Helium

Helium

As demand and the price of Helium have continued to climb, many natural gas producers are evaluating their gas streams to determine if sufficient Helium is being produced to justify separating and selling on its own.  INEXS has conducted several detailed studies and reports of natural gas production with associated Helium and have constructed complete financial models and analyses of the cryogenic separation options to improve the economics of the gas wells.

Helium is an element that is quite abundant in space, however it is extremely rare to find it on earth, since, if released, it rises to and escapes from the upper atmosphere. Helium is released underground by igneous rock as it undergoes natural radioactive decay of uranium and thorium.  Demand for Helium continues to rise, with pure Helium selling in the $350.00 – $400.00 per thousand cubic feet – as compared to natural gas which sells for $3.00 – $5.00 per thousand cubic feet.  As such a natural gas field that produces 3% Helium, and 97% natural gas will make significantly more money from the Helium sales than the natural gas.  However, the Helium must be separated from the other gases and must have a large and concentrated enough accumulation to warrant building a separation plant, along with long-term sales agreements with an off-taking industrial user or marketer.  At these elevated prices though, many natural gas producers are testing their production to determine if they have Helium within their natural gas stream.

 

While Helium has been associated with party balloons and the Goodyear blimp, it also has a vast array of uses in science, computing, aerospace, and medical applications.  Rocky Mountain Air Solutions defines the top ten uses as follows: Helium is used for medical applications to treat respiratory ailments, cooling of MRI magnets, manufacturing fiber optic cables in a pure Helium atmosphere to avoid bubbles, manufacturing semiconductor chips, manufacturing Helium filled computer hard drives to increase storage capacity and reduce power demand, cleaning rocket fuel tanks, is the key element in Helium-ion microscopes, is used to deploy airbags in vehicles, is used for leak detection in non-porous materials, and provides shielding in welding to improve the quality of the weld.

  • The United States is the largest producer of Helium in the world, followed by Qatar and Algeria, with all other countries adding only a few additional percent to the total world Helium supply.  As previously mentioned, Helium occurs naturally as a byproduct of radioactive decay in crystalline granite rock, and as such is often found in association with natural gas fields that are in mountainous areas such as the Rockies, or are positioned above buried mountain ranges, such as the large accumulations of Helium in Kansas, primarily in the areas surrounding the central Kansas Uplift and the Rush Rib arch.  See map above.
  • The Helium market is currently undergoing a major shift as the previously BLM controlled US storage, which supplied a third of global Helium a decade ago, is targeted for privatization by the end of this year. Helium is unique in that there is no available substitute in many of its applications, making the demand relatively price insensitive compared to other commodities. The shifts in the global supply in combination with the massively growing demand from the high-tech sectors, particularly in China, which doesn’t have a domestic Helium market, is creating interesting investment opportunities in the coming years.