Junior gas firm seeks pivot to crypto

By COLLIN GALLANT on August 27, 2022.

cgallant@medicinehatnews.com@CollinGallant

The title of largest Bitcoin mining facility in Alberta could soon be changing as a struggling junior natural gas producer has applied to transform one of its sites to produce enough power to supply a small city.

That appears to be right in line with new provincial rules to allow “unlimited” onsite or “behind the fence” power production in hopes of luring high-tech investments, reduce new demand and expansion of the power grid that supplies other consumers.

However, it could face hurdles from other oil and gas regulators – the company’s control of the site is suspended after it failed to pay into a well cleanup fund.

As well, environmental groups say it highlights flaws in the province’s plans to reach net-zero emissions in the power system by 2035.

Mojek Resources has asked utility regulators to approve a new 96-megawatt power plant at a natural gas battery near the Town of Fairview, north of Grande Prairie.

That, according to application to the Alberta Utilities Commission, would allow them to host an unnamed crypto-mining company and supply power produced from gas collected to the site.

Officials at Calgary-based Mojek told the News they were unavailable for comment and directed inquires to the consulting company steering the application. That company did not return messages.

The proposal is the sort of development described in government updates to power line regulations last spring as Bill 86, which allows the energy minister to develop rules regarding onsite power plants, cogeneration and battery-storage to even out energy flow as address power delivery in the rapidly evolving utility sector.

The approach “encouraged new generation capacity and would increase the competitiveness of our province’s electricity grid,” according to a statement on the issue attributed to Dale Nally, associate minister of electricity and natural gas. “Not only can these projects bring significant investment, but they add more supply to our grid and can help bring costs down over the long term, which will benefit all Albertans.

“Alberta’s government welcomes all business and investment opportunities that bring well-paying and competitive jobs to Albertans.”

It states regulatory processes are in place and reviews will be conducted by agencies before anything is approved.

Environmental and policy observers told the News the specific plan and others like it could be problematic.

“This proposal is a really good example of why we shouldn’t be letting companies fall through loopholes,” said Binnu Jeyakumar, of the Pembina Institute.

She said the bill itself is “technology neutral” and could encourage large-scale renewable power development as well as new gas-fired generation.

However, she said, it also doesn’t deter from the construction of new natural gas plants without carbon capture, which will become uneconomical while adding to emissions. That could be addressed as the federal government works to create clean energy standards which could require new power plants to have very low emissions or carbon capture capability.

“The larger problem is that province doesn’t have a credible plan to get to a net-zero electricity grid by 2035 or the mechanisms in place to set a pace for companies,” she said.

Though the new Crypto enterprise at a remote site in Fairview might not make more power available to the grid in order to boost supply and dampen prices, neither would it draw power from the grid, affect general demand of market prices or require new power lines.

According to Mojek’s application to the Alberta Utilities Commission, it would install a sequence of 18 generators, each capable of producing 5.7 megawatts, in three phases. The total amount of power would be enough to fully supply a city the size of St. Albert.

It’s also more than 50 per cent more power than is used by the Hut 8 dataprocessing centre in Medicine Hat, currently considered the largest capacity crypto mine in the province.

That 60-megawatt data-centre is two-thirds supplied with power by the City of Medicine Hat’s power plant and the remainder off the provincial grid via the city’s distribution company. (Hut 8 also has facilities in Drumheller and North Bay, Ont., and a company-wide power draw above 100 megawatts.)

It released an ESG report this year stating its goals of becoming “carbon neutral” through a general trend away from coal to less polluting sources of fuel, as well as power purchase agreements with wind and solar power producers.

Jeyakumar also states that Pembina’s recent paper titled “From Coal to Clean” outlines plans by Alberta’s major power producers – Capital Power, TransAlta, Heartland and Enmax – to meet net zero targets.

Mojek will also have to separately engage the Alberta Energy Regulator regarding the plant site.

In early 2021, Mojek was ordered to suspend operations at its sites, then transferred the properties to the care of the Orphan Well Association, telling the company to draw up a plan to responsibly retain custody.

Officials with the AER told the News that Mojek has filed a satisfactory working plan to come back into compliance, but so far has only taken repossession of one well.

Others, as well as the gas-battery where the power plant would be built, have not yet been returned to the company and would require a satisfactory agreement, officials said.

The AUC will consider written submissions from anyone affected by the power proposal until a Sept. 19 deadline.