This fact alone supports so much of the underlying changes that we are seeing in these fast paced times. Advanced communication is what separates us from the other animals.
  
• IT will be the majority of GNP in 2020's.
• By 2010 computers will disappear and become ubiquitous.
  
• 2002 was the year in which the average age expectancy was 78. By 2017 we may have long life.
  

These comments provide a strong background for the challenges and times we face in oil and gas. The plurality thesis suggests that the engineering and earth science disciplines will change and advance at a rapid pace in the next 5 to 10 years. I stated that the corporate organization as represented by the hierarchy would be unable to keep up with these changes.

Mr. Kurzweil's presentation shows me that the days of the bureaucracy, of command and control of the corporate mechanisms are in their final days. Although they may appear to be as strong as ever, I would suggest that their capability to deal with their current problems is limited.

The theories represented in this blog are establishing the community that will eliminate the command and control hierarchy's. Now is the time to get involved, find somewhere in this community that you fit and start making the difference that you know you can. If you have organizational budgetary authorization, please do not hesitate to make a donation through this blog to secure the needs of this community.

Standards in a flat world.

A quotation that I find of value. From Thomas Friedman in his book "The world is flat".

"Standards don't eliminate innovation, they just allow you to focus it. They allow you to focus on where the real value lies, which is usually everything you can add above and around the standard." p. 76

Dr. Giovanni Dosi, "Sources" Parts I, II and III, A) & B)

[innovation] (Click on the title to link to Dr. Dosi's Curriculum Vitae)

Since this blog is about innovation in oil and gas, we should make it the most prominent topic of discussions. With that in mind, I want to expand on the works of Dr. Giovanni Dosi and continue with the research of his work that I started three years ago. I believe that his work has defined the process and methods of innovation in the most effective manner. Therefore, as time permits I will attempt to communicate many of his ideas and thoughts and apply them to the systems development this community is doing here in oil and gas.

Please note that the Plurality thesis contains a large section of these works applied to oil and gas. These can be sourced by selecting the February 2006 archive and selecting the entry for "Plurality Dr. Giovanni Dosi." Please also note that these research summaries are more to inform the reader on the research done, so that the reader may use these as tools in their day to day business and participation in these software developments.

Dosi, G. (1988). Sources, Procedures and Microeconomic Effects of Innovation. Journal of Economic Literature Volume XXVI: pp. 1120 - 1171

If you have access to some databases that hold proprietary data, I highly recommend downloading as much of Dosi's works as you can. This is the main starting point of where Dosi truly began to hit his stride. Recognition after this was a forgone conclusion.

Part I, Introduction

Starting his discussion Dosi dives in and speaks to the motivation that drives the innovative process within organizations. Noting that much of the motivation falls to that one intangible in business, that being a "belief" that the "existence of some sort of yet unexploited scientific and technical opportunities;" provide economic value in excess of its costs." page 1120

Setting out to establish some broad objectives, Dosi then points to the main aim of this work as;

2. "Identify the main characteristics of the innovation process."
3. "Identify the factors that are conducive or hinder the development of new processes of production and new products."
4. "Identify the processes that determine the selection of particular innovation and the effect on industrial structures." page 1121

Lofty objectives that set the stage for the scope of this seminal piece. If we were to identify the main characteristics, the factors that are conducive or hinder innovation, and thirdly, the processes that determine the selection of innovation and its impact on industrial structure we begin to see the value that Dosi's work has the potential of achieving.

Dosi defines two key issues that also provide evidence of the scope of this document and help to define it as a landmark piece. The issues are;

2. "The characterization, in general, of the innovative process."
3. "The interpretation of the factors that account for observed differences in the modes of innovative search and the rates of innovation between different sectors and firms, and over time." page 1121

Dosi has therefore framed the scope of his research and clearly undertaken a large project.

Within the context of what would make an innovative producer, Dosi identifies two main characteristics of an innovative company.

• (a) "capabilities and stimuli generated within each firm and within industries"
• (b) "broader causes external to the individual industries, such as the state of science in different branches; the facilities for the communication of knowledge; the supply of technical capabilities, skills, engineers, and so on; the conditions controlling occupational and geographical mobility and / or consumer;" and many more.

