San Antonio-based Ecoark Holdings Inc. plans to begin beta testing a cryptocurrency mining approach in May that would be powered by natural gas that is constrained by a lack of infrastructure.
The diversified holdings company established a strategic initiatives team in February to analyze ways to deploy capital for the test project. Led by CFO Brad Hoagland, the team is looking at opportunities related to environmental, social and governance initiatives that would reduce emissions.
“By redirecting power back to the grid when green sources of energy production are unable to supply the required load, we alleviate grid pressure and help fill gaps that currently hinder the growth of green energy technologies,” said Hoagland.
“We plan to mine a diversified basket of higher margin, established cryptocurrencies. Our strategy entails reselling cryptocurrency back into the market, as permitted by applicable laws, and redeploying the capital raised toward accretive growth projects within this sector.”
Ecoark plans to use “regionally constrained energy that is otherwise lost” because of a lack of commercial natural gas infrastructure to economically process and/or transport volumes to market.
There are no plans to use flared gas from individual wells for the pilot because of the “unpredictability of gas production uptime, personnel requirements to service non centrally located assets, lack of oversight and control, surface use issues, and gas quality issues.”
The “modularized infrastructure approach” would allow Ecoark to become a “spot midstream” operator, allowing it to create mobile gas market hubs. The company said it is working with several publicly held midstream companies “to relieve pipeline capacity constraints and allow additional third-party molecules to be transported, thereby creating additional revenue synergies.”
Ecoark, founded in 2011, manages a portfolio that includes White River Holdings, which has more than 11,000 acres of drilling rights in Louisiana and Mississippi. Subsidiary Banner Midstream Corp. has 20,000 acres of active mineral leases in Louisiana, Mississippi and Texas.
Portfolio companies also include Permian Basin operator Shamrock Upstream Energy and hydraulic fracturing sand provider Pinnacle Frac Transport. In addition, Capstone Leasing provides equipment to oilfield operators.
Ecoark also is partnering with BlackBrush Oil & Gas LP and GeoTerre LLC to develop the Austin Chalk formation, which extends from South Texas into Louisiana. Drilling recently was completed on the Deshotels 24 No. 1-H horizontal in Avoyelles Parish, LA.
Other companies are also looking to convert wasted natural gas for crypto mining.
For example, Casper, WY-based Wesco Operating Inc. is using a flaring mitigation system by EZ Blockchain to convert natural gas into electricity to power crypto mining operations.
The Smartgrid Flaring Mitigation System was deployed last October in Wesco’s Utah oilfield, with a 30-foot mobile data center and a generator. After the first container’s deployment, Wesco increased the scale of the project by 200%. It added another container to provide total power capacity of 1 MW. As of February, “a fully operational crypto mining system reduced gas flaring to zero, according to Wesco.
Block By Block
New technologies are being used by oilfield operators in other ways too. Blockchain technology, which bolsters bitcoin and other digital currencies, is a distributed ledger that can initiate and verify transactions on a network as they occur.
The first pilot to leverage blockchain technology was completed last year on five Equinor ASA wells in North Dakota’s Bakken Shale, according to the Offshore Operators Committee Oil & Gas Blockchain Consortium.
In the water hauling pilot, blockchain technology reduced the workflow process to one-to-seven days from 90-120 days, while it eliminated nine steps. It also automatically validated 85% of all the water volume measurement, the consortium noted.
While the pilot test focused only on water hauling, the consortium said there are plans to broaden its use to other resources.
As Wyoming steps up, Texas also is looking to take some of the blockchain action by offering incentives to operators.
For example, UK-based Argo Blockchain plc recently acquired New York-based DPN LLC. The deal gave Argo 320 acres of land in West Texas with access to up to 800 MW of power. Argo plans to build a 200 MW mining facility over the next year that it said could provide low electricity rates, mostly from renewable resources.
The Texas purchase “not only gives us greater control over our mining operations but also the ability to meaningfully expand our mining capacity on a large scale,” CEO Peter Wall said. “We now have access to some of what we believe is the cheapest renewable energy worldwide, in a location where innovation in new technologies is encouraged and incentivised.”