Bringing Blockchain into Energy Operations & Transition

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Technology is helping the energy industry improve safety and efficiency in so many different ways. From detecting methane with drones to using AI, AR, ML, and other acronymed innovations, energy companies are moving quickly in adoption as climate change policy enters a new phase. 

Another new digital technology is helping energy companies improve data collection, reporting, validation, and auditing: blockchain. 

What is Blockchain? 

Blockchain can feel as enigmatic as the cloud, but when boiled down, it’s a decentralized way of storing and sharing data that provides an immutable, secure record. 

Blockchain uses a distributed ledger to record transactions (or any flow of data) in a way that’s secure and cannot be edited without another record. It comes with a built-in audit trail and provides a single source of truth. 

No single party controls a blockchain. Using this decentralized data storage framework can all but guarantee validity and security of information thanks to a transparent, tamper proof record of transactions and data.

Deloitte expects blockchain to “improve visibility, increase operating efficiencies, and streamline regulatory reporting” in the energy industry.

Blockchain in Action

There’s a long road ahead to transitioning to a blockchain data infrastructure, but industry leaders are already using it to save time on reconciliation, ensure accuracy on contract reporting, and track and report on carbon emissions. 

Shell Builds Blockchain Baseline

Shell has multiple blockchain proofs of concept and pilot projects in areas ranging from proving the origin of energy to verifying equipment source.

For example, Shell, in collaboration with industry parties, completed a pilot project that creates digital passports for equipment to be tracked throughout the lifecycle. This solution:

  • Reduces paperwork from conventional audit trails, 

  • Increases productivity

  • Helps ensure safer operations for every party within the ecosystem

  • Allows engineers to conduct component inspections remotely

At Shell, as well as in the industry as a whole, blockchain projects are working to help support the energy transition. Some of Shell’s renewable-focused blockchain initiatives include:

  • Verifying that hydrogen comes from sustainable sources

  • Ensuring the validity of carbon credit programs by helping identify and avoid double counting of credits

  • The Energy Web Foundation, which aims to accelerate a low carbon, customer-centric electricity system

Equinor Adopts Auditable Information

At Equinor’s giant new North Sea oilfield, Johan Sverdrup, thousands of sensors are monitoring everything from how much oil is flowing through pipelines and how fast new wells are being drilled to how much diesel fuel the facility is consuming.

What happens to all of that data? It’s transmitted continuously to an immutable blockchain ledger called GumboNet, a product of Houston-based startup Data Gumbo. The distributed ledger provides a single source of truth, which allows Equinor to automate “smart contracts” with confidence. 

“In the old days it would take weeks to reconcile orders with records, weeks more for contractors to get paid,” said Data Gumbo CEO Andrew Bruce. Now, a smart contract can be programmed to trigger payment to a contractor when certain limits are reached. With this, Equinor can negotiate cheaper contracts and improve back-office efficiency. 

Equinor figures that in its first year of operations, Johan Sverdrup saved $20 million thanks to Data Gumbo and the power of blockchain. 

Many other energy companies are using Data Gumbo in the transition to lower-carbon energy sources. It’s only a matter of time until more and more industrial companies will be using blockchain to monitor and report on their carbon emissions.

Future Blockchain Applications

The opportunities are endless for blockchain to disrupt the energy industry. The capabilities for data transparency among producers, corporations, consumers, and auditors will shake up how assets, supply, and usage are tracked and reported. 

Blockchain could be a game chainger.