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13 Bene ts Blockchain O ers Industrial

the Oil and Gas Industry

Dmitriy Malets Pro le 

April 10 17 min read

Finding applications of blockchain in the oil and gas industry takes some searching.
While a great many sectors have embraced distributed ledger technology, energy has
been slower to adopt.

But that is getting ready to change. Energy’s reluctance toward DLT is rapidly dissolving.

A recent Deloitte survey revealed that 72% of oil and gas executives expect blockchain to
interrupt the industry.

To be sure, exploring beneath the earth’s mantle for natural resources is a far leap from
exploring how blockchain might bene t the energy sector. But as DLT cuts a disruptive
path through automotive, nance, and healthcare, oil and gas companies have started to
think blockchain technology might offer them something too.

Let’s see why, and then let’s take a look at 5 solutions blockchain offers this crucial
sector. Finally, we will take a look at one case history that shows how DLT is already
changing this venerable industry.

Oil And Gas Industry Challenges

The production, re nement, and delivery of fuel products is a highly complex business.
The ease of refueling our vehicles is in stark contrast to the challenges involved in
getting the fuel to the pump.

An ultra-short list of issues facing the oil and gas industry every day include the
following:

Finding new ways to locate petroleum and gas deposits

Transporting volatile fuel components safely and ef ciently
Managing complex supply chains
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Securing trading and settlement of energy
complete commodities
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 Securing and simplifying billing and payments

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 Maintaining arduous and ever-changing regulatory compliance
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These issues, and the host of other problems facing fuel producers, transporters, and
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distributors, can be solved or greatly mitigated by blockchain technology.

Here are 5 bene ts DLT offers the energy sector. The full list of advantages is much
longer.

Blockchain Benefits For Oil And Gas

Upstream

The Exploration and Production (E&P) of petroleum and gas reserves is what’s known as
the upstream segment of the industry. It’s the most complex, expensive, and dangerous
part of the energy business. The upstream segment is a mammoth collection of
government and private entities, further divided into hundreds of functions and
expertise.

Safety, ef ciency, and transparency are crucial to keeping the upstream segment from
coming to a grinding halt. Unfortunately, legacy systems are no longer able to keep pace
with the highly data-centric nature of upstream entities. Blockchain, on the other hand,
is perfectly suited to these challenges.

Here are just a few ways blockchain can bene t oil and gas upstream providers:

Financial Reconciliation

Because of the complexities of upstream processes, several companies might work on

the same project, often at the same time. Keeping records of who does what is more of a
challenge than it out to be. Veri Docation
you haveof labor
any hours,
questions beforealone,
you is a time-consuming
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process, fraught with delays, disputes, and corrections.
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 Blockchain lends itself perfectly to billing reconciliation because data can be recorded
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and processed in real time. The immutable nature of DLT ledgers ensures that billing
records cannot be forged, altered, or deleted.
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Identity & Certification

Oil eld operations often require that company and even worker certi cations be
validated. Certi cations can come from a multitude of sources, with errors and delays
being all too common.

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By putting all certi cations on an industry blockchain when they are issued, all
permissioned stakeholders can access them as needed, without delay, and with an
assurance that certs are current and legitimate.

Error Reduction

If the errors that occur in gas and oil production could be eliminated, you might not mind
going to the pump. While no technology can compensate for all human error, blockchain
can take error-prone processes out of human hands.

Field tickets, maintenance data, and production data are still heavily dependant on
manual data entry. By automating data collection, energy blockchains can not only
streamline data collection, but can signi cantly reduce errors, delays, and cost.

Improved Maintenance

If safety is goal number one for the fuel industry, maintenance is job number one.
Without regular, effective maintenance, safety cannot be assured. And without data,
maintenance cannot be performed effectively or veri ed.

DLT databases are ideally suited to automating many of the processes associated with
maintenance operations.

In time, all oil eld maintenance will be managed using mobile apps and cloud-based
blockchain platforms. In fact, this nascent market represents one of the hottest
opportunities for investment and innovation in the energy industry.

Land Rights Management

Oil companies can’t drill just anywhere they like—at least not without paying someone
for the rights to do so. Identifying who owns land and mineral rights is necessary before
exploration or drilling can be done.
Do youTill
havenow, the processes
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been a long and dif cult process.
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 Until the government agencies that manage land and mineral ownership records adopt
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blockchain, rights management will remain a dif cult process. However, as energy
companies obtain the rights they need, those rights can be stored on blockchains, where
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they can be sold or traded as commodities.

Decades from now, when rights are eventually all stored in the cloud, fuel companies will
be able to identify owners and purchase rights all in the same day.

Midstream

Midstream refers to the transportation of crude oil from oil rigs and oil elds to
re neries. The processes involved in midstream can bene t from the ef ciency offered
by blockchain technology.

Supply Chain Management

The midstream segment of the energy industry requires a constant and abundant supply
of materials, tools, equipment, and other supplies. Just as with any industry, managing
these complex supply chains is a sub-industry unto itself.

Keeping supplies moving 24/7 is a data-intensive task. Most legacy oil and gas supply
chain management systems are barely capable of keeping up. Blockchain excels at
tracking products, supplies, eets, and other resources.

