The US federal government is on the cusp of a significant move in the helium industry – the sale of the Federal Helium System.
Managed by the Bureau of Land Management (BLM), this system is a major supplier of helium worldwide. In fact, the Federal Helium System is responsible for 15% to 17% of the global helium supply, according to Phil Kornbluth, president of Kornbluth Helium Consulting LLC.
The sale, set to commence on July 12, 2023, was mandated by Congress through the Helium Stewardship Act of 2013. This major event will include a variety of critical assets including the Cliffside Gas Plant and the Bush Dome, a natural geologic reservoir containing both federally- and privately-owned helium. Also up for auction will be federally owned plant equipment, mineral rights, natural gas wells, and the federal helium pipeline.
This significant sale is happening amid a challenging time in the helium industry. An ongoing shortage has driven helium prices to unprecedented levels, making the upcoming sale even more noteworthy.
As the helium industry battles this prolonged shortfall, the future global supply of helium has become a focal point, casting the spotlight on the impending opportunity. This potential influx of supply could provide much-needed relief to the strained helium market and offer stabilization in a time of escalating prices.
Energy companies such as Exxon Mobil Corporation, which has a big helium operation in Wyoming’s Riley Ridge deposits, dominate helium production in North America. However, pure-play helium producers have developed in recent years, hoping to capitalize on privatization measures in the United States and rising helium prices.
An Alberta-Focused, Cash-Flowing, Multi-Project Helium Developer
Helium exploration and development company First Helium Inc. (TSXV: HELI) (OTCQX: FHELF) is making significant headway in the burgeoning helium market. Led by a multifaceted Senior Executive Team with expertise spanning oil and gas exploration, mining, finance, and capital markets, First Helium is advancing two key helium projects. These include the Worsley Helium Project in northwestern Alberta, and the Southern Alberta Helium Fairway Project, positioned close to existing helium production.
First Helium is making particularly impressive strides in its Worsley Property. The team has completed successful drilling of multiple wells. The noteworthy 15-25 well, with a robust helium content of 1.3%, has a best estimate contingent resource volume of 323 million cubic feet (mmcf) of helium.1 This well’s projected value surpasses $35 million, calculated at $600 per mcf pricing.2 First Helium has an ambitious timeline, targeting helium production by mid-2024. The company is also set to widen its operations footprint, acquiring rights to over 26,000 acres of fresh exploration lands, inclusive of sought-after territories at East Worsley.
On July 11, First Helium provided an update on its recently completed 5,200 acre proprietary 3D seismic program over a portion of its most recently acquired lands at Worsley. First Helium‘s exploration team’s first data analysis reveals the presence of a number of highly prospective drill targets on trend with and inside the same Leduc reef complex as the successful 15-25, 1-30, and 4-29 wells. These additional drilling possibilities supplement the company’s vast current portfolio of Worsley locations. These targets are currently being evaluated by the company for priority inclusion in subsequent drilling programs.
“We are very pleased to have completed our 3D seismic program at Worsley on time and within budget” said Ed Bereznicki, President & CEO of First Helium. “Building on the exploration model established with the acquired 3D seismic programs and through the successful drilling of the 15-25, 1-30, and 4-29 wells, we are extremely excited to further test the model on these targets on our new exploration lands,” added Mr. Bereznicki. “Located on contiguous lands east of our successful wells, these newly identified drilling targets are anticipated to yield helium rich gas which would give us the opportunity to deliver additional potential volumes to capitalize on our helium gas offtake agreement,” concluded Mr. Bereznicki.
On May 24, First Helium solidified a long-term helium supply agreement with a leading global gas company. Under the arrangement, the company commits to sell 80% of its produced helium to the buyer, with an option to sell up to 100%. This deal, structured around a “take-or-pay” agreement, could generate up to US$100 million in potential revenue over the first five years of production, contingent on the pace of helium production escalation at Worsley.
For the second half of 2023, The company’s agenda includes finalizing engineering design for the Worsley helium processing facility, selecting construction contractors, and beginning construction of the facility. The company also plans to kickstart new drilling activities in the Worsley area and expedite exploration and development efforts on its newly acquired lands, backed by data from a recently completed 3D seismic program. Lastly, the company is preparing to drill one high-impact exploration well at its southern Lethbridge property.
Click here for more information about First Helium Inc. (TSXV:HELI) (OTCQX:FHELF).
Featured Image @ Unsplash
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6) This document contains forward-looking information and forward-looking statements, within the meaning of applicable Canadian securities legislation, (collectively, “forward-looking statements”), which reflect management’s expectations regarding First Helium Inc.’s future growth, future business plans and opportunities, expected activities, and other statements about future events, results or performance. Wherever possible, words such as “predicts”, “projects”, “targets”, “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative or grammatical variation thereof or other variations thereof, or comparable terminology have been used to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to: (a) revenue generating potential with respect to First Helium Inc.’s industry; (b) market opportunity; (c) First Helium Inc.’s business plans and strategies; (d) services that First Helium Inc. intends to offer; (e) First Helium Inc.’s milestone projections and targets; (f) First Helium Inc.’s expectations regarding receipt of approval for regulatory applications; (g) First Helium Inc.’s intentions to expand into other jurisdictions including the timeline expectations relating to those expansion plans; and (h) First Helium Inc.’s expectations with regarding its ability to deliver shareholder value. Forward-looking statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this document including, without limitation, assumptions about: (a) the ability to raise any necessary additional capital on reasonable terms to execute First Helium Inc.’s business plan; (b) that general business and economic conditions will not change in a material adverse manner; (c) First Helium Inc.’s ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; (d) the accuracy of budgeted costs and expenditures; (e) First Helium Inc.’s ability to attract and retain skilled personnel; (f) political and regulatory stability; (g) the receipt of governmental, regulatory and third-party approvals, licenses and permits on favorable terms; (h) changes in applicable legislation; (i) stability in financial and capital markets; and (j) expectations regarding the level of disruption to as a result of CV-19. Such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of First Helium Inc. to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Such risks include, without limitation: (a) First Helium Inc.’s operations could be adversely affected by possible future government legislation, policies and controls or by changes in applicable laws and regulations; (b) public health crises such as CV-19 may adversely impact First Helium Inc.’s business; (c) the volatility of global capital markets; (d) political instability and changes to the regulations governing First Helium Inc.’s business operations (e) First Helium Inc. may be unable to implement its growth strategy; and (f) increased competition.
Except as required by law, First Helium Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Neither does First Helium Inc. nor any of its representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this document. Neither First Helium Inc. nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this document by you or any of your representatives or for omissions from the information in this document.
7) Any graphs, tables or other information demonstrating the historical performance or current or historical attributes of First Helium Inc. or any other entity contained in this document are intended only to illustrate historical performance or current or historical attributes of First Helium Inc. or such entities and are not necessarily indicative of future performance of First Helium Inc. or such entities.
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