Editor OilPrice.com
Tue, April 12, 2022,
Worth 100x more than natural gas, the shale boom has taken on a new angle for exploration and production, with the critical level of helium supplies igniting a land rush that could determine the future of innovation itself.
The bulk of the world’s helium reserves are found in natural gas fields, which means that these fields now have double the potential–and double the interest from a national security perspective.
Non-renewable and irreplaceable, helium is a critical element in hard drives, supercomputing, scientific research, space travel, and even medical MRIs.
Supply is now at a critical level, and the Russian war on Ukraine is compounding the supply crunch, stripping us of more global helium resources as the natural gas it is extracted with is hurriedly shipped off to Europe to stave off a crisis without stripping and liquifying the helium.
For North America, which until recently enjoyed a stable supply of helium through the Federal Helium Reserve in Amarillo, Texas, there is an opportunity for anyone who can bring helium back home.
In our view, the advantage here goes to Total Helium (TSX.V:TOH; OTC: TTLHF) the owner of a large helium play in the Kansas-Oklahoma panhandle that has already started producing and enjoys a lucrative offtake agreement with one of the biggest members of the helium oligopoly”–the $160-billion behemoth, Linde Plc (NYSE:LIN).
Total Helium’s wildcatter team jumped on the helium prospects in the largest U.S. gas field before others saw the potential supply squeeze looming.
Now, it’s not only started producing, but it’s also ready to sell, and it’s expanding its helium holdings, fast, with an eye to grabbing as much market share as it can against the backdrop of a major helium shortage that has seen prices upwards of $500 Mcf–again, more than 100x the price of natural gas.
First to market may be the biggest beneficiary of a helium boom. Right now, our pick is Total Helium.
Here are 5 reasons to keep a close eye on Total Helium right now:
#1 Hugoton: Why This Massive Gas Field Is Back on Everyone’s Radar
So far, Total Helium (TSX.V:TOH; OTC: TTLHF) has amassed approximately 115,000 acres of leases on hand at Hugoton, the largest gas field in the United States. Half of that acreage is in the form of farmout agreements with Scout Energy, one of the largest producers in the basin.
This land has proven helium concentrations …
And Total Helium is targeting 70 billion cubic feet of helium here, along with 8.5 trillion cubic feet of produced gas.
#2 The Wildcatters Surprising Everyone from Africa to North America
Total Helium brought new technology into Hugoton while everyone else appeared to be distracted by the non-conventional opportunities; in other words, the shale boom.
After getting at the easy natural gas in Hugoton historically, not to mention some 300 BCF of helium, the shale boom drew attention away from this massive field. Even though conventional, its huge remaining resources were too expensive to extract due to the high water content. That water has to go somewhere–and it has to do so economically.
Total Helium, backed by Craig Steinke of Reconnaissance Energy Africa (Recon Africa), was up for the challenge. This wildcatter has a reputation for going where no one else is paying attention and drumming up big discoveries and even bigger opportunities. It was small-cap Recon Africa, after all, that went on a super-sized expedition to Namibia and came back with the discovery of a working petroleum system in the giant Kavango Basin. That may end up being the last big onshore oil discovery in the world, and now, with Total Helium, Steinke is once again backing a tiny company that’s aiming big.
Putting the right technology in the right place and right before a supply squeeze–that’s Steinke’s modus operandi.
The right technology is always a matter of keeping costs down. Total Helium’s answer to Hugoton’s water problem is a de-watering tech that works best on huge zones. For every ten producing wells, the company intends to drill only a single salt-water disposal well. Those are some economics that investors can handle when they consider the Linde downstream partnership deal, the soaring price of helium, and the additional upside potential here.
#3 Already Producing and Ready to Hit the Market
We think this could be one of the fastest production plays investors have seen in a long time.
The estimate is that Total Helium (TSX.V:TOH; OTC: TTLHF) could produce over 27,000 Mcf from each well.
After drilling and completing its first two wells by January this year, Total Helium has already started producing. On March 15th it geared up to hit the market with its first helium and one of its upside offerings–methane.
