Every industry has suffered from the onslaught of Covid-19, but the role of oil and gas in supporting the majority of other industries means that the current levels of uncertainty are making life particularly difficult. With the price of oil being unreliable due to geopolitics along with the supply and demand policies that seem to change based on political and superpower agendas, is there a way for oil and gas companies to optimize project cash-flows by making better use of the resources that they have?
The oil and gas sector are under considerable strain even before arrival of the global pandemic. Alternative sources of power are becoming economically competitive, and while existing infrastructure gives an incumbent advantage, the challenge is no longer something that can simply ignored.
Regulators, meanwhile, are also looking at the sector and asking whether there are ways to improve efficiency that should be being implemented. And where it looks like the industry isn’t moving quickly enough, there is a risk that change is going to be imposed. In a world where low-cost drones can be flown over even the remotest sites to test for evidence of prohibited emissions, the threat of fines and lawsuits following unfixed leaks is getting larger.
Consumers are also starting to look elsewhere, with electric vehicles becoming a more and more common sight, not just in Europe but in Asia and North America as well. While high gas prices can be justified as part of the sector’s Covid-19 recouperation process, there is little doubt that they’ve accelerated the electrification process.
Finally, investors are also looking elsewhere. A decade or so ago, oil and gas projects were well supported by the market. Today the process of seeking funding can be more challenging.
Four steps to improve
So, what can be done? There are four simple ways that the PermianChain platform can enhance the way that oil and gas firms operate.
1. Release value early:
Primarily, PermianChain helps oil and gas organisations release value far earlier in a project’s development (watch video). Using our platform, oil and gas organisations can tokenise existing natural gas resources (that are convertible to electricity) and trade them with PermianChain who will then locate mobile data centres onsite for bitcoin mining. This means that an oil and gas firm can monetize associated, excess, wasted and/or stranded natural gas resources. Organisations can leverage PermianChain’s Digital Energy Currency (DEC) as a smart-offtake agreement (SOTA) to optimize revenue and cashflows, a considerable change on the current structure.
2. Automate bureaucracy
Secondly, because the tokens that are created stick with a volume of natural gas throughout its extraction, production, combustion and consumption, far more of the bureaucracy can be automated, helping keep costs down and ensuring that projects are as efficient as possible.
3. Slash costs
Related to this, the PermianChain structure massively reduces the need for broker involvement. On the one hand, the platform solves the market challenge of natural gas and addresses the inefficiencies in the funding challenges. Investment in a project is managed through the tokenization process, so transparency is significantly enhanced and the need for broker expertise is diminished. Again, this will help keep prices low, a massively attractive proposition in the current environment.
4. Be proactive
The PermianChain platform makes it simple to manage a value chain efficiently. It becomes simple to participate in an emerging ecosystem that is seeking low-cost and sustainable energy resources. In practice this will mean that oil and gas organisations can ensure the net benefit natural resources without adding significant sunk costs by establishing an onsite market to ensure that supply to the end consumer is consistent, whether that’s the open market, governments or militaries.
Simplicity and maximising returns while reducing emissions are an increasing focus of the industry over the next few years. PermianChain is well placed to support the sector as it evolves and transitions into the new energy era.
PermianChain Technologies is a pioneer member of the Blockchain Research Institute and a start-up member of the Petroleum Technology Alliance Canada (PTAC). PermianChain is implementing ways to harness the power of blockchain technology, data science and artificial intelligence to digitize, tokenize and monetize natural resources, starting with oil and gas. The PermianChain, which already has secured natural gas reserves to be listed on its platform, intends to unlock liquidity to revolutionise the way that oil and gas reserves are funded, produced, bought and sold. Creating value in resource finance and sustainability. For more information click here to fill our contact form.