NEWS FILE PHOTO
Medicine Hat City Hall is seen in this file photo. The city plans to drill several helium prospect wells this fall after ongoing oil exploration showed amounts of the element that 50 times more valuable than natural gas.
cgallant@medicinehatnews.com @CollinGallant
Senior officials with the City of Medicine Hat are disputing a report that states it has found “a gusher” of helium, but confirm plans to add the valuable industrial chemical to its energy business model.
The report, which appeared Wednesday under a large headline on the Medicine Hat News front page, states that drilling results of ongoing oil exploration in west-central Saskatchewan showed amounts of the element that is about 40 to 50 times more valuable than natural gas.
Administrators, however, say that there is “no helium discovery at this point,” but they wish to add the valuable gas to the existing energy business model and plan to work so the production can be refined locally.
Elected officials responded to media reports of the project with enthusiasm.
“Finally,” Mayor Ted Clugston wrote on social media. “I’ve been eagerly anticipating this announcement for more than a year. This is really fantastic news for the Gas City.”
A presentation set to be given on Thursday to council’s utility committee states that helium-specific leases have been secured and exploratory plans have been drawn up to build a local refinery, possibly in partnership with a major firm.
Chief administrator Merete Heggelund told the News early Wednesday that there is no helium production currently.
“We have plans to drill several prospect (wells) starting this fall,” she wrote in an email. “We have also spent significant time researching and positioning ourselves in the market to build the business plans.”
Administrators and council members approached this week by the News declined comment until the item went before the utility committee meeting on Thursday.
A backgrounder for the committee states the city has acquired its first helium-specific exploration lease in Saskatchewan and will seek others. The plan is to drill five exploratory wells in 2018, paid four out of division reserve funds.
A second lease has been obtained in Alberta, where the royalty regime is different. Some lobbying on the current extraction rates has already taken place.
In late 2015, the city-owned energy exploration company, Prodco, embarked on a oil exploration program aiming to diversify the business in light of steadily low natural gas prices.
That $45 million drilling program produced, “extraordinary results” according to the most recent update in late 2016. Since then, several city councillors have told the News that helium could add another dimension to the city’s business units, end a drain on current reserve funds and backstop the city’s finances well into the future.
Others have spoken about their wish to get an update to Prodco’s oil drilling activity made public before the fall.
The city hopes that securing new production of helium, which is naturally occurring and often found in conventional oilfield geology, could result in new refinery located in Medicine Hat that would serve several helium plays.
Helium is used in a variety of high-tech purposes, medical equipment and industrial manufacturing. Almost half the global supply is produced in Qatar, followed by the United States with a 30 per cent share.
