The OOC Oil & Gas Blockchain Consortium with its ten core members reached a significant milestone on Dec. 10, 2019, by successfully demonstrating blockchain in action for the AFE Balloting use case. The proof of concept (POC) developed by the consortium with GuildOne showcased distributed ledger technology with an operating node for each company, allowing them to digitize the balloting process.

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The event hosted at ConocoPhillips began with an introduction to the Consortium’s objectives and the benefits of blockchain. Vanessa Thompson, Project Champion, provided context on the current way the industry conducts the balloting process, as well as a potential future state leveraging blockchain technology. GuildOne’s Kent Moore and the AFE Balloting project team demonstrated five scenarios where elections were made on the blockchain, resulting in automatically calculated working interest percentages through multi-round balloting. Each of the five scenarios increased in complexity and showcased the following actions:

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• Scenario 1 demonstrated all companies electing to participate in a proposal with the operator’s pre-determined working interest assignment based on a joint operating agreement.

• Scenario 2 demonstrated a two-round ballot, with the first round showing two companies electing to non-consent a proposal. A subsequent automated workflow (second-round ballot) was triggered by those non-consents whereby remaining companies were given the option to assume additional interest. Logic was also exhibited regarding “non-response”.

• Scenario 3 continued to build on digitization logic demonstrated in the prior scenarios but included the additional election of “accepted with extra” in the second-round ballot. Companies that made this election were automatically attributed additional interest based on programmed algorithms.

• Scenario 4 introduced a new concept enabling the management of multiple controlling contracts, including forced pooling. Non-consent elections made by a company subject to one contract were not offered to companies subject to other contracts in the second ballot round.

• Scenario 5 concluded with an accumulation of all functionalities demonstrated above but brought all variables into a single balloting process.

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The POC successfully demonstrates that blockchain technology does indeed bring the projected benefits of improved transparency, faster cycle times, reduced potential for error or data loss, which can all lead to significant time and cost savings for the industry in the balloting process. The truest value demonstrated is an industry joining together to provide consensus on how to work in the future. 

 

We are encouraged by our progress and therefore plan to combine AFE Balloting and JIB Exchange use cases into a more holistic end-to-end solution for the joint venture management process in 2020. 

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To reference the news release, please follow the link here.

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