Pipeline Mileage Needs Improvement: Onus On Mid-Stream Companies To Modernize Infrastructure

Since 2010, the crude oil production in North American shale patches have increased by 40% surpassing the figures in Russia and Saudi Arabia. Unfortunately, this development has not resulted in better transportation of energy due to old infrastructure and outdated logistic methods. Integrated pipeline systems with automation can accelerate the capacity per barrel and improve operations. Once the mid-stream company’s infrastructure is upgraded, the benefits are multifold. Otherwise, the slow progress and supply chain inefficiencies mar the functions and business.

If you run an E&P company, modernization of all systems should be a priority. This is the only way to get pipeline mileage for daily operations. The adoption of blockchain technology is highly recommended to get a competitive edge.

First Step: Catch Up With Infrastructure

As the US energy sector continues to produce additional crude oil, its timely transportation and delivery in the marketplace is critical for getting a good price. Outdated infrastructure is an impediment, and various obstacles occur in the following areas:

• Pipelines
• Ports
• Waterways & railroads
• Storage facilities for crude oil and refined oil
• Logistics involving transfer of natural gas from production sites to refineries
• Delivery to the end consumer
• Stranding of resources due to poor logistics
• Supply chain inefficiencies

These crucial areas need upgrades and sophisticated equipment to keep a healthy progress. There is a strong connection between the mid-stream infrastructure which involves the production of crude oil, refineries, and the storage plants. Moving the fuels from one terminal to another and storage in retail outlets lag due to gaps in information and logistics. Even if foreign investors are willing to back E & P companies, the trade deficit needs to be curbed by virtualization and adoption of technology. If these companies find investors who can put the money in upgrades on the blockchain platform, the expansion and modernization can add value to the production by creating jobs and additional revenue streams.

Modernization Of Blockchain Technology In Energy Companies

Consistent oil production quality and volume keep operators in demand. Larger organizations have taken up pilot projects to test how this technology trend is proving to be an asset for mid-stream operations. The results have been very encouraging especially when the focus is on transportation of the raw material to be refined.

The other benefits of adoption deal with:

1. Complex processes which can be handled better with a digital ledger system. It eliminates brokers, fraud transactions, and provides a high level of security. The encryption helps operators to control the distribution of information to stakeholders.
2. The data integrity is enhanced from the source to the end point, i.e., from the rig site to the storage facility. Due to data visibility, operations have improved in major pilot projects.
3. The ledger system decentralizes the database and decision making is clearer. The authority is not restricted to government, broker or the bank.
4. Real-time transactions ensure that there are no discrepancies. It puts a premium on self-governance. Contracts are legal and commercially safe to deal with.
5. There is a reduction of double spending or aberrations related to supply chains connected to oil production.

Managing Wells And Sub-Contractors:

Software-enabled systems form a crucial part of managing wells. The onus lies with the mid-stream companies to modernize the infrastructure. Doing small term pilot projects with the help of blockchain derivatives can provide the competitive edge in the market.  Since sub-contractors are also an integral part of the system their services can be matched on the blockchain platform.

Adding this latest trend will be useful for:

• Equipment tracking when maintenance is required.
• Payment and invoices get streamlined. Settlements are easier when this system is in force.
• Genealogy and deep data from basins can be encrypted with accuracy.
• All documents and transactions can be analyzed after the closure of the project. It makes the next production cycle more effective with a secure ledger system.
• The entire lifecycle of the well, asset allocation, and inventory can be managed securely.
• Contracts – old and new can be revised to get better deals.
• Regulatory compliances and audits are update with regular entries.

Skills Required For Competency:

The decision to adopt blockchain technology requires specific skillsets to get optimum business values from its applications. You will need to connect to a knowledgeable service provider who can create a roadmap and evolve a strategy around its functionality. Validating the structural changes for the oil production and provision for a ready-to-use platform is important to implement the systems for the pilot and actual projects. It is highly recommended to deploy the best team to leverage from the partnerships and be recognized in the market as a reliable oil producer.