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PermianChain Supplier: a blockchain-integrated framework for energy resource finance and trading

14 September 2021

PermianChain Supplier enables exploration and production (E&P) companies to unlock value from proven energy resources while offering a bridge between E&P companies and registered exempt market dealers (EMDs). It delivers access to potential capital sources without adding to the administrative burden. Our platform helps E&P companies catalogue, manage and create new forms of value from proven reserves. It supports collaboration with registered EMDs to achieve sustainable resource financing, and it delivers a digital marketplace where energy projects and digital-asset miners can trade tokenised, field-generated electricity to power onsite server farms.

The Challenge

With US President Biden’s environmental agenda adding to the pressure from governments in Canada and across Europe, the energy sector needs to show that it is using the world’s resources responsibly.
This pressure, coupled with the changing focus of the global energy mix means that institutional investors that have traditionally supported E&P projects are turning away from the industry, making financing and access to market an increasing challenge.

The Solution

PermianChain Supplier is part of a suite of blockchain-based tools and services that enable the sector to enhance the way that it operates. It helps E&P firms reduce waste, while the low barriers to entry will enhance returns and attract new sources of capital.
PermianChain Supplier creates an evolutionary marketplace for natural gas, where E&P companies can sell field-generated electricity to digital-asset miners. The blockchain has an insatiable appetite for power and around US$16 billion of power is wasted each year in the form of natural gas that is either flared or released. [1] In Canada, it is estimated that there are US$110 billion of stranded natural gas resources that currently have no commercial value. By creating a digital market that offers onsite supply of responsibly produced energy, we believe that we can significantly reduce the pressure on both the oil and gas and the crypto sectors.

How It Works

PermianChain Supplier simplifies several complex tasks:
  1. Issue digital securities: Registered EMDs can list securities created by E&Ps on the PermianChain Investor dashboard so that they can be offered to accredited investors
  2. Enable potential buyers and sellers to communicate directly: Enhancing communication to simplify the development of a blockchain-based digital market for field generated electricity
  3. Convert natural gas into tradable smart contracts: Using Smart Off-Take Agreements (SOTA), the value of natural resources can be released quickly and transparently

The Technical Process

Issuing a digital security

Create a Supplier account at supplier.permianchain.com
Click on ‘Campaigns’ from the menu tab
Click on ‘Add Campaign’ from the Campaigns page
Supplier gathers documentation on reserves for PermianChain’s due diligence prior to adding a production campaign to the PermianChain platform.
Supplier inputs ‘Average Production Details’ and uploads an internal or third-party reserve report. Documentation is compressed, encrypted, and saved in decentralized cloud storage.
PermianChain’s experts and advisors (including geologists, petroleum engineers, acquisitions and divestitures consultants) conduct due diligence on each supplier in exchange for an agreed amount of Digital Energy Currency (DEC), PermianChain’s native token.
If at least two experts approve the submission, then proof of submission, proof of approval, and hashes of supplier’s datasets are automatically published to PermianChain’s blockchain explorer (IBM Hyperledger Fabric)
Supplier can now go back to the Campaigns page from the supplier dashboard to ‘Select EMD’
Once the supplier has selected an EMD, they go through the EMD’s onboarding process and submit know-your-customer (KYC) information
Once the supplier’s submission is completed and approved by the EMD, they work together to formulate the offering structure, determine capital requirements and share structure
The EMD submits the details onto the PermianChain platform, which generates an ERC20 smart contract with coded restrictions to comply with securities laws
Upon review, approval and audit of the smart contract, the supplier’s ERC20 tokens are listed on the PermianChain Investor dashboard where the EMD’s clients can browse, review and subscribe
A more detailed flow-chart on this process is available on request.

Sell Natural Gas into SOTAs

Supplier gathers documentation on reserves for PermianChain’s due diligence prior to adding a production campaign to the PermianChain platform.
Supplier uploads documents through PermianChain’s dashboard. Documentation is compressed, encrypted, and saved in decentralized cloud storage.
PermianChain’s experts and advisors (including geologists, petroleum engineers, acquisitions and divestitures consultants) conduct due diligence on each supplier in exchange for an agreed amount of Digital Energy Currency (DEC), PermianChain’s native token.
If at least two experts approve the submission, then proof of submission, proof of approval, and hashes of supplier’s datasets are automatically published to PermianChain’s blockchain explorer (IBM Hyperledger Fabric).
The PermianChain-appointed treasurer unlocks a quantity of DECs, making them available for sale.
Miner buys DEC tokens to secure power from natural gas resources.
Miner submits purchase order and sends the order amount to PermianChain’s smart contract, where it is held until the end of the term specified.
Miner receives access to natural gas power in the form of kWh.
Supplier processes an order to deliver power via on-site power generation. The miner ships mining servers to the supplier for installation in containerized data centres.
Once the mining equipment is up and running, an automatic confirmation for the receipt of power is triggered, this releases funds to the supplier on a monthly basis for the power consumption of the miner’s mining servers.

The Benefits

PermianChain Supplier helps E&P firms to enjoy increased revenue and net benefits that make the most of automated arbitrage between natural gas (mcf/d) and electricity (kWh) using SOTAs.
By using a trust protocol that enhances market efficiency PermianChain Supplier helps E&P firms work with EMDs to offer investment opportunities in the form of blockchain-based compliant digital securities.
PermianChain Supplier makes it simple to unlock previously untapped digital earnings, register with digital currency mining pools and convert digital earnings from onsite data mining into cash-flows.
PermianChain Supplier is one of the three foundation blocks of the PermianChain platform.
Follow these links if you would like information about PermianChain Miner and PermianChain Investor .
About PermianChain
PermianChain is a proprietary technology platform that brings together the crypto-mining and oil and gas sectors. Using a permissioned access blockchain, PermianChain makes it possible to utilise stranded and wasted energy resources, unlocking liquidity and transforming the way that oil and gas projects are funded, produced, bought and sold. Established in 2018, PermianChain Technologies is a pioneer member of the Blockchain Research Institute (BRI) and start-up member of the Petroleum Technology Alliance Canada (PTAC).


[1] Source: World Bank, NOAA, Colorado School of Mines, GGFR Rounded numbers. www.worldbank.org/en/programs/gasflaringreduction#7 .

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PermianChain Technologies is a Toronto-based technology company that is focused on bringing efficiencies of the blockchain to natural resources. Creating value in resource finance and sustainability.

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