At least one Medicine Hat well located in Sask. contains helium

Companies pay royalties on petroleum and coal in the province to account for the sale of the publicly owned resources.

Since helium had never been commercially produced in Alberta, there was never a need to consider or set a royalty rate, provincial officials said last winter.

An information letter to producers on July 19 by the Alberta Energy Ministry states that since there is no reference price for the gas, “there is no applicable royalty payable on helium.”

Beginning Sept. 1, operators were required to begin reporting production volumes and selling prices to the department.

“Efforts to establish a royalty rate for helium products will be done with consideration for competitiveness with neighbouring jurisdictions,” the note concludes.

The elusive gas collects in deep underground caverns, is extracted similar to conventional petroleum, and is increasingly used as a cooling in high-tech applications due to its stability and non-combustible nature.

At least one City of Medicine Hat well thought to have helium potential was drilled recently in Alberta’s deep southern region, but administrators won’t disclose which of the three helium wells was successful. One positive well is still being tested.

Officials with the Saskatchewan Geological survey confirm to the News there are 79 active permits and 90 leases covering helium exploration on just over 973,000 hectares.

The total of 16 completed wells is an increase, and the department expects higher prices to drive further activity.

This month, the U.S. Bureau of Land Management reported that the average auction price for helium deliveries from the U.S. federal strategic supply rose to US$279.95 per MCF. That’s compared to an average price in 2017 of US$119.31.