By July 4, 2016 Read More →

Helium production eyed in Canada as U.S. reserve shrinks

Helium production

This helium production plant in Mankota, Saskatchewan produces 40 million cubic feet per year for Linda AG and other buyers.  The plant’s owner, Weil Group Resources, is planning to open a second plant in Alberta soon.  Weil Group photo.

Helium production upswing in Alberta, Saskatchewan

By Rod Nickel

MANKOTA, Saskatchewan, June 30 (Reuters) – An approaching squeeze in U.S. helium supplies has producers of the gas, used in everything from party balloons to magnetic resonance imaging (MRI) machines, looking north to Canada’s wheat fields.

Almost three quarters of U.S. helium demand is filled by an underground reserve in Amarillo, Texas. But the U.S. government, which controls it, has announced plans to get out of the commercial helium business by 2021.

That has prompted refiners and customers to look further afield, taking them to the Canadian provinces of Saskatchewan and Alberta.

In April, Virginia-based Weil Group Resources opened Canada’s only high-grade helium plant near the village of Mankota, Saskatchewan, population 211. The $10 million project provided welcome economic activity in a province hit hard by the oil price crash.

The plant, which can produce 40 million cubic feet per year for Germany industrial gas company Linde AG and other buyers, will be followed soon by a plant in Alberta, according to Weil.

“I believe southwest Saskatchewan (and) southeast Alberta to be prolific future helium producers,” said Bo Sears, president of Weil Helium.

Helium, a $4.7 billion industry according to Mordor Intelligence, is a byproduct of natural gas production. But because of high prices, small players are exploring fields of helium-bearing gas once considered too expensive to exploit, said helium consultant Phil Kornbluth.

Canada has the fifth-largest global helium resource as measured by the U.S. Geological Survey.

“The gas in Saskatchewan and Alberta has rich concentration, which you don’t find everywhere,” Kornbluth said. “And Canada is politically secure. If you have a choice of Canada or Russia, where would you rather do business?”

Saskatchewan issued 17 permits and leases from 2014 to January 2016 for helium, its busiest period in 50 years, according to government records reviewed by Reuters.

“There’s some optimism that this could grow to be a pretty good opportunity,” said Saskatchewan Economy Minister Bill Boyd.

Quantum Helium Management, which opened a lower-grade helium plant in Saskatchewan in 2013, is planning to build two more plants within two years in Saskatchewan and Alberta, said president Ovi Marin.

The wind-down of the U.S. reserve is a “positive element,” Marin said. “We have a niche and we plan to expand on it.”

Production outages contributed to a three-year shortage of helium until late 2013. Supplies are currently ample, partly because of new output from Qatar. Exploration firm Helium One also plans to tap new resources in Tanzania.

But prices of helium from the reserve managed by the U.S. Bureau of Land Management (BLM) are 84 percent higher than a decade ago, and the wind-down is forcing refiners Praxair Inc , Air Products and Chemicals Inc to look elsewhere for future supply, Kornbluth said.

“We realize that the BLM system is in decline and eventually will be depleted,” said Air Products spokesman Art George. “At the same time, the world’s demand for helium is likely to continue to grow and will require additional new sources.”

The trend has Western Digital Corp, which uses helium in its hard drives, adding suppliers in more countries including Canada and maintaining a six-month supply buffer, said vice-president of product marketing Brendan Collins.

Tightening supplies may encourage helium users to substitute other gases or recycle helium, as they did during the last major shortage.

General Electric Healthcare, which uses helium to cool magnets in MRI machines, is finding ways to capture helium during manufacturing for reuse and redesigning magnets so they are less dependent on the gas, said spokeswoman Amanda Gintoft.

It is also counting on new sources coming online.

“Our helium supply is a strategic priority,” she said. (Reporting by Rod Nickel in Mankota, Saskatchewan; Editing by Jeffrey Hodgson and Lisa Girion)

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