Volume 22 Number 10


Gazprom's digital twins

Khantos unit rolls-out Upstream Control Center for production and MRO in 'electronic asset development' program. Science and Technology Center deploys Norwegian eDrilling's software.

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E-biz consolidation

Supply chain, logistics and point of sale boutiques Oildex, Solaris and PDI software expanded offerings, reflecting trend to factory-style operations.

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Blockchain - another misunderstanding?

Neil McNaughton looks at the blockchain-based trading initiatives that are springing up to solve problems that you never thought you had. Blockchain's peer-to-peer technology promises 'democratization of trust. But why would oils, banks and traders want this? What exactly are the aims of the Commodity Trading Consortium, the Energy Web Foundation and other groupings?

Did you realize that oil trading in major companies BP, Shell and Statoil uses ‘cumbersome paper contracts?’ No neither did I. The ‘revelation’ came in a release from the newly formed Commodity Trading Consortium, more of which below. But first have a thought for all those traders scratching away with their quill pens before sealing their orders, affixing a stamp and calling in the postman.

What led to the creation of the CTC is the latest big thing, blockchain. A technology that uses encryption to secure information exchange. A good Wikipedia page explains the nuts-and-bolts. Blockchain enables secure, peer-to-peer exchange of digital information. The controversial currency Bitcoin is an example. Peer-to-peer means that there is no intermediary, no server operating in the background. In fact, it’s just like email and the technology that underpins the world wide web. Peer-to-peer generally means ‘free’ in so far as the software is open source and the hardware is your own. For blockchain, ‘secure’ means that users and transactions cannot be spoofed or falsified. Blockchain has been described as the ‘democratization of trust.’

The CTC, founded by BP, Shell and Statoil along, with an group of trading houses and banks, is an independently-managed blockchain-based platform for energy commodity trading. Judging by the CTC members, it seems unlikely that this will be a truly ‘democratic’ venture. The CTC as I said before, plans to ‘move away from traditional and cumbersome paper contracts and operations documentation.’

This all sounds rather familiar. The wording is almost identical to OFS Portal’s ‘standards-based electronic transaction infrastructure’ (2003) or even better, from BP, which, in 2002 when it was BP Amoco, had ‘invested in several neutral energy exchanges which harness the power of the internet to bring a more transparent, low cost, multi-party market to a broader range of energy product buyers and sellers’ (2000). And that’s not to mention the bubble of energy e-commerce activity that burst along with other dot-coms, again around 2000.

The CTC will be ‘open to the commodity industry’ i.e. closed and almost certainly not peer to peer. The CTC’s raison d’être would seem to be ‘because blockchain is there, let’s do something with it!’ Cumbersome paper contracts indeed, where do they get language like that anyhow! The CTC is expected to be operational by the end of 2018.

A more touchy-feely blockchain in energy application, and one that makes some sense, in that P2P-based trust is used is GE-backed French startup Evolution Energie, which provides ‘certificates’ that vouch for the greenness of traded energy. The solution was built with help from GE’s Digital Foundry

Another good blockchain resource is a blog post on the CarnegieMellon-Software Engineering Institute by one Eliezer Kanal. He argues that healthcare exposes multiple potential uses for blockchain to ‘securely exchange patient information, X-rays and prescriptions.’ Well that might be so. But secure exchange of medical data has been possible for decades, managed by a complex web of incumbents who for sure will be ‘excited’ about blockchain and who will do anything to promote the technology so long as it doesn’t damage their business. I.e. they will join consortia, debate and proselytize the new technology and generally filibuster away while business as usual carries on.

A more immediate application of blockchain involves a simple jump on the bandwagon of currency issuance. A cute combination of Canadian Petroteq and the magnificently-titled ‘First Bitcoin Capital Corp.’ (FBCC) is to create a new supply chain management platform based on blockchain technology, ‘specifically geared’ for the oil and gas industry. FBCC claims to be ‘the world’s most prolific generator of cryptocurrencies.’ Personally, I am keeping my cash under the bed. Petroteq backed up its own claims with the issuance of … a plethora of press releases!

