Expert Insight

Oil, blockchain and evidence

While many sector leaders tend to be slow in adopting emerging systematic technologies, those of the oil and gas industry continue to lead the emergence and development of the Internet of Things. 

Put simply, IoT represents the transfer of data and adjustment/optimisation of processes without the need for human input or interaction. Common examples include smart homes, wearable tech (such as smart watches) and even some models of cars.

In the oil industry, the benefits of IoT are realised in the form of networks of sensors built into a web of inputs and optimising outputs. A company might reposition a rig, for example, in response to sensors measuring the wind, waves, and other important environmental considerations. Given the heavy regulatory requirements of the sector, the ability to accurately data, analysis, and final decisions is vital to passing internal and external verification and audits.

But what about when things go wrong? When IoT fails, there is clear and present need for a method of ensuring availability and reliability of associated data and decisions based on such. Relevant investment and management entities require an explanation, safety commissions and investigations require proof, and the company itself wants to know exactly what went wrong and how to prevent such a failure in the future.

Blockchain-based proof chains are the best solution to that need. By implementing the principles of distributed ledger technology and adjusting them to better suit the needs of the industry, oil and gas applications can effectively record and adjust for changing conditions and failures of any scale. Blockchain tech allows companies to record high volumes of granular data from sensors in order to record the reasons for actions and the information that drove them in a provably accurate way for future decision making, safety regulations and procedural audits.

At its core, the blockchain allows for “linked” datapoint input, wherein collections of transactions (an umbrella term to allow for exchange of value, transmissions of data, or other recordable events) are grouped into “blocks” and stored in an interlocked chain. By linking the blocks, distributed ledgers ensure the immutability of past entries. In order to alter previous inputs, the responsible party must also re-process every transaction linked after the target block. Given the computing power necessary to create a single block, the rapid-stacking of the blockchain ensures near-perfect security and integrity of all previous blocks.

In much the same way, blockchain integration into an established IoT network ensures traceability of events leading up to a failure, as well as response and outcome. Rather than a post-mortem approach of manual collection and analysis, a blockchain system can identify (with provable certainty) exactly what actions triggered the negative outcome, as well as related data and any individual responsibility.

Imagine that Dino Oil runs an IoT network, connecting its many rigs into a network of internal and external sensors. These sensors feed data into a controlling algorithm, which adjusts relevant processes to account for changes and optimize output. Somewhere along the line, though, the algorithm produces an action that results in a spill. Immediately, government and environmental agencies, as well as internal review processes and other stakeholders, demand an explanation.

A proof of evidence protocol based in the blockchain could systematically produce verifiable and immutable certificates to satisfy these many requests. Much like a direct copy of the relevant piece of the chain, such a certificate allows for confirmation of events and the provable retelling of events leading up to the spill.  This saves the responsible company and all investigative enquires a huge amount of time in the verification process, as the method for data collection (IoT/blockchain integration) inherently disposes of need for additional processes.

While the IoT looks to keep expanding in consumer and enterprise applications, complementary adoption of blockchain tracking and collection is vital in ensuring the integrity and maximum value use of such.

About the author

Adrian Clarke,Founder of tech startup Evident Proof and CEO of Berkshire Cloud & former Microsoft CTO and Innovation director. Evident Proof uses blockchain technology to bring ‘trusted, distributed consensus’ to supply chain management.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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