A company with connections to the cryptocurrency industry is considering drilling for natural gas near the Deep River north of Sanford in Lee County, North Carolina.
If approved, the project would be the first commercial well drilled into the Triassic Basin, a natural gas repository underlying North Carolina and other Eastern Seaboard states.
Deep River Data, based in Alamance County, is interested in accessing gas from Butler Well No. 3, just south of U.S. Highway 421 near the Lee-Chatham county line, according to emails obtained under public records law.
Company adviser Dan Spuller, who is both a crypto entrepreneur and a natural gas landman, contacted the state Oil & Gas Commission in September about applying for a drilling unit, a parcel of land where drilling would occur. He said the natural gas would be for a data center to power “AI workloads,” not crypto mining. Both applications are energy-intensive, running server farms around the clock to power streams of computer computations.
“We want to submit a packet that is complete on first impression—avoiding delays and making the Commission’s review as straightforward as possible,” Spuller wrote.
Duke Energy recently projected data centers could add nearly 6 gigawatts to demand in North Carolina, which has prompted the construction of new natural gas plants and pipelines, major sources of planet-warming methane and carbon dioxide.
Methane, which leaks upstream from well heads, pipelines and compressor stations, traps 86 times more heat over 20 years than carbon dioxide, the primary greenhouse gas, which power plants emit when burning fossil fuels.
Nationwide, some data centers have not only tapped into the grid but revived shuttered coal and nuclear plants for their power. The Lee County project would tap into the natural gas reserves in the Deep River Basin, which spans 150 miles over 11 counties in central and southern North Carolina.
Spuller told Inside Climate News the company will use conventional drilling, rather than fracking, to produce the gas. Fracking is a particularly destructive type of extraction. It requires horizontal drilling beneath the ground and often uses toxic chemicals mixed with large volumes of water injected at high pressures to crack the shale formations and free the gas trapped within small fissures.
Fracking is legal in North Carolina, but has never been deployed. Lee County enacted two-year fracking moratoria in 2017 and in 2019; both have expired.
“We are evaluating whether the well can safely and efficiently produce gas using conventional methods,” Spuller said. “It remains in a pre-feasibility phase—we are still evaluating whether development is even viable. Nothing has been approved, permitted or built.”
Butler Well No. 3 was drilled vertically in 1998 to a depth of 2,655 feet, according to a 2011 report by the North Carolina Geological Survey. The well lies within a geological region of black shale and old coal deposits, a legacy of the area’s mining history.
“The Oil and Gas Commission must look carefully at this proposal to exploit the gas well near the Deep River, as well as those who want to develop it,” said Therese Vick of the Blue Ridge Environmental Defense League. “It is incumbent on the commission to do its due diligence. Having worked with communities in Lee and Chatham Counties for over a decade, my concerns are many.”
Depending on their size, data centers can also consume enormous amounts of water to cool their computer servers. The project would be less than a tenth of a mile from the Deep River and Patterson Creek.
Spuller said water use “would be minimal” and that “there are no plans to withdraw water from the Deep River.”
The project could tap into groundwater or a public water main that runs along the north side of U.S. Highway 421.
The company is considering closed-loop systems and other sustainable options, he said. Some closed-loop systems, however, use more energy to run the coolers.
The project will likely need standard utility interconnections, Spuller said, such as electricity, fiber and “basic access roads typical of small-scale data facilities. There are no heavy-industrial or extraction components proposed.”
The state Geological Survey noted that Butler Well No. 3 is located within three and a half miles of a 6-inch distribution line to the Sanford Industrial Park, “which has large volume gas users.”
Stephanie Stephens, the Deep River Riverkeeper, said she’s concerned the project could be a harbinger of more data centers along the Carolina Core, an area that includes Sanford and is targeted for economic development.
“We would like to be choosy about the types of industry that come in,” she said.
The proposed data center would also be near the new Boone Trail kayak and canoe access site.
The Deep River is a troubled waterway. Nearly 23 miles are on the federal impaired waters list, and it contains 1,4-Dioxane, a likely carcinogen, discharged from the City of Asheboro’s wastewater treatment plant. Another 131 miles of tributaries to the river are also impaired, state records show.
“We already have a polluted river,” Stephens said.
Lee County records show Butler Well No. 3 is on a 643-acre forested tract owned by Ed Myrick of Pompano Beach, Florida. However, Dan Butler, who lives in Southern Pines, purchased the mineral rights beneath that property in 1975 from the previous land owner, Weyerhauser, the timber company.
Butler owns more than 2,700 acres of mineral rights in Lee County, state records show.
Since 1998, several companies have conducted exploratory drilling of Butler Well No. 3. However, given the comparatively small amount of gas and lack of a pipeline to transport it, they determined it wasn’t economically feasible and abandoned their projects.
