NetworkNewsWire
Editorial Coverage: The stunning rise of bitcoin’s price from
under $1,000 at the start of the year to above $11,000 at the start
of December has generated an intense scramble by investors to
identify opportunities that relate to the cryptocurrency and the
blockchain — the distributed ledger that underlies bitcoin. One
industry that may be particularly well suited to benefit from
blockchain technology is the petroleum fuel market for oil and
gas. Petroteq (TSX.V: PQE) (OTCQX: PQEFF)
(PQEFF
profile) is one energy industry participant that
believes in the potential of the blockchain, recently announcing a
partnership that positions it to bring the power of cryptocurrency
to the sector. It joins other blockchain players such as
Riot Blockchain (NASDAQ: RIOT), Marathon Patent Group, Inc.
(NASDAQ: MARA), BP (NYSE: BP) and Wipro Limited
(NYSE: WIT).
Equipped with patent-pending technologies, Petroteq (TSX.V:
PQE) (OTCQX: PQEFF) is economically extracting heavy oils from
oil sands, oil shale deposits and shallow oil deposits. The
environmentally-friendly system dramatically lowers the cost per
barrel of production, produces no greenhouse gases, requires no
high temperatures, leaves only clean dry sand and can easily be
deployed anywhere in the world to unlock heavy oil deposits.
As part of its strategy to build advanced oil processing and
refining facilities around the world, Petroteq encountered an
impediment: less-than-optimal global oil and gas industry supply
chain channels. Already familiar with the intricacies of the oil
and gas industry, Petroteq quickly recognized the business
opportunity at hand. In its quest for a solution to overcome
difficulties associated with the industry’s supply chain
inefficiencies and bottlenecks, Petroteq recently partnered with
First Bitcoin Capital (OTC: BITCF) to develop and operate an
enterprise-grade, blockchain-based platform called Petrobloq
(https://petrobloq.com/) that will enable oil and gas
companies globally to conduct transactions.
Petrobloq will constitute the first blockchain-based platform
devoted entirely to serving oil and gas industry supply chain
needs. The project is designed to address the cost constraints
industry participants face in the wake of almost seven years of oil
prices languishing at levels far below their $120 peak. Petroteq
expects Petrobloq users will realize cost and time savings while
benefiting from the increased transparency offered by the
blockchain, enabling them to more easily navigate the vicissitudes
of an ever-evolving global market.
"As a company focused on the development and implementation of
proprietary technologies for the environmentally safe extraction of
heavy oils, we understand the importance of developing new
technologies, especially blockchain-based innovations, to help
companies in our industry to get competitive advantage and cost
efficiency," Petroteq CEO Alex Blyumkin said in announcing the
partnership with First Bitcoin Capital (http://nnw.fm/l3hJ4).
The blockchain is an open-distributed ledger system that stores
encrypted “blocks” of information over a worldwide connected
network of anonymous computers. Because the network stretches over
many computers, the “chain” making up the system’s “blocks” is
distributed, or spread, over the network in a decentralized manner,
meaning that it is not under the central control of any single
entity, whether government, individual or company.
As new blocks are created, they are added to the chain linearly
according to chronological order, enabling the blockchain to grow
indefinitely. All information added is recorded permanently and
synchronized across all of the networked computers in the chain so
that retroactive editing or alteration of entries is impossible. As
a result, the data is “secure by design,” providing a publicly
available, verifiable history of all past transactions.
Its robust transparency and resistance to alteration makes the
blockchain a powerful tool for records management activity
involving any type of digitized assets. Given the heavily regulated
nature of the oil and gas industry, with a variety of government
protocols and industry specifications related to environmental
impacts, refining, taxation, etc., the blockchain offers a secure
method for completing tasks required under that framework. These
could include real-time data sharing with regulators or exchanging
information with joint-venture partners.
The blockchain’s transparency also provides a company’s managers
or investors with the ability to audit its history, helping to
avoid contract conflicts and adding efficiency to the due diligence
process. By potentially saving time and eliminating contract snafus
that could lead to millions of dollars in losses, the blockchain
may revolutionize the way business is done in the oil and gas
industry.
Another area of impact is the ability to reduce the damage
caused by hacking attacks. In the wake of attacks on major energy
industry players in recent years, the industry may be seen as
highly vulnerable on a global basis. The blockchain’s nature as a
system that is synchronized and distributed makes it highly
resistant to hacking.
"Oil and gas companies could benefit from blockchain technology
for a range of applications, from optimizing efficiency to
transparency in business transactions to securely storing inventory
data on the blockchain,” First Bitcoin Capital CEO Greg Rubin
stated in a press release. “In the last few
years, the industry has struggled with price volatility and
production levels, which has led to cost-cutting efforts, reduced
outputs and layoffs. These challenges have prompted many companies
to rethink how they operate and to identify new ways to optimize
supply chain management and transaction processing. As such,
blockchain is gaining traction and broader acceptance by oil and
gas industry for its potential to fundamentally change the way
certain transactions are conducted."
