Natural gas crisis

Natural gas – not economic

Alberta Gas Price has been low and uneconomic for years.

At a price below CAD$ 2.50/mcf natural producers are losing money: A low case cost estimate for each mcf produced is:

Processing and Transportation: $1.22/mcf
Compression (if required): $0.70/mcf
Operating and Land Costs: 0.50/mcf
Royalties: $0.18/mcf
Total: $2.60

The above does not include any capital costs associated with bringing the gas to market (such as building pipelines to the Gas plant).

Alberta Energy Regulator Natural Gas Price Forecast does not see gas price exceeding $2.50 until 2022.

industry Requirements to produce

Need to Produce Natural Gas

Natural Gas is an usual commodity to come with any oil well. That is, it is not uncommon to find an oil well that also produces natural gas. It is not rare to find 1/3 of the production from a well being natural gas.

The choice of the owner of a well producing natural gas is to either conserve the natural gas (i.e. sell it) or dispose the natural gas through flaring (i.e. burn it for no financial return and releasing CO2 into the atmosphere).

By choosing to conserve natural gas the well owner is left having to:

build a pipeline to deliver the gas to the market
incur monthly expenses related to the processing of the natural gas

This commonly will result in a loss being incurred by the natural gas producer.

By choosing to flare the natural gas well owner is:

left with an environmental liability which must account for the applicable provincal government.
no revenue return from natural gas
if gas rates are too high then they will not be entitled to flare the gas. Therefore, the well will have to be shut-in. The result is it cannot produce the oil or other valuable commodities for the well

Natural Gas wells by regulation are
required to incur a $55,000 loss

The Canadian regulations have strict requirements as to when gas can be flared (or not conserved) for example:

Directive 60 requires a natural gas well over 32 mcf/d be conserved unless strict requiuirements are met. A well of over 106 mcf/d must be conserved.

Large Capital Cost to Conserve Natural Gas and environmental liabilities

In order to conserve natural gas, unlike oil (which can be trucked to the sales location), Natural Gas requires a pipeline to the sales location. That pipeline may have to travel a great distance. The cost to build a pipeline is usually approximately $45,000/km.

An oil and gas producer is subject to strict requirements to maintain an environmental asset ratio above 1. A shut-in well, reduces that ratio. Our system avoids having to shut-in the well

Conserve the Gas at the Well Site

Our Bitcoin mining operation is set-up at the well site. Avoiding the capital costs of taking the gas production to market and avoiding the processing and transportation fees associated with the natural gas.

Choices for Oil & Gas Producer

We have developed various models to meet the goals of the gas producer:

For a straight gas well, we will pay the costs to operate the well, including the land lease costs, the insurance costs, and the operating costs. These costs normally are
in the $10,000/yr range. Essentially the goal is make the producer break-even and remove the environmental exposure.
For an oil well where the producer will receive oil revenue but to get that revenue it needs to find a solution for its natural gas, we provide two options (1) our taking the gas and all capital costs for mining the operation; or (2) a joint venture which sees the oil company receive a portion of the mining income in exchange for it taking on an equivalent portion of the mining capital costs.
For the petroleum company that wishes to get into the crypto mining business we will joint venture with the company which will see us share the expenses and profits from the crypto mining operations

Contact details

Phone: 403.680.9264

Email: jzanglaw@gmail.com

Cryptogaz ventures ltd.

1150, 707 7th Avenue SW

Calgary, Alberta T2P 3H6