US Government Announces Sale of Entire Federal Helium System
The US federal government is gearing up to sell the Federal Helium System, a major global helium supply that’s managed by the Bureau of Land Management (BLM). The sale, which was directed by Congress in accordance with the Helium Stewardship Act of 2013, will begin July 12, 2023 and will include the Cliffside Gas Plant and the Bush Dome, a natural geologic reservoir with federally- and privately-owned helium, federally owned plant equipment, mineral rights, natural gas wells, and federal helium pipeline will be auctioned. As the helium industry faces another prolonged shortage, prices are reaching new highs as future global supply prospects come into sight. Increased prices and rising demand stand to benefit the industry, from major players like ExxonMobil (NYSE:XOM), which has a significant helium facility in Wyoming’s Riley Ridge deposits, manufacturers like Linde PLC (NYSE:LIN), Air Products and Chemicals, Inc. (NYSE:APD), and Chart Industries, Inc. (NYSE:GTLS) and exploration and development companies like First Helium Inc. (TSXV:HELI) (OTCQX:FHELF).
First Helium Inc. (TSXV:HELI) (OTCQX:FHELF) is a helium exploration and development company led by a core Senior Executive Team with diversified and extensive expertise in oil and gas exploration and operations, mining, finance, and capital markets. The company is developing two premier helium projects in Alberta, Canada, the 60,000-acre advanced-stage Worsley Helium Project in northwestern Alberta and the Southern Alberta Helium Fairway Project, which is located near existing helium production.
First Helium is making particularly impressive strides in its Worsley Property. The team has completed successful drilling of multiple wells. The noteworthy 15-25 well, with a robust helium content of 1.3%, has a best estimate contingent resource volume of 323 million cubic feet (mmcf) of helium.1 This well’s projected value surpasses $35 million, calculated at $600 per mcf pricing2. First Helium has an ambitious timeline, targeting helium production by mid-2024. The company is also set to widen its operations footprint, acquiring rights to over 26,000 acres of fresh exploration lands, inclusive of sought-after territories at East Worsley.
On July 11, First Helium provided an update on its recently completed 5,200-acre proprietary 3D seismic program over a portion of its most recently acquired lands at Worsley. First Helium‘s exploration team has evaluated the data and found that there are a number of highly promising drill targets in the same Leduc reef complex as the successful 15-25, 1-30, and 4-29 wells and along the same trend. These new drilling targets add to the large number of locations that the company already has at Worsley. The company is prioritizing these targets for inclusion in upcoming drilling programs.
“We are very pleased to have completed our 3D seismic program at Worsley on time and within budget” said Ed Bereznicki, President & CEO of First Helium. “Building on the exploration model established with the acquired 3D seismic programs and through the successful drilling of the 15-25, 1-30, and 4-29 wells, we are extremely excited to further test the model on these targets on our new exploration lands,” added Mr. Bereznicki. “Located on contiguous lands east of our successful wells, these newly identified drilling targets are anticipated to yield helium rich gas which would give us the opportunity to deliver additional potential volumes to capitalize on our helium gas offtake agreement,” concluded Mr. Bereznicki.
On May 24, First Helium entered into a long-term helium supply arrangement with a major global gas company. First Helium has agreed to sell 80% (with the option of selling up to 100%) of its produced helium to the company under the terms of a predetermined per unit volume pricing schedule, maximum monthly and annual volume quantities. Depending on the rate of rise in helium production at Worsley, the “take-or-pay” agreement is worth up to US$100 million in potential revenue over the first five years of production.
For the second half of 2023, First Helium plans to finalize engineering design for the Worsley helium processing facility, select construction contractors, and begin construction of the facility. The company also plans to kickstart new drilling activities in the Worsley area and expedite exploration and development efforts on its newly acquired lands, backed by data from a recently completed 3D seismic program.
Energy Companies Signing Deals in the Helium Space
Last year, Linde PLC (NYSE:LIN) signed a long-term helium off-take deal to recover the helium from the Texas production plant of Freeport LNG. Linde will also build a new helium processing plant in Freeport to clean and turn the salvaged helium into a liquid. This will give the US another source of liquid helium. Linde‘s clients will use the helium in a number of end markets, such as aerospace, electronics, healthcare, and industrial, where demand is still high both in the United States and around the world. Linde‘s supply of helium will grow by about 200 million cubic feet when the project begins in 2024.
Under a potential $1.07 billion contract, Air Products and Chemicals, Inc. (NYSE:APD) will deliver 33 million liters of liquid helium and lease six patented liquid helium pumps to NASA’s Kennedy Space Center in Florida. NASA said that the commodity will be used to support the International Space Station program, the Space Launch System, and other programs at the Kennedy Space Center and Cape Canaveral Space Force Station. The sole-source contract has a base performance period of 23 months and three options to extend work through Oct. 31, 2027. Helium is employed in a variety of NASA applications, including pressurizing fluid systems, purging hydrogen systems, and as a cryogenic agent. NASA also awarded Air Products and Chemicals a $57.3 million contract to provide 13.1 million pounds of liquid hydrogen to the Marshall Space Flight Center and Stennis Space Center.
ExxonMobil’s (NYSE:XOM) LaBarge facility in Wyoming has established itself as a key player in the future of carbon capture and storage. It will continue to play an essential role in providing society with this critical element as the source of 20% of the world’s helium and with an 80-year supply remaining. When LaBarge began producing natural gas in the mid-1980s, extracting helium was not part of the original plan. Helium was discovered in huge amounts underground and quickly proved critical to the facility’s operation.
Chart Industries, Inc. (NYSE:GTLS) signed a definitive deal on November 9, 2022, to buy Howden from affiliates of KPS Capital Partners for US$4.4 billion. Chart received all regulatory permissions needed to complete the transaction on March 13. Howden is a global manufacturer of mission-critical air and gas handling equipment. Compressors, rotary heat exchangers, steam turbines, and other air and gas handling equipment, services, and solutions are part of its offering. Chart‘s equipment portfolio and process technology options in hydrogen, carbon capture and storage (CCS), decarbonization of industries, water treatment, petrochemical, liquefied natural gas (LNG), air separation, and natural gas processing are expanded by Howden’s product lineup. Because compressors are the longest lead-time item in the current context for hydrogen, helium, and small-scale LNG liquefaction, Chart will profit by incorporating Howden’s compressors within its solutions when applicable.
First Helium has exercised an option to acquire 640 acres of highly prospective helium exploration lands near Dixonville with indicated grades, or helium concentrations, ranging from 1.7% to 5.7%.
Featured Image @ FreePik
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