Jan 19, 2022
The oil and gas industry is undergoing many changes as they are now implementing blockchain in their processes. How can we revolutionize the industry by using blockchain in oil and gas industry? What is the future of energy industry, energy efficiency and how can blockchain technology help us with sustainability? This article tries to answer some of the questions.
How does blockchain impact the oil and gas industry?
Blockchain technology is now barely niche and is being used to revolutionize many industries from their traditional ways by digitalizing automation, security, and saving costs. The oil and gas industry have been under huge pressure to cut their expenses and increase their profits, reducing losses, from shareholders. By using blockchain in oil and gas industry, we can achieve these goals and increase transparency in the supply chain process as well as automate processes. Using blockchain technology can lower costs in the maintenance and trade systems of the industry. The importance of technology in the oil and gas sector is that it has the potential to improve performance across the whole value chain by allowing for optimization and automation Even other segments of oil and gas industry can be reduced such as labor, data management, data visibility, settlement delays, and inter-system communication. The future of energy industry looks great as US companies like Exxon and Chevron teamed up to become the first blockchain consortium for the entire sector.
Companies in oil and gas industry can be categorized into three segments—upstream, midstream, and downstream. So, how does blockchain in oil and gas impact the upstream segment?
The upstream segment in the oil and gas industry refers to resource exploration and extraction side of the oil and gas industry. National oil companies (NOCs), major oil and gas companies, independent companies, and oilfield services make up the upstream segment of the oil and gas industry. Major oil and gas industries manage their own oilfield and well. Upstream companies need to share data by third parties and have multiple stakeholders. Blockchain technology allows for multiple parties to share data on a wide scale.
Major companies and NOCs need to rely on oilfield services to complete tasks such as well creation, maintenance, and operation which are specialized tasks. Workers who complete these tasks need to be efficiently trained and hold certifications for legal, safety, and regulatory purposes. Using blockchain in oil and gas industry for upstream federated identity construct on the blockchain, which is basically a way to identify a company of the sub-contractor, a major or NOC can manage certifications of their employees. For example, it can take around 45 days to prove that a rig was adequately run and staffed. Many companies need to produce data, worker identity, certification and other paperwork to prove this. It can reduce cash cycle time because all transactions now become transparent and shared and available in one place. It can reduce overhead and the number of cost intermediates.
How does blockchain impact the midstream oil and gas segment?
The midstream oil and gas segment refers to the part of the industry that is involved with storing and transporting resources once they are extracted. Vast transportation networks and substantial regulation are also a purview of the midstream segment. Blockchain technology can help the midstream oil and gas segment from disaster mitigation and infrastructure maintenance. Risk mitigation is also an important area of focus for midstream oil and gas companies as there is heavy regulation on this. Blockchain technology can provide multi-stakeholder information sharing for asset tracking as many companies benefit from sharing of information. The blockchain platform can help in sharing information that will benefit the entire midstream industry. MSRvantage provides services like smart contracts, trace solutions, asset digitalization and rewards and loyalty programs that can help the midstream oil and gas segment.
How does blockchain impact the downstream oil and gas segment?
The downstream segment of the oil and gas industry refers to companies that refine resources into multiple final products or sell products to end-users. Downstream normally means managing products that are sold to different customers and have different environmental regulations. They require different types of transportation. Imagine a blockchain platform that keeps a track of these products in the supply chain from one end to the other. Smart contracts in conjunction with blockchain can replace time, energy, and money.
How does blockchain help in promoting sustainability?
Blockchain can contribute to Sustainable Development Goals (SDGs) in multiple ways. Blockchain, smart contracts, and IoT devices can change the traditional supply chain and increase transparency. Blockchain in oil and gas industry can revolutionize the supply chain and decentralize the digital passport system to authenticate equipment, parts, and products. For example, a huge challenge in future of energy and energy efficiency, is waste management. Oil and gas industries produce a lot of waste that can be harmful to the environment. Through Performance-based Contracts (PBCs), blockchain will work through a series of smart contracts and companies can then code waste management and resource optimization into their daily work cycle. This promotes recycling.
Blockchain in oil and gas industry is also one way to reduce costs, minimize risks and injuries. By combining IoT and blockchain technology, a device can be created which alerts corresponding personnel of any mishaps, equipment breakdown and other dangerous situations, thus saving lives and the environment.
How does blockchain help in increasing fuel efficiency?
Fuel efficiency is the capacity of any engine of a vehicle to obtain energy from a fuel. The efficiency of fuel varies from vehicle to vehicle. As a digital ledger technology, blockchain can be used to create a database that updates regularly regardless of where it is stored. The database can hold vehicle information to help with choosing the right fuel for the right vehicle.
Blockchain is no longer a niche buzzword but a favorite technology of many oil and gas companies due to its cost saving, environmental sustainability solutions. With blockchain in oil and gas, the industry can become more efficient, environment and security conscious as well as transparent.
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