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themack89
11-20-2020, 09:04 AM
Hi all, I've stopped in for my semi-annual posting binge.

Long story short: Bought several MW of load in Bitcoin miners, currently getting them tested and rigged up in mobile containers. Looking to get these things energized. Either off-grid or on grid if conditions are right (as in, probably partnering up with an energy provider in some capacity). Just for full disclosure: current miner configuration is set for well over $1mm USD/year.

My preferred avenue is starting up a conversation with Medicine Hat. I noticed they are shutting down gas wells because they cannot operate them profitably. I don't want to approach them at this precise moment, because I do not understand what costs are involved in operating a gas well. Hence why I have returned here. I know this forum is likely one of the best places to come for a high concentration of O&G knowledge and experience.

There is more profitability here than I am letting on, I just don't want to post it publicly.

If you have a good idea, or know someone, or are someone, who can assist in getting these fired up, there is pie available to be shared.

*Edit, Please note: the play here is not to deal and stay in Crypto per se.
The play here is to deal in Energy and real optionality w/ Energy related assets.
Did not come for lectures or criticism, we all understand the laws of thermodynamics.

Thanks guys.
Best bet is to Gmail me at murraymack

killramos
11-20-2020, 09:33 AM
Is this the same as what Iron Bridge ( unsuccessfully ) tried to do?

pheoxs
11-20-2020, 09:38 AM
Anyone that invests in bitcoin miners in Canada doesn't know how the bitcoin difficulty factor works. 0 chance of being successful.

themack89
11-20-2020, 09:40 AM
Is this the same as what Iron Bridge ( unsuccessfully ) tried to do?


Anyone that invests in bitcoin miners in Canada doesn't know how the bitcoin difficulty factor works. 0 chance of being successful.

A lot of people have tried unsuccessfully, usually from a "mine the coin for profit" angle. We have a couple successful energy traders on the team who view the coin production as a hedge.

Look up Real Options and the dots will start to connect. I appreciate the concerns though.

*Edit, also Hashrate derivatives weren't a thing before (proxy for difficulty factor)

riander5
11-20-2020, 09:46 AM
I wonder how successful this will be with gas making a comeback. I suppose BTC is ramping higher than gas so you know your metrics, but I doubt people are giving away gas wells for free at the moment.

What does a gas well need to run? Depends on the well. What condition of fuel does your generator need? There are tons of variables... Im not super familiar with med hat but your best bet is finding one well that supplies you with the gas you need, versus having a bunch of low producers - which is likely the wells they are shutting in.

Darkane
11-20-2020, 09:48 AM
This isn’t about turning profit in Bitcoin, it’s about maintaining well production while getting rid of the gas.

If the Bitcoin machine pays itself off in - 18 months on current blocks, it’s a huge success.

The well can keep going instead of shutting it down.

themack89
11-20-2020, 09:52 AM
I wonder how successful this will be with gas making a comeback. I suppose BTC is ramping higher than gas so you know your metrics, but I doubt people are giving away gas wells for free at the moment.

What does a gas well need to run? Depends on the well. What condition of fuel does your generator need? There are tons of variables... Im not super familiar with med hat but your best bet is finding one well that supplies you with the gas you need, versus having a bunch of low producers - which is likely the wells they are shutting in.

https://www.bnnbloomberg.ca/commodities/video/alberta-s-gas-city-plans-to-shut-down-2-000-money-losing-wells~1781374

This is pretty much why I am asking about operating cost of the well.

If I laid out a few base case scenarios for gen configuration, could you fill in some gaps on operating costs? Or am I even framing the question properly?

I guess it would help me if there was like a bullet point list on the personnel you need to operate a gas well, and the materials / resources required to do it.


This isn’t about turning profit in Bitcoin, it’s about maintaining well production while getting rid of the gas.

If the Bitcoin machine pays itself off in - 18 months on current blocks, it’s a huge success.

The well can keep going instead of shutting it down.

Correct.

pheoxs
11-20-2020, 09:57 AM
I think you VASTLY underestimate how much a 1MW genset would cost that can run off syngas.

You're basically taking a very expensive capital project (Bitcoin miners) and fusing it with another very expensive capital project (genset) all for the sake of getting free electricity (assuming you get a free gas well).

dirtsniffer
11-20-2020, 09:58 AM
Produce gas
Dry gas
dispose of water / liquids
maybe dry gas again
use gas

does 1 medicine hat gas well produce enough gas? can you get it dry enough on site? Transport costs? disposal costs?

