Data Gumbo, a Houston based Blockchain as a Service (BaaS) startup, announces its entrance into the completions segment of upstream oil & gas. “With several strategic hires and use cases in progress we are really excited to be forging ahead in this space” said Andrew Bruce, Data Gumbo’s Founder and CEO. “We believe the completions segment is under-serviced and we can bring a step change in fracking operations”. Just in time for the uptick in activity for upstream, Data Gumbo will focus on automating industry pain-points and tailoring this emerging technology to industrial needs.
With the historically recent advent of modern hydraulic fracturing in the oil and gas industry, the days of approximations and guess work are fading quickly as the industrial internet of things (IIoT), big data, and data analytics have exploded to service the segment. Thirty years ago, completions was just a line item on the overall cost of a well, now it represents a comparable cost to drilling in bringing a well from exploration to production. With data available the next step change in completions is automation, transparency, and trustless collaboration. Blockchain’s distributed ledger technology is the foundation that will disrupt how contracts are set, incentives are aligned, and operations are optimized.
A “Smart Contract”, or a computer protocol designed to facilitate, verify, and enforce the terms of a contract, operates in parallel to the Blockchain. One variety of a smart contract pays bonuses or penalties based on Key Performance Indicators (KPIs). Feeding off the data automatically produced from IIoT devices located on a pad, the smart contract assesses the work of a crew or service provider to generate premiums or penalties based on actual, real-time performance versus a rolling average. This KPI data is fully logged within the Blockchain allowing all participants to view the source data along with the calculations used to determine performance and payments. After verification from each participant, transactions can be sent autonomously to internal ERP software, or directly to payment accounts. Streamlining will lead to lower net payment terms and cash could even be released on a per- stage basis.
Blockchain also allows for contract execution to be done automatically. Removing the white space and unnecessary touch time on transactions allows an organization to focus on solutions rather than clerical work. Simple transactions, such as delivering sand or water for a frack operation, could go from sixty-day multiple signature ordeals to company men verifying these types of transactions and triggering payment in the same day. Integrating Blockchain with pre-existing approval matrices will allow flexibility in accordance with an organization’s comfort for oversight. Any required digital information can be loaded into the Blockchain including digitized, hand-signed or stamped PDF’s. With all the transaction data recorded into the blockchain, the immutable nature of this technology will allow a transparent, auditable record for the required statute of limitations.
Additionally, Blockchain offers transparent distributed asset lifecycle tracking. Certifications, maintenance schedules, and work logs can be uploaded onto the Blockchain allowing all participants to verify that equipment is supported and up to date. Fracturing and wireline service providers with provably maintained equipment can differentiate from competitors and reduce redundancy requirements from customers.
There is an enormous amount of untapped value in optimizing completions operations, across all players in the space. Blockchain is an emerging but foundational technology which, coupled with domain knowledge, can be effectively applied to upstream organizations. Marrying the two will drive a step change in the efficiency of completions operations. Only three of the major applications of Blockchain are covered in this article, performance smart contracts, contract execution, and asset maintenance tracking; however, Blockchain also has application in other arenas such as logistics, resource sharing, single window and many more. Learning and implementing Blockchain solutions into organizations will be an essential step in maintaining a leadership position in today’s market.
Starting today Data Gumbo will be offering six initial software solutions to service the segment. Performance based smart contracts, asset life-cycle tracking, autonomous contract execution, single window viewing, logistics tracking and resource sharing. They hope to dominate the market with this suite. Working closely with the Carnrite Group to generate awareness, Data Gumbo is rapidly expanding into new territory.
by Jorge Leis