Impending shortage created great value for this important resource | 2021-06-14 | Invest news

(Image via Desert Mountain Energy Corp.)

As a Stockhouse earlier this month through Desert Mountain Energy Corp. (TSX-V: DME, OTCQX: DMEHF, Forum) reported, we looked at this company’s work on the extraction and processing of one of its most important resource investments – helium. The second most abundant and second lightest element in the known universe.

One of the last and possibly most important sources of helium is the Holbrook Basin in northeast Arizona. In our previous editorial on DME, we highlighted a recent report on “Feasibility of Developing New Helium Wells in the Holbrook Basin, Arizona,” published in May 2021 by graduate geologist Jacob Smith of the Colorado School of Mines, highlighting helium development in the Holbrook Basin and the potential for further exploration in the area.

Located in northeast Arizona, the Holbrook Basin stretches approximately 273 km by 128 km and has one of the highest helium contents in the world. Desert Mountain’s Holbrook Project comprises more than 343 square kilometers (85,000 acres) of major helium projects that are leased.

As explained in the previous editorial on the company, Desert Mountain operates near the Pinta Dome area of ​​the Holbrook Basin, which is where historical production was primarily concentrated, as well as in the Navajo Springs and East Navajo Springs fields. Desert Mountain Energy recently completed two new wells in the Holbrook Basin and plans to bring these new wells into production in late 2021.

Structural mapping and stratigraphic insights from previous drilling in the area will allow the best exploration locations and new drill holes to be more clearly identified.

These represent two of the world’s richest historical producing helium gas fields, the Pinta Dome and Navajo Springs. Historic production of 9.23 billion cubic feet (Bcf) with exceptionally high helium produced levels of 8 to 10% versus the industry benchmark of 0.3% to 1% for commercial grade.

The Holbrook Basin is casually referred to by many as the “Saudi Arabia of Helium” and is widely recognized as the world’s best source of helium. The market demand for this gas is great because its physical and chemical properties make it indispensable in a number of medical, scientific, and industrial applications, from MRI machines to airbags to balloons.

Why is the demand so high? Helium is a non-renewable resource and many of its uses cannot be replaced by other elements. As the Smith report noted, the demand for helium has increased in value in recent years. This gas is available in limited quantities and the rise in price is reflected in the results of the Federal Helium Reserve’s Bureau of Land Management (BLM) helium auctions from 2015 to 2019 (see figure below).



(Federal Helium Reserve sales of helium at BLM Auctions, 2015-2019. Image depicting feasibility of developing new helium sources in the Holbrook Basin, Arizona.)

The report also indicated that since the end of these auctions, a larger market has opened up for private helium suppliers. It added that helium is generally cheaper to process in the absence of natural gas. This makes the deposits in the Holbrook Basin particularly interesting for exploration, as the gas is mainly composed of nitrogen with little to no CO. consists2 and natural gas, depending on the well.

The U.S. government’s raw helium auction prices in 2018 rose from $ 119.31 to $ 279.95. This corresponds to an increase in the global helium market of 135% compared to the previous year and is due to dwindling reserves. The 2019 US crude oil-helium auction is expected to be the last due to the dwindling reserves required by law. Helium is seen as a primary exploration target because helium prices have increased while natural gas prices have decreased.

Desert Mountain continues to work in a prime location to capitalize on the increasing value of helium. DME will soon complete construction of its helium separation facility in Navajo County, approximately a mile from the nearest well, and is expected to save the company more than $ 7.5 million compared to other processing options. Specialized refining techniques and the nearby location will reduce transportation costs and add value to the helium produced, as Smith’s report found, by providing a more concentrated product to the industry.

Further efforts were made to advance this work when the company filed documents with the United States Federal Contractor Registration. This registration is a prerequisite for doing business with the US government as a supplier.

This inert, non-toxic, colorless and odorless gas has a low boiling point (-268.9 ° C) and a freezing point (-272.2 ° C) – the lowest of all elements in the periodic table.

The physical and chemical properties of helium make it the only option for cryogenic applications that require extremely low temperatures.

From the report – “Even where substitutions are possible, helium is often the optimal choice when technological advances take advantage of its unique combination of properties. The medical field, for example, is finding a rapidly growing range of new uses for helium due to its physical and chemical properties, and space exploration continues to rely on helium. ”

With the continued research and technological advances, the need for the unique physical and chemical properties of helium is expected to increase steadily. In view of the increasing demand and the rising prices for helium, combined with the end of the auctions of the federal helium reserves by the BLM, which opened the market to private suppliers, this proves to be an excellent time for this opportunity.

Found primarily in the United States, particularly the Nevada natural gas wells, helium is on the rise in both literal and financial terms. Desert Mountain Energy Corp. seems like a company in the right place at the right time to capitalize on one of the best resource investment opportunities in a generation. The demand for helium is expected to continue to grow as the supply continues to decline.

For a more in-depth look at how this company operates, visit desertmountainenergy.com.

FULL DISCLOSURE: This is a paid article from Stockhouse Publishing.

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