Volume 23 Number 3


Editorial Editorial: Blockchain is bullshit!

Oil IT Journal editor Neil McNaughton looks into some proposed use cases for blockchain. Many require supervisory control from a ‘permissioning’ authority. At which point, blockchain serves no useful purpose at all.

In French there is a wonderful expression, ‘l’esprit de l’escalier.’ Imagine, you just left a society dinner where a subject dear to your heart was discussed at length. You felt you had something very important to say but could not quite formulate the bon mot. As you go down the stairs, your repartee comes to you - but too late! The opportunity to shine has gone. Happily, this is not a problem for the editorialist who is in the enviable position of meeting you all on a regular basis. So, at the risk of boring you, this is what I wish I has thought of last time.

It was not exactly the last time, but it was last year in issue N° 238 where I was skeptical about blockchain. But not perhaps skeptical enough. Some of you may see me as rather outspoken. Actually, I often regret not having put stuff more forcefully. I rely too much on understatement that I think is lost, especially on non-English speaking readers. So just to make things perfectly clear, blockchain is bullshit*!

Let’s unpick a couple of proposed use cases for blockchain. First, blockchain has been proposed to stop forgery in the high-end art world. The idea is that an auction house or gallery would record each sale in a blockchain ledger that was sharable worldwide and available to all subsequent buyers and sellers to check the art work’s lineage and provenance across the years. So far so good (although the notion that the system will operate worldwide for all time may stretch the imagination). I allow that the system as described will faithfully record all transactions.

The problem arises when you try to equate a ‘transaction’ with a physical object – the work of art in question. What happens if one dishonest owner decides to sell a forgery at some future date and keep the original work on the wall of his dacha? All is fine as far as the blockchain goes. All subsequent buyers get a forgery that checks out according to the blockchain. The cheater gets to keep the original and his money. The blockchain may stop him selling it again in the immediate term, although it could go on the black market for a substantial amount, especially once folks have read and digested this editorial. In a few hundred years, with perhaps several re-forgeries ‘verified by blockchain’ and sold-on, nobody will have a clue where the original piece is or who have been cheating along the way. The work may even later be ‘rediscovered’ by an expert, sans provenance and might reacquire great value.

I can hear you object that the digital transaction could be tied to the physical work of art by some sort of RFID chip or other smart device embedded in the work of art. But this is just going back to ‘technology’ which is much like the artist signing his oeuvre. The debate as to whether a signature or RFID chip can be falsified is orthogonal to the blockchain issue. It is no longer the blockchain that provides the mechanism of trust.

Another example, blockchain in green energy trading. The idea is that ‘green-certified’ electricity can be bought and sold on an exchange with blockchain ‘guaranteeing’ greenness. This seems even more far-fetched. At least an art work is unique. But electricity? Why can’t an unscrupulous owner of say a coal mine and a wind farm pass off electricity from the former in a blockchain-certified transaction? This is a question I put to Evan Caron, the founding partner and MD of a blockchain-based green energy trading system, Swytch. Caron offered the following, ‘The verification layer and asset system registration will verify the energy quantity and validate it against the type of technology used. Machine learning and artificial intelligence are used to determine if the energy source or source data is corrupted or had levels of irregularities.’ In other words, trust again comes from stuff that is external to the blockchain.

Blockchain has also been proposed for the exchange of contracts. In this issue we report on one such initiative from SAP and IBM to develop a blockchain-based joint venture accounting solution. One approach to this is the Ethereum Smart Contract,which has a mechanism for registering a contract alongside a blockhain. Maybe this is a less bullshit use case than some, I'm not sure. What I do know from my days as a consultant in an earlier digital transformation is that legal was the last department in the company to join the corporate network. I suspect that they will be similarly reluctant to turn their contracts over to some ‘open yet secure’ environment. Already, the Smart Contract world has seen some of its technology retired for security issues. The Smart Contract has been touted as having the potential to ‘cut lawyers out of the process altogether.’ That, as they say, is not going to happen.

