Saskatchewan Releases Helium Action Plan; Province Aims To Produce 10% Of Global Supply
The Saskatchewan government has announced an action plan that aims to see the province become a major global helium supplier by the end of this decade, supported by increased helium drilling and key liquefaction infrastructure.
“Really, to get there, we’re probably going to need 15 new greenfield purification facilities,” Jared Ward, director of energy economics at the Ministry of Energy and Resources, told the Bulletin. “Once that production comes, we’ll get to the stage where there’s enough volume of gas that a liquefier starts to make sense for the province.
“Hopefully, that happens sooner than later here in Saskatchewan. Hopefully, in the next couple of years, we start to see some action on a liquefier.”
Saskatchewan aims to produce 10 per cent of the world’s helium by 2030, increasing its helium sector to 150-plus dedicated production wells, creating more than 500 permanent full-time jobs, thousands of construction and service jobs, while building necessary purification and liquefaction facilities, and generating more than $500 million in annual exports, according to the newly-released Helium Action Plan: From Exploration to Exports.
Currently, according to Ward, Saskatchewan producers transport their helium to the U.S. for liquefaction. They could save a lot on transportation and processing costs with an in-province liquefier set up at a “hub” location.
“[Liquefaction] typically would be relatively close to production, which we’re mostly seeing in the southwest now. And so, a logical place could be in the southwest, maybe along the Trans-Canada Highway. Swift Current is a [logical] area. But we are starting to see a lot more exploration in the southeast, too.”
Along with determining potential locations for this helium hub, he added, liquefaction proponents must determine ownership structures, whether tolling fees are required for producers, and various other infrastructure details. “It’s one of the deliverables we’ll kind of get into too.”
Brett Keller, manager of energy economics with the ministry, said helium liquefaction facilities come in a range of sizes and shapes, including massive, multibillion-dollar ones in major helium-producing regions around the globe. Regarding Saskatchewan, he sees it as more realistic for a facility to require a more modest investment.
“There is the opportunity to scale that down,” he told the DOB. “The age of modular processing equipment is here, too, and so that would be interesting if you built a smaller, modular facility. The hub approach, instead of doing that, if you could just pick up your processing infrastructure and move it to wherever production is next, then that is something that could be on the horizon in the future.”
Unfortunately, said Keller, there exists a “chicken-and-the-egg” conundrum, in which large infrastructure investors are not be willing to risk building these multi-decade assets without proven upstream production, while simultaneously producers find it challenging to invest heavily into drilling and completing new wells without processing infrastructure (to bring that helium up to certain grades) already being in place.
“The plan really helps to bridge that gap and connect the upstream side along with the infrastructure processing side to really make sure we’re not overbuilding processing or underbuilding production, or something like that. We want to ensure the entire sector is moving forward together.”
Setting up working groups, which include industry, governmental and other stakeholders, is a key part of the new helium action plan, said Ward. Important work involves determining permitting requirements, funding opportunities, transportation requirements, ownership agreements and other matters involved with developing liquefaction, he noted, as such work is needed for Saskatchewan to become a major global helium producer and exporter.
“You are saving a lot on transportation costs if you’re shipping liquid helium versus gas in a tube trailer,” Ward added. “You get a lot of savings there, and that’s where we think we can add value to this sector, too — it’s to liquefy provincially. I don’t know if I have an exact date [for construction], or can say what this liquefier will look like, but we’ll be doing a lot of work behind the scenes.”
Action plan focus areas
The province’s action plan includes four areas of focus — exploration, production, innovation and processing — that are supported through 10 actions. On the exploration front, actions include a comprehensive provincial resource reserves study (in collaboration with industry) of Saskatchewan’s helium resources and reserves.
“We’d want to talk with industry first to see what makes the most sense,” noted Ward. “This would probably lead into stages of a study, but really to prove out the reserve in the province. What’s possible? What’s proven?”
Another action involves leveraging oil and gas sector data, updating the Integrated Resources Information System (IRIS) in order to digitize and streamline helium gas analysis reporting from all wells in the oil, gas and helium sectors. Ward said: “It is to automate the fluid analysis upload. Right now, there are still some holdovers from subsectors where it’s a manual process.”
Third, the government would encourage exploratory well drilling by expanding its incentive program to include helium. Ward added: “There are existing programs for the oil and gas sector. There are some maybe more related to the mineral side. But we’re looking at how can we provide some support there [for helium]. This is something we will go back out to talk with industry about [to see] what makes the most sense.”
According to Keller, these exploration action items hopefully “bridge the gap” and make it easier for the province to develop helium resources outside of the southern regions, such as eventually in the Lloydminster area. “Something like this hopefully will help facilitate that. We know the resources are up there. It’s just a matter of exploration.”
In terms of the focus area on production, the province would support reducing administrative costs by expanding IRIS to automate helium production reporting and royalty payment administration for industry, bringing the helium sector into the existing automated royalty administration system.
