Operations Management Module, Part IX

Conclusion to the Research & Capabilities, and Knowledge & Learning modules

These two unique modules are designed to deal with the distinct competitive advantage of the producer firms through what can only be seen as the most difficult and challenging period of oil & gas history that begins today through to 2050. To establish a footing of profitability everywhere and always will be a challenging transition when the business discipline takes center stage in the decision making process. And it will be there that better, actual, factual, standardized and objective information in terms of comprehensive financial statements and other information will be provided for each Joint Operating Committee by the Preliminary Specification enabling those decisions to be made through this Operations Management module. When there is none of this business information available these resources have resorted to their own means of determining what the situation is and the status of the industry today is the consequence. 

To suggest this occurred by accident would be incorrect. There is no doubt in my mind that the lack of any funding of even reasonable levels to the ERP providers in oil & gas was deliberate. The self-serving means of those officers and directors who have chosen not to be accountable for their actions. Discovered they were best able to attain their lofty objective through purposely inadequate ERP systems, disorganization, their excuses, lies and viable scapegoats. When was the last time officers and directors took responsibility for any aspect of their authority or the business they’re responsible for? They’ll state that “oil & gas is such a complex industry,” hide the details, confuse the point and claim they don’t have the data, which as stated they don’t. Convenient and easy. 

In 2015 their investors said enough and ceased to continue funding the industry any further. An industry that was and is incapable of supporting itself through “real” profitable operations. An industry where officers and directors are satisfied personally with what is generated in terms of cash flow from investors prior investments, keeping them enthused for another year. They’ve lost the common sense of what it is that a business should do and how it would do it. Establishing corporate objectives such as “building balance sheets” and “putting cash in the ground” as reflections of how obscure and indecent their lunacy has become. 

Nonetheless the industry is in a state where its issues throughout North America are serious and demand resolution. The seriousness of the difficulties we face is not only the volume of issues, but their consequences. I’ll first put an apt quote from Professor Richard Langlois’ paper “Transaction Cost Economics in Real Time”

F.A. Hayek (1945, p. 523) once wrote that 'economic problems arise always and only in consequence of change.' My argument is the flip-side: as change diminishes, economic problems recede. Specifically, as learning takes place within a stable environment, transaction costs diminish. As Carl Dahlman (1979) points out, all transaction costs are at base information costs. And, with time and learning, contracting parties gain information about one another's behavior. More importantly, the transacting parties will with time develop or hit upon institutional arrangements that mitigate the sources of transaction costs. p. 104

• The protracted oil & gas downturn, covid and other concerns leaving inappropriate staffing levels available in the industry. 
• The inventories of work-in-progress within the industry and producers are shallow and will demand excess attention. Issues such as shales decline curve and the cannibalization of the processes that support normal operations. What capacity is the industry capable of operating at?
• Capacities and capabilities in the service industry are a severe detriment to the needs of the producers in the normal course of business. Service industry representatives are not motivated to rebuild the infrastructure that producers destroyed during the past decades and most particularly during the COVID epidemic. 
• The service industry will not rebuild their industry to have it ruined again by producers. Their thinking is if the producers had some skin in the game then they’ll think twice about destroying that industry again. Therefore the producers broke it, the producers can fix it. Oil & gas producers are the primary industry and all others participate in secondary or tertiary industries. 
• Rebuilding, refurbishing, reclamation and infrastructure need to be undertaken on a scale never done before. Just to maintain the status quo production. The status quo is unacceptable to the most powerful economy in the world, and if we become dependent on foreign sources of energy we may no longer be able to claim the title of most powerful economy. 

The serious nature of the consequences of continued inaction on behalf of the officers and directors will have a severe impact on all those involved in North American society. The officers and directors are fine and they thank you for asking. They are oblivious, uncaring and fundamentally inactive. “Mudding through” and “doing nothing” are the only strategy and tactic I’ve ever seen from this bunch. They can sit high above and continue to criticize the Preliminary Specification because it was rude, or it didn’t have that feature or they didn’t like that one and wait for exactly what it is they’re thinking of when they’re “muddling through.”

However we are undertaking a comprehensive rebuild on the basis of the vision of the Preliminary Specification. We won’t be compromising and dealing with them in much detail. We’ll ignore what we feel are their cultural influences and establish the performance based culture that we are seeking. A comprehensive rebuild at this time will be less onerous, it will take far less time than attempting to deal with their compromises and culture. And our user community will be far more successful building from the ground up in terms of breaking away from the losing traditions of today's oil & gas producer. 

