Zephyr to power new crypto mining venture with gas from Utah well

US energy company Zephyr Energy said on Tuesday it will resume production from its State 16-2LN-CC well at the Paradox Basin in Utah, and use the gas resources to power a Zephyr-owned cryptocurrency mining facility now under development at the same site.

Zephyr Energy was looking to make the fast-tracked crypto mining facility operational in eight to 12 weeks, in tandem with the start of production from the State 16-2LN-CC well, the Rocky Mountain oil and gas company said in a statement.

While oil produced from the well will be trucked and sold to refineries in Utah, the produced gas volumes will be sold to fuel onsite power generators which in turn will provide electricity for the co-located crypto-mining facility, Zephyr Energy said.

“The Company plans to fund the initial investment required to launch the initial 1 megawatt crypto-mining facility (capital expenditure forecast to be less than US $2 million) from existing cash resources or via third party investment, with facility capital payback expected in under two years at current crypto-currency prices,” the company said.

Oil and natural gas producers in places like the Rocky Mountain often have no pipelines to get the produced gas to market from the site – a practice that earlier forced them to burn it off or vent it and thereby releasing carbon dioxide or methane into the atmosphere.

That’s why budding oil-cryptocurrency alliances in North America are increasingly beginning to use the natural gas to power onsite crypto mines that typically require vast amounts of electricity to unlock digital vaults and extract digital currencies from cyberspace.

Zephyr Energy said its board had taken steps to fast-track equipment procurement, and well work will also be conducted over the same timeframe, at which point production from the State 16-2LN-CC well is expected to recommence.

“Over the longer-term, the company expects to tie its gas production into the nearby gas export infrastructure recently purchased by Dominion Energy … which currently services over seven million customers in the US. Dominion has made public its plans to refurbish and expand the natural gas infrastructure running across Zephyr’s acreage, and is expected to be available to accept gas volumes from Zephyr’s wells in 2023,” the company said.

Zephyr Energy is also at an advanced stage of planning for a three well drill programme on the Paradox project that is expected to commence in the second half of this year.