How Blockchain and Crude Coins could Transform the Energy Industry
A look at the innovation integration of blockchain technology into the global energy industry.
In 2018, The Crude Life’s founder Jason Spiess did a series of interviews related to Cryptocurrencies, Blockchain and Crude Coins.
To read the original published article from The Oilman Magazine and others, click here. For those who wish to read the article from May 2018, it is published below:
Over the past decade I have had the privilege of interviewing some of the greatest minds in the world of energy, economics and technology. One theme predominant throughout each one of their respective industries was "paradigm shift". These men are serious men who do not exaggerate their words. They choose their words wisely because lawyers and stockholders are always listening.
In fact, John Gibson from ONEOK, Matthew Rose from BNSF, Harold Hamm of Continental Resources, James Volker of Whiting Petroleum and other industry heavyweights were not only using words and phrases to describe the change, but also going a step further by citing examples of why their respective companies were, and in some cases, still are rewriting their business plans.
"The shales plays have been a paradigm shift in our industry, we always knew there was gas in the shale, but we couldn't economically get that gas out now with the technologies of horizontal drilling and the continued ability to use fracking, which isn't new as we've been fracking for 25 years," Ron Jibson, past chairman of American Gas Association told me in a 2015 interview.
Jibson continued contextualizing the milestones and magnitude of this modern day shale play.
"For many many years, dating back to the 1970's with president Carter when he said the country would be out of gas in the next 8-10 years," Jibson said. "He was right, we had an issue at the time, but as always, ingenuity and smart people found ways to change that and find new ways to develop the natural resources and do it very effectively and prudently."
Words like "innovation", "energy tech" and "disruptors" are recurring subthemes and reasons of validation for the industry overhaul.
After a decade many companies have finally found their stride and migrated towards certain innovation, technologies and shale sciences. Now the game is changing once again. The next innovation chapter in the business plan rewrite is happening right now and it is not at the wellhead or chemists’ lab, it is on your computer.
Blockchain. The newest fiscal buzzword. Many people know the word, but few know the definition. Simply put, a blockchain is nothing more than platform that stores safe, secure blocks of information across a shared digital network. Sounds a lot like the Internet, well it is. Only, like the Internet, there is so much more.
The execution of this technology could literally revolutionize the future of energy, logistics and legalese by creating a new system of transparent global transactions that are not manipulated by governments, special interest groups or private companies.
"The Wellsite blockchain and Crude Coins are digital utility tokens that cut out much of the friction tied to oilfield transactions and the resources that accompany them. That leaves the oil companies and servicers more money which means increase profits,” entrepreneur Chris Ely said. “Currently oil producers at large is struggling with a lack of standardized transacting processes, where lack of now-your-customer and verification standards makes moving forward efficiently with more affordable options in services, nearly impossible. But with a digital ledger-fueled Wellsite blockchain, a digital verification and identity to suppliers and their products are possible."
Furthermore, anything that holds value can be tracked and traded on a blockchain network, making it an ideal tool for arranging and tracking commodity services.
“Crude Coins can be exchanged in the platform and converted for real-world goods and services. A subscription, commission, and rewards model provides a constant demand for Crude Coins and a revenue stream for the platform,” Ely said. “By integrating fiat payment gateways, the Crude Coins aims to become a legitimate gateway of fiat-into-crypto, enhancing the entire ecosystem and accelerating mainstream adoption in the oil and gas industry.”
Record-keeping within the blockchain could streamline the industry to new levels and create new efficiencies not yet even conceived.
“With blockchain, the 90-120 average collection period will become history,” Ely said. “Cryptocurrency transactions will be a lot more transparent than current ones and a lot more reliable, due to the nature of the blockchain. These are just a couple of the benefits that this particular technology can offer one of the most conservative industries in the world that is now being dragged, sometimes screaming, into the modern age.”
Expounding on the blockchain technology, one can see how it can provide solutions to some of the bookkeeping, legal and invoicing challenges in the oil and gas industry while keeping the central theme of protecting their commodities and maximizing monetary efficiency.
“Digital technology, encompassing everything from cloud services, machine learning, and robots, is increasingly turning into the key to achieving the double goal of lowering costs and boosting operational efficiency in the oilfield,” Ely said. “It was only a matter of time until cryptocurrencies joined the digital part in the oilfield and now they are here, likely to stay.”
Even something as simple as a small oil spill, the blockchain will give a digitized road map allowing distributors to follow the logistics of every element involved creating an organic ecosystem to source out the issue. Often time these blockchains have turned into a preventative ecosystem.
Right now the industry's number one issue is acquiring a workforce. Companies are advertising everywhere they are hiring. Blockchain technology will help companies adapt to a shortage of workers and still maximize their efficiencies through a number of ways, like identifying which areas to cut budgets.
“In both the E&P and the oilfield services segments, there are a few very large players and thousands of small independents,” Ely said. “There are more than 18,000 E&Ps globally and some 40,000 oilfield service providers. Most of these, as one can imagine, are small companies.”
The key to blockchain’s value is that the system is transparency. The entire platform and each part of the transaction process is completely transparent and involves no intermediaries.
“The sharing of digital blockchain information as required in joint operating agreements could lessen, if not eliminate, the need for reconciliations between companies and for data hubs controlled by third parties,” Ely said. “This level of efficiency can no longer be ignored in oil and gas, as it has proven to bring great efficiency to companies in outside industries.”
The distributed ledger technology we all call blockchain truly has the potential to eliminate huge amounts of record-keeping, save money and disrupt technologies in ways the world hasn’t even thought about since the Internet began publicly sharing information and commerce.
The global economy is about to shift once again and Crude Coins are poised to be a leader in the new world of energy.
Article originally published in May 2018 in The Oilman Magazine and was written by Jason Spiess, the founder of The Crude Life.
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