TMX Group is launching its second blockchain-based service, it announced on Wednesday, that will track natural gas flows at delivery locations in the U.S.
The service will be offered by TMX subsidiary Natural Gas Exchange (NGX) and was developed with Toronto-based Nuco Inc., a firm focused on developing enterprise-grade blockchain infrastructure. Described as a prototype, the blockchain service will be used by NGX to optimize its gas settlement process for clients by providing a transparent view of gas movements between locations. It will also allow participants to accurately report their positions.
TMX is no stranger to blockchain technology. In April, it announced a prototype service that would deliver a shareholder voting system through its corporate trust services provider TSX Trust. The project also saw a technology partner take a collaborative role on the project, in Accenture.
For Nuco, winning the deal with TMX also marks the signing of its biggest customer yet, says Matthew Spoke, CEO of Nuco.
“We’re in the trenches. We’re actually developing this technology instead of just applying it,” he says. “We can tweak our system to meet the requirements of a big enterprise like TMX.”
The problem NGX is looking to solve with blockchain is the lack of unity between different stakeholders involved in the natural gas eco-system. Today when a seller sends gas down a pipeline to a buyer, it manually inputs the amount of inflow that it’s adding to the pipe. That is tracked automatically as it travels down the pipeline by sensors.
“It’s half manual and half automated and we’re trying to find the discrepancies and red flag them,” he says. “What we’re trying to flag is when a gas flow doesn’t go the way it’s intended to flow.”
Rather than have a system where independent stakeholders track the gas flow in their own systems, they’d all be updating the same distributed ledger system.
“You eliminate the imperfect information that you have when you try to replicate these transactions in 20 or 30 different systems,” Spoke says.
Spoke is also on the board of the Enterprise Ethereum Alliance, but says he’s building Nuco to support multiple protocols in the blockchain eco-system. Right now that includes the Bitcoin standard and the Ethereum standard.