Hilcorp is set to host a new project that will test the idea of using plentiful natural gas in Alaska’s North Slope oil fields to power data centers — the digital infrastructure that keeps the internet running and is essential to the emerging AI economy.
Privately owned Hilcorp, one of Alaska’s biggest oil producers, is working with a Texas-based firm to place a small, pilot data center at its Endicott field, inside a shipping container on a gravel pad, according to a permit application filed recently with state land managers.
The Texas firm, TA Infrastructure, says in the application that it will use the computers inside the shipping container for Bitcoin mining — a digital process that supports the cryptocurrency. Power will come from natural gas, using Hilcorp’s existing generators, according to the application and a public notice posted by the Alaska Department of Natural Resources.
“The goal of this pilot project is to demonstrate the ability to operate computers and associated data center infrastructure in the unique environment of the North Slope, as well as identify any logistical and operational challenges that a larger project might present,” the application said.
The computers will operate on a continuous basis for four years, according to the application, with a starting date for the permit of this month.
TA Infrastructure’s contact listed on the application, Tim Bonstaff, did not respond to requests for comment. Neither did a spokesperson for Hilcorp.
The proposed project comes amid increasing demand for, and scrutiny of, data centers, which are needed to power the heavy computing demands of AI but also consume huge amounts of electricity.
The industry is facing a backlash in some communities in the Lower 48, while GOP Gov. Mike Dunleavy has been trying to recruit data firms to Alaska, citing its ample undeveloped real estate and lower potential for conflicts over location.
Another selling point touted by Dunleavy is that Alaska has huge amounts of natural gas associated with its North Slope oil fields.
That gas, in theory, could be used to generate electricity to power new data centers. But there’s no pipeline to carry it from the thinly populated North Slope to markets in urban Alaska or Outside. The state has long sought to build such a pipeline, which could cost tens of billions of dollars.
Dunleavy, in a recent interview, said he thinks new data centers could generate enough demand for electricity to support construction of a gas pipeline; the gas could be used in urban Alaska to run power plants that would support the data centers.
The Bitcoin project at Hilcorp’s North Slope field, though, would test a concept that would not need a costly gas line. Instead, it would use electricity derived from natural gas on site at the region’s oil fields — using Hilcorp’s preexisting generation infrastructure.
TA Infrastructure wants to install computers that will collectively use 1.4 megawatts of electricity, according to its permit application — enough to power hundreds of homes.
Using that much computing power to mine Bitcoin could earn the equivalent of roughly $300 an hour, said Colin Read, an economics professor at State University of New York Plattsburgh who has studied cryptocurrency.
But, he said, relying on natural gas to mine Bitcoin is “bad for the environment” because “you’re belching out a lot of CO2 in the process, as well.” Other leading cryptocurrencies, he added, have abandoned the mining process and now keep their networks functioning using different methods that consume far less electricity.
“Fossil fuels are just not a sustainable model, and the greenhouse gas implications, to me, are really troubling,” said Read, who’s also taught at University of Alaska Fairbanks. “If they could solve those, that would put them in a much better situation.”
Dunleavy’s administration is reviewing TA Infrastructure’s permit application, the state’s commissioner of natural resources, John Boyle, said in a prepared statement.
“We are very encouraged that companies are pursuing opportunities like this in Alaska,” he said. “And the Department of Natural Resources hopes to continue to see more opportunities for computing and data center development using Alaska’s abundant resources.”
Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.
