Introducing Ondiflo

Ondiflo is a joint venture between ConsenSys — a global blockchain solutions provider — and Amalto — a B2B integration leader for the oil and gas industry. The venture aims to provide bespoke, enterprise-grade blockchain solutions to oil and gas companies in the upstream, downstream, and midstream segments.

Since its launch in February 2018, Ondiflo has focused on two solutions: a platform for all ticketing-based services and consortium building between oil and gas stakeholders.

Ticketing Services Platform

Ondiflo’s first solution focuses on ameliorating the problem of reconciliation in the oil and gas industry. As discussed in detail in the article on upstream use cases for blockchain technology, reconciliation today is plagued by inefficient communication between dozens of stakeholders. The largest issues with reconciliation include: identity and certification, field capture errors, data sanitation, and financial reconciliation.

Together, these reconciliation issues reflect an industry rife with disparate data, inefficient system communication, and siloed financial processes. The delays in payment and reconciliation not only create frustration for those stakeholders awaiting compensation — they also create a tremendous amount of financial liability and risk as money “on the books” is not actually moving to the parties who need it.

Ondiflo’s blockchain-based ticketing solution aims to address the inefficiencies in reconciliation with radical data transparency. By submitting and managing data on a shared and secure platform, service providers, producers, refiners, transporters, and distributors can transfer data between one another seamlessly and instantly. Such optimized data transfer will ensure the proper certifications and information are verified. The solution creates a verifiable and trusted tradable instrument for supplier financing, so vendors are paid soon after delivering products and services, leading to even more cost savings and benefits.

Automation with IoT Devices

Ondiflo is seeking to automate the reconciliation process by connecting tank-level gauge readings with flow meters on tanks or trucks and with meters on disposal sites. IoT information from operations groups are integrated with truck-based electronic logging devices (ELD) or trucker device observations/readings to validate location, timing, quantity, or quality. Blockchain-based smart contracts apply the tolerances established in the master data for each step in the workflow in order to notify parties involved of data mismatches and ensure further actions can be taken near the time of events in the workflow.

With automation comes the need to replace error-prone manual entry. Ondiflo is working to provide reports to check and validate flows at aggregate levels based off geography or time intervals and identify statistically significant deviations. Such pattern recognition can optimize the use of assets and help reduce waste, abuse, and fraud.

ERP/CTRM Integration

The full value of a blockchain-based transaction workflow can be realized by extending data transparency back to the appropriate PO#, AFE#, or WBS code within the organizations’ back offices. This coordination requires strong integration with Enterprise Resource Planning (ERP) systems for each of the participant’s back office process. The design of these integrations would leverage the prevailing standards within each participating company while integrating blockchain-powered efficiency. At Ondiflo, the goal is to partner with leaders in transformation management to minimize the risks of blockchain adoption within each participating company.

The Ondiflo team has years of experience in automating the integration of back office systems at various companies across the oil and gas supply chain. Getting this part of the vision of a blockchain-based future correct will allow for the benefits of efficiency to be fully realized and for enterprise record systems to be streamlined and optimized.

Consortium Building

The Ondiflo team recognizes the hesitations traditional companies have to blockchain and believes in the ability of industry consortium to overcome those concerns and push forward the adoption of enterprise Ethereum and blockchain. The unique struggle to the oil and gas industry is: how do you create a sharing economy for adversarial companies within an industry? In other words, how do you convince competitors to invest in the same technology, use the same platform, and share data with each other?

Value of the Consortium Model

A consortium is a diverse group of stakeholders representing the various actors across the supply chain. Consortiums provide value by sharing resources, reducing the financial and behavioral costs of adoption, and engaging the network effect to catalyst industry evolution. Ondiflo is working to build a consortium including operators, service providers, trucking companies, terminals, banks, and other financial institutions.

The true potential of blockchain technology hinges on industry stakeholders agreeing upon and accepting certain standards for industry practices, data management, and inter-company communication. A consortium model contributes to the creation of industry standards that all members will embrace and adopt, while also establishing governance rules for future evolution. By redefining the boundaries of what can and cannot be shared, companies can reduce operating overheads and data mismanagement.

An industry-wide conversation has begun about taking a hard look at the value chain of oil and gas and the sources of competitive advantage that each company possesses. We have to ask: Is there a better way for companies to interact? Answering that question requires a hard look at what improvements can emerge from sharing and how to implement those improvements with blockchain technology.

Vision for the Consortium Model

What would it look like to share on an industrial level? We’ve seen sharing become integrated into the social media and services realm, but it is still a taboo subject for large, legacy companies. Many of these industry players have built their competitive advantages through information asymmetry, i.e. the disparate ownership of data; owning “more” or “better” data than their competitors.

While popular impression of the oil industry brings to mind stagnant innovation, ancient pumpjacks on Texas plains, and magnates such as Rockefeller, the oil and gas industry actually has a robust history of disruption. The convergence of blockchain technology, legacy industries, and the sharing economy presents another moment of disruption for the industry. We are witnessing a shift away from the traditional “scarcity mindset” where companies refuse to work together towards an “abundance mindset” where competitors share with one another in a new form of “co-opetition.”

In a meeting this summer, the Ondiflo team gathered a group of senior executives from leading oil and gas companies for an early-stage conversation about consortium-building within the industry. They were asked to name what business information they would be open to sharing with competitors, customers, and vendors. The initial response was complete silence. With some further discussion, however, they reached consensus on sharing non-sensitive information like invoice addresses, public regulatory information, and industry-wide master data. As expected, however, sharing proprietary information such as pricing information and bilateral trade volumes was vehemently opposed.

The challenge and opportunity for Ondiflo was clear: build platforms that facilitate the sharing of non-sensitive information that would improve efficiency and coordination while simultaneously protecting competitive information from being seen by others on the same platform.

Ondiflo: Looking Ahead

So how does a company begin its journey towards co-opetition, sharing, and blockchain integration? First, collaborate with industry peers at all points in the value chain. Seek to influence industry-wide standards that allow participants to rapidly and securely share data with other stakeholders. Brainstorm crypto-economic incentive structures to effect desired behaviors across your industry. Seek emerging “white spaces” where new technology can provide significant savings and new revenue sources. Temper the excitement and hype with the reality that collaboration means you might not get everything you want, but that short-term concessions lead to long-term growth.

One such experiment around blockchain integration in oil and gas upstream, midstream and downstream sectors is getting off the ground. Ondiflo is bringing together oil and gas operators, oil field service companies, trucking companies, refineries, pipelines, banks, brokers, exchanges, and systems companies to create the standards for sharing and governance in the industry. With the backing of ConsenSys, who is deeply involved in creating blockchain-based ecosystems, and Amalto, with integral understandings of the fundamentals of industry operations, this may be a template for other industries and other supply chains to bring sharing and its benefits to the industrial masses. It’s a true win-win scenario, as we are empowering our future clients to participate actively in the governance of our product by sharing and collaborating with peers.

If you are part of a company in the oil and gas industry and are interested in the Ondiflo Consortium, email here. If you are looking for more information, visit here.