Joint Operating Committee User Budget Category Part IX

Working on the Performance Evaluation and Analytics & Statistics modules the user communities will have User Budget allocations of $3 - 6 million or 9 to 18 man years of time for each module. These will be stand alone budgets as there is little crossover in terms of the budgets with other user groups. There will however be some resources that are available from the Oracle Fusion Applications and Oracle Fusion Middleware areas that are of substantial value. Oracle and People, Ideas & Objects have similar thoughts on the future of these types of tools and that is why we have allocated what initially appears to be a high budget amount to these modules.

If I had to pick one element of these modules that will provide the greatest level of difficulty. And at the same time creates the greatest value for the end user community. It would be the collaborative nature of these tools that need to be developed into both modules. Having stand alone tools is one thing, having them operate in a collaborative environment brings them to a new level.

A little off topic but pertinent to the user community is the sources of revenue that the user community will have when these application modules have been built. Once the User Budget allocations have been expended, to a large extent they will not be recurring on such a scale. These budgets that we are discussing here are over the course of our initial development and during the multiple years that we are in development before the first commercial release of the software. There will however be additional budgets for further development after that. The continuous improvement of the software at the direction of the user community is a priority of People, Ideas & Objects. It is reasonable to assume that the scope and scale of the involvement of the user community will not be as large as what is described in these budgets, however it will be significant.

There is also the fact that the user community will be comprised of other groups. With the largest being the Service Providers that will be forming as a result of the decentralized production model that is used in the Preliminary Specification. It is important to recall that the revenues of the Service Providers are not as a result of the budgets that we are discussing here but are the current G&A costs of the producer firms. As the resources that are focused on the administrative and accounting tasks of the producer are moved from the producers themselves to the Service Providers, the G&A that is currently paid to these people will become the revenues of the Service Providers. Making the Service Providers as a sub-industry substantial in its size with revenues in the tens of billions of dollars.

It is these initial User Budget allocations that will lead to how the development of the Service Provider sub-industry is developed, structured and operated. It will be these members of the user community who may move on to become Service Providers that define what it is that they need in the People, Ideas & Objects software to make the producers the most innovative and profitable.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part VIII

The Knowledge & Learning module picks up from the Research & Capabilities module and continues with the objective of getting the right information to the right people at the right time. I have assigned a User Budget allocation of $5 - 10 million or 15 to 30 man years of effort to the module. As with the Research & Capabilities module, pooling of some of the User Budgets with the Service Industry, Service Providers, Engineering and Earth Science allocations will help to offset some of the requirements of the module.

In addition to the ability to move the knowledge to where the operational decision rights reside. The Knowledge & Learning module provides the ability to focus the users on the capabilities that are pertinent to the property held by the Joint Operating Committee. Only those capabilities from the Research & Capabilities module that are pertinent to the Joint Operating Committee are being published. And that relates to each of the producer firms that are participants in the Joint Operating Committee. Therefore the user will be provided with a focused view of the capabilities that are available from all of the participating producers. And will be able to choose based on which capabilities provide the best opportunity for innovativeness and profitability.

This interdependency between the producers is necessary as the Preliminary Specification implements the pooling concept. Where the earth science and engineering resources of the producers are specialized and the division of labor between the producers is relied upon. Therefore the ability to pool the technical capabilities of disparate producers to cover off all of the needed capabilities of the operation are a given in these modules.

The user community involved in both the Research & Capabilities and Knowledge & Learning modules will be heavily populated with earth science and engineering resources. This is to be expected as this is predominantly a module that they will use. It is however a module that will rely heavily on the ERP elements as well. As when they are working within a Joint Operating Committee and find a capability that meets their needs we want to be able to provide them with the full suite of ERP capabilities at that point. That is to have them raise an AFE, or Work Order, or process some payment, issue a Purchase Order or some other commercial operation that is the generic capabilities of an ERP system such as People, Ideas & Objects. To have these capabilities invoked with a simple right click of the mouse and then have a reasonably populated AFE form appear to invoke the capability within the property.