The perspective of the global oil and gas industry is the focus of this blog and hence this research. In applying and learning from Dosi we need to realize the scope of the academic pursuits within the sciences and social sciences of oil and gas. A key part of the thesis asked where the sciences of physics, geology, geophysics and engineering were heading in the next 5 to 10 years. When we include many of the social sciences involved in business and economics, I feel the importance of Dr. Dosi's work should be foremost in the minds of most of the individuals employed in oil and gas. This also provides for the remarkable opportunity to discover virgin research territory in the areas of these sciences and innovations application.

I also want to reiterate that the context of this blog is to alter the fundamental organizational structure of an oil and gas concern away from the hierarchy towards the joint operating committee. The purpose of this blog is to define the systems that define the organizational structure. With out the new systems developed here, no change in the organizational process can be made and producers innovative efforts remain constrained and difficult.

Part II, Searching for innovations - The general patterns.

Dosi establishes through various statistics the breakdown of the various expenditures incurred in research, applied research and development. These statistics are also broken down between the government, industry, academic research and non-profit institutions.

Nothing of interest jumps out of these statistics other then the annual expenditures seem to be fairly constant over time. They also appear to be sizeably influenced by the American military and space programs. As these two engines of research make a clear demarcation from what the U.S. spends in comparison to other countries.

The consistency of the expenditures from year to year seem to reflect that the amount of research and development spending is constrained by the quality and quantity of the research industry. i.e. spending more money does not necessarily increase the benefits of research and development.

Dosi goes on to note that there are undocumented expenditures incurred in the innovative process of "learning by doing, and learning by using". These are not quantifiable or measurable as they are incurred as required and may be directly associated with the culture of the country and the value assigned to research by the country of origin.

The time frame of this research was 1988 and much has changed since that time. I would particularly assert the value of the Java programming language and the Internet. These two technologies provide a new means of learning by doing and learning by using. Based on the premise of code re-usability, an infrastructure of high quality code has become available through the Internet's revolutionary open source movement. These infrastructures are threatening the large software companies such as Oracle, Microsoft and SAP.

Raising this point and classifying this as a new method of learning by leveraging the works of others, particularly in the java programming language. In a manner of minutes I can download and install state of the art servers, IDE's and frameworks at no cost. The impact of this will begin to bear fruit in all industries as these systems are organized for superior competitive advantages. Leveraging off of the base of Java frameworks that exist today and being planned for tomorrow make most of what Dr. Giovanni Dosi suggests, especially in concert with the Genesys system we are building here, very possible and very real. The missing ingredient is the ability to collaborate and communicate effectively, a.k.a. a system issue.

Part III, Innovation, the Characteristics of the Search Process.

Dosi identifies many of the common characteristics of innovation and notes the critical importance of the economics of technological changes.

A. Innovation as Problem Solving: Technological Paradigms.

Solving problems is the root cause of innovation. This is inherent in most peoples understanding, but Dosi identifies and quantifies the difficulty in moving to an innovative mind-set in the following.

"In other words, an innovative solution to a certain problem involves discovery and creation since no general algorithm can be derived from the information about the problem that generates its solution automatically." page 1126

Or in other words, innovation is not as easy as it appears. Dosi continues,

"Certainly the solution of technological problems involves the use of information drawn from previous experience and formal knowledge, (example, from the natural sciences) however, it also involves specific and un-codified capabilities on the part of inventors." page 1126

Dosi notes the difficulties and complexity of the innovation process and the tie in to the scientific, mathematic and academic pursuits. Drawing on the tacit knowledge of many participants, these collaborations have the effect of releasing the creative process of innovating. The point that I think Dosi is attempting to make here is that this stuff called innovation, no matter what or how you slice it, is not easy. Discovery is a process that takes effort. It is the scope of the effort necessary in the oil and gas industry that the hierarchy is unable to exercise to make these or any discoveries.

The other point that Dosi makes is that when the underlying sciences or engineering paradigms change it has the effect where it can become a major point of innovation, however as noted in the prior paragraph, that innovation will take substantial tacit and explicit knowledge and effort.