“We know that there’s more and more helium production, and so we just want to automate that to make it easier for companies and easier for government internally,” said Ward. “Behind the scenes, IT bills can be kind of long and way too expensive, and so it’s a fair amount of work to do internally for governments. There’s a cost commitment there, but it’ll make things more efficient and easier for companies in the future.”
Secondly, the province would review and enhance recognition of eligible exploration costs for helium tenure work expenditure requirements, accelerating creation of targeted geoscience information at potential well drilling locations in order to achieve enhanced geoscience information. The province will also promote regulatory excellence, which comes as an advantage since Saskatchewan already has a well-established helium regulatory regime in place.
With regards to innovation, the province plans on driving investment by expanding the Saskatchewan Petroleum Innovation Incentive (SPII) program to include eligible ‘new-to-Saskatchewan’ helium-sector innovations. Ward said that SPII is very similar to the Oil and Gas Processing Investment Incentive (OGPII) in how it functions, but it offers a bit higher royalty amount of around 25 per cent. Also, operating costs are eligible for the SPII program.
“Both of those programs, the OGPII and the SPII programs, can be used to support projects. They’re stackable. They’re pretty unique types of programs, but also fairly unique in the fact that helium is eligible for this, and I’m not aware of other places that have this type of support for projects.”
When it comes to a company building major helium-related infrastructure such as a liquefier, added Keller, such a project could independently qualify for both SPII and OGPII, and therefore a firm could receive a substantial amount of transferable royalty credits that it could turn around and sell to an oil and gas producer, for example.
“In relative terms on a project’s total cost, $8 million on a $20 million project could definitely move the needle and attract some of these types of projects.”
As part of its efforts towards prioritizing ‘unique-to-Saskatchewan’ innovations, the newly-released plan would also see the government establish a Helium Innovation Commercialization Working Group that will focus on helium-relevant pilot deployment of new, critical technologies. Ward said: “There are a lot of things we want to scope out.”
Single well support
Support for single-well processing is key to encouraging development of Saskatchewan’s considerable number of smaller helium pools, which require specialized onsite purification equipment to be economically viable. As such, the government will review the helium royalty regime to ensure it accounts for these single well production sites’ unique investment competitiveness conditions when calculating royalty rates.
In terms of supporting single-well developments, Ward told the DOB, new types of purification equipment could make sense, possible modular, that could be scaled up and/or down, which also might be true for liquefaction. Other questions a working group might consider include enhanced emissions management, and whether there is value in the nitrogen or even methane coming off these wells, and how exactly the helium might best be transported to markets.
Finally, says the plan, the province aims to establish a coalition of municipal, provincial and federal agencies, as well as helium companies and global investors, dedicated to building helium liquefaction capacity in Saskatchewan — an effort that involves assessing potential to develop integrated export-oriented helium processing hubs in the province.
Ward added: “Every month, more wells are getting drilled. And so, before too long we are going to have more production, so we’re going to want to start looking at a liquefier.”
Saskatchewan is lucky to be situated next to the world’s largest helium consumer, the U.S., which takes up around one-third of the world’s helium each year, according to Keller. With a major suppler having reduced its output, he said, and in conjunction with multiple announced semiconductor-chip plants south of the 49th parallel, there is a significant amount of demand potential that Canadian helium could satisfy.
“That’s not to say Saskatchewan couldn’t become home to some multibillion-dollar semiconductor plant, but you already have those tangible investment dollars flowing down there, and we know there’s proven demand. And so, I’d think the export market makes a bit more sense.
He added: “That’s not to say we would not be supportive of the internal use for nuclear or the Canadian Light Synchrotron, or some of these other [opportunities], but there are more opportunities down there.”
The Saskatchewan advantage
Saskatchewan is one of the few jurisdictions that can support helium production as a standalone sector because of the province’s geology supporting dedicated helium-well drilling, notes the newly-released action plan. The province’s helium deposits are mixed with nitrogen, which makes up nearly all the remaining gaseous mix in these formations.
Currently, according to this morning’s news release, Canada has the world’s fifth-largest known helium resources, with considerable underground reserves located in Saskatchewan.
“In Saskatchewan, helium exploration and production are leading to more wells, more jobs, more facilities and, ultimately, more exports,” Energy and Resources Minister Bronwyn Eyre said about the province’s helium plan. “We have high helium concentrations in the province and some of the most attractive geology in the world for low-emission helium production.”
Earlier this year, North American Helium Inc. opened its $30 million Battle Creek Helium Purification Facility, the largest in Canada, which also qualified under for OGPII support. Marlon McDougall, president and chief operating officer, said this morning’s announcement further solidifies Saskatchewan’s position as a “best-in-class jurisdiction” in which to explore, build infrastructure, and produce helium to serve global markets.
Also, in 2021, Royal Helium Ltd. announced a significant helium discovery at its Climax project, which has the potential to be one of the largest helium discoveries in Saskatchewan history. Andrew Davidson, president and chief executive officer, said that his company is playing a leading role in the sustainable development, in consort with the province’s other Helium producers and the Saskatchewan government.
“This is a tremendous opportunity for Saskatchewan to become a major supplier of helium, which is critical for health care and high-tech industries both locally and around the world.”
- New Energy