Blockchain is best suited for those industries where there are multiple organizations involved, trust and credibility play an important part of any deal and involves exchange of data. Oil and gas exploration industry also known as Exploration and Production (E&P) industry is one such industry and this industry could benefit a lot by integration of blockchain technology into it. E&P industry and blockchain has many intersection points. The whole E&P process work flow could be divided into 4 steps presented below:
UNDERSTANDING THE E&P WORK-FLOW:
1. Survey (Satellite then Aerial and then land).
2. Based on the data collected research is done and probable geo-locations of oil reservoirs or shale plays are interpreted.
3. Wild cat wells are drilled and further study is done based on data collected before drilling exploitation well.
4. Exploitation well is drilled and completed.
Throughout this whole process lots of data is generated and many companies are involved in this whole process. Data changes hand from one company to company. Survey companies do their survey, based on the data collected from data collection companies. Based on the outcome of data produced from survey any probable oil bearing area is evaluated for its worth and upstream companies bid for the field. Once a field is owned then based on the survey data wells are planned and wells are drilled accordingly.
DATA:
On an average drilling an oil-well costs around 7 to 8 million USD. While drilling enormous amount of data is generated and it is logged. Logs provide an insight of what's inside the earth decisions or it helps in predicting the behavior of oil reservoir or the plays. Once the log is prepared it is kept on hard drive and it rests in peace there as labelled for that well. We move to other location, not very far, and repeat the process. This process is done by many companies. In Texas, US alone there are more than 100 operators. As of today, the rig count in Texas alone has surpassed 1000 mark and with the crude price increasing it is supposed to increase to a higher number.
PROBLEMS & WHY FAB IS A SOLUTION:
One company does not share data with other company because one does not trust other. Blockchain can solve this issue by putting all the terms in smart contract. There won't be any trust issue and one company can make money with the data it has accumulated from their leased field and it will help other E&P companies to fasten up their work.
Second issue is when a well is drilled data is generated continuously and its very critical that the data does not get tampered by the other party. So, if one wants to share it with someone it has to be a secure and it should be done in such a way that there is a always a copy of earlier one. Blockchain comes into play here. This is the integral part of blockchain, nobody can change what was before and it always stays there.
Third point is about ownership. Tomorrow anyone can claim my data as his and could sell it. But when it is on blockchain I don't need to go through all the legal procedures to verify the ownership as the ownership could be stamped with the data file and it will be tamper proof.
An image of log.
Last but not the least part is large no of transaction. When a wild cat well or production well is drilled, lots of data is generated and it happens for long continuous hours. If I want to share it with any other well nearby or any company exploring same formation then it has to be in real time or very close to it. With the current solutions available it's not possible as the transaction speed is not that much to match up the scale. Now this is where FAB comes into play. FAB is built for enterprises where lots of transactions are made. FAB can support up to 1 million transactions per second and the integrated protocols (KANBAN, SCAR) provides data storage and security. FAB can install a dedicated node for a specific region and speed of data transfer will be near to real time.
Once started drilling operation never stops until the well is completed This is because most of the operator companies rent rig on hourly basis and time is money. Estimated cost of drilling an oil well ranges from 7 to 8 million USD. On an average it costs 100k USD per day. Many times, some avoidable problems could not be avoided because of lack of data and it leads to extended period of work. Those rig down hours increase the cost of production and is a wastage of human resource to trouble shoot and repair the problem. Most of the problem down the earth, whose behavior is predicted based on the data collected.
FUTURE:
Using AI, companies can avoid some of the problems. But to fuel the AI data is required. Think of future where there are lots of data to automate the drill plan and trouble shoot. Oil production price will go low and everyone will be benefited from it, from producers to consumers and everyone involved in the whole process of oil hunt. This is only a glimpse what FAB can do to and for enterprises. There are many more opportunities to be explored with FAB.
References
https://www.chron.com/business/energy/article/Total-U-S-drilling-rig-count-inches-toward-1-000-12776738.php
http://www.roseassoc.com/the-current-costs-for-drilling-a-shale-well/
https://www.spe.org/en/jpt/jpt-article-detail/?art=2819
https://www.ugcenter.com/rockies-workover-rig-rates-under-pressure-778761