There are certainly more to these two modules than what has been discussed here in the past two days. I think however that the user community, with the budgets that are established here, can develop these modules into the components that make the producer and Joint Operating Committee the innovative and profitable entities that they should be. It is capabilities that are the defining act that make the oil and gas industry what it is. It is not supply chains or cross docks as in other industries. It is the capabilities development and deployment that make or break the oil and gas entities. It is fully one half of the producers competitive advantage and these reside in the difficult science of geology and geophysics and the applied science of engineering. Making oil and gas one of the most technically demanding of all industries. It is here, I think, that the user community can make such a difference in the future of the oil and gas producer. To underestimate the potential value and significance of these two modules is easy. Lets make sure that doesn’t happen.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part VII

We move on to the implementation of the Research & Capabilities module. I have allocated a User Budget for this category of $7 - 14 million or 21 to 42 man years of effort. The Research & Capabilities module shares many characteristics with the Knowledge & Learning module however I have considered these in the allocations of their budgets and as a result there is no real crossover in terms of any opportunities for pooling of funds. That is to say that pooling of the budgets is expected and any savings that might have occurred have been reallocated to other areas. There will be some synergies however with the Service Industry, Earth Science and Engineering user group budgets to help defer some of the costs of the developments here.

One of the key objectives of the Research & Capabilities and Knowledge & Learning modules is to move the knowledge to where the decision rights are held. The operational decision rights are held with the Joint Operating Committee and the knowledge is held within the producer firm. We therefore have to move the knowledge to the Joint Operating Committee. This reverses the flow that is currently in place as the industry is moving the operational decision rights to where the knowledge is held. This current practice is in conflict with the culture of the industry and leads to a variety of issues that are inconsistent with the needs of an innovative and profitable oil and gas producer.

The actual process of capturing the capabilities and populating them within the various Joint Operating Committees seems to be rather simple when it is first introduced. However, it becomes incredibly complex when the proprietary nature of the capabilities contained within the module, and their security, are taken into account. This contrasts with the need to have the right information to the right people at the right time in order for it to have value. And that precision in the informations deployment is what we are seeking to attain in these modules.

If an engineer updates a capability within the Research & Capabilities module that is specific to their proprietary knowledge about fracing. And they know that the capability provides value to the firm when it is used. It is imperative that that capability is populated to the pertinent Joint Operating Committees that they are participating in that have a demand for that fracing capability. That it is released to those Joint Operating Committees and to only those Joint Operating Committees. Understanding also that there are partners within those Joint Operating Committees who will have access to those capabilities and will be able to vote to deploy those capabilities for that property.

This does not lead to any proprietary leakage of capabilities to the partnership. The capabilities that are developed within the firm are proprietary to the firm and are for its exclusive domain. Others can attempt to copy the capability from your firm however they will find that it is as costly and as difficult as it would be to develop the capability on their own. Capabilities are not transferable from one firm to another on the basis of copying. If you watch a surgeon conduct open heart surgery, or read his procedure, does that make you a heart surgeon? Having the knowledge within the Joint Operating Committee that one of your partners is capable of conducting extensive multilateral fracing, and the ability to review that capability through the Knowledge & Learning module opens up the “opportunity” to expand the horizon of what is possible.

In the hands of the user community we can achieve the precision that this module demands. Maintain the security and proprietary nature of the capabilities of the producer firm. Yet expose these capabilities to the properties that it owns to let it fully understand and appreciate what is possible and probable. And that is just one aspect of the module. There is also the research area where there are a variety of interfaces that lead to the further development of capabilities in the innovative and profitable oil and gas producer.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part VI

The Accounting Voucher, like the Partnership Accounting module introduces some new concepts as a result of using the Joint Operating Committee as the key organizational construct of the innovative and profitable oil and gas producer. Key among those concepts is that an Accounting Voucher is open to the participants in the Joint Operating Committee during the time the voucher is open in the system. This is as a result of the pooling concept that is introduced in the Preliminary Specification. It is as a result of these new concepts and the fact that the Accounting Voucher is such a critical accounting module that I have assigned a $12 - 24 million or 36 to 72 man years of effort to it. There will be some crossover, or joint development efforts with user groups in the Compliance (Tax, Royalty, SEC), Service Provider, Service Industry, Accounting Firm, Engineering and Earth Science groups. There is also some joint development work on the Material Balance Report with the Partnership Accounting module and various odds and ends here and there.