500 mw generator use 4000 m3/day of gas for reference.
https://www.generac.com/Industrial/products/gaseous-generators/configured/500kw-gaseous-generator
Cost? I dunno, mid-high six figures?

couple thoughts from an layman.

Going to an oil producer could be a better bet as they may be dealing with a problem of trying to tie in gas assets. I know in the permian for a while take away capacity for gas was limiting production for operators. Might be resolved now though.

ThePenIsMightier
11-20-2020, 10:02 AM
Hi all, I've stopped in for my semi-annual posting binge.

Long story short: Bought several MW of load in Bitcoin miners, currently getting them tested and rigged up in mobile containers. Looking to get these things energized. Either off-grid or on grid if conditions are right (as in, probably partnering up with an energy provider in some capacity). Just for full disclosure: current miner configuration is set for well over $1mm USD/year.

My preferred avenue is starting up a conversation with Medicine Hat. I noticed they are shutting down gas wells because they cannot operate them profitably. I don't want to approach them at this precise moment, because I do not understand what costs are involved in operating a gas well. Hence why I have returned here. I know this forum is likely one of the best places to come for a high concentration of O&G knowledge and experience.

There is more profitability here than I am letting on, I just don't want to post it publicly.

If you have a good idea, or know someone, or are someone, who can assist in getting these fired up, there is pie available to be shared.

*Edit, Please note: the play here is not to deal and stay in Crypto per se.
The play here is to deal in Energy and real optionality w/ Energy related assets.
Did not come for lectures or criticism, we all understand the laws of thermodynamics.

Thanks guys.
Best bet is to Gmail me at murraymack

So, you've got the computing infrastructure purchased and it's being packaged and your economics is based on paying for grid power. Correct?

And now you want to explore purchasing gas from someone and using that to generate 100% of your power? (Doesn't sound like it).
Or, you're looking at buying/owning an abandoned, producing well and feeding a gas turbine to generate your power. Correct?

themack89
11-20-2020, 10:03 AM
I think you VASTLY underestimate how much a 1MW genset would cost that can run off syngas.

You're basically taking a very expensive capital project (Bitcoin miners) and fusing it with another very expensive capital project (genset) all for the sake of getting free electricity (assuming you get a free gas well).

The cost basis we got the miners for was quite low, almost for free. Even if we spin at break even, it pays off the asset. In any case, I came here seeking outside the box thinking. You are saying "this is impossible", what I am offering is a slice of the pie of you come up with a notion of "how this may be possible" given the current socioeconomic environment of Alberta, an ultra low cost capital base, and only to at least satisfy the requirement of breaking even.

We are also exploring Solar and Hydro. Basically stranded energy.

pheoxs
11-20-2020, 10:04 AM
The cost basis we got the miners for was quite low, almost for free. Even if we spin at break even, it pays off the asset. In any case, I came here seeking outside the box thinking. You are saying "this is impossible", what I am offering is a slice of the pie of you come up with a notion of "how this may be possible" given the current socioeconomic environment of Alberta, an ultra low cost capital base, and only to at least satisfy the requirement of breaking even.

We are also exploring Solar and Hydro. Basically stranded energy.

I'm starting to think you bought the bankrupted Medicine hat bitcoin mining company. Hence the location and cheap miners haha

themack89
11-20-2020, 10:05 AM
So, you've got the computing infrastructure purchased and it's being packaged and your economics is based on paying for grid power. Correct?

And now you want to explore purchasing gas from someone and using that to generate 100% of your power? (Doesn't sound like it).
Or, you're looking at buying/owning an abandoned, producing well and feeding a gas turbine to generate your power. Correct?

Not committed to any particular path at the moment, and open to many.

Ideally, however we energize, it is mutually beneficial for all parties.

themack89
11-20-2020, 10:15 AM
Produce gas
Dry gas
dispose of water / liquids
maybe dry gas again
use gas

Do all of these items happen on site before its tied into feed civilization? Or is there wild variation from site to site.



does 1 medicine hat gas well produce enough gas? can you get it dry enough on site? Transport costs? disposal costs?

Ballpark requirement of around 1mmcf/d assuming a 13 HR.


Produce gas
500 mw generator use 4000 m3/day of gas for reference.
https://www.generac.com/Industrial/products/gaseous-generators/configured/500kw-gaseous-generator
Cost? I dunno, mid-high six figures?

couple thoughts from an layman.

Going to an oil producer could be a better bet as they may be dealing with a problem of trying to tie in gas assets.