Petroteq and First Bitcoin are quickly moving Petrobloq into key
industry circles. Earlier this week, Petrobloq joined
the Enterprise Ethereum Alliance (EEA), the world’s largest
open-source blockchain initiative (http://nnw.fm/19eTr), and the American Petroleum
Institute (API), which is the only national trade association
representing all facets of the oil and natural gas industry as it
promotes safety across the industry and influences public policy in
support of a strong, viable oil and natural gas industry on a
global level (http://nnw.fm/t3YeL).
“PetroBLOQ is looking forward to leveraging our collective
experience in the oil and gas industry and with blockchain
technology to help solve the inherent difficulties and complexities
up and down the industry,” Rubin stated in the news release.
In addition to its blockchain initiative, Petroteq is expanding
production capacity at its Asphalt Ridge heavy oil extraction
facility near Vernal, Utah. The company’s leased oil resources
contain 87 million barrels, with production expected to start in
2018 toward a goal of 5,000 barrels of oil per day (BOPD) in 2019.
In addition, the company owns a minority stake in an exploration
and production play in Southwest Texas held by Accord GR Energy
Inc.
In a sign of their faith in the company’s prospects, Petroteq’s
CEO and chairman have invested $10 million of their own money in
the company.
Riot Blockchain (NASDAQ: RIOT) is a company
that has been well rewarded for its initiatives in the hot
blockchain sector. The company formerly was known as Bioptix, Inc.
but changed its focus from biotech to building and supporting
blockchain technology companies in October. Riot’s stock has
skyrocketed as a result of this strategic shift, rising from under
$7 per share early in November to over $15 this month. The
company’s objective is to brand itself as a leading blockchain
authority and offer investment exposure to the blockchain
environment.
In addition to taking steps to establish a cryptocurrency mining
operation, Riot has announced a strategic investment in Verady,
LLC, which provides accounting standards and auditing services to
the cryptocurrency market. This investment, even though it is aimed
at a different industry sector, demonstrates that Petroteq is not
alone in seeking to take advantage of the power of the blockchain
for auditing and accounting purposes.
Another company that has seen its stock price rally
substantially after making a move into the blockchain arena — from
under $1 to over $4 a share — is Marathon Patent Group
(NASDAQ: MARA). Marathon is an IP licensing and management
company that recently purchased Global Bit Ventures, a digital
asset technology company engaged in the mining of cryptocurrencies.
The company believes that this acquisition will help it enhance
shareholder value by participating in the revolution in digital
transactions made possible by the development of the blockchain.
The company believes that blockchain protocols will increasingly be
adopted in our day-to-day lives.
Blockchain technology has also attracted the interest of major
enterprises. Energy industry heavyweight BP (NYSE:
BP), a major integrated oil and gas company with
operations around the world, has been following the technology’s
development closely. In its corporate magazine (http://nnw.fm/5NtEO), a focus on next generation
technologies included an article on the blockchain. The article
credits the innovative technology with possessing the potential to
disrupt entire industries. BP sees the blockchain as presenting the
opportunity to create new business models for trading, supply chain
management and retail in the energy industry. As an example of its
potential, the article mentions that the company could use the
blockchain to process payments directly from the blockchain
“wallet” of an automobile driver to a business such as a retail
store without involving a bank.
Wipro Limited (NYSE: WIT) provides global
information technology consulting and business process services. It
recently announced that it will be working in conjunction with
Hyperledger on the design and development of enterprise-grade
blockchain deployments. Hyperledger is a worldwide, open source,
collaborative effort with the goal of advancing inter-industry
blockchain technologies in a variety of sectors, including finance,
supply chain, manufacturing, banking and the Internet of Things
(IoT).
Wipro believes the blockchain to be a prime driver of digital
innovation and transformation throughout the enterprise. The
company assists its clients in experimenting with and deploying
proof-of-concepts on blockchain. In the press release announcing the
partnership with Hyperledger, the company’s vice president of
Service Transformation said that Wipro has experienced an increase
in the demand for the use of Hyperledger by its customers for the
purpose of creating blockchain solutions at the enterprise
level.
With the use of the blockchain seemingly poised to rapidly
expand beyond cryptocurrencies into other industries such as oil
and gas, the companies named above offer investors the opportunity
to participate, to one degree or another, in the investment
potential of the blockchain’s innovative technology.
For more information on Petroteq, please visit Petroteq (TSX.V:
PQE) (OTCQX: PQEFF)
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