Sustainability and efficiency are current goals of oil and gas operators, driven by energy transition initiatives to overcome climate change issues. As a result, technologies are continuously updated to help reach these goals. One promising new technology is blockchain, which plays a crucial role in digitizing oil and gas deals, making them easier, more efficient, and less costly and time-consuming.
Blockchain technology is a secure database shared between the users through a network, it always has up-to-date information that is available to all the users at the same time, according to an article published by McKinsey & Company. Blockchain is a type of distributed database or ledger as it can record data and transactions in a permanent, immutable, and transparent way.
Blockchain technology has three main features: First, its database should be cryptographically secure by having two cryptographic keys; a public key which is the address in the database, and a private key which is the key approved by the network. Second, blockchain is a digital log or database of transactions. Third, it can be shared across public or private networks.
Consequently, blockchain provides significant benefits to the users as well as industries. It enhances security, especially for sensitive and important data as information is stored in a network of computers rather than one server, which prevents hackers from accessing the data. It also allows participants from different places who have permitted access to get the same data at the same time; providing full transparency.
Additionally, it enables instant follow-up by creating an audit record that documents the source of an asset at each step, IBM indicated. Moreover, blockchain can increase efficiency and accelerate the transaction in addition to facilitating automation as it is done by using smart contracts.
Blockchain Shapes Efficient and Sustainable Oil & Gas Industry
Blockchain technology has the ability to positively affect the oil and gas industry. According to an article published by Globuc, it can reduce operational time and costs as well as provide transparency to the industry. Moreover, blockchain can benefit the oil and gas industry in many different aspects. A survey conducted by Accenture demonstrated that 90% of oil and gas executives believe that blockchain will be critical to the sector’s success in the next three years. It also reported that 77% of respondents believe that blockchain will reduce transaction costs and increase efficiency in the industry.
An article released by LinkedIn about the global blockchain in the oil and gas market stated that the oil and gas industry relies on paper-based transaction processing, which can be exposed to failures and may lead to operational losses. Thus, blockchain enables the operators to organize their workflow requirements leading to improved efficiency and lower costs as well as time as this technology would digitize these transactions.
Furthermore, this technology can provide transparency and improve trust between the companies and contractors or employees as it safely stores the track record of employee and contractor certifications, Globus reported. In addition, it enables regulatory authorities (i.e. environmental authorities) to audit the commitment with rules.
An article posted on Birlasoft said that blockchain facilitates the efficient collection and recording data of from oilfields and wells; this data is easily accessible to all involved shareholders.
As blockchain records real-time data, it is a very good option for following up with the wells, equipment maintenance and reducing hazards so that it decreases the expected costs resulting from any damage as a preventative technique. Also, blockchain enables waste management by using Performance-based Contracts (PBC), which allows oil companies to code waste management and resource optimization into daily operations.
The most important mission of the blockchain is that it limits the carbon footprint. An article published by LinkedIn discussed how blockchain can improve oil and gas sustainability, while also mentioning that this newly emerged technology can be used in tracking carbon emissions and ensures its coincidence with the carbon price mechanisms. This is done by creating a transparent and secure record of carbon emissions to encourage the companies to decrease carbon emissions during their operations.
Hence, blockchain can revolutionize the oil and gas industry as it offers efficiency, transparency, and security to the sector’s businesses. It will help them to provide products and services with high quality and in a sustainable way.