There is a neat way of reducing waste in the oil and gas sector that will also meet the crypto sector’s growing appetite for electricity in a responsible way. And it could be the first step in significantly enhancing the way that the entire natural resources sector operates. Tokenization is more than hype.
The crypto sector offers efficient, low-cost transactions across a range of industries, it is challenging many established business models, and many people are excited. There’s a challenge though: it requires sustainable and reliable energy to verify the blocks of transactions taking place on the chain. These blocks contain datasets that are crucial to the transparency and reliability of any blockchain network.
Nevertheless, crypto enthusiasts suggest that the criticism around energy consumption is based on unfair studies that focus on first generation of crypto currencies and it would be fairer to look at more efficient second-generation currencies. They also say that studies also fail to take into account the myriad of secondary and tertiary activities associated with a traditional bank transaction, making like-for-like comparisons unfair.
This article is too short to go into these perspectives in detail, but suffice is to say that crypto clearly has a significant energy requirement that we need to meet in a cost-effective and environmentally responsible way if we are going to enjoy the full benefits of the technology.
Crypto needs electricity, natural gas is being wasted
The natural resources sector may already have the answer. The pockets of natural gas that accompany an oil deposit are often too small to make it worth building the pipes and other infrastructure necessary to get it to market. This gas is flared away or simply released into the atmosphere, which has both an environmental and an economic impact.
It is estimated that around 150 billion cubic meters of natural gas, translating to US$16 billion, is wasted in this way each year globally.
So, there is a demonstrable and growing demand for electricity from the crypto sector, and potential energy in the form of natural gas that is currently being wasted.
Put servers on location and reap the benefits
There is a relatively simple way to bring supply and demand together: put crypto servers onsite at a natural resource extraction project and power them with previously wasted gas. The infrastructure necessary is relatively small and can be moved to different locations as projects come to their end.
But why stop there? Part of the current antipathy towards oil and gas is the perception that there are structural issues causing waste all the way through the supply chain from the ground to the consumer.
In the case of natural resources, tokenising a volume of oil or gas at the point that it is brought out of the ground would be relatively simple and have far reaching benefits for pretty much every aspect of the sector.
Increased efficiency, enhanced transparency, reduced costs
A token could be used to enhance bureaucratic efficiency, which is exceptionally complex and involves assets being divided, mixed and changing forms as they move through the refinement process, as well as moving across jurisdictions. A token can be divided and change alongside the asset, making it clearer how natural resources move through the development process. Opportunities to reduce wastage or even impropriety would quickly become apparent, helping the sector enhance its reputation right at the point that it is being challenged by alternative energy sources.
Tokenising the oil and gas sector could deliver these benefits without a significant investment in the back-office, which is particularly important as the sector recovers from the uncertainty of the last 18 months.
Working with the crypto sector and tokening oil and gas assets could solve several of the issues that are likely to face the natural resources sector over the next few years. This is a superb opportunity to help both sectors move forward.
If you would like to find out more, visit us at our website, permianchain.com
PermianChain is a proprietary technology platform that brings together the crypto-mining and oil and gas sectors. Using a permissioned access blockchain, PermianChain makes it possible to utilize stranded and wasted energy resources, unlocking liquidity and transforming the way that oil and gas projects are funded, produced, bought and sold. Established in 2018, PermianChain Technologies is a pioneer member of the Blockchain Research Institute (BRI) and start-up member of the Petroleum Technology Alliance Canada (PTAC).