If we look at the service providers as a group we need to understand that their revenues are the current oil and gas firms General & Administrative costs. And will continue to be the oil and gas producers G & A costs. And not the net G & A costs that are reported on the Financial Statements in annual reports. It will be the Gross G & A costs that are incurred by the firms. Some of these costs are capitalized, some are offset by revenues and the net that are reported can be as low as 25% of what is actually incurred by the firm. It is the Gross G & A costs that will be the service providers revenue stream.

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

Where are we going in the future of the administration of oil and gas. Are we to spend the next century huddled in the backroom processing transactions ever faster than the year before? Our ability to continually automate the processes that are involved in oil and gas will be necessary. That is handled by the Accounting Voucher in the previous discussion. And secondly we need to be involved in designing transactions for their efficiency. Or the best description of what designing transactions means is “coordinating markets.”

To better understand the role of the service provider in designing transactions we turn to the ways in which we build value for the innovative and profitable oil and gas producer. Through the decentralized production model we can affect change in the commodity marketplace and create the ability to seize the opportunity costs that total $170 billion for 2012 and 2013. Secondly, with the alignment of the compliance and governance framework to the legal, financial, operational decision making, cultural, communication, innovation and strategic framework of the Joint Operating Committee we gain a speed, innovativeness, accountability and profitability in the producer firm. And third, through a specialization and division of labor that is above and beyond what is possible through the current bureaucracy, we are able to achieve a greater throughput of economic output from the same resource base. It is this last point of our value accretion that is the role of the service provider in designing transactions. By defining and implementing constantly higher levels of specialization and division of labor through coordination of the markets, or transaction design, you will affect a greater economic output from the same resource base.

These are the concepts that will be implemented in the Accounting Voucher by the user community. The process automation tools are more tangible than the latter in most people’s minds. Most will be surprised at the extent of the work done in the area of transaction design. These tools will add significant value to the producer and Joint Operating Committee in any field operation that is undertaken.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part V

You would think that the last thing anyone would want to discuss would be the boring accounting modules. However, nothing could be further from the truth. According to the visitor logs of the Preliminary Specification its the Partnership Accounting and Accounting Voucher modules that are the two most visited modules. Accounting being at the heart of an ERP system being the probable source of this interest. It is in the Partnership Accounting module that a significant volume of activity is occurring. Therefore I have allocated a User Budget of $13 - 26 million or 39 to 78 man years of time. There are areas where these funds can be pooled with other User Budgets and that includes Compliance (Tax, Royalty, SEC), Service Providers, Service Industry, Accounting Firms, Engineering and Earth Science. Therefore the scale of these funds could be far greater than what they initially appear. Also, we are building upon the Oracle Fusion Middleware and Oracle Fusion Applications. Much of the “generic” accounting functionality already exists and only needs to be implemented in innovative ways. The Oracle Budget Allocation is also $333 - 666 million and includes hardware, software and services. It is these Oracle services that I know the user community would be of keen interest in the Partnership Accounting module.

It is in the Partnership Accounting and Accounting Voucher modules that some difficult issues are presented. These issues are unique to the Preliminary Specification and are as a result of using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. Within the Partnership Accounting module these issues include the Pooling of the technical resources, the Work Order, the decentralized production model, and the Material Balance Report. And these are just the large ones that I am aware of today. These will require significant effort in terms of their resolution. One thing that I have not mentioned to date and is of importance to the user community. Is that People, Ideas & Objects is a research and software development company. We will have a group set up for the continued research into areas of innovation and the Joint Operating Committee. Much the same as what we have done over the past ten years. These resources are also available to the user community to aid in resolving these larger issues and their implementation.

The Pooling concept is a strictly mechanical implementation of the Joint Operating Committee. There are a few additional twists that are above the manner in which accounting is done today, and those dovetail with the Accounting Vouchers ability to have multiple producers charging costs / revenues to an open voucher. This can be done simply, or it can be done extensively. As it is conceived in the Preliminary Specification it is done extensively with the costing of the earth science and engineering resources, the ability to budget the departments revenues from commitments to the Joint Operating Committees etc. This is a second source of revenue for the innovative and profitable oil and gas producer and it is a means to source the appropriate technical resources for any properties operation. The ability of this system to accommodate those two needs should be an administrative capability that defines and supports these critical processes.

