The recent decline in US helium supply has created a clear long-term opportunity for helium producers in North America. That’s because it’s a molecule that is expensive to transport and store, and there are risks that attach to moving it around the world, with geopolitics playing its part.
This framing by Robert Ferguson, Partner and co-founder of Blue Spruce Operating, is one that’s supported by independent analysis, and is the driver for what is the largest helium development project in North America today: Dry Piney in Wyoming.
Dry Piney is Blue Spruce Operating’s project, and Ferguson was addressing delegates last week at Helium Super Summit 2024 in Houston. The project is sited next door to ExxonMobil’s huge and globally important LaBarge facility and is described by Ferguson and Blue Spruce as a helium development project rather than an exercise in exploration.
“In other words, we know what we have. This is an enormous, well-understood gas accumulation. We have three-dimensional seismic mapping of the subsurface, and it shows a large-scale helium development site that is calculated to deliver over 800 MMcf per year of helium for many, many years – half a century or more,” said Ferguson.
The project has been moving forward since 2008 but is now far advanced and developing more quickly, he said.
“The plant is now designed and we are ready to move forward. The front-end engineering design work plus permitting and well results should all be wrapped in 2025, leading to a final investment decision in the fourth quarter of that year. That would then mean three years of construction could start in 2026, targeting commissioning and commercial activity in late 2028, if all goes to plan.”
Ferguson argued that political instability really matters when it comes to helium, given sanctions on Russian helium supply in many markets and instability in the Middle East, threatening shipping routes and more.
“Next to this, you already have US supply falling – but the size of the market is not changing. It all adds up to an opportunity in domestic supply for the US market and for adjacent markets. Remember, too, that there is likely growing demand from the semiconductor fabs that are under construction in the US. The notion that US strategic and business interests in semiconductors, healthcare, and aerospace will increasingly rely on Russia and Qatar as key suppliers, even if indirectly in the case of Russia, shows what’s at stake.”
The proximity of ExxonMobil’s LaBarge facility is also a strong pointer about the site, noted Ferguson.
“That crucial facility has many decades of safe production history and the reservoir is of course well understood. It all helps to support the thesis that Dry Piney has excellent long-term prospects and economics – in helium, methane, and in carbon dioxide sequestration.”
The project will cost more than $1bn to deliver, and necessarily has numerous constituent parts: gas processing, liquefaction, eight production wells, CO2 sequestration, and all the associated gathering pipelines, noted Ferguson.
“Helium is the key driver for revenues flowing from the project, accounting for about 60% of projected revenues, but the other slice of revenues is still substantial and should be evenly split between CO2 sequestration and methane production,” he added.
And the methane piece is notably important, said Ferguson.
“It means we can use methane for most of our own power needs on site.”
There are grants and tax breaks in the mix, as well. There is a match-funded $6m grant for the project from the state of Wyoming and there are tax credits for every tonne of CO2 that’s sequestered.
Ferguson said the large industrial gas operators had responded well to the project as it moves forward.
“We should have sales and purchase agreements in place in the near future – before the year is out. It is fair to say with have done a lot of work on the helium sales side.”
