© 2019 Oil & Gas Blockchain Consortium.

AFE BALLOTING USE CASE DEMONSTRATION

Questions & Answers

Scenario One - Happy Path

Will all information in the system be available to the BNO?

No. No information exchanged between counterparties is available to the BNO.

Are there any assumptions that will need to be made about the JOA?

The JOA requirements need to be specified. The POC did not define the JOA on blockchain. If the JOA, or aspects of the JOA, were on blockchain then the AFE Balloting process could be refined to leverage company and operational terms specified and agreed to as part of a JOA onboarding process.

Does the ballot open at a specific scheduled time?​

The ballot process is initiated once the Operator ‘Proposes’ the New Well Requests. Individual ballot response timers are initiated once the delivery of a ballot to a Non-Operator is confirmed on the blockchain network.

Can the BNO access all information on the system?

No. The BNO is only a party to business network membership information, and the BNO node only contains membership related information.  As this is a distributed ledger it is key to understand there is not a single systems with ‘all of the data’.  Each node contains only the data they are a party to as defined by the business processes enforced by the smart contracts.

What happens if you send a ballot that has an error and needs to be corrected/recalled?

Correction or recall functionality was not included in the scope of the POC. This could be added in a future iteration.  In technical terms nothing is ever edited.  It is possible to version or update previous information analogous to the concept of an adjusting entry in accounting terms.

Are attachments hashed into the blockchain or where are they stored?

Yes.  Attachments are stored on each of the entitled nodes.  They are also hashed so that a single copy of an attachment is stored (to save storage space) and referenced by multiple transactions as appropriate.

Is the "allowed ballot receipt time" also editable, or is that a system setting?

In the POC it was defined by the operator for each new well request.  This was defined by business process and could be changed in future versions.

 

What notification does the NonOp to prompt view of finalized decimals?

Each NonOp receives the finalized well interest. Notification can be generated upon receipt.

Can each member's GUI (spell out acronym) be customized for their own visualization needs, or does it have to be the same for all nodes on the blockchain?

Each member can develop their own user interface or use one developed by Guild1.

Will the 'response time allowed' be in days (not minutes) in a real-life scenario?

This is defined by the business process and can be configured differently in future versions.

Does the BNO have access to all information in the system?

Absolutely not.  See above.

Do attachments exist on multiple nodes or is it just one document that participants are granted access to?

Attachments are distributed to all participants on a contract.  Each node has its own copy.

Can attachments can be large files, is there a maximum capacity?

There is a system parameter that can be configured. Care is required to specify a maximum size based on business and system requirements.

How does a company join the OOC Oil & Gas Blockchain Consortium?

A company is required to go through an on-boarding process governed by the business network operator. This involves KYC (know your customer) processes and identity issuance as well as physical software and infrastructure provisioning.

Can anyone propose a ballot?

The POC business process specified that any organization on the business network could propose a ballot provided they are acting in the ‘Operator’ role for a New Well Request.

Does the POC support the concept of a business calendar?

No. This can be modeled in future business process design.

 

Scenario Two – Opting Out

What do you think the biggest hurdles are in terms of taking this solution live?

There are certain business requirements that require addressing before going live. The largest of which is how to represent off-ledger contract participants (participants without a blockchain node).

Is this built on a cloud foundation?  If so, which one?

The POC blockchain nodes were provisioned on AWS (Amazon Web Services).  Any cloud foundation should be compatible.

What is the risk of using Blockchain when working under older JOAs that require certified mail when balloting?

The project team has engaged the legal technical team on this question.  The end solution must constitute "notice" under the governing contracts, including forced pooling.  Several options have been identified, including companies entering into letter agreements amending all JOAs they have entered into together.

How long is the balloting information available for those that are a vested interest?

Indefinitely

Who provides "support" for the solution?

Support for this solution is provided by GuildOne, Inc. and R3, Inc.

Is there an option to extend a response deadline?

The requirement for the POC was to fix the response deadline at the time of creating the new well request. Functionality can be added to allow the deadline to be extended in the future.

What happens if everyone declines a first-round ballot?

The operator receives 100% of the working interest.

Can operator withdraw or cancel the proposal and is it updated on the blockchain?

Not at this time. This requirement has been identified for consideration in the next phase.

 

If this is rolled out, will you see all your ballots across all your assets in this one tool?

Yes.

Where does the data physicality reside; who’s server?

Each counterparty’s server physically stores the data for the contracts that they are party to.

How do we amend thousands of JOAs to allow balloting by blockchain?

The project team has engaged the legal technical team on this question.  The end solution must constitute "notice" under the governing contracts, including forced pooling.  Several options have been identified, including companies entering into letter agreements amending all JOAs they have entered into together.

Does the second ballot always have the same time limit as the first ballot?