The Work Order is technically and mechanically complex. If we only had to concern ourselves with the needs of one firm than we could implement this type of Work Order very easily. However the system needs to operate initially at the industry wide level. And then once it has received the subscriptions from the producers who are participating within the Work Order then it can operate within those producer firms. Then it is simply a matter of aggregating costs and distributing them based on a working interest distribution that will be unique unto itself. That is the first phase of the Work Order. The second phase is that it controls the costs and efforts of the producer firm and Joint Operating Committee in any operation that is undertaken. If you have an element of an AFE that you want to be completed by someone, set up a Work Order to have them collect their time and costs to. If you have an internal program that you want to control the costs on, set up a Work Order and collect the time and costs of the people who work on it. Everything that is done in an oil and gas producer should have a Work Order, and everyone should be charging their time to a Work Order.

In terms of the value that the user community can bring to the innovative oil and gas producer, the decentralized production model is the best there is. With over $170 billion in opportunity costs for 2012 and 2013 it is the dominant justification to proceed with the development of the Preliminary Specification. The decentralized production model is simple in its implementation and requires little in terms of technical complexity to overcome. The difficulty is in the level of change that is implemented in the people’s lives that are disrupted as a result of the introduction of the model. As with any change there will be winners and losers and with the level of disruption it is reasonable to assume that there will be big winners and big losers. It is my assumption that I am speaking to the potential winners. In that they can form the requisite organizations that can become the users and service providers that form the sub-industry that we will come to know as a result of the decentralized production model.

What the decentralized production model does is take the prototypical producer and reduces them to the C class executives, the earth science and engineering resources, the land, legal and support staff with the remainder of the resources moved to service providers that will be focused on a process, or part of a process. They will use the entire oil and gas industry as their client base for the one process that they manage. And they will bill the Joint Operating Committees for the services that they render. So that when a production accounting service provider located in an area where production was shut-in for the month doesn’t send a bill to the Joint Operating Committee. They will not be the only ones. As all the service providers for that area will have incurred no services for those properties and as a result have not charged those Joint Operating Committees for any of the administrative or accounting charges that they would normally charge during months of production. Therefore the Joint Operating Committee reports a null operation where only the costs of capital are uncovered. The operating costs, administrative, overhead and accounting costs are not incurred and as such the reserves are left for a time when they can be produced profitably, the commodity is removed from the marketplace and effectively places a floor on the commodities pricing and the producer doesn’t lose any money on their operations.

This requires that the service providers will have accounting and administrative process management capabilities that are consistent with the producer needs. Therefore they are part of the Preliminary Specification and indeed are using People, Ideas & Objects software to manage those processes. The User Budget allocation for the Service Providers is $83 - 166 or 250 to 500 man years of effort. These budget dollars will be implemented under the coordination of the user group that is participating in the Partnership Accounting and Accounting Voucher modules.

With little budget help from any of the other user groups. And little to no help from Oracle Fusion Applications. However, Oracle Fusion Middleware makes this next project doable. The Material Balance Report is reliant on the User Budget that begins and ends here. The Material Balance Report is something that should have been undertaken by industry years ago. The scope is however beyond what can be tackled by a single producer, even Exxonmobil. Since we are aggregating the resources of the industry we will be able to approach a technically complex problem such as the Material Balance Report. Tracking the source and disposition of product from its origin to its point of sale in an unimpeachable manner is a necessary requirement for the innovative and profitable oil and gas producer. It is the foundation of which they we build, which is also part of the budget requirements here, the processes that depend on that volumetric reporting.

