By Liz Hampton
Sept 10 (Reuters) - A group of oil and gas companies hasagreed to begin testing blockchain, a technology at the heartof digital currencies, in a bid to lower administrative costs intheir field operations while also reducing payment disputes andchances for fraud.
The OOC Oil & Gas Blockchain Consortium, whose membersinclude Chevron Corp, ConocoPhillips, ExxonMobil Corp, Equinor and Royal Dutch Shell, among others, has awarded a contract to Data Gumbo topilot the technology for water handling services in the Bakkenshale field in North Dakota.
Blockchain, a technology that underpins bitcoin and otherdigital currencies, is a distributed ledger that can make andverify transactions on a network in real time, offering thepotential to cut costs and lower the risk of fraud.
In the pilot, Data Gumbo's blockchain technology will beused to automate payments, which are typically handled manuallyand through third-party reporting that increases costs. Thetechnology could generate about $3.7 billion annually in costsavings for the oil and gas water business, Data Gumbo ChiefExecutive Andrew Bruce said.
"There is going to be a huge amount of cost taken out of thewhole supply chain," according to Bruce.
Data Gumbo's platform, GumboNet, will synchronize datarelated to waste water disposal.
Norwegian state-owned oil company Equinor, a member of theconsortium, expects to save 25% in process costs related to saltwater disposal from the technology, according to Equinor'sRebecca Hofmann, who is also chairman of Consortium.
The Oil & Gas Blockchain Consortium launched in February todevelop ways the technology can be used in the oil and gasindustry. The group hopes this pilot will pave the way forbroader usage for blockchain in the industry.
Houston-based Data Gumbo has financial backing from SaudiAramco Energy Ventures, the venture capital arm of state-oilcompany Aramco, and Equinor Technology Ventures, a unit ofEquinor. The company is already working with a large oil companyto use blockchain to track drilling equipment and mud in theGulf of Mexico.
Blockchain technology has already been deployed in energytrading. In 2017, Swiss trader Trafigura Ltd teamed up with IBMand Natixis to develop a platform for U.S.crude oil deals.
Last week, Reuters reported a Sinochem subsidiary was intalks with Shell and Australian bank Macquarie Group tobuild an energy blockchain platform.
(Reporting by Liz Hampton; Editing by Steve Orlofsky)
