ExxonMobil has been working with Denver-based Crusoe Energy Systems to mine bitcoin in North Dakota for over a year, according to people with knowledge of the project.
The pilot program, which is operating in the Bakken region, launched in late January 2021 and had begun expanding by July.
ConocoPhillips is pursuing similar work in the same area.
Reuters: ExxonMobil, the top oil and gas producer in the U.S., is piloting a project to mine bitcoin in North Dakota, according to people with knowledge of the matter.
For over a year, Exxon has been working with Crusoe Energy Systems, a company based in Denver, said the people who asked not to be named because details of the project are confidential. Crusoe’s technology helps oil companies turn wasted energy, or flare gas, into a useful resource.
Similar to ConocoPhillips’ mining scheme in North Dakota’s Bakken region, Exxon is diverting natural gas that would otherwise be burned off into generators, which convert the gas into electricity used to power shipping containers full of thousands of bitcoin miners. Exxon launched the pilot in late January 2021 and expanded its buildout in July.
While Exxon hasn’t talked publicly about its work in the space, Eric Obrock, a 10-year veteran at the company, said on his LinkedIn profile that from February 2019 to January 2022, he “proposed and led the first successful commercial and technical demonstration of using Bitcoin Proof-of-Work mining as a viable alternative to natural gas flaring in the oil patch.”
Obrock’s title on his profile is NGL industry outlook advisor, referring to the natural gas liquids market. Obrock told CNBC through a LinkedIn message that he’s been advised that he can’t speak to the media on this topic. Exxon didn’t respond to a request for comment.
Exxon’s bitcoin project isn’t really about making money from the cryptocurrency. Rather, the company has pledged to reduce emissions as part of an industrywide effort to meet higher environmental demands. In early March, Exxon joined other oil companies in committing to the World Bank’s “Zero Routine Flaring by 2030” initiative introduced in 2015.
The type of crypto mining arrangement it’s pursuing with Crusoe reduces CO2-equivalent emissions by about 63% compared with continued flaring.
Exxon’s bitcoin mining work in North Dakota was first reported by Bloomberg, which said the company is also considering similar pilots in Alaska, the Qua Iboe Terminal in Nigeria, Argentina’s Vaca Muerta shale field, Guyana and Germany.
Mining bitcoin in the Bakken
The problem Exxon and Conoco are addressing has existed for years: What happens when drillers accidentally hit a natural gas formation?
Unlike oil, which can be trucked out to a remote destination, gas delivery requires a pipeline. If a drilling site is close to a pipeline, producers can sell it right away. But if the pipe is full or if the gas is 20 miles away, drillers often burn it off. That’s why you typically see flames rising from oil fields.
In addition to the environmental hazards, drillers are also burning cash.
Enter bitcoin mining, which only requires an internet connection and can be done from anywhere. And because miners’ primary variable cost is energy, they’re incentivized to find the cheapest sources of power.
“This is just a great way to bring that demand to the wasted energy and solve two problems at once,” said Cully Cavness, president of Crusoe, whose backers include Valor Equity Partners, one of Tesla’s largest investors. “Solve the energy appetite of bitcoin and solve the stranded energy, flare gas problem for the energy industry.”
Cavness said Crusoe has 150 employees and works with Norway’s Equinor ASA, Canadian oil producer Enerplus and Devon Energy, based in Oklahoma City.
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