One of the broader things that is happening here may not be too evident at this point in the discussion of the implementation. And that is the impact on the producer firm in terms of their staffs capabilities and requirements in use of the People, Ideas & Objects software. How will they be trained in the use of the software. How will the software be implemented in the producer firm. These are the traditional issues that cause the kind of complexity that we are talking about to fall apart. What works in the lab in the hands of the developers can fall apart immediately in the hands of the actual users. Its important to remember that People, Ideas & Objects are cloud computing provided software services. All of the software will be available anywhere on any device. And that the service providers will be the ones that are “replacing” the usual “in-house” accounting, administrative and overhead personnel. It won’t be the individual producers focus or responsibility to acquire the capabilities to understand or operate the software. It is the service providers who are focused on the individual process or subprocess that will be providing the capability to potentially Exxonmobil or the startup oil and gas firm. The administrative or accounting capability exists irrespective of the level of need within the producer firm or Joint Operating Committee. And that level of capability is state of the art in terms of the software, driven by the user community who may be active participants in the service providers. All operating as a sub-industry of the oil and gas industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part IV

The key aspects of the Financial Marketplace module is to align the financial framework with the Joint Operating Committee and to have the producers capital structures perform beyond market expectations. To do this I have allocated the user community a budget of $5 - 10 million, or 15 to 30 man years. There are few areas where these budgets can be augmented by pooling them with other development efforts. There is the “marketplace interface” with the Petroleum Lease and Resource Marketplace modules, however that is probably all that there is.

The speed that the producer is able to attain over their investments in oil and gas properties will need to accelerate. That is, the expectation that the producer will be able to accelerate their investments in oil and gas with less time and investment will increase. This performance will be difficult to attain and will require the producer to have the systems and procedures within their own organizations, the capabilities, to be able to compete within the broader business environment and within oil and gas. The user community will have to define what is required beyond the Preliminary Specification in order to support this critical producer capability. This is the type of area where the user community will be able to differentiate itself from the other systems and organizations that it, the user community, will compete with. It can tackle an issue such as this and resolve it in a way that would materially affect the outcome of the producer firm.

And speed is nothing without control. The producers ability to maintain their capital discipline in an environment as discussed above will be of critical importance. How they do that is detailed to some extent in the Preliminary Specification but it is here again that the user community will need to determine “how” the producer firm can maintain control of the higher throughput in terms of investment capital.

It is these tasks and budgets that the user community will undertake during the development of the system. Users who have special knowledge of what is required and how to implement the Preliminary Specification will organize themselves to define what is required. These budgets are healthy but the scope of the problems that are being addressed are the ones that need to be addressed in the industry. The budgets are primarily composed of user participant fees. There are other costs associated with the budgets but I expect that approximately 85% of any of the User Budget allocations are for the hourly fees that we have established. These fees are the $185 U.S. per hour that we have established as our rate for user participation. And these are not “employees” of People, Ideas & Objects. Our developers are employees and though we have costed them at $185 as well, there are elements of overhead and other costs in the rate which are needed to support the developers and the users. The users are paid directly $185 U.S. per hour as third party businesses that have a close relationship with People, Ideas & Objects.

It is that close relationship that the user community has with People, Ideas & Objects that brings them to the user community. Some of the user community participants may be involved in the service provider sub-industry that we note will be created as a result of the decentralized production model. This requires the prototypical producer to be stripped down to the C class executives, the earth science and engineering resources, some land, legal and support staff. The remainder are moved to service providers who are focused on the process and use the entire industry as their client base. These service providers will be a large part of the user community as they are using the software in their day to day management of the processes of the oil and gas industry. Other members of the user community will come from the producers themselves, whether that is from a producer or a Joint Operating Committee both will be required. And some will need to be provided from the service industry. Lastly there will be some who are specialized in the needs of the user community itself and are exclusively employed in the community.

It may not be rare in the future that you will have multiple sources of revenue from different types of clients and the user community should be considered one of your roles in the future. Once we secure the funding for development and proceed with these developments the work of this community will be the critical element of success for the profitable oil and gas producer.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part III

The Petroleum Lease Marketplace is where the innovative and profitable oil and gas producer manages half of their competitive advantages. Those being their land and asset base. It is in the Research & Capabilities and Knowledge & Learning modules that they manage the other half of their competitive advantages, their earth science and engineering capabilities. As a result of this the Joint Operating Committee User Budget allocation will be material to deal with the nature of the Petroleum Lease Marketplace module. There are few User Budget allocations to other areas that can be pooled within the Petroleum Lease Marketplace. Other than the “marketplace interface” and some small dependencies here and there the Petroleum Lease Marketplace is a stand alone module. However it is also one of the key modules in terms of the critical data that will be sourced by other modules. It is with that important role within both the producer firm and Joint Operating Committee that I have allocated a range of $8 - 16 million in User Budget, or 24 to 48 man years to the module.

