Helium: Markets Reimagined, Part 2

Having been blighted this year by persistent shortages and supply concerns stemming from the war in Europe and the shutting down of the BLM, one can accuse the global helium market of being anything but dull. Eight months ago, gasworld explored these themes and more in Helium: Markets Reimagined, Part 1, but how have things changed since then? How can the industry meet future challenges and exploit new opportunities?

Revisiting a theme, Part 2 aims to answer these questions with guest speakers Tim Rynott, CEO and Founder of Four Corners Helium, Jeremy Jordan, Senior Vice President of Commercial at IACX Energy, and Nick Haines, Executive Director for Global Helium at Messer.

Equipped with 40 years of experience in the energy business with expertise in the upstream helium supply chain, Rynott has been involved in all areas of the helium exploration industry including prospect generation, evaluation and operations. But what exactly is upstream helium?

“It’s a complex interplay of geologists, the landman, geophysicists, reservoir engineers, production engineers, and we may as well add psychic to the list!,” explained Rynott. “You can think about it as this three way interplay between scientists, the landman and engineers.”

In the upstream stage, geoscientists must demonstrate source migration, trap, and seal, the land man goes back and forth finding out if the land to be drilled is leasable and if so, is it under realistic terms.

“Finally, the engineers, they need to able to lift it and produce at a commodity price that will eventually turn a profit so there’s this constant interchange back and forth between those disciplined, moving the ball forward.”

Challenges

In addition to persistent shortages, there are a range of challenges facing the industry, including funding, lack of seismic and lack of infrastructure. Beginning with the latter, Rynott explained, “Over the past century, natural gas really didn’t hold much value, therefore many original pipelines were only associated with oil fields to move associated gas.”

To fast forward to today, the prospective helium trend is associated with non-hydrocarbon fuels – something that is becoming more common, this inherently means lack of pipelines to move gas.

To obtain images of specific priority areas, adequate seismic surveys must also be undertaken, a challenge in and of itself. Rynott emphasised the importance of obtaining a seismic survey prior to drilling, saying, “Having no seismic is like driving a car without a steering wheel.”

“In terms of challenges, there are many. Are we tackling them as we go along? Yes. Are we going to overcome them? I would say we’re going to get there.”

Having co-founded IACX in 2006, experienced energy industry entrepreneur Jordan has taken on the role of midstream representative in the helium cycle.

For the midstream side of its business, IACX takes helium from its origin form once it reaches the surface before turning it into a marketable product. Due to the inherent nature of helium to vary dramatically in concentration reservoir by reservoir and with the added presence of a potential hydrocarbon stream containing methane, the company must determine the optimal way to monetise any and all of the components coming out of the ground with the major focus on helium.

As for IACX’s services, it designs, constructs, and operates natural gas gathering, treating, and processing facilities.

But what are the challenges faced?

“If you asked me that 5 or 10 years ago I would have said the biggest challenge was educating the producers who have the expertise to actually develop the resource. That was our biggest hurdle”

The complexity associated with the technical and commercial aspects of helium made it a ‘hard sell’ for operators and investors when it came to convincing them that helium development is a worthwhile endeavour.

“Producers would come to us and ask, how do you process it? How is it sold? What’s it worth? All those kinds of questions that were unique to the helium industry were very foreign to them.”

Although those questions to the producers still exist, the biggest hurdles today involve permitting, bureaucracy and infrastructure considerations; road infrastructure must be developed to allow for the constant movement of helium transport and the various bureacratic procedures associated with jurisdictions and federal governments can cause things to move “painfully slow”, according to Jeremy.

“Unfortunately, sometimes that means you’ve got to do a great deal of waiting for various permit application, but it can all be done. It just takes some tenacity.”

Transitioning into the next stage of the helium supply chain, downstream helium, Nick Haines explained, “Downstream helium is about collecting helium from sources where it’s produced after both people like Tim and Jeremy have had their functions carried out and then getting it to customers who needs it, it’s heavily about logistics and distribution.”

Downstream occurs in three different phases: phase one involves distribution by ISO container in bulk form. Although there are smaller producers, the vast majority is shipped by these large ISO containers. Phase two involves delivering the helium to a network of transfills where it’s repackaged into cylinders for delivery to customers.

“The third phase is the downstream delivery of the repackaged helium to those customers in the form that they can use it, those are the key phases of downstream”

According to Intelligas, downstream production of helium was 6 billion cubic feet with North America producing around 59%, Qatar around 40%. Due to the location of these sources, a lot of helium is shipped around the world to various markets and a lot of the markets are where sources are not located, such as the far east and Asia – which are regarded as key import markets.

Transportation is a key factor in the role played by downstream helium.

Supply as a liquid is the most cost effective way to distribute helium over long distances and, with a liquefication temperature of -269C (4 Kelvin), helium is one of the coldest liquids and therefore the industry has had to develop specialised equipment to manage it.

“Most of the big locations outside of the US require helium transport in liquid containers, the big issue is keeping that temperature at -296C for lengthy periods of distribution time.”

These containers feature a liquid nitrogen reservoir that absorbs heat and prevents helium from evaporating. In total, it takes around 45 days for the reservoir to deplete. Once that shield of liquid nitrogen has been depleted, the pressure starts to rise quite rapidly.

“In the early days, the first containers were designed with a pressure of about 64 psi, but as technology has developed, we’re now at about 175 psi. That means once the liquid has depleted, the pressure in the container can get to about 175 psi,” explained Haines.

In terms of challenges faced, industry was faced with a global supply chain that was impacted by Covid, which in turn lowered the demand for global shipping. As the shipping requirements rebuilt, chaos ensued and congestion issues in LA saw hundreds of ships waiting to be unloaded.

“This has continued for the period since Covid, exacerbated by the shipping liners which have made more demands regard bookings.”

“This has all meant that it’s way more complex transporting helium without losses. The containers were designed with a limit up to about 30 to 45 days and we’ve seen international transport times well in excess of that.” This results in a larger loss of helium for the off takers.

Issues have also been seen regarding the actual manufacture of the containers themselves, further impacting the global supply of helium.

But which applications does helium serve?

The properties of helium make it ideal for use in MRIs and its low boiling point means that it stays as a gas at the lowest temperature where all other gases are actually solid, making it useful for purging, displacing very cold liquids such as liquid oxygen or liquid hydrogen safely without freezing.

Its lightness and high safety rating see it used commonly in balloons and airships and its high ionisation potential sees it used for analytical and electronic applications.

“Because of this wide range of applications, helium is used in all the continents, even Antarctica where it’s used in weather balloons.”

Having had to deal with wars, blockades and explosions, Haines stated that these unprecedented challenges have seen the industry adapt and develop new skills.

“We’re hoping it improve, as we know, a lot of this is outside our control.”