Cryptocurrencies have popularized blockchain. But a lack of knowledge around the technology has held back its deployment in traditional industries. The challenge was differentiating between crypto hype and blockchain as its underpinning technology. Until now.
Today, organizations are creating their own blockchain environments to drive interoperability of networks and applications.
Based on transaction-handling capabilities, interoperability gives organizations a choice in selecting the most relevant blockchain platform for their specific industry or business. Having choice of a blockchain platform is required for businesses that exchange data in the value chain, such as financial services, manufacturing, logistics and healthcare, where patient records are exchanged to provide better services.
Blockchain for sustainability in O&G
Before the O&G industry adopts blockchain at scale, it must first understand the purpose, use cases and viability of a platform, so that it can maintain focus on day-to-day work, while minimizing the number of waste materials sent to a landfill and simultaneously reuse, repair, refurbish and recycle used products.
The O&G industry is one of the key drivers for the world’s economies but produces over 18 billion barrels of waste fluids annually in the US alone as it is yet to find sustainable substitutes of certain industrial and household products. As part of any plan, it’s important that the O&G industry embrace the switch to a transparent and sustainable technology such as blockchain to reduce their impact on the world.
Even with the rise of electric vehicles, the components for these vehicles—from tires to designing its interiors—come from the O&G industry. The world will continue to need O&G products until it has sustainable substitutes that enable countries to grow and thrive in a circular economy (CE).
“As O&G companies shift their models to the circular economy, they continue to clarify their strategies and vision toward carbon neutrality, plan the transformation with latest technologies like blockchain and IoT, develop circular collaborations and measures with planet restoration bodies, review and communicate progress with stakeholders and incentivize new ecofriendly alternatives and business models, and reduction in waste materials,” says Gregory Lawrence, Associate Vice President, Industry principal O&G vertical, HCLTech.
“In this transformation journey, HCLTech’s capabilities and rich experience in technology management, sustainability initiatives and innovations in IoT solutions help oil and gas companies achieve their goals,” he adds.
In addition to supporting sustainability goals, blockchain offers three major benefits to the crude oil industry: digitizing transactions with higher security, increased transparency and greater efficiency.
“Two common elements between a CE and blockchain—trust and transparency—are brought in with an intelligent and secured design aimed at maximizing resource usage and reducing waste. To help build a positive human future and make the CE successful, two main uses a blockchain’s design supports are incentivizing positive behavioral change and proving product origins,” says James Trebilco, Senior Sustainability Manager at HCLTech.
“Moving a step ahead from the current linear economy, among positive behavioral change that can be incentivized (or tokenized for trading further) are sustainable resource production and consumption, product repurposing, reuse and recycling, and assuring goods we buy are not made from virgin materials wherever possible,” he adds.
“As the CE promotes sustainable resource management, the use of blockchain brings transparency to digital supply chains where product origins, waste reduction as well as repurposing and recycling of resources, are tracked and recorded—thereby driving positive and responsible consumption among people and making cultural changes needed in modern-day businesses to meet the sustainable goals to protect the planets’ future,” continues Trebilco, the author of the whitepaper The Role of Digital Asset Management In Meeting The ESG Metrics.
Embracing blockchain in O&G
In 2020, seven O&G majors, including Chevron, ExxonMobil and Shell, formed the first blockchain industry consortium Blockchain for Energy. In June 2021, the consortium launched its first pilot program for water hauling services to five wells in North Dakota.
In a bid to combine blockchain with innovative technologies, the consortium is positioning itself and its members to drive optimal blockchain solutions at scale for the industry, while identifying, testing and deploying use cases that prove value generation.
“Blockchain is a technology that helps businesses achieve their goals and support the environment. This technology can help the O&G companies streamline their partner ecosystem while continuing to produce hydrocarbons in a more economical and eco-friendly way. For example: buying carbon credits to offset their production facilities, tokenization and transparency in use of materials,” says Lawrence and adds: “But, unlike wind and solar renewables—which have zero value beyond electricity generation—oil and gas production generates exponentially more goods and services than just the energy aspect.”