It is with that in mind that we should note that certain processes will be moved to the service providers with use of the decentralized production model. Lease rental payments, surface rights payments and other processes that were the usual domain of the land and legal department are best removed from the producer and Joint Operating Committee and handed to the service providers. As with the Resource Marketplace module the users within the Petroleum Lease Marketplace module can involve themselves more in coordination of the users in the Service Providers User Budget allocation than a direct hands on development of those processes.

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

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part II

Staying with the Joint Operating Committee User Budget Category we come upon the Resource Marketplace module and find a little relief from the heavy lifting found in other modules. That is to say the user community demands in the Resource Marketplace module are not critical in the module itself, however, there are demands of the user community as a result of the Resource Marketplace module in other User Budget Categories. Such as the Service Industry and Service Providers. Therefore what I see for the user community in this module is not so much a heavy lifting but more of a coordination of the users in the Service Industry and Service Providers. There will also be a number of synergies with respect to the budget requirements. Many of these other categories will have requirements for this module and a strong pooling of the resources of all of these categories should be undertaken at the beginning of the development.

In saying that we need to point out that it is in the Resource Marketplace that the decentralized production model is implemented. It is here with the service providers that the prototypical producer will be stripped down to the C class executives, the earth science and engineering resources, the land, legal and support staff. Where the remainder of the producer firm will be permanently located in service providers who are focused on the process and provide their service, and their billing, to the specific Joint Operating Committees. The service providers have a specific User Budget allocation of $83 - 166 million to deal specifically with these needs. It will be these resources that will define the software that supports the processes within the service providers that will support the decentralized production model. It is the resources of the service providers, as a sub-industry, that will be accessed by the producers through the Resource Marketplace module.

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

One area that will be a unique development will be the Job Order system that should be developed with the aid of the Research & Capabilities and Knowledge & Learning modules. Pooling of those User Budgets will assist in keeping the demands in the Resource Marketplace module down. In contrast I don't see much of a role at all for the Work Order in the Resource Marketplace module. One may want to keep a very close watch on the developments of the Work Order in the Partnership Accounting and Accounting Voucher, but as for a direct involvement in the Work Order, a minimal budget allocation may be all that is required.

I caution the users to recall that these are based on the understanding that I have of the modules and the oil and gas business. The reason that these are user based developments is that no one individual has the global perspective of the oil and gas business. Therefore I may be completely wrong. And if there is significant conflict between what is being stated here and what the user community wants in terms of budget allocations during the preliminary phase, then the user community should raise these points for further discussion.

With that, and understanding the role of the Resource Marketplace, I think an allocation of $6 - 12 million, 18 - 36 man years, will provide the needs of the user community to complete the tasks defined in the Preliminary Specification. These budgeted resources are the allocation for the Resource Marketplace module only. The user community may pool some of these resources as discussed above for joint development efforts such as the “Marketplace Interface” and the Job Order.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

Joint Operating Committee User Budget Category Part I

The first allocation of user community funds will be to the Joint Operating Committee User Budget category. Here we have allocated 22% of the user community budget for a range of $73 - 146 million. This works out to a range of 220 to 440 man years of work for the user community. It is important to take this budget allocation into context. These are the costs associated with the needs of the producer in its prototypical form based on the decentralized production model. Where the producer is stripped down to the C class executives, earth science and engineering resources, land and legal and support staff. It should also be pointed out here that the earth science and engineering resources, as well as the former administrative and accounting resources, which are now the service providers, each have their own user community budget allocations. These budget funds may be subsequently pooled to approach joint software development initiatives. Initiatives such as the Material Balance Report which have the producer firm and the service providers interests.

