Blockchain, a digital distributed ledger system, will be tested on water handling services in North Dakota’s Bakken oil fields.
A group of companies including Chevron Corp., ConocoPhillips, Exxon Mobil Corp., Equinor, and Royal Dutch Shell has formed OOC Oil & Gas Blockchain Consortium and contracted with Data Gumbo, which is based in Houston.

It is being tried as an effort to lower administrative costs, while also reducing payment disputes and chances for fraud.

In the pilot, Data Gumbo’s blockchain technology will be used to automate payments, which are typically handled manually and through third-party reporting that increases costs.

Norwegian state-owned oil company Equinor, a member of the consortium, expects to save 25% in process costs related to salt water disposal from the technology, according to Equinor’s Rebecca Hofmann, who is also chairman of the consortium.

The technology could generate about $3.7 billion annually in cost savings for the oil and gas water business, Data Gumbo chief executive Andrew Bruce said. “There is going to be a huge amount of cost taken out of the whole supply chain,” Bruce said.