Blockchain and IoT technologies provide an opportunity to significantly reduce upstream and downstream costs in the Oil and Gas Industry. The World Economic Forum estimates that the digitization of the Oil and Gas industry could unlock $1.6T of value globally and realize $140B in productivity. While Blockchain and IoT won’t be entirely responsible for these savings, they are the final building blocks that allow the entire Oil and Gas ecosystem to be digitized and connected. Besides improving productivity, these technologies which require unique systems and intrinsically safe hardware can be applied to significantly reduce the friction inside the industry caused by the need to address the following issues:
- Currently 9% of oil transactions are disputed – Significant delay in payments, incremental legal fees, significant overhead costs
- 15% of assets in the industry are counterfeit – Lost productivity, environmental risk, inspection and validation overhead, production delays
- Reduces transaction friction – Payments accounting, asset utilization, third parties
All of the above issues have significant impacts on the profitability of the industry, but the most important issue is counterfeiting which affects every industry. In the case of Oil and Gas and Aviation, counterfeiting has serious environmental and safety implications.
Analysis of the Oil and Gas Industry yields a rich mix of use cases which include but are not limited to;
- Environmental and regulatory compliance monitoring and reporting
- Performance based smart contracts
- Transaction validation
- Proof of State
- Proof of Reputation for third parties
- Supply Chain Management
- Provenance, Chain of Custody
- Asset Tracking, management across the performance lifecycle
- Blockchain and IoT
- Counterfeit component avoidance
- Component integrity validation
- Certification assignment
- Integration of suppliers
- Sample tracking (BHP Billiton)
- Field Service Ticket Management
- Tank Battery tracking and management
- IoT data integration and management
- Implement transactional protocols
- Asset sharing and/or leasing
- Integration of supplier blockchain
- Management of full asset lifecycle
- Production/resource/asset sharing
- JV/Royalty accounting
- Land Management
Some of the above use cases have someone working on them now. We have prepared other use case summaries for the Aviation, Food, Automotive, Aerospace, Healthcare and Regulatory industries. Across all industries, we find the same result: Lot’s of investigation, some pilot projects and little strategic understanding.
When making decisions about Blockchain, it is important to understand the maturity of the technology, how it will grow in importance, how it applies to your company and your industry and gain a full understanding of the potential Blockchain and IoT technologies have to your business and supply chain. Here at Group50, we have developed a 7 step Blockchain implementation process:
As part of our process, we have created workshops for the first four steps. These workshops are designed to:
- Blockchain and IoT Immersion Workshop: Bring your leadership team up to the same level of understanding about Blockchain and IoT business applications
- Blockchain and IoT Strategy Workshop: Identify applications for Blockchain and IoT and understand how it would integrate it into your business strategy
- Building the Business Case for Blockchain and IoT: Developing the understanding the implications in your business, to your customers, throughout your supply chain and to the bottom line
- Blockchain and IoT Implementation Roadmap Workshop: Creating the multi-year plan for how your are going to implement and integrate
Just like the Internet in 1995, Blockchain and IoT solutions, such as Scioebc™ which is built on top of Thinaër’s IoT platform, have transformative capabilities, but their implementation needs to be well thought through and the significant cost reductions they bring to a company will occur over several years. It will take time to rebuild the lost trust in centralized third parties and allow a distributed ledger to displace the 20-30% of overhead cost that is spent on verification and validation.
To find out more about how you can apply Blockchain and IoT to the Oil and Gas Industry, call Group50 at (909) 949-9083, drop us a line at Blockchain@group50.com or request more information here on how we can help you develop a Blockchain strategy in your business.
Group50 Consulting, founded in 2004, works with middle market companies to leverage their investments in people, process and technology to significantly improve the efficiency and cost performance of their supply chains. Already subject matter experts in global supply chain consulting, Group50 has added Scioebc™, a supply chain focused Blockchain solution powered by Thinaër, an IoT platform to its portfolio of goods and services. Group50 works with their clients in developing and implementing transformational strategies across their business. More information about the company can be found at www.Group50.com/blockchain.
Thinaër was founded in 2016 to provide the world with an easy and affordable way to track people, places and things. The Thinaër IoT platform leverages Bluetooth technology to generate new and unique actionable data at a fraction of the price of traditional solutions. Led by industry experts in healthcare, manufacturing and technology, Thinaër builds solutions that empower hospitals, manufacturers and enterprises to answer the most challenging questions never answered before. Thinaër is the first ever end-to-end solution to provide immediate ROI without disrupting existing workflows or overhauling existing systems. To learn more about Thinaër and The Internet of People, Places and Things, visit www.thinaer.io.
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