Efficiency must be the future of the energy industry (Part one)
The oil and gas sector has held a unique position of prominence in the global economy for the last half a century. There have been concerns about peak oil and the environmental impact, but the sector has continued to produce the energy and power we need to heat and cool our homes, run our technology, help us broaden our horizons and, in many cases, help us get to work. There are rising challenges to the oil and gas sector’s primacy however, with viable alternatives starting to gain momentum. The sector needs to focus on making the best use of its resources if it is going to retain a central position in the global economy in the medium to long-term.
There’s currently a paradox in the oil and gas sector. It is central to the global economy, represents around 3% of the world’s economic output and underpins a massive proportion of the rest, but major oil producing nations and companies are moving away from the sector, and there are even suggestions that it is struggling to attract the brightest global talent in the way that it did 20 years ago.
What is driving the change?
Has the industry matured to a point that economies, companies and people are looking elsewhere because the returns have become too predictable? Is it that irrespective of when peak oil actually arrives, the reality is that it will inevitably arrive, either as a result of oil being a finite resource or rise of an economically viable alternative? Is it that the industry has grown to a point that innovation has become very difficult to carry through and as a result people simply do not want to take part?
What’s the answer?
Irrespective of what is driving the change, enhancing the efficiency of the sector will go a long way to securing its future. The sector needs to prove that it can adapt to changing expectations and is open to new ideas that will help it make the most of the resources it has to offer.
Blockchain is one such innovation that lends itself to the oil and gas sector.
Blockchain grew out of the underlying technology that supports digital currencies such as Bitcoin, but it has the potential to support a far wider range of activities beyond currencies. It creates a constant, global, tamper resistant store of information that is stable enough to be traded. Tampering with information stored on a blockchain would be such a convoluted process that the time required would outweigh the potential returns.
Using the blockchain, products and services can be assigned a value, also known as tokenizing, and those tokens can be traded like a traditional financial instrument such as a stock or bond. There are several advantages of tokenized trading based on a blockchain including:
- all administrative tasks can be automated so it is likely to be significantly cheaper from an administration point of view;
- the digitisation of information means that it can be moved between owners virtually instantaneously, making it possible to trade a wide range of goods and services;
- information is transparent to authorised parties, so both sides in a trade, as well as appropriate regulators, can see what is happening.
In the next part of this three-part article, we will discuss how these factors make the blockchain perfect for the oil and gas sector as it moves to the next phase of its history. You can read it here.
If you would like to learn more about PermianChain and how it is setting out to revolutionize the oil and gas sector, get in touch via the social media channels available on our website.
PermianChain Technologies is a Pioneer Member of the Blockchain Research Institute. PermianChain is investigating ways to harness the power of blockchain technology, data science and artificial intelligence to digitize, tokenize and monetize proven but undeveloped natural resources, starting with oil and gas. The PermianChain, which already has secured oil and gas reserves to be listed on its platform, intends to unlock liquidity to revolutionise the way that oil and gas reserves are funded, produced, bought and sold on a permissioned-access blockchain. The firm is currently in the process of applying to for its regulated digital securities trading and investment platform.