Butler is a third-generation oil and gas developer. His grandparents were born in western Pennsylvania, where he owns “oil wells being drilled by the hundreds in the Alleghany State Forest,” according to a transcript of his comments at a 2012 Legislative Research Commission meeting.
Butler’s father, Howard, was the superintendent of the Coal Glen Mine in Chatham County in 1925 when it exploded and killed 53 men.
It’s uncertain whether the property, which currently allows residential and agricultural uses, would need to be rezoned. There are no provisions for data centers in Lee County’s current unified development ordinance, said County Zoning Administrator Thomas Mierisch. The UDO went into effect in 2006, before data centers and cryptomines “were really a thing,” Miersch said.
Spuller became a registered landman in North Carolina in 2021, according to state Department of Environmental Quality records. In this capacity Spuller can negotiate business agreements for exploration or development of natural gas.
Although Deep River Data officials also work for other cryptocurrency interests, Spuller said the project would not be a cryptomine. “It is envisioned as a modular data-infrastructure project” that would include AI workloads and other compute-intensive research, he said.
Deep River Data was incorporated on April 30, according to the North Carolina Secretary of State business registry. The company’s officers work in cryptocurrency: Spuller, Dan Fisher and Gerald Wilkie, Jr. A separate Wilkie-run enterprise, HM Tech, which operates out of a large, blue warehouse on South Maple Street in Graham, is listed as a “managing member” of Deep River Data.
HM Tech is a bitcoin mining facility and repair center. Two other top executives, Alun Williams and Murray Stahl, are with Horizon Kinetics, a New York-based investment firm whose funds include cryptocurrency.
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Wilkie was among 55 cryptocurrency company representatives who signed a letter in 2022 to U.S. Environmental Protection Agency Administrator Michael Regan disputing the industry’s environmental harm. Two dozen congressional Democrats had previously sent a letter to Regan expressing their “serious concerns regarding reports that cryptocurrency facilities across the country are polluting communities and are having an outsized contribution to greenhouse gas emissions.”
Wilkie signed the letter in his role as founder and president of HMTech.
“There are no pollutants, including carbon dioxide, released by digital asset mining,” the cryptocurrency companies wrote. “Associated emissions are a function of electricity generation, which is a consequence of policy choices and economic realities shaping the nature of the electrical grid. Digital asset miners simply buy electricity that is made available to them on the open market, just the same as any industrial buyer.
“It is imperative that elected officials in the United States recognize that bitcoin … is the most important financial, economic, and accounting innovation in the history of humanity.”
Wilkie did not respond to an email and voicemail from Inside Climate News requesting an interview.
In addition to Deep River Data, Spuller is the executive vice president of industry affairs for the Blockchain Association, headquartered in Washington, D.C. However, Deep River Data is separate from that work, he said.
Earlier in his career, Spuller worked as the communications director for former Republican Gov. Pat McCrory’s inaugural committee. Spuller parlayed that connection for a marketing position at the state Department of Commerce, according to his LinkedIn page, where he worked closely with the Office of the Commissioner of Banks to help negotiate and pass the North Carolina Money Transmitters Act of 2016.
Former Lt. Gov. Dan Forest appointed Spuller to the North Carolina Blockchain Initiative in 2019, where he was a co-chairman and member until this year. From 2016 to 2020, he led membership and growth at the Chamber of Digital Commerce.
On Oct. 20, Spuller, representing the Blockchain Association, and Eric Peterson, senior government affairs manager at Kraken Digital Assets Exchange, appeared before the first state House Select Committee on Blockchain and Digital Assets.
They were advocating for legislation favorable to stablecoin, which is considered less volatile than other types of cryptocurrency. It can also be used to transfer funds between different crypto tokens.
Spuller was urging the passage of House Bill 92, the North Carolina Digital Assets Investment Act. It would authorize the state treasurer to invest a portion of public funds in the digital assets, study employment employee investment options, and evaluate the creation of a state-level digital asset reserve.
This measure passed the House earlier this year, but is still waiting for Senate approval.
“Hopefully they will pass it because I think that would also send really a fantastic message to the global economy that our state’s open for business,” Spuller said. “There’s no reason not to pass that. That would be on my wish list.”
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Lisa Sorg is the North Carolina reporter for Inside Climate News. A journalist for 30 years, Sorg covers energy, climate environment and agriculture, as well as the social justice impacts of pollution and corporate malfeasance.
She has won dozens of awards for her news, public service and investigative reporting. In 2022, she received the Stokes Award from the National Press Foundation for her two-part story about the environmental damage from a former missile plant on a Black and Latinx neighborhood in Burlington. Sorg was previously an environmental investigative reporter at NC Newsline, a nonprofit media outlet based in Raleigh. She has also worked at alt-weeklies, dailies and magazines. Originally from rural Indiana, she lives in Durham, N.C.
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