Emerging Blockchain Concepts in the Oil & Gas Sector
By: Chris Peoples Managing Partner at PP&A and Grant Smith projectScape General Editor at PP&A
“Blockchain technology is gaining steam in the oil and gas sector.”
The oil and gas sector with a 2017 gross output of over $300 billion, represents one of the largest industry sectors in the U.S. Despite the sector’s significant scale, the industry is not always been synonymous with digital innovation. This lag is seen in PP&A’s projectScape market intelligence platform, a repository of blockchain use cases across the energy and environment sector, that until recently showed relatively few concepts focusing on oil and gas specific applications. The findings from Deloitte’s ‘2018 Global Blockchain Study’ also echo this sentiment with only 7% of respondents coming from the oil and gas industry. Despite this low representation, the relevance to the sector was evident in that 72% believed that blockchain would disrupt elements of the oil and gas industry.
Despite this comparably low representation within the oil and gas sector, there has been a string of recent activity indicating that the industry is looking to find ways to innovate. Shell, for example, has just announced an investment into LO3 Energy, a technology company which is exploring a host of blockchain-related concepts in and around the energy and environment sector. In PP&As projectScape platform, we have seen the recent emergence of new concepts looking to streamline transactions between parties, improve trading operations, and make the supply chain more transparent in the oil and gas business areas. Three exciting companies testing and deploying new concepts in the market found within the projectScape platform are Vakt, OOC Oil and Gas Blockchain Consortium, and Ondiflo.
Vakt
Vakt is a recent entrant building a downstream energy trade management platform on Ethereum. In January, Vakt announced investments from three strategic oil & gas investors: Chevron, Total and Reliance Industries. These investors are looking to serve as early users of Vakt’s blockchain-enabled platform. Efficiency is the root benefit of the Vakt platform. An article by Global Trade Review cites that a financial trade deal for a single commodities cargo by sea transaction has been said to require up to 36 original documents and 240 copies from as many as 27 parties which can often take weeks, if not months, to complete. Vakt’s executive team claims that the platform will drive efficiency and trade finance savings of as much as 30-40%.
OOC Oil & Gas Blockchain Consortium
Organizations are also discovering new value in upstream/midstream operations through blockchain applications and have taken the first step to fill this adoption gap by forming the OOC Oil & Gas Blockchain Consortium. The Consortium has been formed to develop and launch a set of use case pilots in 2019, focusing on applications for the oil and gas sector. Its objective is to establish blockchain standards, frameworks, and capabilities for the oil and gas industry. The Consortium is working to achieve these objectives by collaborating with a diverse set of partner members including ExxonMobil, Chevron, ConocoPhillips, Shell, Hess, Repsol, Marathon Oil, Pioneer Natural Resources, Noble Energy, and Equinor who will serve as a testbed for use cases applicable to the industry. These use cases seek to spread across the industry value chain. At present, the Consortium is focusing on four use cases for 2019, Truck Ticketing, Authority for Expenditures (AFE) Balloting, Joint Interest Billing (JIB) Exchange, and Seismic Data Management.
Ondiflo
Ondiflo is a Texas-based company exploring the potential use of blockchain technologies focusing on water management in the oil and gas upstream as a solution to simplify supply chains and reduce costs.. According to the ‘Crucial Importance of Water Handling in Oilfield Operations – An Oil & Gas 360® Special Report’ the major U.S. shale basins are producing a close to 6 million barrels of oil per day. They estimate that 15-20 million barrels of water are required daily to facilitate this level of production. Due to this volume of water necessary for the extraction process, transportation of the clean and waste water exceeds 100 million truck rotations per year. These rotations take place between oilfields and water treatment centers requiring a diverse network of drivers, operators, and regulatory auditors. The sheer volume of the process and multiple interactions between parties turns these rotations into a high cost of doing business.