Blockchain is a means of assuring the trustworthy exchange of a ‘token,’ bits and bytes if you like. The problem is the relationship between this token and anything else in the real world. This is also true for bitcoin whose relationship with real money is tenuous. You can’t use a bitcoin to buy stuff in a shop. I also understand that it can be much easier to exchange real money for bitcoins than the other way around as exchanges may have more or less liquidity. Again, the connection between the digital token and real cash is not guaranteed by the technology but by the local exchange.

So why all the fuss about blockchain? I think that it is the promise of a connection between the digital and the real world. This is an IT obsession, as witnessed too by the romance of 3D printing. Blockchain is touted as tying all and any non-digital assets into the computer. But it doesn’t. It needs some external agency such as a ‘permissioning’ authority to do this. Once that is in place, you don’t need blockchain at all!

* For a best in class example of blockchain bullshit read the World Economic Forum’s effusive post on, the Fourth Industrial Revolution and how blockchain is going to ‘upgrade society’s operating system.’

@neilmcn

Headlines

Oil IT Journal interview: Nelson Silva and Augusto Borella, Petrobras

Petrobras’ chief strategy officer is planning for digital moonshots and disruption. Examples include robotic reporting, real time AI-driven pressure monitoring. Call is out for in-house and outside expertise.

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SIRIUS researchers, Schlumberger and Statoil are developing a digital geological assistant for prospect evaluation.

Exploration geologists are, apparently, ‘limited by their reasoning capacities!’

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More from the 2018 IFPen DataSciEnergy event

Paraview - Total’s a big viewer for big data. Données Brute applies game theory, data science to the energy transition. Total’s random forest classifier bests the industry-standard approach to distillation column flood mitigation. IFPen uses a simple response surface for rapid evaluation of proposed well locations.

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Oil IT Journal interview: Michael Jones - Halliburton/Landmark

Landmark’s senior director of alliances, partnerships and strategy provides an update on Landmark’s OpenEarth initiative, now a 1700-strong developer community.

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2018 PNEC E&P Data Management Conference, Houston*

ConocoPhillips on the ‘million wells yet to be drilled in the US.’ Total’s data management revolution. Fixing Shell’s data ‘Tower of Babel.’ DrakeWell, ‘your data pipeline is your competitive advantage.’ BP’s GIS-enabled common operating picture. CGG on machine learning and document classification. Newfield’s daily text crawler. Talus, ‘don’t put all your data online.’ Shell, the Data Doc and sustainable petrophysical workflows. Enaxis defines the data lake. Wipro on the power of ‘small’ data management. Anadarko and Perigon’s ‘intelligent autoloader.’ PDS’ open source Witsml server.

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Equinor releases massive data set from decommissioned Volve oilfield

Open data supplied in Eclipse, OpenWorks, RMS and Witsml formats.

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Wall-to-wall machine learning for CGG GeoSoftware

PowerLog and Hampson Russel now expose open source ML functionality. CGG ‘lifts-and-shifts’ to the Azure cloud.

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Book Review: Intelligent Digital Oil and Gas Fields

A comprehensive guide to the digital oilfield from well-qualified specialists.

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Software, Hardware Short Takes

INT, Schlumberger AspenTech, Coreworx, Epsis, Flare Solutions, SeisWare, Geologic Systems, GeoTeric, Geovariances, Halliburton, Hexagon, NETL, Osisoft, Cougarstone, Ikon Science, Roxar, Thermo Scientific, Peloton, Yokogawa.

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Capital facilities information handover standard face-to-face meeting

Enthusiastic CFIHOS attendees hear from parallel initiatives (Mimosa, DEXPI, EPIM-STI) and on owner-operator deployment issues.

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Upstream Intelligence’s Data-driven drilling and production conference 2018, Houston

Quantico’s AI-derived logging while drilling. Energistics and drilling data standards. Flow Works/Lavoro for Hess’ tank automation. DataGumbo’s blockchain for smart contracts. WERCIA, artificial intelligence and ESP failure.

