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Potential Uses For Blockchain Technology in Oil and Gas Sector

Blockchain technology, the software behind the massively popular cryptocurrency Bitcoin has now officially entered the oil and gas sector. 

This distributed ledger technology for digital currency payments is gaining confidence with real-world applications towards improvements in operations and finance. 

Executives in the oil and gas industry are yet to access its potential benefits adequately. But, before we delve further, let’s understand more with a small frame of reference.

What is Blockchain Technology?

The blockchain database is shared across millions of computers simultaneously, with the public, and data stored remains incorruptible. How? Data in records are broken down into fragments which is then stored in multiple server locations. 

While the database is decentralized, and all economic transactions are accounted for and authenticated at every touch point, known as ‘nodes.’

Data can only be altered when there is an agreement among a majority of these nodes. This agreement ensures that records cannot be hacked or violated – and any change in the record is automatically made public across the entire network.

How are Transactions Made?

Blockchain eliminates the need for third-party businesses like legal firms or banks. The transaction is conducted directly between the owner and the buyer. A combination of public and private keys is used during a transaction.

For example, a consumer requests access by using his private key and the producer’s public key. The producer then accepts the invitation by using his private key. The nodes connected in the network can see that a transaction has taken place, but since they cannot decrypt data without the private keys of the consumer and the producer, they are unable to view the details of the transaction. This makes the cryptographic algorithm used in Blockchain secure.

Potential Uses in the Energy Market

Oil and gas market, with their ever-growing concern to struggle with price fluctuations, has found an innovative technology in Blockchain which can now meet the acceptable margin of costs.

 The energy sector can potentially benefit from the supply chain, purchase orders, payment invoices and validation of documents before the final delivery of goods. All these can be managed through the ledger which gets updated in real time and is synchronized across all platforms in no time. Supply chain, proof of origin, managing the assets can be done without the need of a central intermediary.

 The significant leverage that is brought about in utilizing Blockchain technology for this market is:

  1. Reduced cost
  2. Transparency and authenticity
  3. Security and elimination of fraud, and
  4. Smart contracts

Reduced Cost

Stamped documentation and validation can be updated instantly for all the participants’ knowledge, thereby reducing administrative procedures regarding auditing or taxation. The absence of a third party participant means a reduction in legal fees or broker’s commission. Since there is no scope for fraud or human error, there would be no lapse of time. 

Transparency and Authenticity

Blockchain provides a platform where every stage of the transaction performed can be tracked and stored permanently for your record. Digital tokens represent the goods involved in the transfer and can be tracked at any point of supply chain journey. Moreover, this record is accessible to every computer connected to the network. The sophisticated algorithm is secured from unapproved parties by preventing them to access/alter invoices.

Security and Elimination of Fraud

Emerging IT solutions that claim to provide all-around security can fall flat because of one main reason. The database is encrypted and hosted on a single server. Unlike these, Blockchain uses the fragments of data encrypted and stored in disparate locations. Even if you can consolidate them somehow, you would be unable to decrypt, owing to the absence of private keys. A combination of private and public keys is used by two or more participants to get the transaction approved. Hence, there is no chance of data being hacked.

Smart Contracts

The tremendous volume of the transactions made in oil and gas projects consume a significant time for documentation, verification, and execution. Using automation techniques can ease these procedures. Blockchain can provide smart contracts which are automated much before the actual time of execution, sometimes years earlier. This facilitates for smooth execution.

The Verdict

Business models, especially the energy sector, are open to rethinking their tried and tested transaction processes. Oil and gas sector deals with overseas payments and tax laws governed by various nations. Joint ventures take up a whole share of the market, which makes transparency a necessity. As with any new revolutionary innovation, Blockchain’s entry into the energy market is gaining momentum, and we at Terra ATS are at its forefront. With such advantages, this technology is here to stay.

Houston Oil and Gas: Top 4 ERP Solutions to Tap the Energy Revolution

An up-and-coming oil and gas behemoth, Texas is a key component of U.S. energy security. It leads three-tenths of our crude oil-refining capacity — and a third of all oil production.

A report by the U.S. Energy Information Administration (EIA) states a new-found resilience in the shale sector. This will create a significant surge in oil and gas production over the next few years.

Shale producers from the Eagle Ford Shale and Permian Basin are using technological advances and safe hydraulic fracturing – also known as ‘fracking’ to tap vast oil and natural gas reserves that were previously locked away in tight-rock or shale formations.

Extracting these new resources will continue to inject billions of dollars into local economies and will be the biggest single reason for a spur in the energy revolution.

This trend, in turn, will create a compelling need to implement long-term IT development solutions for mid-stream and downstream companies who are looking to find more significant control over processes and efficiencies across existing functions.

 

ERP Solutions in the Oil and Gas Industry

oil and gas houston erp

 

Enterprise resource planning (ERP) is an integrated way of weaving core business processes together, often by an intermix of software and technology, in real-time.

An ERP system can play a crucial role in automating, standardizing and digitizing processes in a volatile ecosystem such as oil and gas, where a systemic and cross-functional approach can offer a bird’s eye view of operations that impacts profitability. Further, it can facilitate error-free transactions and production, thereby enhancing an organization’s efficiency.

Houston-based energy companies looking to connect people, digital process and data can cut down under-performance, costs and wasted time by leveraging integrated ERP solutions that will allow them to move into the world market quickly.

Let’s look at the potential benefits of implementing such a system –

 

#1 Replace Customized Legacy System with a Future-Ready Platform

An easy to use, intuitive ERP integrated platform supports a company’s contract terms and business growth targets, manage resources, plan for what’s ahead, including risks and support multiple operations.

It cross-connect assets across other vendor supported gathering and management platforms to leverage synergies for itself and its customers.

 

#2 Optimize Business Workflows

Oil and gas companies need people, resources, and utilities to manage critical assets in their operations. Scheduling demands and short turnaround times need stringent processes and capabilities.

Through the three pillars of standardization, automation, and new technology they can eliminate costly customization that were inhibiting margin, growth and potential future revenues.

An ERP system helps gather valuable data in real-time to ensure resources allocated are optimally used with deadlines. Also, it can avert any potential crisis that may arise.

 

#3 Reduce Capital Cost, Complexity and Risk

A right ERP provides full visibility of a company’s financial position especially in areas such as AFE’s (Authorization for Expenditure) and Procure to Pay with specific governance needs. Further, there are modules for Purchasing, AP, AR, Invoice Workflow, Fixed Assets and Integration with Quick Books that give control of complete CAPEX spend.

Companies can use ERP software to identify project risks well in advance and accelerate risk response with integrated risk reporting and remediation.

 

# 4 Business Analytics Integration

An ERP system can embed analytic tools with internal applications to monitor performance. With technology, companies can predict trends and identify new opportunities based on master data integration and other data conversion activities.

In a complex, ever-changing market such as the energy sector, an ERP system aligns to the nth degree to your proven business processes. Our consultants at Terra ATS have over 40 years of combined experience helping businesses put in place customized ERP solutions to your specific needs.

Schedule a call with us today to help us build the perfect oil and gas ERP system for your company.