Saskatchewan To Become A Major Helium Power


In November 2021, the Saskatchewan government released Helium Action Plan: From Exploration to Exports to further bolster the province’s budding helium industry. The goal of the plan is to produce 10 per cent of the world’s helium by 2030 — making Saskatchewan a top-five global producer.

Based on provincial estimates, this will require at least 150 dedicated production wells — Saskatchewan’s most attractive helium resource tends to be comingled with nitrogen rather than methane —15 purification facilities, and significant helium liquefaction capacity (see Saskatchewan Releases Helium Action Plan; Province Aims To Produce 10% Of Global Supply).

In response to the helium plan, Marlon McDougall, president and COO of North American Helium (NAH), the dominant helium producer in Saskatchewan and Canada, said it further solidifies the province’s position as a “best-in-class jurisdiction” in which to explore, build infrastructure, and produce helium to export to the global market.

And in a recent interview with the Bulletin, McDougall gave the province’s goal of producing 10 per cent of the world’s helium by 2030 his stamp of approval: “We do believe this is plausible and we intend to be a big contributor to that goal.”

Saskatchewan appears to have the helium resource and proactive provincial policies to achieve this goal, while the stars are aligning on the helium market and geopolitical fronts (see Helium Shortage 4.0 Likely A Prolonged Affair).

It’s the geology, stupid

“Helium cannot be manufactured or synthesized,” says McDougall. “It can only be extracted from deep beneath the earth’s surface where it is generated, through radioactive decay of uranium and thorium, over hundreds of millions of years — about 10 times longer than to generate hydrocarbon-based resources. Saskatchewan is well known for its world class uranium resource — the prime ingredient for helium generation and that which is only found in a handful of other locations on the planet.”

“We have world class helium geology, with some reservoir concentrations showing 50 times higher than some competing jurisdictions,” the Saskatchewan Ministry of Energy and Resources told the DOB. “In addition, Saskatchewan’s helium is sustainable. Ours is produced with 97 per cent nitrogen, which is not a greenhouse gas.”

As a result, Saskatchewan produced helium has both environmental and cost benefits, according to McDougall. “The carbon footprint of our operations is about 95 per cent less than other current helium resources,” he says. “It also significantly reduces operating costs since there is no secondary handling of methane or other corrosive elements often found in hydrocarbon extraction and production. Facilities are simple nitrogen rejection systems with little rotating equipment and require less maintenance with no chemical treating.”

Proactive provincial policies

There are several other key factors which set Saskatchewan apart from other helium producing jurisdictions, according to McDougall. These include: Saskatchewan being the only jurisdiction in the world to pass comprehensive legislation to encourage helium development, including legislation way back in 1964 that separated the rights to deeper horizons, where fields of helium/nitrogen are found, from shallower oil and natural gas rights; more favourable royalty rates of 4.25 per cent, compared to 12.5 per cent in the U.S.; long lease terms of 21 years providing certainty and stability to exploration and development efforts; access to skilled labour, field services, power and road infrastructure given the province’s long legacy of oil and natural gas development, and low-cost and extensive seismic surveying data as well; and an economic growth mindset at all levels of government in the province translating into short and transparent timelines for drilling licenses and facility approvals.

“The Government of Saskatchewan also has a number of incentives in place to encourage industry to develop helium projects in the province,” says the Ministry. “For example, the Oil and Gas Processing Investment Incentive (OGPII) provides 15 per cent transferrable royalty credits to eligible value-added processing projects, including helium purification and liquefaction, and the Saskatchewan Petroleum Innovation Incentive (SPII) provides 25 per cent transferrable royalty credits, based on eligible costs, to eligible innovation projects, including those in the helium sector. As an added benefit, a company can apply and qualify for both OGPII and SPII, significantly improving the incentives realized on a project.”

In addition, the Helium Action Plan is providing support to helium producers through deliverables like comprehensive reviews of geology and resource potential and a liquefaction hub study. “No other jurisdiction in the world has a comprehensive helium development strategy like Saskatchewan’s,” says the Ministry.

Supportive markets and geopolitics

“As demand for helium rises globally in the medical, technology, and manufacturing sectors, the Russian invasion of Ukraine, along with other geopolitical and supply issues, has further emphasized the need for Saskatchewan to become a major helium exporter,” says the province’s Ministry of Energy and Resources.

“As for U.S. helium supply and demand, with declining production from legacy methane fields and depletion of volumes in the Bureau of Land Management’s Federal Helium Reserve, the U.S. is projected to become a net importer of helium by 2025,” says NAH’s McDougall. “This is in stark contrast to being a significant net exporter historically. The net effect of this major change is that we have seen strong and increasing interest from North American based companies and research institutions, that rely on helium in their supply chain, looking for a stable and reliable source of helium supply.”

And on the geopolitical front, less than 10 facilities account for about 90 per cent of global helium production, with the majority of global helium supply coming from facilities in countries with a history of political instability such as Algeria, Qatar and Russia, according to McDougall. “In fact, Russia recently announced its intention to restrict the export of helium, largely in response to ongoing sanctions resulting from its invasion of Ukraine,” he says.

“Additionally, recent geopolitical conflict and the global helium shortage have sent prices skyrocketing,” says the Ministry. “Although Saskatchewan has always had significant drilling opportunities, the current global prices are encouraging the sector to scale operations and begin exporting as quickly as possible.”

Saskatchewan rising

“Saskatchewan is already Canada’s leading helium producer and the province’s helium industry currently produces one per cent of the world’s helium,” says the Saskatchewan Ministry of Energy and Resources. “If helium wells and processing facilities continue to be drilled and constructed at the current pace, Saskatchewan is well on its way to reach our goal of a 10 per cent share of the global helium market by the end of the decade.”

And NAH is doing its part to help Saskatchewan achieve its 2030 market share goal. “We commenced our first helium production in mid-2020 from a single-well purifier to test that concept and it’s exceeded our expectations on all fronts,” says McDougall. “We now have three helium production facilities operating, including Canada’s largest helium purification facility, with plans for a total of eight facilities by the end of 2023. With these new facilities coming onstream we will exit this year producing at a rate of approximately 110 mmcf/year, which is double 2021, and expect that to double again by the end of 2023. We intend to keep an active capital program moving forward, drilling 30 new wells per year.”

At the same time, NAH is seriously considering construction of the missing link for Saskatchewan to achieve its 10 per cent market share goal, a helium liquefaction plant to allow the province to access overseas markets and improve the economics of exporting helium to the U.S. compared to trucking gaseous helium south of the border.

“We are currently in advanced stages of engineering for the construction of a helium liquefaction facility,” says McDougall. “What is required is to ensure there is an adequate long-term resource to support such an investment. North American Helium has done a lot of drilling and proven up significant real reserves to date, just not enough to justify a liquefier. But it is a two-year build and we expect to be there in that timeframe. In addition, since we view this as a regional solution, we expect others could be additive to this.”

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