Oil Field DAO
The development of an oil field is a complex mission which requires a variety of different skills along with capital investment.
Before the asset owner company can sell oil and earn petro-dollars, it has to invest a lot of money into seismic survey, drilling of exploration and production wells, production surface facilities, oil pipe transportation system and so on.
The oil production requires a lot of professional technical personnel in different areas: starting from drill workers, field personnel to the geologist, drilling, reservoir, production engineers.
If some drilling process can be easily replaced by automation over the next decade by using hi-tech robotics technology, there are a lot of non-trivial tasks during field development where skilled human personnel is need.
In summary, the oil field development requires a money and educated people. A company who owns an oil field asset constantly are trying to optimize a search cost for investment and people. Today, a traditional top-down operator company has limited number of instruments to raise the fund and attract human resources:
- how to fund the field development: take a loan, invite investors, pay dividends,
- how to bring a skilled people: hunt the head, sign a work contract, pay competitive salaries.
New way of organization of the operator company can help to improve some challenges here.
The recent rapid development of distributed ledger technology and cryptography allows building a reliable, open, and programmable accounting system, leading to the invention of the Decentralized Autonomous Organization (DAO).
DAO is an open, self-organized network coordinated by incentives and self-executed code, cooperated around a shared goal. DAO is an organization that runs autonomously, in decentralized manner, that functions without the need for a central party to make decisions for the organization to grow. It builds on blockchain, in which governance and rules are encoded in the form of the smart contract. The daily operation can be programmable and automatically enforced to execute when meeting a specific condition.
Adopting a DAO type of business organization in the oil & gas industry has several advantages that can significantly simplify and optimize the search cost for capital and people. Some of them are discussed below:
- Easy raise the fund by selling a native token: Everyone can stake their money for oil field development starting from one $ or Satoshi. A token can represent the ownership of the oil reserves.
- Gather qualified personnel for specific task: People can join a DAO, choose a current task, complete it, and get paid by results and performance not by spending time.
A DAO type of organization in oil & gas field can become a very cost-effective and high-performance company due to transparency, common goal and clear incentive mechanism which are secured by blockchain technology.
