Blockchain is an emerging technology that could very well become a major disruptor in many industries, but particularly in an industry like the energy sector that has a lot of complexity and security requirements.
According to the World Economic Forum, digital transformation
in the Oil & Gas industry could unlock between $1.6 and $2.5 trillion dollars in value.
5 Blockchain Use Cases
In a recent post, we shared some high level concepts around blockchain for the oil and gas industry. Today, we want to delve into more detail around specific use cases throughout the energy industry supply chain.
- Blockchain for Financial Transactions
Blockchain technology rose to public consciousness though the popularity of bitcoin cryptocurrency, so it stands to reason that the easy entry to the oil and gas industry would be through automation and authentication of financial payments, particularly international financial transactions.
Blockchain allows oil and gas companies to securely complete transactions throughout the energy supply chain, without the involvement of banks, brokers and other third parties. Because oil and gas is typically sold in high volume and at a high frequency, blockchain could save oil and gas companies a significant amount of time and money, while lowering the exchange rate fluctuation risk of international transactions.
- Blockchain for Recording Land Use Rights
A universal challenge for energy companies is the management of land ownership, mineral leases, and land use rights. While a solution like EnergyCONNECT Joint Venture Accounting can help keep track of these documents and communications, land records and mineral leases have to be correctly captured in the system.
Sometimes land titles can be mismatched or misplaced. Owners may have different understandings of agreed upon values. Blockchain smart contracts could provide proof of ownership, transaction dates, prices and other pertinent information – and reduce the time lag between ownership transfers and document filing dates.
- Blockchain for Energy Supply Chain Security
The combination of high transaction volume, high transaction frequency and high dollar value in the energy supply chain creates opportunities for both fraud and errors at every exchange point.
Combating fraud and error today takes an enormous amount of administrative effort. Using blockchain technology to record the exchange of money and goods would authenticate the transfer, while maintaining the privacy of the sales transaction value for both the buyer and seller.
- Blockchain for Performance-Based Contracts
Blockchain technology could revolutionize service-level agreements as we know them today. Combining blockchain with Internet of Things (IoT) devices, companies could track equipment performance, downtime, and costs; or track speed to market from exploration to distribution. Oilfield service companies could offer service contracts based on performance guarantees.
- Blockchain for Regulation and Compliance
Down the road, energy regulators, safety regulators, tax officials and other government agency representatives could be provided with access to the blockchain records, eliminating the need for manual reporting.
Are You Ready?
The digital oilfield is fast becoming a reality. You may not be ready to adopt blockchain or IoT technologies today, but it’s time to set yourself up for success. What do you want your company’s future to look like? What technologies, resources and processes do you need to have in place to seize these opportunities?
Author: Brad Smith, Analytics DirectorOther articles you might be interested in: