The ten benefits of the PermianChain (Part four)
In the current climate, there is a lot of excitable talk about the blockchain from a technical perspective, but surprisingly little about what a blockchain enabled sector would actually look like. In this set of four linked articles, we are outlining ten benefits of moving the oil and gas sector onto the blockchain.
In the first article in this series we outlined what the blockchain is from a non-technical perspective. We then outlined the benefits of the blockchain for the oil and gas sector from the perspective of cost and efficiency. In this article we will look at the final three advantages.
8. Enhanced efficiency, less administration
Trading oil and gas is currently complex, slow and fundamentally inefficient. Agreements are cumbersome and difficult to transfer without adding costs and there are so many different steps involved in the process of getting oil and gas from upstream through mid-stream to downstream, that the knock-on effect of delays at any point can be significant and costly.
By moving to the PermianChain structure, oil and gas organisations at every stage of the process will be able to trade and interoperate at an unprecedented level of efficiency without having to individually invest in major new systems or training for new ways of working. Opaque and time-consuming bureaucracy will be resolved and information will be able to move to the right places far more quickly than is currently the case.
9. The right time to make changes
The oil and gas sector is currently in a unique position.
On the one hand, changing prices and enhancing technologies are making new forms of natural resources viable. Shale gas, tight oil, oil sands, and coal seam gas are all in the process of becoming part of the global energy mix, creating a unique opportunity to develop new trading methods. Once these new sources of energy become business as usual, there is a risk that existing market inefficiencies will become entrenched.
On the other hand, while oil and gas currently dominate the global energy mix, the pressure from renewable energy is starting to become apparent.
This makes it a perfect time to look at how the sector is operating and ensure that it is making the most of the world’s natural resources, rather than simply continuing to operate in slow, sometimes murky structure that has evolved around the sector over the last fifty years.
10. Attracting new liquidity
Investing in oil and gas has traditionally been the preserve of institutional investment houses who can make large investments that make a project. There is a growing risk though that they could start to turn their back on oil and gas as they look to burnish their environmental credentials.
This becomes less of a problem if there is an efficient blockchain-based structure in place that helps strip out many of the administrative, bureaucratic and brokerage costs. With these removed, the cost of investment becomes significantly lower, particularly if the investment process is managed via a secure, regulated system such as the PermianChain token.
The way that the PermianChain token has been designed means that oil and gas organisations can manage a swathe of small investors without having to manually administer their input. By working more directly with retail investors, oil and gas firms will be able to replace any potential lost institutional investment while at the same time offering smaller investors the opportunity to diversify their portfolio in a way that has not been possible in the past.
We hope that this set of articles has been a useful outline of some of the opportunities that we believe that the PermianChain represents for the oil and gas sector, its regulators and its investors. Please get in touch in the comments section below or over one of our social media channels if there is anything you would like to discuss or you would like us to elaborate on.
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.