This was a requirement of the POC but in future this can be configured to allow different time limits for different rounds of balloting.

Does the Operator always take additional interest?

Yes, as per the business rules specified for the POC. This can be modeled differently in future versions.

How do you foresee supporting counterparties who are not on the blockchain network?

We are currently working on designs to support off-ledger counterparties.

Can you re-send a ballot to someone who didn't receive it?

Not at this time. This can be designed into future versions of the process.

What happens if I hit the wrong ballot response?

The response is submitted. Additional functionality can be added to provide correction capability but this has to be carefully considered in terms of what circumstances this would be allowed.

What happens if a node is offline and a ballot is never received?

Currently, the receipt timer would timeout and the ballot and new well request are updated to a failed state.

What is the difference between sent and pending?

Sent is an interim status meaning the receipt confirmation has not yet been received by the Operator. Pending indicates that the receipt has been confirmed and the response timer has been initiated.

Why didn’t the round 2 ballot percentages add up to the round 1 declines?

This is due to the Operator receiving a share, which is not balloted.  Additional intermediate calculations could easily be presented for visual aid as designed in the business process.

 

Scenario Three – Give Me More

If we need data from the app to do analytics, do we need to offload it or will there be analytics?

ConTracks supports data integration to enterprise analytics and reporting platforms.

How do you foresee supporting counterparties who are not on the blockchain network?

We are currently working on designs to support off-ledger counterparties.

 

How will you handle variations in JOA forms?

This may be supported through the use of ConTracks ‘smart contract templates’; however, this requires further analysis to understand these variations.

 

Scenario Four – Forced Pooling

If a cash call/cash advance is allowed per JOA or under FP order, can it be submitted at the time of AFE submission?

No.  This was not in scope for the POC but can be addressed in a future iteration.

How would you manage rule changes?

Depending on the nature of the rule change, this would be managed either by updating the ConTracks contract template, or by updating the smart contract code itself.

Is there a way for a user to go behind the GUI and see the business rules?

Not at this time. Business rules are encoded in the ConTracks contract template and the smart contract. ConTracks does have features to support Template testing, activation and deactivation to ensure each company has the opportunity to endorse the use of a template prior to being a participant on any contract ‘instances’ leveraging a template.  These extended features were not scoped for inclusion in the PoC.

Can upper limits on how much extra is wanted be set on the accept + extra response?

Yes. This could be added in a future iteration.

Do the other non-operators know which participants were under forced pooling orders?

In the PoC, the controlling contract information is shared as part of the Finalized Well Interest which are distributed to all companies who ‘opted in’.  This information would not be visible to companies who opt out, or to any company prior to the generation of the Final Well Interests.  This can be changed in future iterations as per business process design.

How do I know that the user making the elections has authorization to respond to ballots for that company?

Governing the authentication and authorization of a User (person) is the accountability of each company with a node on the blockchain network.  Multiple options are available to support user identity management.

Tell me about security.

Security is implemented in various forms and supported by multiple components within the ConTracks/Corda environment:

 

  1. End-user role based access control is leveraged to secure what functions can be performed by which users.

  2. Entity or enterprise identity is used to provide permissioned access to the blockchain network - in this case, a purpose-built network for the AFE Balloting POC. Cryptographic keys are issued to each enterprise for transaction signing. In the POC these keys are managed with operating system keystores and secured with operating system usernames and passwords.

  3. The network infrastructure used for the POC is secured via devices and facilities employed by Amazon Web Services and administered by Guild One.

I see the operator is only noted as being subject to the "J-1" JOA.  Is that really the case for interest allocations?

No.  The Operator is considered a party to all JOAs.

Scenario Five – Real World

Is there a capability to run reports and export it to excel?

Yes.

Can a key assigned to a node ever be changed?

Yes.  This would of course require appropriate governance processes to be implemented and followed.

What legal concerns have arisen?

None to date.  Consideration may be required to address using blockchain for JOA agreements that currently specify the use of registered mail.  This could potentially result in the need for amendments, but should be determined by appropriate legal resources.

How do we get data out of the system for analysis?

See above.

 

What will it take to move this into production?

The solution will need to be evolved to address additional requirements as defined by the consortium members.  Network Governance, Support, Refined Business Processes and commercial models must be detailed at a minimum.

Are any smart contracts part of this solution? Where does the code reside?

Yes. The smart contracts code resides on the node of every company who is party to the smart contract.

Does the 2nd ballot round only start after all responses are received on all JOA's/forced pooling orders or can 2nd ballot round for each controlling contract start independently?

POC requirements were defined to start the 2nd ballot round only after all responses are received on all JOA’s/forced pooling orders.  The determination of 2nd round ballot offers are generally dependent upon the receipt of 1st round ballots, though some exceptions may exist.