Helium Could Lift Saskatchewan’s Industry Portfolio
With supply shrinking and demand rising, helium has snagged a lot of fresh interest recently. The element has a sleepy history in the province dating back to the 1960s, but global helium shortages have triggered a drive to find new sources. “That’s where the Saskatchewan story becomes very interesting,” says Andrew Davidson, CEO of Royal Helium (RH).
“Globally what we’re seeing is a return to demand growth in helium after a year of covid-related cutbacks,” Davidson says. A Financial Post story earlier this year states that helium demand growth is all about growth in hightech. Because of its diverse uses in health care, hi-tech manufacturing, space and rocketry as well as military and nuclear power, helium may well be recession-insulated, Davidson says. “The demand cannot be curtailed on all of them at any one time.”
Helium is created by the natural decay of uranium. Saskatchewan is well known for abundant uranium deposits and accounts for nearly 85 per cent of Canada’s uranium exports. Prospects for helium maybe just as good.
With a million acres of helium rights in the province, Royal Helium is one of Canada’s largest helium landholders after North American Helium, which is “by far the largest landholder in North America,” Davidson says.
Using historical drilling data from the oil and gas industry as well as seismic and airborne surveys, companies are able to locate helium sources. In Saskatchewan, helium is typically found at a depth of about 2700 metres.
RH is injecting $20 million into their operations this year. Three wells have been drilled in the Climax, Sask. area, with a fourth in progress. The plan is to drill a half dozen more wells and begin production by year end.
The path to production is not a mystery for a province familiar with oil and gas industry processes. Once helium is located and trapped within a geological column, a steel casing is installed inside the well and then perforated to allow helium to rise to the surface.
Helium concentration seems surprisingly low in the gas flow. In Saskatchewan it may be between 0.5 and 1 per cent. “This is exceptionally high from global perspective. Other parts of the world which produce a lot of helium produce it at rates of 0.04 per cent on average. Our concentration is quite high,” says Davidson, adding that US companies doing helium development in the States have productive zones that are three to five feet in width he says. “Ours is 100 metres in width.”
Once at the surface, helium is separated from other constituent gases like nitrogen or methane. Purification facilities can be constructed on site or brought to the well site.
Recently, Canada’s largest helium purification facility was completed at Battle Creek, Sask., an exciting development cheered by the province’s leaders. “This facility will support local jobs and position Saskatchewan as a leading supplier of helium to the world,” Premier Scott Moe has said.
Alternatively, there’s an option to bring in a smaller mobile facility, basically a Sea-Can, drive it to the site and purify the helium that way, Davidson says. “It’s a much cheaper option but doesn’t process as much gas. That’s probably what we’re going to do initially. Once you have proven you have sufficient gas to justify the investment in a facility, that’s when you would build one.”
Most helium is sold at the well site, he notes. After purification the gas is compressed and loaded into helium tubes or canisters. It can then be driven to the U.S. where it can be liquified. Unlike the gas, liquid helium can travel anywhere, potentially serving hungry Asian markets.
Global Helium (GH) began helium exploration in Saskatchewan more recently. GH has applied to the province to build a land position here. The company went public earlier this year. “When we went public, we had under 100,000 acres and now we have over 700,000 acres,” says CEO Wes Siemens, who like Davidson, was lured from the oil and gas industry by the potential of helium. “Our plan is to try to get 1.5 million acres in three core areas where we think the prospectivity for helium activity is good. And we’re shooting seismic and doing other techniques to assess the subsurface and then hoping to launch a 3-well program that we would undertake hopefully in the first quarter next year.”
GH’s primary backing is out of San Francisco and Vancouver. In addition to exploration in Saskatchewan it is directing attention to the U.S. where helium is better known and offers more locations. GH is also “elephant hunting” and exploring larger opportunities or projects that can go directly into development.
“What’s really exciting is helium is a very green and hi-tech industry. There is lots of capital out there for things like hydrogen and lithium and helium,” says Siemens. “I think the access to capital for these ideas is remarkable. We’re seeing an ability to raise money and that’s been a big hurdle over the last number of years for a lot of businesses.”
Ventures like this always require good geological work and always involve risks. Not all wells will offer the right conditions. The geology isn’t always going to be favorable. But Siemens is not seeing any barriers that can’t be overcome.
“The helium market is very, very under served and the world needs a stable North American supply source,” says Davidson. “The gap between supply and demand is about 2 billion cubic feet of helium per year. That’s just more than we can reasonably produce in any short period of time and the same for our competitors.” That spells opportunity in an industry whose whispered worth could approach three trillion dollars. And it should float a lot of balloons.