thyshift, I did have a very keen interest in helium and it’s...

thyshift, I did have a very keen interest in helium and it’s potential a few years ago, however lately it’s been at the back of my mind due to the monetisation issues central face with it. Overall it’s a brilliant commodity to have in the package due to the worldwide supply/demand/inventory equation. I believe the US federal reserve is now down to about 25BCF and most of the larger fields outside the US are around Qatar etc which have not been exploited as yet.

One thing about the helium market is that it is extremely volatile and fluctuates to an extent. I have seen projections leading into 2020 suggesting that Helium will be worth around $120 per thousand cubic feet but I’d assume if any significant discoveries are made this figure would come down considerably. In the near-term it all comes down to how it’s distributed and, IMHO Linde has the monopoly over it and is somewhat like the OPEC of Helium to an extent!

As mentioned, in regards to CTP – the real challenge is to turn that significant helium potential into revenue which would take years to achieve from discovery due to the infrastructure required. I believe Linde are more than happy to contribute to these costs should a discovery be made and IMHO it wouldn’t surprise me if HeN is only a vehicle set up by MPS to sell off to Linde on any discovery, somewhat along the lines of PXA. Never know though – that’s just an assumption.

At present I believe the NT Helium facility will initially be at capacity due to the current arrangements with the Bayu Undan partners however there is significant scope to expand. Its current capacity being 750tpy (150MMscf/yr) of Grade A helium, which is gained from the Bayu Undan field (0.3% in the well), fed to the Darwin LNG plant where gas components are stripped and then from there fed via dregs pipeline to the Helium facility where the dregs come in at about 3% concentration. The helium processed in the NT will be sent off to Linde’s asian distribution channel and, from memory this plant as a whole has the ability to supply around 3% of current global demand.

Now CTP’s main targets are obviously Mt Kitty (185BCF He UGIIP), Magee (4BCF He UGIIP) and Wells (190BCF He UGIIP). As we know Magee flowed 6.3% He back in 92’, and from memory outside the 4BCF He has the 805BCF(?) UGIIP at P10. If they were able to strip the gas somewhere along the line ie the proposed GTL facility, then they could theoretically feed the Linde plant at 63% He and, on a global scale this is unheard of.

What needs to be kept in mind is that Mt Kitty and Wells, should they be successful are by no means small inclusions to the global helium inventory. Any significant increases to inventory and production rates would have a sideways effect on helium’s momentum. There are many documents and studies saying that the “shortage” of helium (as a finite resource) at present is hampering technological progress, especially in respect to medical and aeronautical engineering. It’s not so much the “shortage” of the commodity per se, but lack of discovery, lack of production and subsequent lack of supply which in turn leads to an increased cost which slows down ultimate availability and usage.

Many oil/gas companies are now seeing the value in the helium from their conventional gas reserves and are employing ways to take advantage of this – especially since in years gone by it has been a by-product of production. Throughout 2010 and 2011 we are going to see new plants in Qatar, Russia, Algeria etc and these will have an impact on the supply/demand scenario. To compensate that we will be seeing advanced technology, and scores of nuclear reactors in india and china which require helium for cooling etc so it’s a very hard industry to predict!

IMHO I don’t think helium is going to shoot off into the sky but I do think it will have a sustained price as technological advances and new production and discoveries come online.

It's definitely an interesting commodity to follow though!