B. Technological Paradigms and Patterns of Innovation: Technical Trajectories.

Dosi states

"A crucial implication of the general paradigmatic form of technological knowledge is that innovative activities are strongly selective, finalized in quite precise directions, cumulative in the acquisition of problem-solving capabilities... Let us define as a technological trajectory the activity of technological process along the economic and technological trade-offs defined by a paradigm." page 1128

It could be argued that the discovery of new sources of energy has been constrained by the very low cost of fossil fuels. The opportunity to discover "better" sources of energy to power the world will have to wait until the financial resources and focus is on commercial levels of cost recovery of those technologies. This would apply equally to the pursuit of exploration in remote areas, deeper wells, bypass gas and other methods and sources of energy.

Dosi suggests these economic / technical tradeoffs affect the trajectories of innovation and are influenced by prices that move the trajectory upward. Clearly the fossil fuel prices are reallocating the financial resources to facilitate innovation and an upwards movements in the economic / technical trajectories.

The final point that Dosi notes in this section is that the innovations are sometimes sourced from differences in the underlying technologies. A good analogy for describing this would be when an assumption is altered, then the conclusion is also altered. The underlying technological cost or performance has a direct influence on the performance trajectory of the items being studied and therefore, are a ripe field for innovation.

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Technical decision.

[Technology] [Decision]

Based on my research and understanding, I am now able to define the technical architecture a little finer. This entry will summarize the architecture to date and define the current changes.

I am eliminating the use of two "technologies" or "methods" of programming from all of the code that will be written. I am also including the limited use of one "non-typed" scripting language.

• Based on the technical vision of this blog and a brief discussion noted here, I am eliminating any and all use of "BPEL" or business process execution language, defined here.
  
• The use of AJAX "Asynchronous Javascript with XML, will also be eliminated.
  

I see these two technologies as stop gap measures that solve today's problems, only to open a pandora's box of issues down the road. In there place Java Applets will be used for the management of asynchronous messaging. Our ability to control the virtual machine on the clients browser provides a more robust system capability at the expense of higher development costs.

The value proposition of the Genesys system essentially allocates these development costs to each barrel of oil equivalent produced. The oil and gas industry is on the verge of breaching $3 trillion in annual revenues. Costs of development will not be an issue, however, system performance and reliability will.

The use of complementary technologies is permissible on the following basis.

• The Groovy scripting language is a derivative of the Java language. (JSR-241) It can be used in limited testing and other uses, however, never on production builds. Essentially allowing the developer to demonstrate new concepts, or, proof of concepts in a more robust and effective manner. Since groovy uses the same frameworks of the Java language, this provides an effective interim initial step for the developer to implement the code in essentially Java and provide value for the final development.
  

Therefore in summary, the technical decisions that have been made to date are as follows.

• Hosting via the Sun Grid. (Reliability, security and data security.)
• Solaris.
• Apache Maven.
  
• Java 5.0 moving to Mustang when reasonable. (Annotations and Generics are essential.)
• Ingres relational database. (Oracle's promotion of BPEL is disconcerting.)
• Sun Microsystems GlassFish Java EE 5.0.
• Sun Microsystems Web Server.
• Preference towards Netbeans, Java Studio Creator, Java Studio Enterprise.
  
• BPEL and AJAX are banned.
• Groovy as a scripting language is excluded from production code.
  

This is the current status of the technical decisions made to date.

Decisions being made in the short term are;

• Toplink vs. Hibernate. (Oracle's Toplink is included in GlassFish.)
• Evaluation of BEA.
• Licensing use and conflicts.
  

I would solicit opinions and comments regarding the decisions made and the future decisions to be made from readers.

System security, continued

The heading of this post will lead you to a tutorial paper on Elliptical Curve Cryptography. The document discusses the issues regarding encryption of data. As time passes the value of traditional encryption methods becomes less and less secure. The solution would be to expand the key size to enforce higher levels of security, however, that appears to be providing a solution for only 20 years after the larger bit length becomes standard.

ECC provides the user with progressively steeper levels of security with much smaller keys. As opposed to 2048 bit keys, ECC can provide the same level of security as RSA, with only a 248 bit key. Providing the following advantages:

"This means, in turn, less heat, less power consumption, less real estate consumed on the printed circuit board, and software applications that run more rapidly and make lower memory demands. Leading in turn to more portable devices which run longer, and produce less heat."

Why is this mentioned? Sun Microsystems have incorporated ECC into the next version of thier web server. Therefore, ECC will be the standard method of encryption of all data elements of the Genesys system.