The Carnrite Group is proud to announce a strategic partnership with Data Gumbo to lead the next revolution in the Oil and Gas Industry supply chain. Data Gumbo’s blockchain technology and smart contracts, together with Carnrite’s deep industry expertise will help companies across the industry better align incentives across the value chain, improve performance and sustainably reduce costs.
“The Carnrite Group has been a strategic partner to the energy industry for over 25 years, and we’re always searching for innovative ways to bring added value to clients,” says Al Carnrite, CEO of the Carnrite Group.
“We believe we have found such a solution with Data Gumbo. Transparency between service companies and producers, made possible by blockchain technology, will eliminate waste and drive higher margins for all parties. Data Gumbo brings real-world and practical expertise utilizing innovative technologies to incentivize our industry to drive radical improvements.”
What is Blockchain and Smart Contracts?
A ‘blockchain’ is a distributed ledger that can record transactions between multiple parties efficiently and in a verifiable and transparent way. Each party maintains a copy of the distributed ledger on their own network, and new entries are only added after consensus by both parties.
A smart contract is a computer algorithm designed to facilitate, verify and enforce the performance of a contract. Breaking from the day-rate model of the industry, performance-based contracts reward improvement of agreed-upon Key Performance Indicators (KPI), which aligns incentives and fosters lasting partnerships.
“Smart contracts keep both sides honest. Buyers and sellers receive bonuses and penalties based on real data,” says Andrew Bruce, CEO of Data Gumbo.
“One client determined that an achievable 17% improvement in a single drilling KPI would yield $250 million in annual savings. This example is one out of hundreds of processes required to drill, complete, and produce oil and natural gas, indicating ample additional opportunity for mutually-beneficial cost savings.”
How it works
- Participants in a smart contract determine the terms and KPIs needed to measure performance. Examples include on-time delivery of equipment, completion of certain activities on a rig site or average drill pipe connection times.
- Parties define the parameters of the KPIs. For example, what constitutes a complete delivery? How are the rig activities defined? What is the definition of a connection?
- Parties agree on a source or sources of data that will serve as “truth” for the contract. This may include data in an ERP, entries on a daily report or other field data sources.
- Data Gumbo’s platform collects the required data, standardizes it for use by the smart contract algorithms, and executes the smart contract on a configurable schedule. This produces one ‘block’, or ledger entry. Each participant runs a node that performs all functions of the smart contract and distributed ledger, and all nodes compare results. If all agree, the results are approved and payment executes automatically.
- All raw data, calculations and results are retained in the blockchain for future review and audit.
Data Gumbo, led by Andrew Bruce, is a Houston-based provider of blockchain smart contracts as a service founded in 2016. For more information, contact Andrew Bruce at firstname.lastname@example.org or Nick Carnrite at email@example.com.