This helium is in the pipeline and will likely hit Linde’s processing plant any day now, pending final processing agreements.
The agreement with Linde is a huge vote of confidence for investors. Linde has made pre-payment for Total Helium’s future helium production and advanced $950,000 prior to the first drill, and another $950,000 upon its completion.
And it was all done at costs that we think make Total Helium’s margins quite attractive. Drilling completion costs come in at about $600,000, and the company’s net from 300 Mcf could result in a payout in as little as 18 months. A payout over this short of a time period is unheard of in the shale industry.
*RPS Confident Person’s Report P50 Case
With Total Helium’s de-watering process, the company can take advantage of low drilling and completion costs because Hugoton is a shallow gas play. Costs can also be kept down because Total Helium doesn’t have to build its own processing facilities or transport infrastructure. It’s all there, and the agreement with giant Linde may be the perfect critical infrastructure setup.
#4 Plans to Lock Up Loads of Helium Land
So what comes next?
Since Hugoton is considered as one of the most important sources of helium in North America, Total Helium is looking to lock up as much land as possible in a planned expansion of up to 1.65-million-acres.
That could give this tiny company up to 19X its current helium land position.
This quarter, they’re planning to expand their developmental drilling and completion program, add more to the leasing campaign, and work out subsurface storage rights with giant Linde.
This isn’t just about producing helium and getting it to market …
There’s an innovative storage opportunity here, as well, and it offers potential upside that could add multiple layers to this play.
They plan to turn Hugoton into the next major American reserve.
Total Helium (TSX.V:TOH; OTC: TTLHF) is collaborating with a multinational industrial gas company to establish underground Helium storage rivaling the successor of the U.S. Federal Helium Reserve. Total Helium will operate the facility with 50-50% ownership.
Helium storage is critical because this lightest of elements in the universe is non-renewable and once it is released into the air, it is lost in the atmosphere, forever.
And it doesn’t plan to just store helium, either …
It intends to store hydrogen, another of the universe’s lightest elements. The hydrogen market is set to hit $300 billion by 2027, and storage here, too, will be critical in maintaining supply.
#5 Qatar, Algeria, Australia … and Kansas
For a tiny company like Total Helium to lock up a deal with a member of the helium oligopoly is the kind of offtake deal that usually takes years for junior companies to achieve.
Linde isn’t just a helium supplier. It’s much more than that. It enjoys a 40% global market share for helium, and it has operations on three continents, in Qatar, Algeria, Australia, and the United States. Its helium plant in Kansas is one of the biggest in the world.
Beyond what is to come for Total Helium in the form of what could be the most advantageous downstream agreement a junior helium company may ever seek, it’s already locked in for over $2.2 million as a result, in both current and upcoming cash flow.
It also looks to have done wonders for Total Helium’s capex: This junior has the advantage of not having to spend tens of millions of dollars building up infrastructure such as pipelines and processing plants.
What Total Helium has done so far is forward-thinking about the helium demand and supply equation.
This team could have a competitive advantage and is ahead of the competition because it didn’t wait for the helium supply squeeze to get critical after the Federal Helium Reserve announced it was winding down and auctioning off all the remaining helium, turning the rare gas into a free market game that other natural gas producers may not have been following.
It didn’t wait, either, until Russia launched a war on Ukraine and we saw our first global helium supplies suspended, in Algeria.
Instead, this junior company started scooping up prospective helium land and looked to resolve Hugoton’s water challenges with new technology. That got Linde’s attention, and now that the first helium is already in the pipeline, with a proposed expansion underway, it could get everyone else’s attention, too.
In this play for a natural resource now critical to American national interest, the future of big data, supercomputing, fiber optic communications, and scientific research at large, Total Helium may be years ahead of the competition, and as soon as that first helium hits the market, it may no longer be pushing ahead off the radar.
America is desperate for home-grown helium, and Total Helium will deliver new supply, first.
Tech: The Industry Desperate For New Helium Supply
From semiconductors to the internet as we know it, helium plays a vital role in the tech world.
Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) has a lengthy history and has helped shape many technologies we rely on today. It’s focus on high standards and its strive for excellence has led them into becoming one of Apple Inc.'s primary suppliers, helping assist Apple during a global semiconductor shortage.
The semiconductor industry is a particularly competitive industry and only five companies in the world own chip-making facilities, making Taiwan Semiconductor a standout in the industry.. Indeed, many leading top semiconductor companies are "fabless," meaning they only design the chips but rely on other companies, known as foundries, to actually make the chips. The shift to outsourcing has been having a big effect on structural changes and related capacity because companies that cut orders in the early days of the pandemic have been forced to go to the back of the line.
Taiwan Semiconductor Manufacturing Co. is a key player to watch in both the helium shortage and the semiconductor shortage. As the world’s largest chipmaker, it needs helium to survive. And with a semiconductor supply squeeze looming, it could stand to benefit big when Big Tech comes knocking.
Intel Corporation (NASDAQ:INTC) is one of the world’s most renowned chipmakers. It has been around since the late 1950's, when it was founded by Robert Noyce and Gordon Moore who first coined their portmanteau name- Integrated Electronics. Intel supplies processors for computer systems such as desktops laptop servers tablets mobile phones (including smartphones)and more; they also make motherboard chipsets that connect these devices together so you can use your processor effectively while having access to fast memory too.
At its core, Intel is a chipmaker. And a big one at that. It’s also a leader in the global semiconductor game thanks to its investments in 65nm process, an advanced node used in volume CMOS semiconductor fabrication. Intel has manufactured semiconductors in Ireland since 1990, and has invested around $6 billion there in this time, but is beginning to branch out with new investments in the United States, as well.
Considering that helium is a critical part of the semiconductor and computer chip manufacturing process, any outages or new discoveries could have an impact on chipmakers like Intel.
Advanced Micro Devices (NASDAQ:AMD) is at the cutting edge of the world of computing and graphics. It founded over forty years ago with a single mission: to advance technology as fast it could be invented. Since then, they've become one of the most relied upon brands for processing power – both at home on your own PC or game console; but also when you need high performance computer systems that can process data quickly enough maybe even live video streaming where every millisecond counts.
Advanced Media Devices isn’t just building home computers, either. AMD also is building CPUs to be used in massive data centers, the kind supporting the likes of Microsoft’s Azure cloud-based workstations and desktops and much more. And its GPUs are providing the speed, security, and scalability to keep these data centers performing at the level needed to push modern tech into the future.
The semiconductor and microprocessor industries are massive, representing hundreds of billions of dollars in revenue, but despite its spot in the Big Tech elite, Advanced Micro Devices is still particularly vulnerable to helium supply chain concerns.
As AMD’s biggest competitor, Nvidia (NASDAQ:NVDA) is another company that develops graphics processing units, or GPUs. Nvidia are continually releasing new technologies to stay ahead of the competition and have an excellent reputation for quality. The company also manufactures processors that power many other devices such as automobiles, robots, and smartphones. These processors are often used for artificial intelligence systems like driverless cars or voice commands on mobile phones so we can expect Nvidia's technology to keep getting more advanced over time.
Nvidia's ambitious innovations are clear in all areas of tech, from computer graphics and artificial intelligence research that are core to robots or future cities. It’s also pushing new technologies into the world with its enterprise server GPUs—even setting records. Thanks for being there when we needed you most, Nvidia--and don't worry: your hardware will not go unsupported now that it has been so instrumental before this point too.
With more and more demand coming for semiconductors and new chip technology hitting the market, companies like Nvidia, AMD, Taiwan, Samsung and Intel are going to be some of the biggest benefactors. They’re already well-known in the industry, and this could just be their time to really shine. But a looming helium shortage could present a number of complications for the booming tech giants.
IBM Corporation (NYSE:IBM), or International Business Machines Corporations, is a United States-based technology company. IBM specializes in developing and providing computer related products worldwide like the automated teller machine (ATM), magnetic stripe card and much, much more.
IBM is often considered one of the leading companies in its tech realm, with a long list of inventions to date. And while this history certainly makes them an excellent candidate when it comes time to explore new trends such as blockchain technology.