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Apache ‘PI AF is the language of Apache’

Comprehensive Asset Framework deployment links international Cygnet/WonderWare scada systems to remote operating center. AF powers artificial lift optimization and completions design.

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Electrification of Norway’s offshore industry. Siemens BlueVault. PG Flow Solutions electric pumps.

Equinor (ex-Statoil) burnishes environmental credentials. Siemens unveils BlueVault battery systems for offshore at OTC. PG Flow Solutions’ e-pumps for Aker BP’s Valhall Flank West.

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2018 WIB Seminar - safe and secure operations in the digital transformation

EU process industry operators hear from DSM on digital transformation in the process industry. NAMUR chair on standard promising ‘security by design.’ ExxonMobil on recent cyber attacks. DNV GL floats MECADA meter calibration and data analytics project.

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Safety first

DNV GL on State of Safety in 2018. CSB reports on continuing ‘deficiencies’ in offshore safety. PRCI analyzes inline inspection technologies. DNV GL studies wellhead fatigue. IOGP on oil and gas construction site safety. New safety kit from Electrolab and Det-Tronics.

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Machine learning detects integrity issues in subsea video

Clarus Subsea’s iCUE leverages historical dataset of corrosion imagery.

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Folks, facts, orgs ...

CMG, American Gas Association, Aqualis Offshore, ARMA, Arundo, Atwell, BCCK, Berkana Resources, C-Innovation, Chemical Safety Board, DNV GL, Equinor, ExxonMobil, Flotek, University of Western Australia, Geovariances, Global CCS Institute, Houston Exponential, Hunter Group, IFS, IOGP, Lazard Bank, Ikon Science, Energistics, Northern Trust, Oilfield Helping Hands, OspreyData, PPDM, CGG, Quorum Canada, Schneider Electric, Seeq, Siemens, SmartUQ, Steelhead LNG, Sure Shot Drilling, Teradata, Texas Railroad Commission, Wellsite, Williams, Wireless Seismic, ExxonMobil, Kosmos Energy, SensoLeak.

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Sales, partnerships, deployments ...

Accenture, AGR, GE, Altair, Arundo Analytics, Acteon Group, Aspen Technology, SAP, EnergySys, ENGlobal, GEP, INOVA, Innoseis, Kongsberg Maritime, Extractive Industries Transparency Initiative, Open Government Partnership, Halliburton, OSIsoft, Amazon Web Services, Percepto, KBR, Radix, Seeq, Siemens, PSE, Siemens, Evonik, Total, Google, Technical Toolboxes, Metegrity, eDrilling, WEX, S-Cube.

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2018 SAP in Oil & Gas, Lisbon

1000 plus attendees hear from Peter Maier on dual trends of greening of energy and digitization. Digitization means a shift to the cloud, whether public or private, hooking into SAP Leonardo Internet of Things and catching the train to microservices. SAP scope grows, although at least one major client warns of risk of spreading too widely. Fedem acquisition now blended with O&M offering as digital twin.

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IBM and SAP plan a blockchain-based joint venture accounting solution for oil and gas

New solution for billing reconciliation and settlement issues said to speed reconciliation. But may cannibalize SAP’s own JVA package.

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Done deals ...

DTN, Energy Management Institute, ENGlobal, AB Riley, Halliburton, OspreyData, Houston Ventures, P2 Energy Solutions, iLandMan, Whitehawk Advisory, Evangeline Securities, Uptake, Asset Performance Technologies, Google, SEC.

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Standards stuff

Energistics Online, IOGP USBL pilot, OGC MapML, OMG/OPC map between DDS and OPC-UA, W3C DCAT dataset exchange/Web of Things, SEC’s Bauguess on machine readability, XBRL ruleset for filing validation/Arelle open source EDGAR front end.

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Worth a mention

Inductive Automation on Oracle’s changes to Java roadmap. Blue Marble’s Beginners Guide to geodesy. Siemens Industrial Knowledge Graph. Explor super high density seismics. Litigation: Teradata vs. SAP. Total/Chesapeake vs rights holders, WellDog vs. Aussie ‘pirates.’

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