Essentially, with our current team we have zero experience with tying into a well or gas infrastructure.

Who is 'the guy' that we'd be looking for to be able to answer these questions you are asking? E.g. their title, or would it be more than one person.

killramos
11-20-2020, 10:20 AM
I wish you the best of luck, but people who actually had experience operating wells and field facilities couldn’t make it work even as a sideshow and couldn’t give away the mining equipment when they were done with it.

The liabilities alone, which the government will make you with no producing assets pay up front for, in those gas wells/fields will kill you.

If you want to pay someone to provide you with economics based advice around the costs of operating wells maybe start with an independent qualified reserve evaluator. They can at least get you your ballpark operating cost and liability metrics for the area you are considering operating in, if you can afford them. Also don’t expect any of these guys to pick up the phone for the next 3 months during busy season. But really, what you are talking about is starting a small oil company just to mine coins.

themack89
11-20-2020, 10:25 AM
I wish you the best of luck, but people who actually had experience operating wells and field facilities couldn’t make it work even as a sideshow and couldn’t give away the mining equipment when they were done with it.

The liabilities alone, which the government will make you with no producing assets pay up front for, in those gas wells/fields will kill you.

These were the initial concerns. Internally there is a slowly developing lean towards Solar or existing Hydro which is spilling.

ThePenIsMightier
11-20-2020, 10:25 AM
Not committed to any particular path at the moment, and open to many.

Ideally, however we energize, it is mutually beneficial for all parties.

Ok. So you're going to need to own a fair bit more equipment. Let's take the huge assumption that the gas you find is of a composition reasonable enough to feed a turbine. (While I think you can use some engineering to find a turbine that'll run on a blended methane/ethane/propane feed, it will still need to be sweet and have very little water, which is unlikely). Let's assume you don't need to do any gas conditioning upstream of the turbine... You'll need to buy:
Inlet compressor (maybe)
Inlet metering (hopefully doesn't have to meet Directive-17, because it's very expensive)
Turbine(s)
Electrical mumbo jumbo (maybe). I feel like something like switch gear or a transformer or MCC's are going to be involved.
Some sort of permit for all the evil, evil CO2 you're generating.
Permit for a power generation facility because you're >1.0MW. (MAYBE).

If that last one is real, the permitting requirements are very onerous and time consuming. I know I've heard about this >1.0MW thing from a person who was taking waste heat to make steam to generate part of their own plant's power from a steam generator and they definitely did not want to go over 1MW.

Overall, it feels like the cost of all this extra equipment you'd have to buy is going to chew up your margins and add much complexity.

ThePenIsMightier
11-20-2020, 10:34 AM
Do all of these items happen on site before its tied into feed civilization? Or is there wild variation from site to site.



Ballpark requirement of around 1mmcf/d assuming a 13 HR.



Ballpark requirement of around 1mmcf/d assuming a 12 HR. Essentially, with our current team we have zero experience with tying into a well or gas infrastructure.

Who is 'the guy' that we'd be looking for to be able to answer these questions you are asking? E.g. their title, or would it be more than one person.

These questions make me think you need some help on the gas side. Apologies if this is something you already knew. I'm only trying to help.
Gas wells don't produce what goes into the furnace in your house. For simplicity, let's say that "pipeline gas" that you burn in your house or that industrial facilities burn is essentially nearly pure methane.
Wells produce lots and lots of methane but it's mixed with other shit that no one wants like water, CO2, ethane, propane, butane, hopefully not H2S, etc.
A "gas plant" removes those substances so that they can sell "pipeline gas" (aka pretty close to pure methane) to ATCO or whoever so they can sell it to users.

themack89
11-20-2020, 10:36 AM
Ok. So you're going to need to own a fair bit more equipment. Let's take the huge assumption that the gas you find is of a composition reasonable enough to feed a turbine. (While I think you can use some engineering to find a turbine that'll run on a blended methane/ethane/propane feed, it will still need to be sweet and have very little water, which is unlikely). Let's assume you don't need to do any gas conditioning upstream of the turbine... You'll need to buy:
Inlet compressor (maybe)
Inlet metering (hopefully doesn't have to meet Directive-17, because it's very expensive)
Turbine(s)
Electrical mumbo jumbo (maybe). I feel like something like switch gear or a transformer or MCC's are going to be involved.
Some sort of permit for all the evil, evil CO2 you're generating.
Permit for a power generation facility because you're >1.0MW. (MAYBE).

