Data is now widely considered the most valuable commodity of the 21st Century, and the oil & gas industry has a critical advantage when it comes to this new data-driven economic landscape. Millions of IoT devices are capturing an astonishing amount of geological, production, and operational data each day, giving the industry unprecedented intelligence that can be used to optimize the entire energy value chain.
Unleashing the power of digital twins
Digital twins use this data – as much as 1-2 terabytes per day generated from each oilfield, refinery, or offshore platform – to create virtual representations of facilities that can then be used for analytics, simulations, safety training, and a wide variety of other applications that help optimize and enhance energy supply chains. These benefits are significant – but demonstrate only the beginnings of the technology’s potential in Industry 4.0.
Transforming energy supply chains with IoT, AI, blockchain, and beyond
The future of the industry will be created through digital convergence – the unity of IoT, AI, blockchain and other technologies to create interoperable, connected data ecosystems that can be fully automated. In particular, the addition of blockchain networks and applications like smart contracts and tokenization to digital twins creates new value for the industry’s increasing volume, variety, and velocity of data.
The application of blockchain to energy use cases typically involves three elements:
- 1. Distributed, encrypted databases, or ledgers, that securely register, track, and share information with other members of the network.
- 2. Smart contracts, which are programmable and automated agreements that run as applications on top of these databases.
- 3. Tokens, which are programmed by smart contracts to create transferable, digital forms of value.
Blockchain has its origins in the 2009 launch of the Bitcoin network, but the technology’s applications in sectors like oil & gas take a very different form from cryptocurrencies. Enterprise blockchain typically involves private, or permissioned, databases only accessible to authorized parties, and uses platforms, such as Corda and Hyperledger, that have a very minimal energy consumption compared to Bitcoin and its Proof-of-Work transaction validation.
The core qualities of the technology are the same; however, data on a blockchain network can only be read and sequentially added to, and never deleted or altered. This high-integrity data management removes the need for many kinds of manual oversight and verification and creates new levels of trust that allow for advanced automation and secure digital transactions.
Combined with digital twins, these three key elements – distributed ledgers, smart contracts, and tokenization – provide important benefits that will reshape how energy companies use and benefit from their data. Leading use cases that leverage the synergies between blockchain and digital twins include:
How can energy companies drive blockchain integration and digital transformation?
Blockchain adoption by energy companies is still in the very early stages, but is predicted by some analysts to rapidly scale from less US$1B in market size in 2022 to more than US$200B by 2032. To realize the synergies between this innovative method of data management and digital twins, the oil & gas industry needs to invest in blockchain education, support R&D for high-impact use cases, and importantly, embrace collaboration across stakeholders like supply chains, government regulators, and project partners to catalyze digital transformation across the entire industry.
About the Author: Alexis Pappas is the Chief Innovation Officer at GuildOne, a Canadian leader in building blockchain solutions for complex oil & gas data challenges. In 2023, GuildOne’s collaboration with ExxonMobil and the Blockchain for Energy Consortium was recognized in the annual Forbes Blockchain 50 list. Alexis is a writer, post-secondary educator, the ESG Committee Chair at the Canadian Blockchain Consortium, and heads initiatives for digital carbon management and credit trading through GuildOne’s sustainability division ESG1.