IBM’s blockchain platform, built on the open-source Hyperledger Fabric platform from the Linux Foundation is helping companies with a wide variety of blockchain solutions including tools for the finance sector, supply chain transparency, and letters of guarantee. IBM’s blockchain platform even helps interested parties develop their own blockchain solutions through educational tools and personalized assistance.
IBM isn’t new to the semiconductor industry, either. In fact, it is pushing the boundaries of what semiconductors can achieve. And it wouldn’t be possible without helium. The vast majority of chips are made with silicon which needs to go through an extensive process to create specific circuitry. Helium has several roles in this process.
The Descartes Systems Group Inc. (TSX:DSG) is a Canadian multinational technology company specializing in logistics software, supply chain management software, and cloud-based services for logistics businesses. Recently, Descartes announced that it has successfully deployed its advanced capacity matching solution, Descartes MacroPoint Capacity Matching. The solution provides greater visibility and transparency within their network of carriers and brokers. This move could solidify the company as a key player in transportation logistics which is essential-and-often-overlooked in the mitigation of rising carbon emissions.
Mogo Finance Technology Inc. (TSX:GO) is a new spin on unsecured credit, which is a burgeoning sub-segment of FinTech. Providing loan management, the ability to track spending, stress-free mortgages, and even credit score tracking, Mogo is at the forefront of an online movement to assist users with their financial needs.
Mogo’s software analyzes borrowers instantly and greatly reduces the traditionally cumbersome underwriting process for loans. It’s online only, so there’s very low overhead and a ton of cash to spend on marketing. Labeled as “the Uber of finance” by CNBC, Mogo is definitely turning heads. With increasing membership growth and revenue lines continuing to improve, and a platform which many banks have failed to offer, Mogo could well become an acquisition target in the near future.
Other Resource Companies To Keep An Eye On
Lithium Americas Corp. (TSX:LAC) is one of America’s most critical and promising pure-play lithium companies. With two world-class lithium projects in Argentina and Nevada, Lithium Americas is well-positioned to ride the wave of growing lithium demand in the years to come. It’s already raised nearly a billion dollars in equity and debt, showing that investors have a ton of interest in the company’s ambitious plans.
Lithium America is not looking over the growing pressure from investors for responsible and sustainable mining, either. In fact, one of its primary goals is to create a positive impact on society and the environment through its projects. This includes cleaner mining tech, strong workplace safety practices, a range of opportunities for employees, and strong relationships with local governments to ensure that not only are its employees being taken care of but local communities, as well.
Celestica (TSX:CLS) is a key company in the resource boom due to is role as one of the top manufacturers of electronics in North America. Celestica’s wide range of products includes but is not limited to communications solutions, enterprise and cloud services, aerospace and defense products, renewable energy, and even healthcare tech.
Due to its exposure to the renewable energy market, Celestica’s future is tied hand-in-hand with the green energy boom that’s sweeping the world at the moment. It helps build smart and efficient products that integrate the latest in power generation, conversion and management technology to deliver smarter, more efficient grid and off-grid applications for the world’s leading energy equipment manufacturers and producers.
Maxar Technologies (TSX:MAXR) is one of the leading space companies on the planet, founded nearly 20 years ago. Maxar has a variety of services, including satellite development, space robotics, and earth observations. One of their most well-known products is the Canadarm2 robotic arm for the International Space Station (ISS). The ISS has been operational since 1998 with more than 100 missions to date. Maxar Technologies has had a history of partnering with NASA to maintain the ISS's systems as well as providing them with new technologies such as the Canadarm2 robotic arm. is a moon-bound tech stock to keep an eye on. While space firm specializes in satellite and communication technologies, it is also a manufacturer of infrastructure required for in-orbit satellite services, Earth observation and more.
More importantly, however, Maxar’s subsidiary, SSL, a designer and manufacturer of satellites used by government and commercial enterprises, has pioneered research in electric propulsion systems, lithium-ion power systems and the use of advanced composites on commercial satellites. These innovations are key because they allow satellites to spend more time in orbit, reducing costs and increasing efficiency.
By. Michael Kern
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