Diversified Energy Company PLC, the largest owner of oil and gas wells in the United States, is under regulatory scrutiny in Pennsylvania for unauthorized cryptocurrency mining operations at abandoned gas wells. The company installed crypto mining equipment at its Longhorn Pad C site without obtaining the necessary permits, leading to violations of state environmental laws.

Unauthorized Installation and Regulatory Violations

In mid-2022, Diversified Energy installed cryptocurrency mining infrastructure at Longhorn Pad C, a site with

low-producing Marcellus shale wells. The Pennsylvania Department of Environmental Protection (DEP) discovered the unauthorized installation during inspections, noting that the company had not secured the required plan approvals for air contamination sources. DEP's community relations coordinator, Tom Decker, stated that installing such equipment without prior approval could lead to enforcement actions.

Despite the violations, the DEP approved the mining operation in December, citing that Diversified had "satisfactorily addressed violations." However, the approval process raised concerns among environmental groups and local communities, who argue that the company's actions reflect a pattern of regulatory non-compliance.

Community Concerns and Environmental Impact

Residents near the Longhorn Pad C site have reported significant noise disturbances from the crypto mining operations. Jay Township's Board of Supervisors received numerous complaints and urged the DEP to consider noise limitations in its permitting decisions. Additionally, the township of St. Mary's implemented zoning ordinances requiring future crypto mining projects to maintain a minimum distance from property boundaries and adhere to sound level restrictions.

Environmental advocates express concerns that utilizing abandoned or low-producing wells for crypto mining could extend the life of fossil fuel infrastructure, hindering efforts to reduce greenhouse gas emissions. Robert Routh, an attorney with the Clean Air Council, highlighted the difficulty in quantifying pollution from such remote operations, emphasizing the need for stringent regulatory oversight.

Diversified Energy's Business Model Under Scrutiny

Diversified Energy's strategy involves acquiring underperforming oil and gas wells and repurposing them for alternative uses, such as cryptocurrency mining. Critics argue that this approach allows the company to avoid the costs associated with properly decommissioning wells, potentially leading to environmental hazards. The company's history includes instances of non-compliance with environmental regulations, including a 2018 finding by the DEP of over 1,000 abandoned wells out of compliance.

The situation in Pennsylvania underscores the challenges regulators face in overseeing emerging technologies like cryptocurrency mining, especially when integrated with existing fossil fuel infrastructure. As the industry evolves, ensuring compliance with environmental standards and protecting community interests remain paramount.