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Investment in Saskatchewan helium resources exploding

Ron Walter writes about the helium industry
BizWorld_withRonWalter
Bizworld by Ron Walter

To most of us, helium is a gas used to blow up balloons and if you inhale it your voice goes funny like Bugs Bunny.        

For most of our lives that was a large use of helium, but technologies in medicine — magnetic resonance imaging (MRI) and nuclear medicine — have changed the use and demand for helium.

Helium is used to cool the magnets in these devices. The gas is also used in laboratories, welding, and for deep sea diving.

While helium has been a known quantity in Saskatchewan since the 1950s, not much exploration has been done until recently.

Depletion of United States helium reserves has changed that attitude. With U.S. helium reserves at one-third of previous levels and dependence on politically unstable and unpredictable regimes of Algeria and Russia for half of global supply, the United States sold a big chunk of government reserves.  

And the race for a new source was on.  

Two private companies lead exploration and development in Saskatchewan. Virginia-based Weil Group has operated a helium plant near Mankota in the southwest for almost five years.

North American Helium invested $32 million in the Battle Creek area, west of Grasslands National Park, and raised another $39 million for a purification plant.

Two publicly traded companies are still exploring — one in Saskatchewan, one in Alberta.

Royal Helium Corporation, trading at 50 cents on the stock exchange, is developing wells in the Climax area of the Cypress Hills with leases in the Cadillac, Bengough, Midale, Griffin and Big Muddy regions.

Imperial Helium Inc. of Calgary, trading at 38.5 cents, is concentrating on natural gas reservoirs in Alberta. The first well is at Steveville, near Brooks by the badlands.

The site chosen is near a 1940 natural gas well blowout that spewed 50 million cubic feet per day of gas for 100 days until put under control.

Imperial believes the 95 square miles of leases contain 1.1 billion cubic feet of helium. To put that into perspective, the U.S. government reserves were seven billion cubic feet before selling about one-third.

Imperial figures there are 189,000 natural gas wells in Alberta logged for helium. Most helium produced in Canada now is a byproduct of natural gas processing.

Helium prices have fallen from the $337 US per thousand cubic fee at that government auction but remain around $200.

That price is 50 times natural gas and makes extraction of helium at one-half per cent content economically quite profitable.

The helium industry presents an opportunity for a mini-boom in drilling and exploration.        

The two publicly traded companies are in the infancy stage and highly risky but the rewards could be explosive.

The cure for high prices is high prices. When prices get too high, users look to alternatives.

Calgary-based Nanalyisis Scientific Corp., trading at $1.17, produces medical resonance image products that need no helium or other material to cool magnets.

Sales of this still risky company were $3.2 million in the first quarter of 2021, compared with $7.9 million in all of 2020.

All three should be on investor watch lists.

CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.

Ron Walter can be reached at ronjoy@sasktel.net

The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.