Why oil and gas should embrace crypto

There’s fascinating article in Decrypt entitled There Will Be Bitcoin: Oil, Gas and a Cash Cow Under Our Feet. Focused particularly on the needs of the natural resources industry in Texas and North Dakota, it examines the potential for closer links between oil and gas and the crypto sector, pointing out that one has too much energy and the other has a massive and growing demand for power.

Naturally that figure will rise and fall with activity levels, but what these figures suggests is that around USD10m worth of gas was being wasted each month in a single state. How many extraction projects would turn down the opportunity to get a proportion of that? How many could afford to in the current climate?

Technology has always been there, but now there’s demand

The point is that we have had the technology to create power from the energy in trapped pockets of gas for some time. It’s relatively cheap, robust and doesn’t need to take up a great deal of space. The problem has been that there’s never been localised demand that would make conversion worthwhile.

The rise of crypto changes this. It’s created significant and growing demand.

Without getting too far into the technical details, the technology sector uses servers to crunch the data it needs for artificial intelligence, gaming, virtual and augmented reality and, increasingly importantly, crypto projects. The servers require power to carry out their activities, but they are generally agnostic about where they are located.

What this means is that a gas conversion unit linked to collection of servers (known as a server farm) can be placed unobtrusively on site at an oil and gas project, left to go about its business and provide steady returns to an oil and gas project.

Relieve pressure and raise revenue

As the article points out, North Dakota is one of several regions around the world that are reliant on natural resources and actively looking for ways to curb natural gas flare-offs. Bringing together the demand for power from crypto miners and others in the tech sector with the supply of excess gas from the energy projects would be a very neat way for the industry to be able to say to regulators that it is being proactive and simultaneously enjoying returns at a time when many businesses are in sore need of them.

There are several projects underway that can help oil and gas projects take advantage of this opportunity, but in the case of PermianChain, we also offer a comprehensive back office suite that enables natural resource contracts to be traded quickly, efficiently, simply and transparently. We are also currently well beyond the planning stage and have several active projects in place in Canada and the US that are seeking to utilize the PermianChain foundation blocks to manage, catalogue, and create value from wasted natural gas resources. We have also received requests from large server farms in China that want to access lower-cost electricity generation in regions that are less prone to flooding and the associated disruption.

PermianChain has a pipeline of over 50 megawatts of server farms that are hungry for power. That is equivalent to around 15 million cubic feet per day (mmcf/d) of natural gas that needs to be registered on the PermianChain to supply crypto-asset miners globally.

With regulatory pressure mounting, changing investor and consumer behaviour, and Covid-19’s significant economic disruption, the next few years are likely to witness several changes across the oil and gas sector. As the Decrypt article points out, the incentives for oil and gas professionals to embrace the tech sector are stacking up.

About PermainChain
PermianChain is a proprietary technology platform that brings together the crypto-mining and oil and gas sectors. Using a permissioned access blockchain, PermianChain makes it possible to utilise stranded and wasted energy resources, unlocking liquidity and transforming the way that oil and gas projects are funded, produced, bought and sold. Established in 2018, PermianChain Technologies is a pioneer member of the Blockchain Research Institute (BRI) and start-up member of the Petroleum Technology Alliance Canada (PTAC).

PermianChain harnesses blockchain technology to digitize, tokenize and monetize proven natural resources, starting with oil and gas.

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