Can Putting Blockchain on Drilling Rigs Really Get Everyone on the Same Screen?
- Stephen Rassenfoss (JPT Emerging Technology Senior Editor)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- September 2018
- Document Type
- Journal Paper
- 44 - 46
- 2018. Copyright is held partially by SPE. Contact SPE for permission to use material from this document.
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When Diamond Offshore Drilling announced that it will be equipping its offshore drilling rigs with blockchain, the calls started coming.
“I was shocked by the response on the first 4 days,” said Harris Reynolds, manager for research and development for Diamond Offshore. The reaction exceeded anything he had seen in more than 3 decades of product development.
The level of interest was surprising in an industry where customers are normally wary of new things until totally proven. Blockchain for drilling is an industry-first based on technology from outside the oil and gas industry that has never been field-tested, and will be valuable only if it disrupts how things are done.
The last point actually may be a positive. The hope is that blockchain can open the door to significant cost reductions by putting everyone on the same screen. The software created in partnership with a pioneer in that field, Data Gumbo, creates a common view of the plan, predicted costs, progress, and performance of everyone working in an offshore project, among many things.
While a drilling company took the initiative looking for a competitive edge, it was built for use by operating companies that will define how this tool will be used. Diamond is seeking initial users of its blockchain service, which it plans to install on its most advanced drilling rigs by year end and eventually on its entire fleet.
“We are just one part of the spread, a fraction of that,” said Reynolds, adding that the company is trying to speed an advance in the industry, which it expects will become common in a few years.
Blockchain’s claim to fame is the software used to record who owns Bitcoin. The safeguards built into the system create an “immutable ledger” of those who create Bitcoin and the parties involved when the crypto currency changes hands. That makes it possible to track a chain of ownership that can be audited.
In oil and gas, the goal is to use an industrial version of the software to create a common account of things that are tracked now using a variety of tools such as relational databases or spreadsheets. Blockchain descriptions often refer to these as ledgers. The problem is the numbers often vary, reflecting different points of view and different record-keeping systems.
“That is the thing. Their accounting software and my accounting system have got different records of what happened,” said Andrew Bruce, chief executive officer for Data Gumbo. Opportunities are missed because “data is out there but it is on an island,” Reynolds said.
The system creates a constantly updated chain of blocks, which cannot be altered, recording facts on a certain topic. With blockchain, Bruce said, “everybody gets a record and there is no room for dispute.”
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