How upstream oil and gas companies can save time on reconciliations with Blockchain!
As we all know, the oil and gas industry is furcated into three main parts, called the upstream, midstream, and downstream. Now, let me tell you what these terms refer to.
Upstream, midstream, and downstream essentially refer to the stage at which the drop of resource goes from its origin to its final destination. Say is it reaching a car or a house or anything else?
So what is upstream all about?
The upstream is a nexus and one of the most heavy-tech portions of the entire oil and gas industry. This upstream segment is also known as Exploration and Production (E&P), involves hunting for natural resources and extracting them from their genesis.
Now that we know it involves drilling and extraction, it is intelligible that wells have to be drilled in locations that are isolated, geographically or politically unstable or restricted to common people like you and me.
Essentially these wells are drilled by few monstrous energy companies. However, it requires anywhere around 40 – 50 companies to do the real extraction or production. All these companies have different contract regulations, different yields, performance calculations and much more.
It’s a meticulous task to unify everything and keep a record and coordinate, especially when it comes to payment reconciliation, to making things work parallelly and attesting performance across all these companies. This is always and forever a point of friction and ends up with inconsistencies that lead to misspending time and energies.
Settlement for upstream Oil and Gas (O&G)
These days settlement between companies is a tedious, manual, slow and laborious process. It involves a countless number of unconnected data, accountability, project attestation, and plenteous other formalities in the Extraction and Production of a single drop of the resource. Hence, here is how blockchain technology can bring a solution to these challenges.
How to use blockchain to maintain the identity of employees
- Oilfield services are greatly depended upon by the majors and the NOCs to complete significant skilled tasks from creating a well to managing it, to operate it.
- The technicians who work on this need specific certificates that declare them the right people to do the duty. The main reason for the declaration is due to safety, regulatory and legal matters.
- Once a unified identity is constructed on the blockchain, with the details of their contractors in a hierarchical method, any oilfield service can administer their employees’ certifications.
How does it benefit?
- Without using blockchain, (I mean doing the paper works manually) it might take anywhere around 40-45 days to establish that the rightly certified individuals operated a well or a rig under the right supervision.
- For this to happen, data has to be put together from a number of companies, labour identity, and several certifications should be confirmed, and sequence should be affirmed.
- With blockchain implemented for this work, the employees’ identity and the respective certificates are updated the moment they board the rig. Also, the sequence (hierarchy) of the labours is transparent and unchangeable.
At present identity management is the origin for many settlement issues in numerous companies. The powerlessness of companies to quickly establish that Labor A inspected the well before Labor B and that Labor A is a well trained and certified person to handle the task is a source of tremendous trust.
Humpty number of oil companies are not aware of what happened in their field until 45 days after an incident due to the challenges in organizing worker identity.
With Blockchain integrated into their systems, the companies will be able to save time on identity verifications and reconciliations.