Taking a chance on implementing a new technology is a difficult step for any industry, and this becomes even more challenging in tough economic conditions. When R&D dollars are limited and companies want to avoid downside risk as much as possible, the idea of disrupting the status quo by bringing in a completely new system or technology can seem especially daunting. At the same time – isn’t this exactly the kind of situation that calls for greater and more disruptive innovations?
In my experience as a technology entrepreneur, one of the hidden benefits of economic downturns is that they expose fundamental ways in which old systems and technologies no longer work. It’s easy to mask inefficiencies and wastage when commodity prices and profitability are high – but when margins are tight, the cracks in the foundation start to become clear.
I think that’s exactly why Alberta’s energy industry needs to be exploring the use of blockchain technologies – they have the power to become the building blocks for an optimized, efficient and even more environmentally sustainable oil & gas sector.
The oil & gas industry often deals with long transaction times, expensive reconciliations and inefficient, costly dispute resolutions. Numerous counterparties and partners in transactions like royalties create a need for smooth data sharing and a simplified way of calculating payments and gaining consensus among multiple stakeholders. Other applications for smart contracts in energy include vendor agreements, land title and mineral rights transfers and other transaction types that now require a high level of paperwork and human oversight.
An interesting application for blockchain is the creation of new ways of trading products – one of the key benefits of the technology is the removal of expensive intermediaries for smooth peer-to-peer transactions on commodities like oil. When thousands of transactions occur per day, the savings from direct blockchain trading can be huge. A consortium developing this innovative platform is the United Kingdom-based VAKT, which has participation from major companies like BP, Shell and Equinor.
Supply Chain Management:
Beyond production in the field, there are incredibly complex supply chains for equipment, labour and other products that are major industry costs. One of the most compelling use cases for blockchain technologies is in streamlining and automating these networks, so that items can be instantly traced throughout supply chains. This enables a new level of auditability and verification among the many suppliers, distributors and end-users in the industry.
As one of the world’s most heavily regulated industries, energy companies face a massive amount of compliance, often with complicated reporting requirements and unwieldy systems. Blockchain applications can reduce the need to confirm reported information and ensure that regulators and companies can easily share and audit production, environmental and other data.
]Each of these applications can help improve the bottom line for oil & gas companies – taken all together, they may have the ability to give us one of the world’s most optimized energy industries. And that’s not the only reason to support blockchain development in our most important sector, because ‘Alberta Built’ solutions to our biggest problems can also boost our growing technology industry and create export-ready products with a huge international market. In this challenging economy, it’s the best possible time for oil & gas to evolve throughblockchain’s transformative potential.
Other oil producing regions around in the world are showing that it can be done. One of the leading regions for blockchain’s oil & gas applications is the United Arab Emirates, where the Abu Dhabi National Oil Company (ADNOC) is pioneering an automated blockchain system that tracks and automates transactions across the full value chain from production to the end customer. Our expertise may not make as many headlines as the UAE’s, but it’s time for that to change.
And our innovations are about to get a lot more recognition. In addition to agriculture, fintech and social good applications, blockchain technology’s benefits for the oil & gas industry is one of the topics covered at the Alberta Blockchain Summit on September 12th. The landmark event of Alberta Blockchain Week, the Summit will also feature incredible presentations by global thought leaders in digital assets like Peter Todd and Andreas Antonopoulos.
Visit to find out more and register for Alberta’s most exciting blockchain event of the year: