Helium royalty fears unfounded

Alberta Energy regulators have confirmed there is no royalty charged on helium production, taking the air out concerns from local city officials that regulation is stifling the emerging industry in the province.

The news comes just as U.S. officials announced auction prices for sales of that country’s strategic supply have more than doubled to nearly US$280 per 1,000-cubicfeet in the past year.

All that said, the city is still not producing helium but is studying possible production levels from one of three wells drilled last year. If the well was in Alberta and if it moved to commercial production, the city would need to report volumes and sales, but for now, no royalties would be due.

“There was some ambiguity about what a helium royalty would or wouldn’t be,” said Brad Maynes, the city’s petroleum production general manager. “It’s a clarification from them that we had been seeking. We hope the rate will be comparable to the Saskatchewan rate, which is very attractive and the reason, we believe, that there’s more activity in Saskatchewan.”

Last fall, the city energy division announced it would begin targeted drilling for the industrial element in order to diversify income with test wells in both Saskatchewan, home to a small helium sector since the early 1960s, but also Alberta.

Mayor Ted Clugston however, said he feared the gas could fall under royalty provisions for general natural gas, which has a royalty rate several times higher than Saskatchewan’s helium rate.