Equinor ASA completed the first live implementation of smart contracts in offshore oil and gas drilling, according to a joint release with Houston-based tech firm Data Gumbo on Oct. 25.
“We are pleased to move from testing to implementation of smart contracts,” commented Erik Gustav Kirkemo, senior vice president of drilling and well at Equinor.
Equinor implemented Data Gumbo’s smart contract platform to automatically calculate and execute payments for integrated drilling and well services (IDWS) day rates for Johan Sverdrup and Troll assets in the Norwegian North Sea.
Data Gumbo’s smart contract network, GumboNet™, enables the company to automate payments under their existing natural language contract using Industrial Internet of Things (IIoT) data from Equinor and third-party logistics systems. The smart contracts enable efficiency and automation gains both internally and for our service providers, according to Kirkemo.
“[Smart contracts have] the potential to take significant workload off the desk of many people at the same time as we remain compliant to our responsibilities,” he said. “It allows all participants involved to continue to focus on drilling safe and sustainable wells while taking advantage of the benefit of automation in invoicing processes.”
Equinor chose to start with the day rate portions of the broader contract for two assets worked by one platform and four drilling rigs.
The Norwegian energy company and its supplier share a variety of data including purchase orders, daily reports, logging, and control system telemetry with GumboNet™. The smart contract then applies agreed business logic to this data and creates charges and invoices, which Equinor and their supplier review.
Once approved, GumboNet™ pushes the charges to SAP via a secure API to complete the payment cycle.
“Equinor is leading the world in industrial business-to-business smart contracts,” Data Gumbo CEO William Fox commented in the release. “Smart contracts are providing unprecedented automation, transparency, and efficiency in the energy industry. The more work we do with operators and their supply chains, the more value we find for all parties that participate.”
Equinor continues to expand the automation of the company’s IDWS agreements with a goal of 80%+ total contract coverage by fourth-quarter 2022. Additional smart contracts in development and testing include lump sum deliveries, meter rates, volume rates, incentives and personnel charges, according to the release.