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Bitcoin miners help US oil producers cut flaring

  • : Crude oil, Emissions, Natural gas
  • 21/10/08

US oil producers are turning to an unexpected source to help solve the environmental problem of excess natural gas — cryptocurrency miners.

On remote well pads dotted across the Bakken shale play of North Dakota and Montana, shipping container-sized data centers packed with computers power energy-intensive operations of Bitcoin miners. Their computers, running around the clock to earn crypto tokens by authenticating digital transactions, are powered by natural gas-fired generators, running on gas from the oil wells that would otherwise be flared on site.

Mining for virtual currencies has attracted widespread criticism — from environmental groups to tech entrepreneur Elon Musk — because it uses vast quantities of energy, more than some nations use in a year. That has led crypto miners to try and cut down on their energy use, or at least find ways to shrink their carbon footprint.

In the Bakken, they are able to capitalize on an abundance of surplus natural gas — a common byproduct of oil production — that would otherwise be burned off given a lack of pipeline infrastructure to take it to market. The environmentally harmful practice of flaring has come under intense scrutiny from regulators, climate campaigners and investors, including fund manager Blackrock.

Companies tapping surplus gas to run their cypto-mining computer banks see a double benefit — reducing the negative impacts of gas flaring and cutting their carbon footprint.

Denver-based Crusoe Energy operates 44 data centers in Montana, North Dakota, Wyoming and Colorado, and was due to deploy another 16 units by the end of September. Plans are afoot to start an initial project in the top oil producing Permian basin of Texas and New Mexico later this year before ramping up there in 2022.

"Our systems reduce greenhouse gas emissions by the equivalent of hundreds of thousands of cars in the process, primarily by reducing the amount of methane escaping into the atmosphere from incomplete combustion in flares," company president and co-founder Cully Cavness said.

Crusoe expected to reduce flaring in areas where it is operating by almost 10mn cf/d by the end of September. Its technology lowers CO2-equivalent emissions by as much as 63pc compared with continued flaring.

The company's digital flare mitigation system is also used to support other computing intensive processes, such as artificial intelligence.

The prices of crypto currencies including Bitcoin have fluctuated wildly this year with China banning all related transactions and mining. The Chinese crackdown "plays greatly into the advantage of US-based operators as it makes available hardware for domestic projects and increases the competitiveness of American operations," Cavness said.

Equinor, Devon among crypto-miner customers

Before divesting its Bakken acreage earlier this year, Norway's state-controlled Equinor was one of the producers that sold excess gas to Crusoe and provided the company with space on a well pad for its equipment. Other clients have included Devon Energy, private-equity backed Kraken Oil & Gas, and Canadian oil firm Enerplus.

North Dakota has had targets to curb flaring since 2014, with the industry spending billions trying to solve the problem. While flaring eliminates most methane — a potent greenhouse gas — the process still emits CO2. Flaring rose to 10pc of all gas produced in July, above the current 9pc limit allowed in North Dakota, due to several natural gas processing plants being offline.

As an incentive to curb the practice, North Dakota lawmakers passed legislation earlier this year that offered operators a tax credit for installing gas flaring mitigation systems like those Crusoe operates. Crusoe qualifies for emissions reduction credits because it uses waste gas to generate electricity that would otherwise have come from the grid.

Texas regulators also have adopted a tougher stance against flaring in recent months, after previously taking a largely hands-off approach.

Jim Wright, one of three Republican commissioners on the Texas Railroad Commission, said recently that companies stuck with unwanted gas should reach out to third parties — including crypto currency miners — who can "eliminate the vast majority of emissions that flaring produces and even pay the operator for the gas."


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25/02/06

Crude Summit: Tariffs risk drying up forward trading

Crude Summit: Tariffs risk drying up forward trading

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Crude Summit: US to remain top crude producer


25/02/06
25/02/06

Crude Summit: US to remain top crude producer

Houston, 6 February (Argus) — The US is likely to remain the world's top crude producer for some time to come, according to shale executives at the Argus Global Crude Summit Americas in Houston, Texas, today. "In the foreseeable future, I don't really see a lot of change," said Shannon Flowers, director of crude and water marketing at Coterra Energy. There is still enough high-quality acreage to go after, while efficiency gains around faster drilling times and targeting longer wells are also helping to drive output gains. "There's a lot of creativity that goes on in trying to understand how we can do more with less," Flowers said today at the event. While the rig count is down 20pc over the last two years, production has grown by more than 1mn b/d. "Doing more with less is kind of a common theme," Flowers said in reference to operations at Coterra and across the industry. "I expect that to continue." While the Permian has dominated all the attention of late, the offshore Gulf of Mexico is likely to be an important driver of output going forward, with several projects starting up this year. Other regions such as the Rockies, Wyoming and possibly Utah could also see some growth. A recent round of mergers and acquisitions that saw $300bn of upstream oil and gas deals inked has further to run, says John Argo, vice president for the Williston Basin at Continental Resources. "There will continue to be more consolidation," Argo said. Scarcity with regard to remaining high-quality acreage means that valuations will continue to climb, he said. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Asset-backed oil trades on the rise


25/02/06
25/02/06

Crude Summit: Asset-backed oil trades on the rise

Houston, 6 February (Argus) — Asset-backed trading is becoming commonplace in the oil industry as companies up and down the supply chain bring capabilities in-house, delegates heard at the Argus Global Crude Summit Americas in Houston, Texas, today. "Traditionally, long term hedging was popular, and it still is, but in general we've seen a move towards the front end of the curve," said CME Group's managing director and global head of energy and environmental products Peter Keavey. "The risks are really in the prompt," said Keavy. "We're seeing a lot of hedging in the short term [and] that also is reflective of asset-based optimization." HC Group managing partner Paul Chapman has also noticed a continued shift in trading by banks, which either exited or scaled down operations in 2014 and 2015, to those directly in the industry. "I would argue that pretty much every single business around the world — producer, miner, refiner, retailer of fuels and major — is on some spectrum of developing some asset trading," said Chapman. "And it's driven by a need to capture more margin." Changing trade flows have naturally had a bearing on who becomes more involved in individual markets. "Over the past five years, European players have more and more exposure to US molecules, whether it be crude oil or natural gas," said Keavey, which has driven the growth of trade of WTI, RBOB, gasoline, and heating oil in international markets. Changing energy policy, and policies to reach other political objectives, have a tendency to shape energy flows, whether they are intended or not, the speakers said. The Russian-Ukraine conflict is a prime example, and there are clear signs that US president Donald Trump's second term in office will do the same. "As this world gets more shaped by trade wars and there's more and more government intervention, that itself starts to break down some of the fundamentals of how some of these markets work," said Chapman. Keavey expects Canadian crude to continue to flow even under a Canada-US trade war, but "the question is, what disruption happens to the pricing?" By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Discipline still reigns in US upstream


25/02/06
25/02/06

Crude Summit: Discipline still reigns in US upstream

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Amos to buy Sinopec Venezuelan oil, gas assets


25/02/06
25/02/06

Amos to buy Sinopec Venezuelan oil, gas assets

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