Water management

Blockchain Pilot Finds Success in the Oil Field

A blockchain pilot program conducted by an oil and gas consortium has shown promise in automating payments for oilfield water handling.


An oil and gas consortium that is testing blockchain—distributed-ledger software—reported that the results of its pilot were promising, paving the way for members to use the technology at production sites.

Blockchain is a peer-to-peer network technology that uses computer science techniques to enable trustworthy interactions. As the underlying technology behind bitcoin cryptocurrency, blockchain could profoundly affect the oil and gas industry by reducing operational time and costs while increasing transparency in the industry.

The Offshore Operators Committee (OOC) Oil and Gas Blockchain Consortium had tested blockchain technology from supplier Data Gumbo to automate payments for oilfield water handling. The 10-member consortium includes ConocoPhillips, Equinor, ExxonMobil, Repsol, and Shell.

The pilot proved a platform for automating produced-water haulage from field reading to invoice payment. It was executed on five Equinor wells in the Bakken field in North Dakota with water logistics and transportation provider Nuverra Environmental Solutions and a midstream disposal company.

Blockchain, which underpins bitcoin and other digital currencies, is a distributed ledger that can make and verify transactions on a network in real time, offering the potential to speed transactions, cut costs, and lower the risk of fraud.

In the consortium’s pilot, the technology eliminated nine steps and reduced the work flow process from 90–120 days to 1–7 days. It also automatically validated 85% of all volume measurements.

Although the pilot focused exclusively on water hauling, the group plans to expand the use of blockchain to other commodities and services to reduce costs, improve timelines, and eliminate disputes among member companies.

The pilot finished at the end of January, but the process for moving forward with the technology was accelerated because of the COVID-19 pandemic and the oil price spiral.

The solution represents a gateway for numerous industry use cases, which can transform the way operators work with oilfield suppliers and vendors and how goods and services can be validated in the field to trigger automatic payments and near-real time expense tracking.