I’ll reiterate that the Intellectual Property that underlies the Preliminary Specification is comprehensive. Any effort by the producer officers and directors to circumvent it in any way our IP will be dealt with. They are unlicensed, unauthorized and warned not to use it. Other software companies whose revenues are dependent upon their Intellectual Property respect other software vendors Intellectual Property. Therefore we feel the appropriate level of assurance that none of our IP will be used by them. The implications of this are broad and consequential to the producer firms as they are therefore unable to breach what we have set out in any attempt that they may make to establish alternative ERP systems. As indicated earlier in this conclusion to the Research & Capabilities and Knowledge & Learning modules. Producer officers and directors are probably satisfied with that as it reinforces their method of operation in somewhat of a permanent state. Or until someone makes the decision for them to build the Preliminary Specification with our Profitable Production Rights initiative. 

Finishing off the Research & Capabilities and Knowledge & Learning modules we have a quotation from Professor Richard Langlois that builds off of Harvard Professor Carliss Baldwin’s “Knowledge begets Capabilities, and Capabilities beget Action.” There is also the quotation from Professor Richardson that capabilities are the “Knowledge, Experience and Skills” (1972, p. 888) to which we at People, Ideas & Objects have added “Ideas.” And this next quote from Professor Langlois helps to bring the clarity we need.

In a metaphoric sense, at least, the capabilities or the organization are more than the sum (whatever that means) of the 'skill' of the firm's physical capital, there is also the matter of organization. How the firm is organized - how the routines of the humans and machines are linked together - is also part of a firm's capabilities. Indeed, 'skills, organization, and technology are intimately intertwined in a functioning routine, and it is difficult to say exactly where one aspect ends and another begins' (Nelson and Winter, 1982, p. 104). p. 106

Operations Management Module, Part VIII

 Knowledge & Learning

We should begin the discussion of the Knowledge & Learning module with an appropriate quote from Professor Richard N. Langlois in “Transaction Cost Economics in Real Time.”

In this sense, the ability of a large organization to coordinate the implementation of an innovation, which is clearly an advantage in some situations, may be a disadvantage in other ways. Coordination means getting everyone on the same wavelength. But the variation that drives an evolutionary learning system depends on people being on different wavelengths - it depends, in effect, on out-breeding. This is something much more difficult to achieve in a large organization than in a disintegrated system. Indeed, as Cohen and Levinthal (1990a, p. 132) point out, an organization experiencing rapid change ought in effect to emulate a market in its ability to expose to the environment a broad range of knowledge gathering 'receptors'. p. 120

In terms of Organizational Constructs the Preliminary Specifications Knowledge & Learning module relies heavily on the Joint Operating Committee, specialization and the division of labor, Intellectual Property, Innovation and Markets. Five out of the seven shows a high dependence on cultural influences. This tells us that the implementation of this module will be difficult as the cultural forces that exist will resist these changes. To which we'll apply our standard approach of ignoring them as we’re rebuilding the industry. And secondly the form of the module will have strong cultural support once what exists is forcefully ignored. 

Whereas the Research & Capabilities module is a producer-facing module that captures and documents the distinct competitive advantages of the firm's earth science and engineering capacities and capabilities. The Knowledge & Learning module is a Joint Operating Committee module designed to manage the specific properties organizational needs. 

People, Ideas & Objects have used specialization and the division of labor throughout the Preliminary Specification as an Organizational Construct to focus the producer and Joint Operating Committees organizations on what they do best. These specializations are broad and diverse throughout and include allowing computers to just store and process information while having humans do what humans do best, which is comprehensive and not just shuffling data about. We have specialized the process of innovations development within the producer organization to ensure they’re constrained, focused and their costs are controlled with results and deliverables. The Knowledge & Learning module specializes in the Joint Operating Committees ability to take the producer firms that are working interest owners of that property. And select from each of those firms what specific capabilities and innovations are available, at what capacities they’ll be needed by that property and for what role they’re required. Organizing them and deploying them to ensure that their field objectives are attained.

It should be noted here that the information, the capabilities that populate the Knowledge & Learning module for each Joint Operating Committee. Is not the full complement of what the producer has developed in terms of their capabilities. Each of the producer's capabilities when developed and made available will be selected or tagged with the type of capability and its application. Therefore a capability involved in multilateral fracing will not have been populated to a producing zone, operation type, region, etc to the Knowledge & Learning module of a Joint Operating Committee without those characteristics. It will only receive those producer capabilities for the purpose that they are undertaking. 

