By Liz Hampton
Sept 10 (Reuters) - A group of oil and gas companies has
agreed to begin testing blockchain, a technology at the heart
of digital currencies, in a bid to lower administrative costs in
their field operations while also reducing payment disputes and
chances for fraud.
The OOC Oil & Gas Blockchain Consortium, whose members
include Chevron Corp, ConocoPhillips, Exxon
Mobil Corp, Equinor and Royal Dutch Shell
, among others, has awarded a contract to Data Gumbo to
pilot the technology for water handling services in the Bakken
shale field in North Dakota.
Blockchain, a technology that underpins bitcoin and other
digital currencies, is a distributed ledger that can make and
verify transactions on a network in real time, offering the
potential to cut costs and lower the risk of fraud.
In the pilot, Data Gumbo's blockchain technology will be
used to automate payments, which are typically handled manually
and through third-party reporting that increases costs. The
technology could generate about $3.7 billion annually in cost
savings for the oil and gas water business, Data Gumbo Chief
Executive Andrew Bruce said.
"There is going to be a huge amount of cost taken out of the
whole supply chain," according to Bruce.
Data Gumbo's platform, GumboNet, will synchronize data
related to waste water disposal.
Norwegian state-owned oil company Equinor, a member of the
consortium, expects to save 25% in process costs related to salt
water disposal from the technology, according to Equinor's
Rebecca Hofmann, who is also chairman of Consortium.
The Oil & Gas Blockchain Consortium launched in February to
develop ways the technology can be used in the oil and gas
industry. The group hopes this pilot will pave the way for
broader usage for blockchain in the industry.
Houston-based Data Gumbo has financial backing from Saudi
Aramco Energy Ventures, the venture capital arm of state-oil
company Aramco, and Equinor Technology Ventures, a unit of
Equinor. The company is already working with a large oil company
to use blockchain to track drilling equipment and mud in the
Gulf of Mexico.
Blockchain technology has already been deployed in energy
trading. In 2017, Swiss trader Trafigura Ltd teamed up with IBM
and Natixis to develop a platform for U.S.
crude oil deals.
Last week, Reuters reported a Sinochem subsidiary was in
talks with Shell and Australian bank Macquarie Group to
build an energy blockchain platform.
(Reporting by Liz Hampton; Editing by Steve Orlofsky)