Commodities production and transportation is a complex chain of events that involves multiple parties, volume measurements and transactions for each unit moved. In oil & gas, crude oil and its derivatives, water and other natural resources like sand and natural gas, are critical components to the production of energy. Each resource must be moved to and from the site of production, typically in poor conditions over risky or remote roads. In U.S. operations alone, the produced water market is worth an estimated $33.6 billion.
More companies today are implementing blockchain technology to apply smart contracts across commodities transport to capture efficiencies and cost savings. By automating payments between the network of intermediaries necessary to move a commodity end-to-end from production, participants can increase access to free cash flow, a must in today’s market climate.
Right now, it’s imperative for oil & gas companies to reduce operating expenses (OPEX) and save cash. With recent oil prices in a four-week free fall, down 60% since the start of the year, further job losses, bankruptcies and consolidations are unfolding.
While a world free of lawyers will most likely never come to fruition (to many parties’ chagrin), new technology in the form of smart contracts is changing how legal matters are drafted.
Now that we are almost a quarter of the way into the new year, numerous articles have ventured guesses at blockchain’s future. By the looks of it, the months ahead are chock full of hype, hope and hard facts demonstrating blockchain’s power as a tool for radical industry transformation.
By Scott Greer, Michael Matthews and Gregg Jacobson
Thousands of cubic yards of concrete, miles of wiring and pipe, and tons of steel: All of it has to be procured, tracked, delivered, installed, inspected and commissioned pursuant to the terms of the contract. This is when the costs begin to rapidly accumulate. And this is where the automation and tracking capabilities of blockchain and smart contracts can begin to shine, and save owners millions of dollars on their capital projects.
The construction industry notoriously lags in productivity improvements and technology adoption. Its sluggish pace results in billions of dollars in lost value – approximately $40 billion a year. One underlying cause of this lagging performance is the way the industry develops complex physical assets, a process that has essentially remained unchanged in the face of technology advances adopted by other industries.