Full of hot air: Helium producers eye Canada as U.S. reserve shrinks

Mon Jul 4, 2016 2:58am EDT
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By Rod Nickel

MANKOTA, Saskatchewan (Reuters) - An approaching squeeze in U.S. helium supplies has producers of the gas, used in everything from party balloons to magnetic resonance imaging (MRI) machines, looking north to Canada's wheat fields.

Almost three quarters of U.S. helium demand is filled by an underground reserve in Amarillo, Texas. But the U.S. government, which controls it, has announced plans to get out of the commercial helium business by 2021.

That has prompted refiners and customers to look further afield, taking them to the Canadian provinces of Saskatchewan and Alberta.

In April, Virginia-based Weil Group Resources opened Canada's only high-grade helium plant near the village of Mankota, Saskatchewan, population 211. The $10 million project provided welcome economic activity in a province hit hard by the oil price crash.

The plant, which can produce 40 million cubic feet per year for Germany industrial gas company Linde AG (LING.DE: Quote) and other buyers, will be followed soon by a plant in Alberta, according to Weil.

"I believe southwest Saskatchewan (and) southeast Alberta to be prolific future helium producers," said Bo Sears, president of Weil Helium.

Helium, a $4.7 billion industry according to Mordor Intelligence, is a byproduct of natural gas production. But because of high prices, small players are exploring fields of helium-bearing gas once considered too expensive to exploit, said helium consultant Phil Kornbluth.

Canada has the fifth-largest global helium resource as measured by the U.S. Geological Survey.   Continued...

Operator Harlan Highsaw works at Weil Group's helium plant near Mankota, Saskatchewan, Canada June 20, 2016. Picture taken June 20, 2016. To match Feature CANADA-HELIUM/  REUTERS/Rod Nickel