It is this process of specialization in the earth science and engineering resources that will cause producers to incur uncommercial operations under the current management. Having the full breadth of skills in house will demand too extensive of an infrastructure and resource uptake for producers to remain viable. Particularly during the era of the looming constraints of these resources. People, Ideas & Objects have therefore eliminated the “operator” designation and created the “pooling concept” in order to resolve these resource and specialization issues. This reorganization is necessary as the demand for these resources is subject to a number of changes that are outside the producers control. The current brain trust is retiring and the intake from the universities are not replacing them quickly enough. Higher throughput needed for energy independence and the demand for incremental earth science and engineering effort increases with each barrel of oil produced. A method is necessary to deal with this issue and People, Ideas & Objects are using the only viable alternative to elevate an organizations throughput through specialization and the division of labor.  

The question then becomes what amount is charged to the Joint Operating Committee for these resources hourly charges through our Work Order system. What we have developed is a unique factor that represents the value of each individual producer's performance, innovativeness and value in terms of their earth science and engineering capacities and capabilities. Revenue Per Employee will be used to determine the charge out rate of any of these individuals who will work at a Joint Operating Committee through the Work Order system. A senior engineer will be charged at x% of Revenue Per Employee and a junior engineer will be charged out at y% of Revenue Per Employee. The diversity in calculating the Revenue Per Employee numbers throughout the North American producer population provides for a remarkable variance. It is the only factor that I can point to that differentiates the quality of the producer in terms of performance. Any overt attempt to increase the producers Revenue Per Employee factor would only create incremental shareholder value and spark a competitiveness within the industry to increase this factor. A floor price for these resources would have to be established for the start-up and small producers due to their initial limited production.

Preparation and development of the specific capabilities of the producer, and most specifically their innovations. Are processes that are controlled and managed within the Research & Capabilities module. Seeking to reduce the costs of innovation by controlling, testing and developing them before they’re deployed too soon. And to ensure that the producer organization is not consumed by too many similar innovations being conducted repeatedly throughout their organization. Once the innovative procedures are documented in the Research & Capabilities and are ready to be deployed. It is through their availability to the Joint Operating Committees that each of the properties working interest producers will be able to access those capabilities and select them to be deployed. It is the Knowledge & Learning module that is the method that innovations, capacities and capabilities are deployed within the property. Using the fully tested and documented processes which each of the Joint Operating Committees producers have established and made available for use.

What may appear to be freewheeling markets to some of the existing officers and directors of the producers today is nothing more than the difference between using the market to provide for what it is the producers need. As opposed to what it is that is tightly controlled within the producer organizations under the “operator” designation today. Freewheeling markets may be an apt description of innovative developments as they are perceived as being messy. However they should not be considered to be uncontrolled in the Preliminary Specification. I would suggest that in the Knowledge & Learning module the ability to maintain high levels of operational control is available through these interfaces. In the Operations Management module we see many aspects of the operations that are not currently provided. The data and information of the financial, operational and technical domains have all been engineered in the People, Ideas & Objects et al software development process to ensure their high levels of integrity and accuracy. The level of documentation of capacities and capabilities are done for a variety of different reasons and the purposes in doing so are comprehensive. The ability to deploy the producer's resources through standardized and agreed methods of what the program will consist of once the selection in the Knowledge & Learning module has been made. And lastly the control of the operation through the Work Order, AFE, Job Order and other means. This will appear messy at times, however reliance on the process will ensure the outcome.

Principally People, Ideas & Objects believe that higher commodity prices are a reallocation of capital that will be necessary to fund the innovations and capital deployment for that very long list of capital projects that need to be undertaken in North America. “Muddle through” doesn’t appear to have been able to identify they have a problem and the firm's officers and directors continue to sail through clear blue waters, or so it would seem. Conversely the Preliminary Specifications price maker strategy is designed to ensure that the actual, factual costs of oil & gas exploration and production are recorded within each Joint Operating Committee to ensure that they remain profitable at all times. If they are no longer profitable, these properties are shut-in so that they’ll generate a null operation, no profit but also no loss. At which point the Joint Operating Committee can turn to the Knowledge & Learning module to determine what is the best course of action that is available to remedy its lack of profitability, and return it to profitable production as soon as possible. In an environment of ever increasing costs the accuracy of actual, factual, standardized and objective accounting information will be critical.

