Tuesday, April 12, 2016

Hunt for helium ramps up in Arizona

Three companies now have active exploration programs underway in Arizona to develop underground helium resources.

Ranger Development, a Texas-based joint venture, made a presentation last Friday to the Arizona Oil & Gas Conservation Commission on their efforts to reopen the Pinta Dome and Navajo Springs helium fields in the Holbrook basin of eastern Arizona.   The fields are at the northern edge of the Holbrook salt basin and potash deposit.   [note, the original post mis-stated the name of the Navajo Springs field]

They described the two fields as some of the richest in the world in terms of percentages of helium in the reservoir.   In most situations, 1% helium is considered economic.  In the Arizona fields, helium accounts for ~8% with the remainder almost entirely nitrogen, according to the Ranger presentation. They said Arizona is the "Saudi Arabia of helium."

The two fields were shut-in in the 1970s due to low prices resulting from the US government selling the gas at a low price from the national reserves rather than the fields being depleted.  Since then, there has been little incentive for the private sector to explore and develop helium resources. However, the US is getting out of the helium business, and extended sales from the reserve while private sources are developed.  There is a global shortage of helium, pushing up prices.  Helium prices are about $90 per thousand cubic feet (MCF) on the spot market, but Ranger said there is a great variability allowing them to sell their product at $125 to as high as $200 per MCF.   They expect to have the processing plant running by May, 2016 to separate the helium from nitrogen and start commercial production.  The plant will handle 2 million cubic feet of gas (MMCF) per day. The primary reservoir target is the Coconino Sandstone, followed by the Supai Formation.

Ranger Development filed permits for wells with the Oil & Gas Conservation Commission for new drilling, and got a spacing exemption for two wells to address local geologic conditions.  They  estimate about 1 billion cubic feet of gas remaining in each of the two fields. 

Meanwhile Blackstone Exploration got permits approved by the Commission for 5 new gas wells in the area, which are expected to target helium as well.  

A third company has advised us that they are getting ready to file their drilling permits.

No comments:

Post a Comment