One of the first concerns of the Joint Operating Committee User Budget category of resources has to be the Security & Access Control module of the Preliminary Specification. How much of this budget will need to be allocated to address the issues and opportunities that are addressed here. We are providing access to the right information to the right people at the right time in the right place on any device. This includes access from multiple producers resources accessing information within the various Joint Operating Committees that they have an interest in. We thankfully are able to rely on the strength of a variety of Oracle products at various layers within their technologies to assist us in making these opportunities possible. The difficult issue that is presented by the Preliminary Specification is the high levels of collaboration and integration that is being conducted by the various producer firms in the Joint Operating Committee. And everyone knows what I mean when I talk about the issues that are presented by the pooling concept and general high levels of collaboration through the product. What I expect from the user community is the ability to take these difficult requirements and make them effective in an environment where the user is enabled and supported in an environment that is constructive and informative. Not one that has the user accosted by constant warnings and pop ups that violate the sense of what a good system should provide. This is your system, don't expect anything but the best. If the developers don't deliver what it is that you want, tell them to do it again until they get it right.

It is with that point that I want to note a number of positions that fall under the development budget. These specific positions are called the Product Owner. We currently have budgeted 25 of these positions and their role is to represent the user on the development team. If I didn't have a job already I would want to be a Product Owner as they are empowered by the user community to ensure that their needs are met. These people are your “man on the inside” so to speak. There will be a product owner for each of the eleven modules, one for the user interface, and so on.

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

It is at this point that I would like to note that the user communities will be comprised of a large variety of sources. Although some will definetly come from the oil and gas producers themselves, that isn’t the case for all of them. There may be some of the people who will have been moved to the service providers as a result of moving to the decentralized production model. Or from the service industry itself. The broader and more diverse the user community that we are able to build, the better the software that we will be able to build for them. That is our focus and that is our desire.

Therefore that will be one of the first things the user community will need to begin to do. Is to determine the amount of budget that is necessary to meet the needs of Joint Operating Committee User Budget category for the Security & Access Control module. Understanding the scope of the issues, and that it includes the Military Command & Control Metaphor I have estimated the budget requirements in the range of $7 - 14 million 21 - 42 man years. It is important to remember that these estimates will be finalized upon completion of the initial phase of the development work. This is a $200 million phase that will determine the scope and scale of the project in its first commercial iteration. It will also determine the costing of each module based on defined user requirements.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz

First Off, The User Community

We have with the Preliminary Specification a vision of how the industry should operate. We now need to involve the user community in the developments to ensure that the vision captures the needs of the community. There are millions of people who work in oil and gas today. Doing thousands of different jobs. Each job takes on average the better part of a year to learn. We need to capture this knowledge and understanding within the software in order to accommodate the needs of the users. That is the task that we are undertaking in the development of the People, Ideas & Objects software.

We have made a variety of assumptions in coming up with our budget for the development of this software. These assumptions include the following. One user hour is required for each hour of development work. 1,000 to 2,000 man years of development time, and 1,000 to 2,000 man years of user community contributions. Costs of these developments and contributions are at $185.00 U.S. per hour. If you are able to contribute to the user community and maintain your job with your producer, congratulations. I would expect few people would be full time user community representatives. And there are 1,800 hours per year of available time per man year.

The costs for only the user community are therefore in the range of $333 million to $666 million for the project in its first commercial release. It is undetermined at this time how many years this will span. Of these costs the allocations to the various different sectors are as follows.

Joint Operating Committee 22% $73 - 146 million

Compliance (Tax, Royalty, SEC) 12% $40 - 80 million

Service Industry                            12% $40 - 80 million

Service Providers                          25% $83 - 166 million

Accounting Firms                       17% $57 - 114 million

Engineering & Earth Science         6%               $20 - 40 million

Contingencies                               6%               $20 - 40 million

The reason that People, Ideas & Objects pays the user community for their involvement is twofold. First the scope of this undertaking is too large to be asked to be done on a volunteer basis. We need to rely on a dedicated, professional user community to define the needs of the innovative and profitable oil and gas producer. Both in the beginning and on a continuous basis. Secondly, the payment to the user community is made to acquire the Intellectual Property rights to the work that is done by the user community. People, Ideas & Objects as my licensee is acquiring these rights on my behalf. Then they’ll be used to generate the revenues necessary from the producer firms to support the users and developers.

Over the next few days we’ll go over each of the seven line items and detail what they involve and how these monies will be expended. People, Ideas & Objects are introducing significant levels of change within the oil and gas marketplace. Some of these costs are as a result of those changes taking place and the user community preparing for the systems that will be needed to support that change.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz