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OOC consortium pilots blockchain on oil and gas field
- June 16, 2020
- Steve Rogerson
A consortium of ten oil and gas companies has completed a blockchain pilot to automate produced water haulage from field reading to invoice payment.
The Offshore Operators Committee (OOC) Oil & Gas Blockchain Consortium has completed its first pilot using blockchain technology. The pilot was developed in partnership with Data Gumboutilizing’s GumboNet blockchain network.
The consortium comprises ten oil and gas member companies – Chevron, ConocoPhillips, Equinor, Exxon Mobil, Hess, Marathon, Noble Energy, Pioneer Natural Resources, Repsol and Shell, – that have partnered to study and define blockchain use cases across the industry value chain to solve common problems.
It was executed on five Equinor wells in the Bakken field in North Dakota with water logistics and transportation provider Nuverra Environmental and a midstream disposal company. It was the first industry-wide use of a blockchain-native network for produced water haulage.
“The results of this pilot prove that non-manned volume validations can trigger automated payments to vendors, and showcase the opportunities that exist for blockchain to reduce costs, increase efficiency, provide transparency and eliminate disputes in the oil and gas industry,” said Rebecca Hofmann, chair of the OOC Oil & Gas Blockchain Consortium. “This is just the tip of the iceberg for the potential of blockchain in our industry.”
The pilot’s initial results included:
- Reducing current process workflow from 90-120 days to one to seven days and 16 to seven steps, requiring zero manual intervention;
- 85% of all volume measurement automatically validating against data from multiple parties, with the potential for near 100% auto validation with future enhancements;
- Validations automatically triggering the execution of related invoice transactions, which reduces financial risk by giving assurance that payments coincide with field activity; and
- Delivering a potential of 25% to 35% reallocation of resources versus current business process for operator and trucking company.
“It’s all about companies knowing their operating expense and reducing it,” said Andrew Bruce, CEO and founder of Data Gumbo. “The consortium use case produced results that show blockchain delivers the ability to know and lower your costs. More importantly the results show collaboration among field operations and technology experts to create a deployable and scalable solution.”
The consortium plans to continue building this and expand it to other commodities and services to deliver cost savings and efficiencies to its member companies and the industry as a whole. While the use case was trucking produced water, the technology represents a gateway for numerous other industry use cases, which can transform the way operators work with oilfield suppliers and vendors, and how goods and services can be validated in the field to trigger automatic payments and near-real time expense tracking.
“Blockchain offers a path to navigate previously convoluted and resource-intensive issues around trust, accuracy and the ability to verify data in the field,” said Eivind Lie Kristensen, Bakken operations production leader at Equinor.
Produced water and commodity haulage invoicing and reconciliations are typically manual processes inaccessible between parties, with data self-reported or stuck in non-interoperable silos. By providing a single immutable record of truth, Data Gumbo’s GumboNet synchronises data across parties for greater transparency that frees up working capital, reduces contract leakage and enables real-time cash and financial management, and delivers provenance.
The consortium tapped the power of blockchain for real-time data transparency, accuracy and automation of contract payments. These efficiencies are available now to return savings and value to consortium member companies.
The pilot also demonstrated that the oil and gas industry was embracing emerging technologies such as blockchain.
“We are always exploring new technology that will streamline oil field processes through automation, reducing cost for our company and our customers,” said Greg Tipton, CIO of Nuverra Environmental.
The consortium was founded to advance industry blockchain learnings for the purpose of transforming the way the industry interacts in business externally and to drive industry standards, frameworks and capabilities around emerging blockchain technology.
“The learnings derived from this pilot show that blockchain is a technology for industry collaboration in oil and gas that benefits all connected parties,” said JD Franke, vice-chairman of the consortium. “The consortium looks forward to leveraging these insights to prompt further adoption and establish key blockchain frameworks and guidelines.
The consortium was established under the not-for-profit organisation Offshore Operators Committee and offers membership-based participation.