Research Scientist, Electrical Engineering and Computer Science at the Khalifa University, Dr Ibrar Yaqoob said a Shell, BP and Statoil research study estimated that adopting blockchain could reduce the oil and gas industry’s transaction-execution time by 30%.
BP uses blockchain to track oil and gas assets and sell fuel at a retail station, while Shell’s blockchain platform simplifies business processes among stakeholders and allows users to pool data, build smart contracts and see what’s happening in the network. Together they are also working with Microsoft Azure—which integrates blockchain-based solutions into enterprise-level applications across industries—to the energy sector.
Also, there are over 100 startups in the sustainable blockchain network that have been making the differences in the O&G industry. Here are some of them:
- MARCO, by British startup Finboot, is a suite of blockchain-based solutions that enable O&G manufacturers to streamline operations and reduce costs. It enhances development opportunities and facilitates a sustainable and circular economy
- Ondiflo is a US-based startup uses real-time data in its blockchain to improve the transaction visibility of O&G companies and its procure-to-pay process automates reconciliation, reduce disputes and improve relationships
- EnHelix Software caters to the Energy/Commodity Trading and Risk Management (E/CTRM) sector. This US-based startup helps O&G trading companies create their own blockchain network where they can draft smart contracts with their stakeholders
- DATA GUMBO is a Norwegian startup that builds smart contract networks called GumboNet and transforms transactions across midstream, upstream and downstream operations in the O&G industry. This results in significant cost savings and relevant field data sharing with counterparties when required
- Dafecs uses blockchain to create asset tokenization and smart contracts for the O&G industry. With its trusted traceability in upstream, midstream and downstream operations, this Turkish startup provides real-time visibility of communication data with its IoT services and streamlines wholesale, retail and inspection-related process.
HCLTech’s blockchain contribution
HCLTech is helping various industries, including O&G, optimize processes and drive transformation through its managed blockchain application platform.
HCLTech CoTrust™ is a highly scalable, cost-effective and easy-to-integrate blockchain platform that supports multiple blockchain engines. HCLTech OBOL is a framework that enables tokenization of assets as fungible and non-fungible tokens (NFTs) in a complete ‘no-code’ methodology using a graphical interface. Its Hyperledger Support Services (HS2) is a pay-as-you-use offering that supports open source and commercial version of Hyperledger without locking a customer in a specific vendor offering.
- CoTrust™ is architected to deploy on Amazon Web Services (AWS) as HCLTech is an AWS Premier Consulting Partner with multiple AWS competencies, including DevOps and Migration.
- Functioning as a managed blockchain application platform, CoTrust™ provides scaffolding services on top of various blockchain engines, such as AWS Managed Blockchain.
- These prebuilt services on the HCLTech blockchain network help developers quickly create blockchain use cases and these services interact with the blockchain engines.
- It comes with its own interoperability solution to address the challenges of running transactions across different networks.
- It logically groups various disparate networks, which work independently and may have been incompatible, to relate to each directly.
- With the combination of CoTrust™ and AWS Key Management Service, customers can solve their interoperability and blockchain deployment challenges effectively.
- OBOL allows an enterprise to fractionalize its physical and digital assets to achieve liquidity and market reach. It accelerates the tokenization go-to-market process for an asset using pre-built smart contracts and promises better auditability for asset transactions and ownerships using blockchain. It also efficiently connects the digital asset ecosystem participants and enables real-time settlement of the asset transactions.
- HS2 covers end-to-end deployment, production, network management and smart contracts support with a subscriber getting 200 hours of monthly support.
In addition, HCLTech understands the unique O&G value chain and provides solutions and services spanning complex engineering in upstream, midstream, downstream and enterprise digital services.
The solutions and services include: Asset Integrity Management, Worker Safety Solution, Cloud Adoption and Enablement in Upstream, IoT-based solutions, Engineering Services, Image Analytics, Logistics Fleet Analytics, Maintenance, Repair and Overhaul Solution, IoT-based Remote Asset Management, Engineering and R&D Services, Cybersecurity Solutions, Digital IT Operations, Digital Applications Services, Intelligent Energy Management, Digital Consulting, Digital Workplace, Business Analytics Services and Cognitive Automation Solutions.