City continues exploration of helium

By Collin Gallant on September 8, 2018.

cgallant@medicinehatnews.com @CollinGallant

The City of Medicine Hat’s foray into helium exploration is still a work in progress one year after the esoteric leg of the petroleum division’s growth strategy was revealed.

On Sept. 6, 2017, the News erroneously reported that a volume of the inert, highly valuable gas had been found by city drilling crews.

Instead, administrators were only readying an exploration program aimed at finding the element that has a host of industrial uses in high-tech industries.

Of three wells drilled last winter and spring that had helium as a target, one proved positive, administrators said in a summer update.

But that’s still being examined to see if it would be profitable, and the goal of building a refinery in the city is still up in the air.

“In the first tranche of drilling … and one shows what we see as reasonable, if not significant quantities of helium, but the well’s not completed or tested as of yet,” Brad Maynes, the city’s general manager of petroleum resources, said this week.

“We’re still doing our homework before we complete it … the question is whether it’s economic to produce.”

The resource has been mined for decades and has recently seen increased interests according to officials with the Saskatchewan Geological Survey. After years of little to no activity prior to a run-up on world prices several years ago, there were 17 active rigs seeking helium in the province in July.

The city sees it as a niche off-shoot of its oil and gas division, but capitalizing on recent activity which could lure investment to the region and city as a refining base.

Underground collections of helium are elusive, and only profitable to extract and market when concentrations reach certain levels.

That profitable concentration is widely stated to be about one per cent of the well’s production, with the remainder being mostly nitrogen. The natural gas is captured in certain geologic strata — imagine non-porous rock shaped like an umbrella — as it migrates upwards.

It also attracts highly secretive, very competitive investors.

The News is aware of about half a dozen such companies, all but one privately held, meaning they aren’t required to report their activities to financial regulators.

One such company, the Wiel Group, announced last fall a plan to partner with the city to build a central hub refinery to Medicine Hat by 2019, but hasn’t provided an update.

Among the other helium players is Thor Resources, which works in deep southern Alberta and Montana.

The lone publicly traded company, Royal Helium, announced in late August it is taking its helium division private in a series of transactions that turns the public firm into a cryptocurrency miner.

Only one company, North American Helium, responded to News inquires about the state of the industry.

CEO Nick Snyder said his company is “fully focused” on three completed wells is has in the Battle Creek area, southern slopes of the Cypress Hills.

“We are very excited to finally bring this field onto production,” Snyder wrote in an email. “It has taken a great deal of work by our team to prove up a sufficient amount of helium reserves to justify the construction of a production plant.”

That could occur later this year, he said.

It would likely occur at of near the drill sites due the particular handling logistics of the element.

Due to the logistics of the gas, which must be trucked in special containers and can’t be sent through a pipeline, the production is gathered by facilities on site, then shipped for further refining.

That procedure has led city officials to believe they could act as a “catalyst” to bring together the companies as a syndicate to build or contract production to local refinery, known as a liquefaction plant.

Maynes said the city is attempting to keep communication open with private firms, but the nature of the sector, makes that difficult.

“It’s a very competitive business,” said Maynes. “But it’s a vision that we have for the group, given that (Medicine Hat) is well located, on a rail line and open for business … At such time as upgrading (facility is needed), maybe if there’s not enough (helium) individually to make that happen, perhaps collectively, there is.”