The oil and gas sector has been surprisingly slow to adapt to new technology, however, with increasing pressure from the rise of renewables, it looks like now it has no other option.
And makes sense. Not only will the sector’s tech transformation save the world, but it will also assist supermajors to cut expenses and save money in on the inevitable shift towards cleaner energy trends. Major business such as Facebook, Apple and Google are currently moving to renewables, with the tech trio aiming to be one hundred percent free from fossil fuels within the next few years. And that’s just the beginning.
Faced with global warming, prominent oil spills, and the market’s relatively undying love for dirty-burning fuels, the public seems to have lit a fire under the powers that be. New regulatory requirements are requiring the market to pass away or adapt.
From blockchain and the Internet of Things to decentralized electric grids, energy tech is having its day in the sun – literally- and it’s clear that the next couple of years are set to change the entire energy industry — even oil and gas.
As eco-friendly energy becomes more budget-friendly, energy supermajors will have to innovate to remain relevant. Whether that means investing in options such as biofuel or cutting expenses in the supply chain, Big Oil will need to step up.
Blockchain & Big Oil
Blockchain technology sent ripples through every significant industry from commodities to stock markets, and the energy sector is no exception. In its efforts to cut costs, the market is starting to embrace the tech in numerous ways.
It’s no secret that supply chain management might utilize an overhaul.
It’s an international undertaking, after all.
And this is where blockchain technology can truly shine. With the Internet of Things (IoT), smart sensors and blockchain technology, oil can be tracked from the ground to the pump, accounting for every single drop of crude at the same time.
Still utilizing paper agreements, dated tech and fundamental trading platforms, revamping Big Oil’s back office stands to conserve the market a lot of cash going forward. Every day, billions of barrels of oil trades hands, moving through producers, suppliers, contractors, merchants, subcontractors, and refiners. Keeping up with the procedure accurately and without taking some losses in the process is virtually difficult. According to Hernando de Soto, a well-respected economist, and blockchain advocate: “some 5 billion persons and 20 trillion dollars have been shut out of the economy due to disputed assets.”
And the finance side of things is no different. As a member of the Ethereum Alliance, London-based Vakt is already drawing a great deal of attention in the field, with supermajors such as BP, Shell, Total, Chevron, and more, in addition to trading houses like Mercuria and Koch Supply and Trading leaping on board. The platform, powered by JP Morgan’s Quorum blockchain, went live in 2015 and aims to improve the security of trades, increase efficiency and create brand-new monetary chances within the sector.
More advanced than Huge Oil’s cost-cutting, nevertheless, is innovation’s capability to remove some of the power (actually) from the hands of massive corporations.
Solar and wind power are progressively within reach of the every-man, and with the development of micro-grids, small, neighborhood-scale energy options are beginning to gain traction, cutting electricity companies out of the mix.
Startups such as Brooklyn-based LO3 Energy are utilizing blockchain innovation to produce a peer-to-peer energy trading platform, allowing users within their micro-grids to purchase and sell clean energy to one another, without the impact of industry majors. And the movement is becoming more popular.
In the heart of Australia’s ‘coal nation,’ the Latrobe Valley Microgrid Program is slowly replacing electricity generated by coal with peer-to-peer solar power. With the assistance of government grants, solar panels are popping up across the region, and these services are sharing their resources, saving an approximated $10,000 annually in energy expenses at the same time.
The Massachusetts Institute of Technology’s Digital Currency Effort (DCI) is looking to take this one action even further, targeting the 1.2 billion people around the world without access to electricity. DCI’s proposition states:
“Technologies such as distributed ledger technology, digital currencies, smart contracts, smart power meters and kill switches, can be combined to create a unique financial and ownership structure that could overcome the uncertainty lenders face in financing solar microgrids.”
Looking into the future
While these decentralized initiatives are still in their infancy, they use prospective services to a few of the world’s most important problems. However will Big Oil and the governments that successfully money them enable these developments to advance?
Political differences on these tasks still hang in a sort of a gray area. Because the tech is brand-new, there is no precedent, and lobbyists might spoil the party before it even starts. Already, it’s forbidden in many U.S. states to collect rainwater for individual use– will governments take the same stance on solar energy?