A Consortium Blockchain for Smart Contracts in Oil and Gas Projects

Abstract

The task of managing petroleum projects is often cumbersome and complex, as these projects involve a vast number of activities that are often conducted in remote and potentially dispersed locations. In addition, petroleum projects must reconcile the many transactions that occur between multiple stakeholders, including the developer and their contractors. Due to this nature of business, projects are subject to fraudulent activity, cyber-attacks and lost time. To alleviate these issues, this paper presents a Proof-of-Work (PoW) consortium blockchain that executes and tracks oil and gas project tasks, while providing secured and transparent documentation and time stamping for all the project activities. Historically, many companies have worked on technologies to improve scheduling and project management by implementing intelligent and digitized information system solutions. Yet, these solutions require a centralized entity to monitor the activities - leading to errors and fraud. The approach adopted here overcomes these limitations by suggesting a smart contract decentralized blockchain that can solve many of the problems preventing management efficiency. The process utilizes a web-based framework that scans record tamper-evident transactions based on peer-to-peer network involving the developer and the contractor machines. The approach also creates a web interface to allow stakeholders to interact with the blockchain and store schedule updates and completion certificates. As there is no paperwork to process, and no time wasted on reconciling errors associated with filing these documents, the proposed application demonstrates a promising tool to improve speed, efficiency, and accuracy. It can enforce the contract conditions and manage the tracking of complex oil and gas activities. Employees within the developer and contractor companies can record a transaction in the network and ensure that the data within the block is not tampered with and contain a secured timestamp. The record is stored in the multiple machines available in the network and serves as a digital signature for each activity completed in the project. However, because the network is open to all stakeholders, the process requires regulation to prevent adverse events, such as members posting without restrictions. To overcome this limitation, each member is required to have a public and private key to post in the application. The paper also discusses other potential limitations to this approach to project management, and strategies that can be employed to make this use of blockchain technology viable in commercial settings. Because the data stored in the proposed blockchain is immutable, secured, and transparent, the blockchain application has the potential to transform the traditional process by tracking and digitally time-stamping all the project deliverables required by the stakeholders involved. Nevertheless, the paper argues that there are several technical, security and legal limitations needed to be addressed before having the application as mainstream.