I'd like to add a little context around events in the helium...

I'd like to add a little context around events in the helium market occurring as a backdrop to the timing of Stefano's recent USA trip. This goes to consideration of whether he was able to negotiate the conditional agreements for LHe on favourable terms.

In mid June the Skikda plant in Algeria was shut down and through July. On an annualised basis this plant removes 300-400 million cubic feet of capacity from world supply.

Also, the Keyes Helium plant, one of four helium plants connected to the BLM went down due to a broken turbine. The repair time could be several months. On an annualised basis this removes 100 million cubic feet from the market.

The BLM also shut down its Crude Helium Enrichment Unit on 1 July for safety issues. BLM allowed withdrawals from their pipeline until 19 July when the pressure fell below a certain threshhold and they stopped withdrawals until after the plant restarts. On an annualised basis, this removes up to 800 million cubic feet of capacity from the market. Covid-19 at the plant added to the delays but it's expected back online any day soon.

These closures will likely cover a couple of months, not a year, however the point is, the helium supply side has a limited number of players and has shown fragility. This fragility was the background situation when Stefano was in USA.


Here's a Q&A from 6 August with the CEO of Helium One around these events:

"Q1: While Helium One have been busy drilling their maiden exploration well at the Rukwa Project in Tanzania, there has been a global supply crisis in the helium market. Tell us what has happened?

A1: The global helium market is tightly balanced and prone to supply shocks as by-product producers can come off-line at a moments notice. This is exactly what has happened here as three recent events have removed supply from the market during the months of June and July.

First the Skikda project in Algeria shut down in mid-June due to problems with the liquid natural gas plant. Skikda sources helium as a by-product of liquid natural gas so a problem in the main plant has a knock-on effect on the helium plant, effectively removing 300,000-400,000Mcf/yr of supply from the global market.

The impact of the sudden closure of a production facility in Algeria has been compounded by two further unexpected closures in the United States. Firstly, the Keyes Helium Plant went down due to a broken turbine, which removed 100,000Mcf/yr of production. Secondly, and more importantly, the BLM Crude Helium Enrichment Unit, which toll treats gas from several suppliers in the mid-west, has been forced to close due to safety issues with the main crude pipeline. This closure has removed a further 800,000Mcf/yr of global supply.

This brings the total deficit due to June/July closures to over 1.2Bcf/yr.

Q2: Is the market able to cope?

A2: In short – no. The market was already fragile prior to these outages and with the loss of over 1.2Bcf/yr of production we expect to see severe market shortages and price increases until the situation is resolved. Helium cannot be substituted in a number of high-value processes including uses in MRI scanners and medically assisted breathing and manufacture of next-gen electronics, semi-conductor chips, flat panel displays, fibre optics and high-capacity hard-drives. With supply disruption expected to last until September at the earliest, we could expect to see supply chain disruption across a range of products into Q3 and Q4 2021."


I have no intention to promote HE1 with this quote, and note their SP dropped 50% yesterday on news their first well had no free flowing gas.