Canadian oil producer mines bitcoin, snuffs out gas flare
Canadian oil producer mines bitcoin, snuffs out gas flare
Mobile data centre consumes enough gas for more than 1,500 homes
There is an urgent need to rapidly curb the practice of flaring and venting waste natural gas at upstream oil wells. There is also growing interest in using this gas to power remote energy-hungry computing applications, such as cryptocurrency mining and data processing. One start-up in this field has just completed its latest installation to capture a not insignificant amount of gas and put it to economic use.
Texas-based leading oil and gas service provider Silver Energy partnered with EZ Blockchain, a Chicago-based cryptocurrency mining management company, to solve a gas flaring problem at a site in Alberta, Canada.
EZ Blockchain installed the first mobile data centre filled with crypto mining equipment at the site of a Silver Energy client in February 2021. The project installation took three days and the data centres were fully operational by March 2021.
As a result, the project size reached almost 1 MW of power consumption, all of which is processed from 250 thousand cubic feet per day (mcf/d) of stranded natural gas using a gas-fired electric generator.
To put this volume of gas into perspective, 250 mcf/d is 91.3 million cubic feet per year, which contains 26,757,388 kilowatt-hours of energy. The average UK household consumes 17,000 kWh per annum, so the Silver Energy client was burning off enough gas to meet the demand of 1,573 homes.
Previously, the operator needed a regulatory permit to flare this gas, which is time-limited. This posed logistical challenges and reputational risks. Instead, that gas is now powering bitcoin mining equipment and generating revenue for the operator.
“Today oil and gas producers are implementing Bitcoin mining in the oil field as a part of their ESG policy more often,” said EZ Blockchain CEO Sergii Gerasymovych. “Bitcoin mining’s enormous power consumption can solve environmental problems caused by gas flaring and leaking wells.”
Gas-fired bitcoin mining still emits carbon dioxide, but it does help to reduce methane venting.
According to Nic Carter, co-founder of Coinmetrics.io and an influential voice in the bitcoin community, gas flaring “tends to be very inefficient and on windy days large fractions of the methane just bubble out... When this gas is put into a generator and used to mine Bitcoin, operators can ensure a full burn (eliminating vented methane from inefficient flaring)”.
With federal, state and provincial regulators finally coming under pressure to get tough on gas flaring, companies such as EZ Blockchain, Crusoe Energy, Great American Mining have sprung up to offer remote crypto mining solutions to snuff out the flare stacks.
The addition of a revenue stream from bitcoin mining reduces systemic business risks that “will begin to affect decisions as opportunity costs adjust,” according to Great American Mining.
Producers no longer need to worry about booking capacity on physical infrastructure to gather and evacuate gas from their oil installations; now they can “convert the produced gas on-site into something more profitable”.