As the energy IoT ecosystem matures, supply chain management will become not only
easier, but automated. While we are a few technology generations away from hands-free
management of energy supply chains, every day there are innovations moving us further
in that direction.

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Opportunities abound today for both investors and developers in this niche sector.
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 Pipeline Inspection Sign me up!

 Pipeline inspection requires close coordination between regional companies who
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perform the work. In many instances, not only do companies have to provide inspection
data, but certi cation data as well.
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Distributed ledgers will soon be created for the sole purpose of managing pipeline
inspections. Inspection data will be provided to the blockchain by inspection companies
in real time. Company and worker certi cations will also be stored there, for instant
access by regulatory agencies and other stakeholders.

IoT Integration

IoT hasn’t taken off as some had hoped. Not because the technology isn’t workable — it
is. Nor because it isn’t marketable — it is. The reason we haven’t gotten past your car
talking to your coffee pot is mainly because there are too few developers to meet the
need.

As both independent startups and mega corporations continue to make forays into the
IoT marketplace, IoT will transform and disrupt all types of industries. Nowhere is the
market potential greater than in energy.

And with IoT comes blockchain.

Blockchains will form the platforms by which IoT data is collected, stored, and shared
within the energy sector. From eet tracking to monitoring logistics, IoT and blockchain
technologies will transform how data is managed in oil and gas exploration and
production.

Downstream

Downstream refers to the re ning and purifying of natural gas and crude oil, and to the
delivery of the nal product to fuel and gas distributors.

Refineries
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 Thousands of processes are required to re ne every drop of crude oil into gasoline or
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diesel. Natural gas puri cation, the same. Ensuring that each of these processes takes
place as required, and within speci ed parameters, is a job for blockchain.
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You can look at a blockchain as blocks of data, each linked to the previous block of data
and to the following one. As oil and gas are processed, test results and process
veri cations can easily be stored in a DLT ledger.

Processing such enormous amounts of data, and keeping it secure, is challenging for
legacy database applications. Not only are conventional databases often inef cient,
keeping them secure is another challenge.

Blockchains are inherently secure. The fundamental nature of the blockchain makes it
one if the most secure database models ever devised.

Transportation

Gasoline and diesel move from re neries to wholesale and retail providers mainly via
truck or train. Managing logistics is certainly within the capability of legacy systems. So
why use blockchain?

While conventional software can handily manage small eets, large eets need a more
robust platform. Vehicle tracking, vehicle maintenance, security of cargo, and vendor
validation are all performed with greater ef ciency using a DLT platform. Not only can
DLT store the plethora of data generated daily, but that data can be shared in real time,
analyzed using AI applications, and used to improve eet ef ciency and safety.

READ Asset Tokenization Gets Real

End Users

DLT offers a wealth of opportunities for consumer-facing products and services. Once
fuel and gas have been made ready for sale, blockchains can manage point-of-sale
systems, customer account data, and purchase reward programs.

Here, the bene ts of DLTs extends to the consumer, by making fuel sales fast, safe, and
convenient.

Smart Contracts

One of the most powerful features blockchain has to offer any industry is the smart
contract. Smart contracts automate transactions between counterparties, without the
need for an intermediary such as a bank or attorney.

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Since the oil and gas industry involves millions
complete of asset transfers daily, putting these
your research?

 transactions on the blockchain can improve efup!ciency, security, and transparency.

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 Depending on how the code is written, a smart contract can cause certain actions to be
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executed only when certain conditions have been met. For example, as a tanker is fueled,
the value of fuel can be automatically charged to the supplier without human
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involvement.

The actual uses for self-executing contracts in the energy sector are limitless.

Commodity Trading

Trading platforms are already using blockchain technology to automate trades. Now, oil
trading platforms are emerging that cater to the unique complexities of trading energy
commodities.

Major oil companies are stepping up to support such platforms, and we are sure to see
more come online in the coming months.

Blockchain oil and gas trading represents the future of investment for the energy sector.

A Case History

We have discussed a few of the bene ts that blockchain offers the oil and gas industry.

All of them are achievable with current distributed ledger technology, but some will take
a little time before they become commonplace.

But we do not have to wait to see the impact blockchain technology is already having on
the industry.

DrillingInfo represents a blockchain-powered platform that provides a wealth of

resources for the oil and gas industry.

The SaaS platform is a prime example of what blockchain can do for companies in the
energy sector.

DrillingInfo has a full set of data analytics features that help industry stakeholders make
better business decisions.
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 Optimized by the Technorely development team, the cutting-edge platform is relied upon
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by more than 2,500 companies around the world.

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Many other blockchain oil and gas use cases are available, and more will materialize as
industry adoption occurs — and it will.

Conclusion

The number of oil and gas companies using blockchain might not impress you yet. But
don’t make the mistake of thinking adoption will not soon occur.

We have seen 5 examples of how blockchain will soon transform the energy industry,
along with just one case study that proves it is already happening.

The need for blockchain applications in oil and gas will soon outpace solutions.

If meeting the needs of this emerging market is part of your business strategy, you need
a technology partner to transform your ideas into marketable solutions. Why not contact
us today for a cost-free consultation?

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