A question that I would ask at this point is whom do you want to participate as partners in Joint Operating Committees. There has been an interesting trend in oil & gas of renewal over the past decades. What was in the 1970s and 1980s a landscape dominated by large corporations quickly saw independent and start-up producers become the dynamic growth arena in the 1990s. Today many of the producers from the 1980s and 1990s that set out the independent producers movement in the oil & gas industry are no longer with us. The past few years has seen high levels of consolidation being the means in which to survive the difficulties in oil & gas leaving even fewer producers than before. Consolidation has been highly beneficial for the clean energy industry but not much else. Now that officers and directors realize their misdirection into other industries was a mistake, will they ask for forgiveness? Will that allow us to trust them that much more? What we believe the Joint Operating Committees would best be represented by would be the start-up and small producers having the opportunity to participate. They are the ones that have driven the change in the industry and it is the change in the industry that is most needed today. Innovation demands that we expand the reserves base, increase revenues and reduce costs. What is it that we’ve seen out of the consolidated producers is foolishness, misguided adventures and nothing much else.

Operations Management Module, Part VII

 Resource Management

Deployment of the producers and Joint Operating Committees engineering and geological resources towards their chosen strategies and tactics is a requirement People, Ideas & Objects propose for the Operations Management module. Whether it be in any one of the three main subsections of this module, those being Producer / JOC Operations, Performance Management or Resource Management, how and where these people are deployed and their activities will be able to be managed, monitored and controlled through this module. This is the purpose of the Operations Management module of the Preliminary Specification. We are not replacing what may exist in the marketplace, we are rebuilding the oil & gas industry on the basis of profitability and performance. Therefore what is done today should be seen as redundant.

The Operations Management module is a senior management Console enabling producers and Joint Operating Committees to manage their operations. Having the financial, operational and technical data and information of the producer and its Joint Operating Committees is appropriately collected, stored and available through these systems. Although much is discussed in the marketplace about data and information and their respective values. Little is discussed about the disparity of the sources within these organizations, the quality of the data or how it’s used and if it’s being managed appropriately. The Preliminary Specification, overall, should be seen as the opportunity that it is to begin the process of objectively standardizing, organizing and implementing the data and information of these organizations. Only then could any value be discerned from these sources. After all, who knows the officers and directors may have been making excellent decisions, they just were using really bad data.

The tools People, Ideas & Objects, our user community and their service provider organizations have included and developed in the Operations Management module of the Preliminary Specification, such as the Work Order, AFE, Job Order and others. Are made available to invoke the authority and fulfill management's responsibilities. These form the basis of the Operations Management modules' purpose. To consolidate the interface of information and tools necessary to effectively operate their domain of responsibility, to document these and ensure compliance and reporting to regulatory authorities is handled.

It’s important at some point in this discussion that we reiterate the two distinct types of information that are the domain of the producer and the Joint Operating Committee. As we’ve noted elsewhere in the Preliminary Specification the producer data and information is predominately proprietary and confidential to all those outside of the producer firm and tightly controlled within the firm. The Joint Operating Committee contains information that is predominantly of a public nature and any of its proprietary information is shared between the producer participants of that property. The use of Oracle Cloud ERP is able to provide the assurance that the architecture of how all of this information and data is stored and shared will be able to meet these requirements and comply with North American regulatory requirements. Security levels are of the highest in terms of Oracle’s capabilities and capacities in terms of its Oracle Autonomous Database. Their Java security model establishes it as the most secure development environment available as nothing is able to be run outside the Java Virtual Machine. Part of our user community's tasks is to define a hierarchy of roles and responsibilities that define access privileges to the data. Then producers are able to assign the appropriate roles to the appropriately authorized individuals to read / write those data elements. Compared to other vendors these security features may seem redundant and more trouble than they’re worth, however they provide good coverage. Oracle’s commitment to security continues as their firm uses Oracle products internally in a practice known as “eating their own dog food.” Also please review the Security & Access Control module of the Preliminary Specification and the unique attributes we introduce and resolve there.

Research & Capabilities

The Research & Capabilities module of the Preliminary Specification is concerned with capturing and documenting the producer firms explicit knowledge of their earth science and engineering capabilities and capacities. Their development and the control over the innovative process, of which the Preliminary Specification has two primary innovative processes being managed. With deep connections through to the service industry, the collaborative efforts throughout the industry and its tertiary industries are able to advance the science and technology of the oil & gas business iteratively. The interface between the Research & Capabilities and Resource Marketplace modules establishes these connections in order to fulfill the various roles and responsibilities for the completion of any initiatives. As a science based industry whose demands will become ever more complex and difficult, it will be the innovative advancement of that science and its interplay between the industries innovative technological development that in turn push the science forward. 

