Employees arrive at ConocoPhillips headquarters in Houston, Texas.
F. Carter Smith | Bloomberg | Getty Images
Oil and gas company ConocoPhillips is active in the bitcoin mining fuel business.
The company said in a statement to CNBC on Tuesday that it has a bitcoin pilot project currently underway in the Bakken, an area of North Dakota known as a major source of new oil production in the United States.
A ConocoPhillips representative said the company does not operate the crypto mine itself. Instead, it sells gas that would otherwise have been burned to a bitcoin processor owned and operated by a third party.
Shares of ConocoPhillips are trading down around 2.5% on Tuesday afternoon.
The push into bitcoin mining is part of a move by the major oil and gas company to reduce routine flaring or additional gas combustion to zero by 2030.
The company has released reports on efforts to phase out the practice of systematic flaring of natural gas in the “Lower 48” states, which represents the largest segment of ConocoPhillips today, based on production. It is made up of two regions covering the Gulf Coast and the Great Plains – an area that includes the Bakken.
Co-locating a bitcoin mine in an oil and gas field is a great help in achieving this goal, although it will not affect the business. Scope 3 Carbon Emissionsan industry term used to describe emissions resulting from activities from assets that are not owned or controlled by the reporting organization.
For years, oil and gas companies have struggled with the problem of what to do when they accidentally hit a natural gas formation while drilling for oil. While oil can easily be trucked to a remote destination, gas delivery requires a pipeline. If a drill site is right next to a pipeline, they dump the gas and take whatever money the buyer on the other end is willing to pay that day. But if it’s within 20 miles of a pipeline, drillers often burn or burn it. This is why you will usually see flames rising from the oil fields.
Beyond the environmental implications of flare gas, drillers also burn money.
ConocoPhillips didn’t reveal to CNBC which bitcoin miner it sells to, or how long the pilot has been running, but what typically happens is that a company like Denver-based Crusoe Energy Systems , places a shipping container filled with thousands of bitcoin miners on an oil well, then diverts the natural gas to generators, which convert the gas into electricity which is then used to power the miners.
The process reduces CO2 equivalent emissions by approximately 63% compared to continuous flaring, according to Crusoe’s research.
In one slide from a presentation at the 2021 industry conference by a ConocoPhillips executive, the company says it has a “continuing focus” on gas capture projects to achieve zero routine associated gas flaring by 2025.
The slide shows photos of what appear to be bitcoin mines located on-site with a title that reads: “Technologies for Beneficial Use of Compressed Natural Gas and Digital Currency.”
ConocoPhillips is one of several oil and gas companies operating in the Bakken. Others include ExxonMobil, Marathon Oil and EOG Resources.