A Calgary-based not for profit company is currently in talks with several Indigenous communities in Western Canada about deploying blockchain to improve business efficiencies and payment of oil and gas royalties.
Blockchain for Indigenous Rights International (BIRI), initiated by GuildOne Inc. (GuildOne), says blockchain can reduce administrative costs and improve the accuracy and speed of payments from oil and gas production on reserve lands. GuildOne’s experience in this area is extensive and includes conducting the world’s first blockchain oil and gas royalty transaction on Energy Block Exchange (EBX), its blockchain business network for energy.
In Alberta, Saskatchewan, Manitoba and British Columbia there are many First Nations with active oil and gas assets. These assets are currently managed independently or by a federal crown agency, Indian Oil and Gas Canada (IOGC).
After conducting a high level data driven analysis based on First Nations owned acreage, adjacent acreage and corresponding production, GuildOne initiated BIRI in response to findings that suggested potential opportunities to increase royalty related revenue generation by employing data driven technology, such as blockchain.
“I realized that there is a tremendous opportunity for real and meaningful sharing of information and resources [with Indigenous communities] through blockchain,” said James Graham, CEO of GuildOne, which develops software solutions to identify, calculate and capture royalty entitlements.
“I have spent a career in boardrooms and workplaces aiming to help create a more fair and trustworthy system of account and transaction where we, as Canadians, share the business values of equity, equality, reconciliation and inclusion.”
Graham has also acted as an expert witness in legal actions to establish First Nations resource equity.
Blockchain has evolved from its early applications with cryptocurrency. It is now being used to mitigate costly data and contract disputes by automating transactions between parties based on concentualized contract terms; changing how business transactions take place. BIRI intends to deploy it to bring transparency and rapid exchange of value to Indigenous energy royalty transactions, impact benefit agreements and other business agreements.
Use cases have shown that blockchain can lower the cost per barrel of administration and accounting in royalty settlements by up to 80 per cent. It can also reduce settlement times from weeks to seconds, and disputes caused by differences in data by up to 90 per cent.
Oil and gas royalty settlements involve large amounts of data from various systems and complex calculations that take into account settlement periods, production volumes and pricing models. This often leads to disputes between the commodity producer and the royalty holder. This has disproportionally affected Indigenous communities, which often lack the expertise to understand the complex processes and the resources to pursue their legal entitlements.
BIRI Executive Director, Leah Bortolin, believes blockchain has the potential to build a renewed, consensus based, nation-to-nation, government-to-government relationship between Canada and its Indigenous People.
Bortolin has talked with over two dozen First Nations and organizations that are considering introducing blockchain not just in oil and gas, but in renewable energy, mining and other resource projects.
“Piikani First Nation in Southern Alberta sees opportunities for blockchain applications at its large wind farm and other natural resources,” said CEO Byron Jackson.
“We are overwhelmed with administering industry partnership and hope blockchain can help reduce that burden through smart contracts and automation,” Jackson said. “We are excited to see how blockchain can work for Piikani across all industry partnerships and encourage other Nations to see how this emerging technology can work for their nation.”