Control of this process of innovation is a necessity as the propensity to disallow innovation within the firm is done to ensure it does not become a free for all. Where experiments are tried by various different groups that may have success or not, only to have them tried again and again each and every year. A highly wasteful, unproductive, un-innovative and costly undertaking. The ability to fully develop, test and deploy on a sample basis the innovations that are developed, to have those well documented in the Research & Capabilities module in order for people to see what the state of affairs are in terms of the innovations development and its pathways taken, as innovativeness is defined by its process of discovery and failure. To have the explicit knowledge captured and where to turn to acquire the tacit knowledge to implement the innovation provides producers with the ability to stop much of the wasteful “innovative approaches” being undertaken in North America today. What we’ve learned is that innovation is a defined process that can be replicated throughout the organization. It must be controlled and managed to ensure that costs are not unnecessarily high. Innovations results can best be realized through the sharing of ideas through a science based business that collaborates to move the science forward.

Capturing the explicit knowledge can be, and should be as robust as possible. Providing the information and knowledge of who and where to have the what and how or “know how” of tacit knowledge deployed. Acquisition of the Intellectual Property through the Research & Capabilities module is an opportunity that must also be undertaken. People, Ideas & Objects seven organizational constructs have Intellectual Property as one of the foundations of how the industry moves forward innovatively and otherwise. Without Intellectual Property being appropriately managed, no one is going to be able to persist to bring about the developments of new ideas when they take so much time and effort and are subject to so much risk of having these poached in the marketplace. Conversely producers and Joint Operating Committees can mitigate the high costs of innovations through Intellectual Properties assertion that no derivative works are authorized without a license. Therefore unnecessary duplication of effort is eliminated in the marketplace. Yet at the same time the ideas are known and others can learn from them. 

It is here within the Research & Capabilities and Knowledge & Learning modules that the producer or Joint Operating Committee can source and organize the team they need for the task at hand. Using the search facilities within their own firm, the Joint Operating Committee, the firms they’re associated with or the larger market of producer and consulting firms, depending on the publication definitions of the producer. Producers will be able to acquire the resources they need to ensure the task is completed through the Preliminary Specifications Work Order. With the Preliminary Specification we are using specialization and the division of labor to resolve the current and anticipated resource shortfall in engineering and geology. However, we also believe that with this specialized diversity of resources, the specialized demands would put the producer firm beyond the point of commercially viable operations if they were to attempt to maintain them internally. We have therefore assumed the “operator” designation of one producer within a Joint Operating Committee, providing all the resources to the Joint Operating Committee is unworkable. And therefore People, Ideas & Objects established the “pooling concept” where all participants in the Joint Operating Committee commit their unique, specialized resources to the property and any shortfall is fulfilled by the market of consulting firms or other producers. Establishing a second source of revenue for each of the producer firms that generates revenue as a means to offset the high(er) costs of maintaining these engineering and earth science capacities and capabilities. Management of this entire process is the role undertaken by the Work Order of People, Ideas & Objects. 

Operations Management Module, Part VI

 Performance Management

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

Partnership Accounting

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

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

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

Financial Statements

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

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

Pro-forma Worksheet

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

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

Accounting Voucher

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

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

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

Data, Information and Performance

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

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

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

Material Balance Report

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

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

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

Production

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

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

Field Data Capture

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

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

Operations Management Module, Part V

 Petroleum Lease Marketplace

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

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

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

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

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

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

Profitable Production Rights

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

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

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

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

Areas of Mutual Interests

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

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

Lease posting, bidding, rentals etc.

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

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

Market Acquisitions and Divestitures 

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

Operations Management Module, Part IV

 Producer Operations

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

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

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

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

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

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

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

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

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

Financial Marketplace

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

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

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

Resource Marketplace

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

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

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

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

Industrial Command & Control

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

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

AFE

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

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

Work Order

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

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

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

Purchase Order

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

Job Order

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

General 

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

Operations Management Module, Part III

 Enabling Technologies

Internet of Things (IOT)

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

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

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

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

Communications

Starlink

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

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

Swarm

LOW COST GLOBAL DATA FOR IOT

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

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

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

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

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

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

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

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