Saskatoon-based Royal Helium Ltd. is in the final stages of putting together a winter drilling program, according to president and CEO Andrew Davidson.
The company is in the process of shortlisting its services providers and drilling rigs to go to work in the Climax area of southwest Saskatchewan in early December, or, if that doesn’t work out, early in the new year. Drilling traditionally shuts down in Saskatchewan for the Christmas holidays, so they’re not going to start drilling in the third week of December.
The company is targeting a five-well program, and no less than three, according to Davidson.
Helium development is a growing industry in southern Saskatchewan. The element is used for magnetic resonance imaging (MRI), quantum computer cooling, and rocketry, in addition to other uses.
Helium is formed by the natural decay of uranium and thorium in the PreCambrian “basement” rock which underlies the sedimentary column in southern Saskatchewan. It is trapped by very tight cap rock right above that basement. That means drilling deep wells. Davidson said they are looking at 14-day wells, and depths in the range of 2,500 metres.
“They’re in the Climax area, where we’re starting,” Davidson said.
Southwest Saskatchewan has been a hotbed of helium development in recent years, with North American Helium drilling extensively in the Consul area.
Davidson said, “Target area Number 2 for us is back in the Bengough area, and that would be later in 2021. We have some more exploration to do there. We have some aeromag to do there, over the Bengough region, which doesn’t take too long to do.”
Davidson said they are thinking summer 2021 is probably the right time for drilling in the Bengough area, depending on the success of the first program.
“If we have good results at Climax and prove that our system works, as we think it will, we'll be over there as soon as possible. I think there's a lot of upside there on, the southeast side of the province. It's virtually untested from a helium production scenario,” Davidson said.
Royal has acquired lands throughout southeast Saskatchewan, from Ocean Man First Nation to Coronach. At Bengough, they’ve identified five prospects through seismic survey which they intend on analyzing with aeromagnetic survey before finalizing their drilling targets.
In September, Royal announced it has permitted an additional 32,166 hectare (321.7 square kilometres), including 173 square kilometres in the Bengough area and 148 square kilometres near Pangman, creating a contiguous land package near Ogema. Their permitted land now totals 4,320 square kilometres.
Several years ago, Weil Group developed several helium wells in the Mankota area, between of Royal’s Climax and Bengough development areas.
Royal is studying a polygeneration project, meaning a plant that produces many products. Davidson said, “The polygeneration we’re studing now, in partnership with the SRC (Saskatchewan Research Council) is processing multiple gas streams. Multiple gases out of the same wellbore in our helium wells, purposing the helium, the nitrogen, CO2, and any other valuable gases that come out, and processing them into one centralized location and monetizing them at that same location.”
In some ways, producing helium is similar to producing old, watered-out oil wells, where just a few percentage points of the volume is the product you want. For old oil wells, the rest is salt water. For these helium wells, the other product is nitrogen, carbon dioxide and possibly other gases.
“In Saskatchewan, we have the ability to produce helium as a primary product, which is something that’s relatively unique to our province. Globally, average helium grades are significantly lower, principally because they’re produced with hydrocarbons or natural gas byproducts.
"In Saskatchewan, it’s co-produced with nitrogen, so you get levels ranging from trace all the way up to north of three per cent. Three per cent is a world-class helium well. Two per cent is a phenomenal helium well. Anything from 0.3 per cent and up is an economic unit. So, we’re expecting in the range of one to three per cent in our wells.
“What we’ve been doing is planning on what we do with the rest of that gas stream. That’s where we get into the polygeneration,” Davidson said. “We’re looking at capturing it instead of venting.”
Nitrogen, for instance, is one of the most significant industrial gases. He said it is the largest segment of the industrial gas industry in North America. “We’re looking at capturing that, and using it as feedstock for fertilizer. Ideally, that would be in concert with a potash company, likely, to combine products from both for a high-value end-use product.”
Notably, Royal Helium’s vice-president of exploration, professional geologist Steve Halabura, is also president of Buffalo Potash.
“We don’t have a final location yet. This is a down-the-road plan. For now, we need to get production online. But as we build to scale, we’re going to decide where we want our large scale facility, whether it’s in the Estevan area, or the Climax/Swift Current area, is going to depend on the results of drilling. What we’re going to have, potentially, is two parts of the province competing against each other for the most appealing location for a large-scale plant.”
He said southeast Saskatchewan is looking attractive right now because North American Helium is building a big facility in the Battle Creek area of southwest Saskatchewan. “Having two large facilities next door to each other doesn’t make a lot of sense,” Davidson said.
While polygeneration is the road they’re going down, Davidson said, “It’s not taking away from the helium project. It’s helium that drives the bus with Royal. We are a helium-focused company, but we are pursuing this other track, because we think it’s a right and sensible thing to do. If it doesn’t work out, if the economics don’t stand up, that’s fine. At one to three per cent helium, the project stands up on its own two feet, quite well.”
The Battle Creek area is more CO2-rich, he noted. “We’re expecting a largely 90 per cent nitrogen drive, with the potential of some CO2. In a lot of helium wells, you see some argon, some neon as well coming out, but those would likely be trace amounts.”
If a polygen plant were to be incorporated, it would likely be in the range of $50 to $100 million, but that depends on the results of the scoping study the SRC is doing.
“The size of the apparent helium fields in Saskatchewan is quite significant. We easily see there being 100-plus wells online, here in Saskatchewan, and we’d like to own the majority of those, build the process, and control the marketing as well,” Davidson said.
The raw gas would likely be trucked from wellhead to the central plant, which would support the entire area. Royal would initially bring in mobile separation units designed to separate out the helium at the wellsite. But if they develop a polygen plant, then raw gas would be trucked to the plant for processing.
The choice of a location would be in the spot where it makes the most sense, including access to employees.