For the oil and gas industry, the ability to know and crush opex is critical. Now that GumboNet has proven enormous cost savings for a low-cost commodity like water, smart contracts can be implemented for any commodity including sand, chemicals, crude and diesel across the industry. From a broader perspective, this is achievable in every use case at which Data Gumbo has been looking at, beyond just the OOC Oil & Gas Blockchain Consortium. With realized millions of dollars in savings, the future for oil and gas — and all industrial applications — is definitively on the blocks.
-Andrew Bruce, CEO and Founder, Data Gumbo
OOC Oil & Gas Blockchain Consortium Announces Successful Completion of Produced Water Haulage Pilot Leveraging Blockchain Technology
HOUSTON, TX — June 3, 2020 — The Offshore Operators Committee (OOC) Oil & Gas Blockchain Consortium today announced the successful completion of its first pilot leveraging blockchain technology. The pilot, developed in partnership with Data Gumbo utilizing its GumboNet™ blockchain network, proved a platform for automating produced water haulage from field reading to invoice payment. It was executed on five Equinor wells in the Bakken field in North Dakota with water logistics and transportation provider Nuverra Environmental Solutions and a midstream disposal company. It was the first industrywide 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, Chairman of the OOC Oil & Gas Blockchain Consortium. “This is just the tip of the iceberg for the potential of blockchain in our industry.”
The OOC Oil & Gas Blockchain Consortium includes 10 oil and gas member companies, Chevron, ConocoPhillips, Equinor, ExxonMobil, 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 pain points. The pilot’s initial results included:
- Reducing current process workflow from 90-120 days to 1-7 days and 16 to 7 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% — 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. The consortium use case produced results that show blockchain delivers the ability to know and lower your costs,” said Andrew Bruce, CEO and Founder of Data Gumbo. “More importantly the results show collaboration among field operations and technology experts to create a deployable and scalable solution.”
The OOC Oil & Gas Blockchain Consortium plans to continue building this solution 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 solution 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 synchronizes 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 demonstrates that the oil and gas industry is embracing emerging technologies like 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 Solutions.
“The learnings derived from this pilot show that blockchain is a technology for industry collaboration in oil and gas that benefits all connected parties. The consortium looks forward to leveraging these insights to prompt further adoption and establish key blockchain frameworks and guidelines,” said JD Franke, vice chairman of the OOC Oil & Gas Blockchain Consortium.