A more romantic offering comes from Mansfield-Martin Exploration Mining which has partnered with Qu to back up the Silverback Ethereum-based crypto-currency offering with ‘up to’ 5 million one-ounce silver Doré bars. A possible analogous oily currency backed up by barrels of crude is not quite so seductive but no doubt someone will try.

The Energy Web Foundation’s ‘Tobalaba’ blockchain test network sounds like a true peer-to-peer offering. Tobalaba now provides energy sector startups and developers with a platform to develop decentralized apps. Code is available on the EWF GitHub and the solution will be showcased at the blockchain ‘Event Horizon 2018’ summit. Authorities already on the network include Centrica, Engie, Shell and Statoil. The EWF was dreamed up between Grid Singularity and the Rocky Mountain Institute along with implementation partners Parity Technologies, Brainbot AG and Slock.it.

Who else? At the recent Open Applications Group Plenary in Redwood, California, David Haimes announced Oracle’s own blockchain cloud service, built on a Hyperledger ‘permissioned’ blockchain protocol. From our reading of Haimes’ presentation it’s hard to see what this adds to Oracle’s existing ERP and e-business offering apart from a multitude of toys for developers. These include a REST API-driven integration, a SaaS toolkit and sample code. Oracle is hosting design jams with industry vertical subject matter experts, pitches for execs and hackathons. A grandiose ‘blockchain advisory customer council’ is being set up.

The European Commission, always a sucker for trendy new technology,’ has launched a ‘European Blockchain Observatory and Forum’ to ‘help the EU to stay at the forefront, build expertise and show leadership in the field.’ The EU at the forefront of blockchain? Really?

So why all the interest in technology that is fixing yesterday’s ‘cumbersome paper’ problems? It sounds to me like we have another of these ‘big misunderstandings’ like I described earlier about exaggerated expectations for Hadoop in oil and gas. The misunderstanding in regard to blockchain is that its killer technology is P2P, i.e. it does not really need a ‘consortium.’ Its killer application, Bitcoin, is mainly used to circumvent authority. Bitcoin is said to be really good for the bad guys.

In a curious incident recently, a former BP economist was charged with five counts of wire fraud for ‘allegedly trying to extort money from the company by attempting to exchange sensitive corporate documents for bitcoins!’ As I write this, I am thinking what would happen if I sold a few bitcoins and a few million euros suddenly appeared in my bank account? I would expect a quick visit from the taxman and maybe the police. The bad guys must know something I don’t.

Oh, and there is one other thing, blockchain, used at scale, is very energy hungry. Possibly very, very energy hungry. It has been reported as consuming as much electricity as a small country. Also, because bitcoin miners tend to be located in China where compute cycles are cheap thanks to dirty, coal-powered electricity, this causes a lot of pollution. Kanal reports that ‘this otherwise-purposeless electricity expense is a significant hindrance so far to adoption.’ Not a good thing either for a ‘green energy’ exchange or for energy-conscious companies like the CTC founders.

I asked the CTC about this problem and they explained, ‘Although we have not yet decided on a technology, at the moment we are expecting to use a permissioned ledger and as such the energy intensive mining does not apply.’

As far as I know, the energy cost of a transaction has never been a problem in the past. The commercial e-commerce exchanges don’t appear to make much of an issue of how much energy they use. A Bitcoin transaction is reported to be ‘4,000 to 5,000 times more energy intensive than a VISA swipe.’

Not only is bitcoin’s cash value now generally considered to be as foolish as was the boom in value of a Dutch tulip in the 17th Century, the technology that underpins it may turn out to be just as improbable.

@neilmcn


Review - IEA study on 'Digitalization and energy'

A '10 to 20%' decrease in oil and gas production costs is forecast from 'advanced processing' of seismic data, the use of sensors and enhanced reservoir modelling. AI/ML and big data are to play a role as is blockchain. Standards are OK if done right. CCS could benefit from fracking!

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Open standards-based assembly of spatial data

OGC announces discrete global grid system for raster and vector data. No more CRS-worries!

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Norway's Geonorge portal aligns to EU Inspire directive

EPIM tasks Kartverket,the Norwegian Mapping Authority with oil and gas reporting pilot.

