Blockchain technology applied to Oil & Gas activities
Blockchain technology applied to Oil & Gas activities Presenter: Robert Young Petroleum Engineer, MBA, PMP [email protected] 12-September-2017
Overview •
Using Blockchain to create sustainable cost reductions in O&G activities.
•
Proposal to pilot test Blockchain under
actual conditions in a logistics/SCM scenario
•
Understanding global impacts of Blockchain
What are unsustainable vs sustainable cost reductions? •
Tactical cuts, which produce short term benefits, tend to be unsustainable
cost reduction measures (e.g., cut staff, reduce training, shelve projects, renegotiate existing contracts, re-tender new contracts).
However, once the oil price goes up, vendor costs will inevitably go up.
•
Strategic cuts, which produce long term benefits, tend to be sustainable cost reduction measures (e.g., equipment standardization, consolidating
suppliers, increasing risk sharing agreements, master framework agreements - and most of all, increased collaboration).
However, sustainable cost reductions require a willingness to make fundamental changes to business processes both internally (operator) & externally (with supply chain partners).
What O&G problems may be reduced with Blockchain? •
When drilling an O&G well, time is money! Offshore operations can average
$1MM/day per well (+/- $0.5MM). The goal is to mobilize both equipment and services on a strict schedule without delay.
•
In general, problems occurring below the surface are technically oriented: they are solved by managing laws of physics, chemistry, fluid mechanics. Problems occurring above the surface involve interactions with people. In
the international arena, cultural challenges exist (refer Geert-Hofstede). Thus, social tools are required to mitigate business issues: surprises, high
uncertainty and volatility.
Potential sustainable cost reduction benefits using BC: •
Blockchain may be an ideal solution to handle the "people & cultural” issue
by increasing the level of Trust (for virtually any kind of transaction).
•
Anticipated Blockchain benefits: operator will improve efficiency, transparency, and internal controls. In addition, the financial, operational, and reputational risks associated with 2nd & 3rd parties may be reduced.
•
The Challenge: pilot test a collaborative approach to Supply Chain
Management using BlockChain technology, thus creating sustainable cost reductions. To go the extra mile, pilot test Blockchain in a US-International
setting to determine whether BC is a robust solution.
Recap of anticipated Blockchain attributes: • • • • • •
Blockchain is a faster & safer way to verify information and establish trust.
At its heart, a blockchain is a record of transactions (ledger). Blockchain can hold and protect sensitive information.
Verification comes from the consensus of multiple users. Impossible to modify data without being detected by other users. A smart contract is a piece of computer code that can connect to multiple blockchains (track multiple assets).
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario: •
To date, $40 billion in Oil & Gas investment is currently taking place in Mexico, with over 20 international oil companies and hundreds of oilfield
service companies participating. There is no existing legacy SCM system.
•
•
Create an effective supply chain solution using Blockchain technology to: o
a) track numerous ledger activities,
o
b) mitigate risk of physical & fiscal harm, and
o
c) effectively mobilize equipment to the O&G fields.
Many stakeholders could be involved. A JIP (Joint Industry Project) – or other organizational structure – may disseminate Blockchain usage.
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario:
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario:
Timeline
Thank you! Additional details for the proposed Texas Mexico SCM project using Blockchain on this Cloud server: http://bit.ly/2xruRyK
Overview •
Using Blockchain to create sustainable cost reductions in O&G activities.
•
Proposal to pilot test Blockchain under
actual conditions in a logistics/SCM scenario
•
Understanding global impacts of Blockchain
What are unsustainable vs sustainable cost reductions? •
Tactical cuts, which produce short term benefits, tend to be unsustainable
cost reduction measures (e.g., cut staff, reduce training, shelve projects, renegotiate existing contracts, re-tender new contracts).
However, once the oil price goes up, vendor costs will inevitably go up.
•
Strategic cuts, which produce long term benefits, tend to be sustainable cost reduction measures (e.g., equipment standardization, consolidating
suppliers, increasing risk sharing agreements, master framework agreements - and most of all, increased collaboration).
However, sustainable cost reductions require a willingness to make fundamental changes to business processes both internally (operator) & externally (with supply chain partners).
What O&G problems may be reduced with Blockchain? •
When drilling an O&G well, time is money! Offshore operations can average
$1MM/day per well (+/- $0.5MM). The goal is to mobilize both equipment and services on a strict schedule without delay.
•
In general, problems occurring below the surface are technically oriented: they are solved by managing laws of physics, chemistry, fluid mechanics. Problems occurring above the surface involve interactions with people. In
the international arena, cultural challenges exist (refer Geert-Hofstede). Thus, social tools are required to mitigate business issues: surprises, high
uncertainty and volatility.
Potential sustainable cost reduction benefits using BC: •
Blockchain may be an ideal solution to handle the "people & cultural” issue
by increasing the level of Trust (for virtually any kind of transaction).
•
Anticipated Blockchain benefits: operator will improve efficiency, transparency, and internal controls. In addition, the financial, operational, and reputational risks associated with 2nd & 3rd parties may be reduced.
•
The Challenge: pilot test a collaborative approach to Supply Chain
Management using BlockChain technology, thus creating sustainable cost reductions. To go the extra mile, pilot test Blockchain in a US-International
setting to determine whether BC is a robust solution.
Recap of anticipated Blockchain attributes: • • • • • •
Blockchain is a faster & safer way to verify information and establish trust.
At its heart, a blockchain is a record of transactions (ledger). Blockchain can hold and protect sensitive information.
Verification comes from the consensus of multiple users. Impossible to modify data without being detected by other users. A smart contract is a piece of computer code that can connect to multiple blockchains (track multiple assets).
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario: •
To date, $40 billion in Oil & Gas investment is currently taking place in Mexico, with over 20 international oil companies and hundreds of oilfield
service companies participating. There is no existing legacy SCM system.
•
•
Create an effective supply chain solution using Blockchain technology to: o
a) track numerous ledger activities,
o
b) mitigate risk of physical & fiscal harm, and
o
c) effectively mobilize equipment to the O&G fields.
Many stakeholders could be involved. A JIP (Joint Industry Project) – or other organizational structure – may disseminate Blockchain usage.
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario:
A proposal to pilot test Blockchain under actual conditions in a logistics/SCM scenario:
Timeline
Thank you! Additional details for the proposed Texas Mexico SCM project using Blockchain on this Cloud server: http://bit.ly/2xruRyK