Ondiflo's Blockchain solution for water hauling leverages industrial internet of things (IIoT) sensors, IIoT clouds, and private blockchain networks. First, field data (sourced from IIoT or SCADA, when possible) is captured in the blockchain. After the data is captured, orders and tickets are created via smart contracts and pushed to trading partners' workflows. Once approved, the platform then creates and captures invoices between the water haulers and the operators. Finally, invoices can then be processed as the platform communicates between both parties and their respective financial institution. In utilizing the unique benefits afforded by blockchain technology, the platform not only eases the interaction between parties but also allows for better environmental monitoring and compliance procedures.
Find out more by visiting projectScape
projectScape is a market intelligence platform developed by PP&A which focuses on providing company and project data for innovative technologies in the energy and environment sector. The projectScape Blockchain and Distributed Ledger Technologies Library covers blockchain projects found in and around the energy and environment sector.
This includes projects found across the energy value chain with applications ranging from consumer-level to commercial & industrial grade deployments.
To find out more about these and other interesting, innovative blockchain concepts being tested and deployed in the energy and environment sector right now, please visit the PP&A projectScape platform where we are building a unique set of company and project profiles covering innovations in the sector. www.ppa-mc.com/market-intelligence
To learn more about blockchain in the energy sector check out our page: PP&A Tech Series: Executive Workshops.
We offer custom tailored private executive workshops and training sessions for organizations and leaders looking to understand blockchain technology and to gain perspective as to how it may fit within their business.
Unlocking Blockchain in the Energy Industry
In our “Unlocking Blockchain in the Energy Industry | Executive Workshop”, we combine a blockchain technology onboarding with energy industry-specific perspectives of how blockchain is impacting the sector today. Our team will elaborate on industry-specific use cases and applications for generators, transmission service organizations, regulators, marketers, and energy service providers.
PP&A offers a comprehensive set of blockchain consulting services through a unique blend of industry experts, strategy consultants, and a leading team of blockchain developers experienced in today's most cutting edge technology, we support organizations with:
– Technology introductions, education, and executive workshops
– Market, industry, and company overviews
– Strategy design and implementation
– Business case valuation, use case development, and application deployment
– Strategic partnerships and investments
– Operations and cyber security solutions
Our teams can help whether you are looking for initial organizational training or looking to develop strategic foundations and business rationales regarding blockchain technology. If you are ready to move our implementation teams can even take you seamlessly into development and deployment of proof of concepts and pilot implementations.
To find out more don’t hesitate to reach out to Chris Peoples at: cpeoples@ppa-mc.com
About the author
Chris Peoples
Chris is the Founding and Managing Partner of Peoples Partners and Associates (PP&A). Professionally, he has gained more than ten years of professional industry and strategy consulting experience working with leading companies. As a Management Consultant, Chris works closely together with clients to develop innovative strategic approaches to solve complex problems and find new ways to generate value.
As PP&A’s Managing Partner, Chris structures and leads consulting engagements by developing work plans focused on addressing client-specific issue sets and ensuring the subsequent execution of work plans according to specifications. Actively guiding multiple consultant and client teams in data collection, synthesis, and analysis efforts he derives and implements data-based solutions.
In addition, Chris is a certified blockchain developer and leads the Energy Working Group for the Government Blockchain Association focusing on identifying unique problem sets and challenges faced by public and private entities regarding energy supply, distribution, and regulation. This group explores innovative blockchain and distributed ledger technologies geared towards addressing challenges while increasing system efficiency, security, resilience, and sustainability.
Grant Smith
Grant is a general editor at PP&A and helps to populate and review entries into the projectScape platform related to blockchain projects that are being tested and deployed in the energy and environment sector. He holds a Master’s Degree in Business Administration with a concentration in Sustainability, from Duquesne University in Pittsburgh, PA and is a certified LEED Green Associate. Grant realizes the immense benefit of blockchain technologies to companies/organizations and enjoys building the business case for its implementation from a triple bottom line approach.
Professionally, Grant comes from a consultative service background in both the public and private sectors across various industries including; engineering, enterprise IT, accounting, strategic communications, logistics/value chain, construction, and law. Currently, Grant is exploring the use of FinTech as it applies to wealth management and private banking. He is also the principal consultant at Prismic Solutions, his business focused on small and start-up consulting for sustainable and forward-thinking entities in the Pittsburgh region.
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