If that last one is real, the permitting requirements are very onerous and time consuming. I know I've heard about this >1.0MW thing from a person who was taking waste heat to make steam to generate part of their own plant's power from a steam generator and they definitely did not want to go over 1MW.

Overall, it feels like the cost of all this extra equipment you'd have to buy is going to chew up your margins and add much complexity.

These questions make me think you need some help on the gas side. Apologies if this is something you already knew. I'm only trying to help.
Gas wells don't produce what goes into the furnace in your house. For simplicity, let's say that "pipeline gas" that you burn in your house or that industrial facilities burn is essentially nearly pure methane.
Wells produce lots and lots of methane but it's mixed with other shit that no one wants like water, CO2, ethane, propane, butane, hopefully not H2S, etc.
A "gas plant" removes those substances so that they can sell "pipeline gas" (aka pretty close to pure methane) to ATCO or whoever so they can sell it to users.

I'm guessing there are buried economics in here which push over and/or pull under the 1.0MW threshold then. Are you aware of any physical constraints for how much this could scale if it is all off-grid? E.g. Are there scenarios where you need to start considering modularity vs buying larger equipment.

Perhaps are you be available for a call? I could PM you.

ExtraSlow
11-20-2020, 10:37 AM
Have a gander at some of the electrical generating systems already commercially availible for oil wells that have no pipeline. Lots of modular units available that just need a pipe to the wellhead.

Then you want your mining shit to be modular too, so if the well dies, you truck it 1 mile away and hook it all up to a new well.

However, my gut feel is that it's going to be vastly cheaper to just buy the gas, instead of owning the wells themselves.

Love the idea, anyone who wants to burn methane is a friend to me.

themack89
11-20-2020, 10:40 AM
Have a gander at some of the electrical generating systems already commercially availible for oil wells that have no pipeline. Lots of modular units available that just need a pipe to the wellhead.

Then you want your mining shit to be modular too, so if the well dies, you truck it 1 mile away and hook it all up to a new well.

However, my gut feel is that it's going to be vastly cheaper to just buy the gas, instead of owning the wells themselves.

Love the idea, anyone who wants to burn methane is a friend to me.

Do you happen to have a line on some specific manufacturers?

killramos
11-20-2020, 10:46 AM
Have a gander at some of the electrical generating systems already commercially availible for oil wells that have no pipeline. Lots of modular units available that just need a pipe to the wellhead.

Then you want your mining shit to be modular too, so if the well dies, you truck it 1 mile away and hook it all up to a new well.

However, my gut feel is that it's going to be vastly cheaper to just buy the gas, instead of owning the wells themselves.

Love the idea, anyone who wants to burn methane is a friend to me.

He needs a million a day of gas if I read correctly, no one is giving million a day gas wells for free. Probably going to cost at least a million bucks just to buy that production.

So he needs a small field of wells, with pipelines and field processing metering operators the whole shabang.

You need to cut the owning wells out of this and instead partner with an existing Company to sell you some of their gas.

ExtraSlow
11-20-2020, 10:51 AM
This would need a roof:
95461

- - - Updated - - -

Burning methane is wicked. Everyone should burn more methane. It's the only way to save humanity.

themack89
11-20-2020, 10:55 AM
He needs a million a day of gas if I read correctly, no one is giving million a day gas wells for free. Probably going to cost at least a million bucks just to buy that production.

So he needs a small field of wells, with pipelines and field processing metering operators the whole shabang.

You need to cut the owning wells out of this and instead partner with an existing Company to sell you some of their gas.

The sticker value of $1mil sounds about right. No matter how you slice it, $1mil/MW seems to be the floor for most forms of energy generation.

Your last comment of 'existing Company to sell you some of their gas' is pretty much what I've been angling for. I am not sure how to start these discussions. Hard example: the company directory of any given O&G Company can be quite extensive. Which department would we look to speak to? Or does there exist some kind of Kijiji for gas.

riander5
11-20-2020, 10:56 AM
You're gonna be looking at around a million bucks at least to get a generator bought and installed, and thats on the low end. Now add in your gas costs, field maintenance, contract operators, i mean even for 10 wells its probably half a million a year in OPEX at least

Like Killramos said you definitely aren't getting 1mmscfd well for free, and if you buy a bunch of old shitty ones your costs to maintain will be through the roof, let alone liability since they aren't worth much if you go under.

You'd think a place like AB with all our gas would be a paradise for people wanting to own a few wells here and there and try different things.... it probably was at one point but too many people declared bankruptcy and left the orphan well fund cleaning messes up so here we are.

