Avanti Helium Is Rising Fast
Avanti Helium Corp. may be relatively new on the North American green helium scene, but the publicly traded company is rising fast. Avanti announced its first significant discovery in April, in so-called Greater Knappen in northern Montana, and is moving as quickly as possible to monetize the resource to take advantage of sky-high helium prices at the present time.
In addition, Avanti is the only company to acquire helium lease holdings in Alberta, Saskatchewan and the U.S., albeit relatively small ones compared to some of its green helium competitors, for strategic reasons on both counts, Chris Bakker, the company’s CEO, told the Bulletin in an interview.
Bakker foresees a bright future for Avanti, and the North American green helium industry as a whole, for a combination of geological, economic and geopolitical reasons. To support this bright future, the green helium industry may ultimately require an association to protect its unique interests.
“The helium market has been robust throughout 2022 with fundamentals still indicating helium demand continuing to heavily outweigh supply,” Bakker said during a company update in mid-September. “With Russia’s export restrictions and higher natural gas prices causing other suppliers to stop refining helium from their gas streams, there has been a global helium shortage. From conversations with traders and analysts, helium spot prices have increased substantially to between US$2,000 to US$5,000/mcf in 2022, with some sales reportedly reaching as high as US$6,000/mcf.”
Moreover, as the world economy transitions into what might be a very different global supply chain structure, the company believes that North American demand growth will continue to drive prices. “For example, the passing of the CHIPS and Science Act of 2022 has encouraged an already strong ‘reshoring’ of semiconductor manufacturing, which is a crucial use for helium,” he added.
“We are very optimistic about the price of helium for the next few years,” Bakker told DOB. “Security of supply is taking precedent over price and we are well-positioned in that regard.”
“First and foremost, we let the geology guide our land acquisition,” says Bakker. “Helium exploration, at this point in time, is primarily a conventional play and doesn’t require large fairways of land as one would for an unconventional natural gas play. With this framework, Avanti has chosen to acquire what the team feels are top tier prospects, wherever they are, and has not chosen to pursue an exceptionally large acreage position for its own sake.”
Since Avanti’s reorganization and recapitalization in late 2020 — the company disposed of its legacy international oil and gas assets in the spring of 2019 — it has increased its helium land holdings in Montana and Western Canada to over 150,000 acres.
In December 2020, Avanti announced it was acquiring a 90 per cent stake in a Montana helium lease operated by privately held Terrellium Resources. Since then, it has struck two additional significant land deals: more than 7,000 acres of highly prospective land in southern Alberta near the company’s Montana leases in May 2021, making up the Greater Knappen, in Avanti parlance; and three helium exploration permits for about 63,000 acres in southern Saskatchewan in May of this year.
This geographical diversity provides Avanti with significant advantages, according to Bakker. “Currently, the governments and regulators of Alberta, Saskatchewan and Montana are very supportive of our young industry,” he says. “However, should something change that hinders the development of our resource in any jurisdiction, we will have the ability to divert capital elsewhere.”
At the same time, each of these three jurisdictions have advantages and disadvantages of their own for helium development. “Saskatchewan and Alberta have a much simpler mineral land system, being mainly held by the government, and the helium royalties are lower than most of our areas in Montana,” says Bakker. “In addition, services in Alberta and Saskatchewan are far closer to the areas of interest and there are multiple service providers to choose from, whereas Montana has a minimally developed oil and gas sector and most services come from one or two states away, greatly increasing costs.
“On the other hand, helium exploration typically requires wells are drilling the pre-Cambrian, and the depth to the basement on our Montana properties is significantly shallower than Saskatchewan, and our lands in Montana are generally showing higher helium concentrations than competitor wells in Saskatchewan.”
The company changed its name from Avanti Energy Inc. to Avanti Helium Corp. in August to reflect its shift in focus from the production of oil and gas to helium.
“At the moment, we have proven results in Montana that we are moving toward production and we are optimistic about the total size of the opportunity we have there,” says Bakker. “We have not yet tested the land position in Saskatchewan or Alberta.”
To achieve production from its major discovery, the WNG helium pool in the Montana part of Greater Knappen, Avanti began a pre-FEED study for the WNG 11-22 purification facility in May. Based on a resource assessment by McDaniel & Associates Consultants Ltd., WNG 11-22 has 187 mmcf of net recoverable helium, with a raw gas estimate of 17 billion cubic feet recoverable made up mostly of nitrogen and a helium concentration of 1.1 per cent.
The WNG 11-22 discovery well has an anticipated production rate of 55 mcf/d of helium, considered extremely high based on a review of publicly available data in Canada. The two most productive green helium wells in our country are producing at about 60 mcf/d and 50.6 mcf/d, respectively.
“We don’t have a firm date [for first production from WNG 11-22] as the bidding process for the project is still underway but we’re hoping to be onstream in late 2023,” says Bakker.
And according to Bakker, the soon to be spud WNG 10-21 delineation well could significantly expand the aerial extent of WNG and its proved helium resource, since the site has similar geological and seismic characteristics to the discovery well. “The rig for the delineation well was moved to site in mid-October,” he says.
“A liquefaction plant is part of the consideration of the facilities engineering work that we’ve undertaken but we haven’t made any decisions on that at this time,” says Bakker. “There are third-party liquefaction plants in the U.S. that are willing to work on a fee-for-service arrangement as an alternative to building our own plant.”
There is no need for a formal helium association at the present time, but this could change in time as the green helium industry in Canada and the U.S. grows, according to Bakker. “Currently the total number of players in the Canadian helium industry is relatively small and this allows for less formal and ad hoc arrangements between us,” he says. “Avanti and several companies are working well together on an issue-by-issue basis.”
“Perhaps some day there will be a formal association … to bring our unique perspectives to government in an organized way,” says Bakker. For example, clarity on land filing assessments would be helpful, he told DOB earlier this year. “We’re not sure with the regulators whether we’re a mining company or an oil and gas company.”