Unleashing the uses of blockchain in the oil industry

Trade relationships in the oil industry are more intricate by competing industries, the vast distances involved, and diverse resources. As a result of these complexities and inefficiencies, supply chain networks have grown exponentially to accommodate the needs of the oil industry. A vital feature of these systems is transparency through supply chain networks that consist of shared data on every step of the process, from production on land to delivery at a refinery. Check out how the oil industry can leverage blockchain technology for its betterment.

But despite its many positive features, there are also challenges with using blockchain technology for oil production-related supply chains because it’s still early days for its application in this context – mainly due to efforts to satisfy regulatory requirements while maintaining confidentiality. In addition, blockchain technology is also developing to track and trace the provenance of commodities, particularly food. 

In terms of compliance with regulatory requirements, blockchains meet the requirements for information sharing for many oil firms’ supply chains because of the decentralized nature of blockchain technology and its built-in auditing systems. For these reasons, blockchain technology could help cut down costs and reduce the amount of time it takes to process transactions across a value chain because it is much quicker than paper-based systems. For oil industry supply chains, blockchain technology is just one of the possible solutions that companies could implement to solve some of these challenges.

The oil industry is increasing the technical aspects:

The oil industry is constantly developing new techniques for extracting hydrocarbons from crude oil. From thermal extraction to gasification and enhanced oil recovery, it is constantly innovating and finding new ways to produce more oil. Today, up to 15% of the world’s oil consumption comes from the industry’s efforts to extract hydrocarbons by using techniques like carbon capture, which uses chemical solvents like propane or butane to separate the CO2 from the methane in natural gas.

Innovations increase production and make getting these hydrocarbons out of the ground cheaper and more efficient at retaining resources. However, as novel techniques pour into production facilities around the world for extracting crude oil and other hydrocarbons from its source rock, it can be difficult for producers to keep up with all of these innovations. Blockchain technology can help reign in innovation and maintain production at the correct cost.

The oil industry is investing in better technology to maintain proper operations and quality:

In the last decade, the oil industry has invested more than $100 billion in R&D. These investments focus on improving production technology and discovery techniques used to extract crude oil from the ground and hydrocarbons from natural gas. 

The oil industry has also attempted to reduce the energy required to extract crude oil by harnessing the sun’s energy through solar power technology. However, with research into new technologies, more advanced equipment must be designed to meet these needs because of changes in regulations associated with extraction processes and meeting environmental requirements for maintaining production facilities.

The use of blockchain in the oil industry:

1. Wells and Equipment Maintenance:

Blockchain technology can help ensure the quality of a well and equipment in the oil production chain by making information and data more transparent and accessible. This way, it is easier to maintain assets like well sites, drilling rigs, trucks, and pipelines.

2. Production Information:

Blockchain technology can provide producers with updated information on the state of production at their facilities. As a result, they can reduce downtime when they need repairs or get new equipment on-site to run at peak efficiency. It also helps them maintain proper records of all operations on site so that each time there is an issue, these records can be verified by independent auditors from outside sources to see whether regulations are being met or broken.

3. Tracking and Tracing:

As with oil production, blockchain technology can help identify any issues or irregularities in the oil industry’s supply chain by gathering information to identify potential problems quickly. In addition, this information can help determine whether regulatory requirements are being met. 

Specifically, using blockchain technology on a field level helps track oil and gas production through a system that tracks all of the data points that go into producing crude oil, such as temperatures of equipment, levels of chemicals used, and the amount of time spent drilling for each well. Blockchain technology also allows for systematic auditing tools that use software and hardware to track everything from every step of the production process to quality control systems.

4. Supply Chain Transparencies:

As mentioned before, blockchain technology helps increase transparency across a value chain in the oil industry by allowing producers to establish auditing procedures based on data recorded through blockchain technology. This kind of transparency helps companies maintain layers of checks and balances that confirm that all regulations are being met and be accountable when mistakes occur. 

Companies can also hold an open audit accessible to any interested parties who can review this information themselves. Effectively, this allows for “third parties” to review the data recorded on blockchain records so they can verify whether regulatory requirements or industry standards are being met, ensuring none of the information is falsified or manipulated.