- - - Updated - - -

Are you willing to pay full price for their gas? Thats the big question.

You could always contact a gas marketing firm like Tenaska or similar. Im not sure their inner workings but they market gas from tons of clients

ThePenIsMightier
11-20-2020, 10:57 AM
Have a gander at some of the electrical generating systems already commercially availible for oil wells that have no pipeline. Lots of modular units available that just need a pipe to the wellhead.

Then you want your mining shit to be modular too, so if the well dies, you truck it 1 mile away and hook it all up to a new well.

However, my gut feel is that it's going to be vastly cheaper to just buy the gas, instead of owning the wells themselves.

Love the idea, anyone who wants to burn methane is a friend to me.

This is a way way better idea. Now you're opening the door to burning "solution gas" from conventional drillers and frac'ers. Solution gas is killing them, so your gas will be nearly free but getting everything modularized and finding 1MM SCF/day might be the new challenge.

I wish I knew how sensitive gas turbines are to variable feeds. My gut says "very sensitive" but I don't know.


I'm not the right guy to call. I'd keep this open to help you narrow down your options. Right now you're "I want to make money with gas and electricity and Bitcoin". You need that narrowed down to "I want to take gas from this named facility and generate this much power to supply this modular facility. Please tell me if it's feasible." Once you're there, you can find some nerd engineers to do a Pre-FEED or feasibility study for you. That should hopefully be less than $100k. Fuck bringing someone in. Just pay engineers on contract.

ExtraSlow
11-20-2020, 10:59 AM
Call a midstream company and ask about bulk natural gas for an industrial project. Maybe Altagas.

ExtraSlow
11-20-2020, 11:04 AM
The generator companies have done a lot of work on fuel gas quality specs that they will give you for free. Don't pay an engineer for that shit. Hell, you don't need an engineer at all for a long time.
Talk to finning and agrekko about the generator options and specs.

- - - Updated - - -

Assuming you can put the mining gear in a seacan, this is not actually that complicated from a technical perspective . It's plugging a few already designed systems together.

revelations
11-20-2020, 11:07 AM
This sounds completely nuts but I did a initial study for a large hedge fund company regarding solar powered BTC/crypto mining setup around the lethbridge area (MH would be good too) - if you were to combine both natgas and solar, it could be viable for far longer.

No need for a large battery system to handle the night time loads that way - natgas at night and combination solar/natgas during the day as needed.

JfuckinC
11-20-2020, 11:07 AM
This would need a roof:
95461

- - - Updated - - -

Burning methane is wicked. Everyone should burn more methane. It's the only way to save humanity.

i don't know if this helps, but the last 100kw arrow we put on a site cost $68k.. Just for the Gen

SKR
11-20-2020, 11:07 AM
I'm sure the City of Medicine Hat would be pretty receptive to any talk of buying gas from them right now. As far as who to talk to, I don't know. Call the mayor.

ThePenIsMightier
11-20-2020, 11:08 AM
The generator companies have done a lot of work on fuel gas quality specs that they will give you for free. Don't pay an engineer for that shit. Hell, you don't need an engineer at all for a long time.
Talk to finning and agrekko about the generator options and specs.

- - - Updated - - -

Assuming you can put the mining gear in a seacan, this is not actually that complicated from a technical perspective . It's plugging a few already designed systems together.

Yep, this. Fuck a gas turbine, you need piston power. Aggreko, Collicut, Caterpillar, all offer skidded, modularized solutions.

schurchill39
11-20-2020, 11:21 AM
Yep, this. Fuck a gas turbine, you need piston power. Aggreko, Collicutt, Caterpillar, all offer skidded, modularized solutions.

I'm good buddies with the Calgary side of the Collicutt family and can put you in contact with them to get an idea on equipment. PM'ed

themack89
11-20-2020, 11:56 AM
Well with the few replies that I have received, this is more than enough to chew on for the time being. I appreciate the rich insight from everybody.

I'm just going to reiterate that if you feel like you could play a key part in getting this project sorted out, and you would like a slice of pie, send me a PM. My philosophy is: the more smart guys you have working on the same problem, especially in this energy rich province, the greater the chances of success and avoiding pitfalls.

Eyes are wide open at the moment.

Darkane
11-20-2020, 12:07 PM
You need to think outside Alberta. You’d have some competition, but check out the conventional dying wells just east of Lloyd instead.

Those are the we need to get rid of casing gas to keep producing wells. Might be clean enough to burn without processing.

https://www.upstreamdata.ca/