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BP calibrates Exa's DigitalRock

Multi-year trials of computer tomographic permeability validates alternative to laboratory analysis.

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Schlumberger upgrades Houston reservoir rock and fluids lab

New offerings for microfluidics, digital rock and fluid services and 'cognitive' Delfi.

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Software, hardware short takes ...

Quantico Energy Solutions, Interica, Nature SciGraph, Esri, Getac, geoLOGIC Systems, Imago, Justcroft International, LMKR/GeoGraphix, dGB, MeadCo, Seisware, Tendeka, KEPWare.

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SICPA partners with Arundo Analytics

Authentication and track & trace specialist teams with big data analytical startup to help governments monitor oil and gas operations and assure regulatory compliance.

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OSIsoft EAME 2017 user conference London

Pat Kennedy, 'There will be a trillion IoT sensors, we love that!' OneWeb LEO satellite IIoT/M2M. OSIsoft/Dianomic collaborate at the IoT edge. OSIsoft message format key to the cloud. Statoil on Ivar Aasen's IT. ARM's cloud connectivity. Setpoint, 'Are you serious about vibration monitoring?' IT Vizion's PI for Sinclair Oil. Element Analytics puts PI in the data lake. TransCanada's in-house AI on PI. PROTEAN, Petronas' DIY rotating equipment monitor. Connected Services for SBM's FPSO fleet.

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Folks, facts, orgs ...

ABB, American Gas Association, Aquilon, Asset Guardian, Attunity, BJ Services, CGG, Department of Energy, ExxonMobil, FloWorks, IFPen, Katalyst, NetApp, Distribution NOW, OMG, PPDM, Pipeline Research Council, Precision Drilling, Quorum, Surtek, Tendeka, Weir, CDA, BP, Göttingen University, ABB, Colorado School of Mines, Acurve, Energy IQ.

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Done deals

Drillinginfo, Pattern Recognition Technologies, Oil-Law Records, Norbit, Aptomar, Oracle, Aconex, Weatherford, Schlumberger, WorleyParsons, Amec Foster Wheeler.

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Capital facilities information handover standard meet

USPI-NL meet hears Shell report on progress of embryonic engineering data exchange standard. ExxonMobil's 'digital vision' for engineering to embed CFIHOS. Total's 'Quantum' digital plant working towards convergence. Chevron cools on mega projects. IOGP sees CFIHOS as 'quick win.'

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Sales, partnerships, deployments ...

AspenTech, AT&T, Autodesk, Esri, BP, HPE, Intel, Emerson, eVision, Dar Al Riyadh, Honeywell, Coreworx, IT Vizion, OSIsoft, KBR, Omnetric Group, Red Hat, Oniqua, GlassPoint Solar, Petrofac, Petrolink, ABB, Quorum, Sercel, Fotech Solutions, Aker Solutions, TechnipFMC, OneSubsea, Tendeka.

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Standards stuff...

PPDM 'What is a completion' seeking sponsors. PODS pipeline data model V6.1 out. Construction Industry Institute, FIATECH to merge.

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C3 IoT for Origin Energy's integrated gas business

Skunk works project matures into 'unified, federated, multi-terabyte' cloud solution.

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Remotely interesting ...

Statoil runs Valemon shoreside. DNV remote witness for NDT. Olympus shares remote video.

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AspenTech acquires Internet of Things specialist

RtTech Cipher connects to multiple legacy protocols and devices 'at the edge.'

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Terminal management communications. SAP HANA SDM.

Implico OpenTAS for legacy field devices. Secondary distribution management for SAP S/4HANA.

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Deloitte brings Foroil's optimization to upstream

Patented technology developed for defense and nuclear to increase brownfield performance.

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Tibco's Connected Intelligence for Nabors

Driller to leverage Spotfire and Streambase as foundation of real time drilling analytics.

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Price intelligence news: Oilprice.com, ClipperData, Eqlim, OPIS

Oilprice.com disrupts. ClipperData and Eqlim combine. OPIS' persona-based price reports.

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Total's 'complete shift' from traditional energy activities

CIO tells FT Digital Energy conference of investment in AI and machine learning.

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