Most of what the Iran war did to energy markets showed up at the gas pump, and that’s where most of us stopped paying attention. But there’s a much smaller market that got hit a lot harder and got almost none of the headlines. Qatar makes about a third of the world’s helium as a byproduct of its natural gas plants, and when QatarEnergy shut down the Ras Laffan complex in early March and Iranian missiles hit it later that month, that third went off the market more or less overnight.<\/p>\n
So when a small Australian company said on October 20 that it had pulled 14,000 barrels of water a day out of a 7-inch hole on a farming peninsula, separated the helium out of that water and bottled it right next to the rig, I figured it was worth a closer look. Not because a tiny company on the Australian stock exchange is going to fix the helium market with three wells. It isn’t. But the way they’re getting at the stuff is pretty unusual, and the numbers they’ve put out are specific enough to check.<\/p>\n
The company is Gold Hydrogen, and the project sits on the Yorke Peninsula in South Australia, grain country a couple of hours’ drive from Adelaide. The company’s drilled four wells there, and this year it ran pump tests on three of them: Ramsay 1, Ramsay 2 and Ramsay 3. The three wells sit along a line roughly 1.4 miles long.<\/p>\n
Ramsay 1 and Ramsay 2 are 4\u00bd-inch wells. Ramsay 3 was drilled as the scale-up well, with 7-inch casing and roughly 2.3 times the cross-sectional area of its two sisters, and the company hung a much bigger electric submersible pump in it, rated for up to 20,000 barrels a day. The whole point of the wider hole was to see what the rock would give up if you pulled on it a lot harder than a 4\u00bd-inch well lets you.<\/p>\n
It gave up a lot. In the first phase, in September, the pump sat about 2,395 feet down in the lower part of the reservoir and brought up as much as 13,000 barrels a day.<\/p>\n
For the second phase the crew pulled the pump up to a shallower spot in the same rock and stepped the rate up over several days until it hit about 14,000 barrels a day, according to the results reported by Small Caps<\/a>. Ramsay 1 and Ramsay 2 had topped out at 2,000 and 2,300 barrels a day, so the wide well flowed roughly seven times what the narrow ones did.<\/p>\n If barrels don’t mean much to you, 14,000 of them is about 588,000 gallons. An Olympic pool holds roughly 660,000. So this well fills most of an Olympic pool every day, and the pump still had headroom.<\/p>\n The other number the company keeps pointing to is the productivity index, about 40 barrels a day per psi. That’s an oilfield measure of how easily a well gives up fluid: you lower the pressure at the bottom of the hole by one psi and see how many extra barrels a day you get.<\/p>\n Forty is a lot. The 14,000-barrel rate took only about 350 psi of drawdown, and a tight reservoir would be happy with a number in the low single digits. The rock here is a dolomite, about 590 feet thick, that water apparently moves through pretty freely.<\/p>\n You may be thinking “helium is a gas, so why are they pumping water?” and the answer is that the gas is dissolved in it. Helium is made underground by the slow radioactive decay of uranium and thorium in old rock, and over a very long time it works its way up into whatever porous layer sits above, where it ends up in solution in the groundwater.<\/p>\n Bring that water to the surface, drop the pressure, and the gas comes out of it the way the fizz comes out of a soda. A separator catches the gas, a purification skid strips out the nitrogen and everything else, and what’s left goes into cylinders.<\/p>\n That’s a different animal from the way most of the world’s helium is made, which is as a byproduct of liquefying natural gas. Ras Laffan is a helium producer because it’s an LNG plant first.<\/p>\n Nobody in Qatar drilled a hole looking for helium. On the Yorke Peninsula, helium is the product, and the water is the thing you’ve got to deal with afterward, which is why the plan is to send it back down one of the wells.<\/p>\n This is where you’ve got to read the fine print, because the headline figure and the per-well figures tell slightly different stories.<\/p>\n Ramsay 1 came in at a sustained air-corrected helium concentration of about 19 percent, and Ramsay 2 at about 20 percent. Ramsay 3, the big well, stabilized at around 6.5 percent, with individual samples as high as 12.6 percent. The company’s project-wide average is 15.2 percent, and as far as I can tell that’s just the arithmetic mean of 19, 20 and 6.5.<\/p>\n So the average isn’t wrong, but it leans pretty heavily on the two small wells, and the well that pumps seven times the fluid has the leanest gas. I’d want to see what Ramsay 3 does over a longer run before I got too excited about 15.<\/p>\n Still, even 6.5 percent is rich by helium standards. Commercial plants recover helium from LNG streams at concentrations down around 1 percent, because the plant’s already there and the gas is free.<\/p>\n Managing director Neil McDonald told ABC Rural<\/a> the project has “the world’s best helium purities ever reported,” which is his claim, not mine, and it’s the kind of thing a managing director says. But the per-well numbers are high, and they’ve been consistent across the two narrow wells since July.<\/p>\n Then there’s the bottling. The gas from the test campaign was run through a purification unit built by Quantum Technology Corporation and put into cylinders on site, a process the company first described in its July filing<\/a> for Ramsay 1.<\/p>\n Gold Hydrogen says nobody had put Australian helium in a bottle since the Darwin BOC plant closed three years ago, when the gas supply to Santos’s Darwin LNG plant ran out. That Darwin plant was the only helium plant south of the equator, and it covered about 3 percent of world demand.<\/p>\n I can’t find a figure anywhere for how much helium the Ramsay campaign actually put into cylinders, and I suspect it’s a few bottles for proof of concept rather than anything you’d sell. The company hasn’t said.<\/p>\n Because Qatar is the reason anyone outside the gas trade is paying attention to helium this year. The US Geological Survey puts world helium output at about 190 million cubic meters last year, which is roughly 6.7 billion cubic feet, and Qatar made about a third of it, more than 80 percent of that from Ras Laffan’s two helium plants. QatarEnergy halted the complex at the start of March, declared force majeure on March 4, and on March 18 confirmed that Iranian ballistic missiles had caused what it called “extensive damage” to parts of the site.<\/p>\n Qatar’s prime minister said on June 24 that normal LNG output would resume within a few weeks, as bne IntelliNews<\/a> reported, but that the damaged units, about 17 percent of the country’s capacity, would stay offline for years. So the helium is partly back, and partly not.<\/p>\n You can’t just stockpile your way through a helium shortage, either. Liquid helium boils off out of its containers over a matter of weeks, so inventory only buys you so much time. If you’ve had an MRI, watched a rocket launch, or own one of the big helium-filled hard drives, you’ve probably used Qatari helium without knowing it.<\/p>\n That’s why a 7-inch hole in a wheat field looks slightly more interesting now than it would have a year ago. Australia currently imports 100 percent of the helium it uses. We’ve covered a British company pumping granite water for lithium<\/a> and a German gas field doing the same<\/a>, and this is the same idea with a different element: the valuable stuff is dissolved in water, and the hard part is pumping enough of it.<\/p>\n The plan now is a modular pilot built around the wells that already exist, so the company doesn’t have to drill new ones before it sells anything. Ramsay 2, 3 and 4 would produce.<\/p>\n Ramsay 1 would take the spent water back down into the aquifer. The processing side is a skid-mounted plant that combines membrane separation with pressure-swing adsorption to get the helium to about 99 percent purity, and McDonald described it to ABC Rural as “the size of two tennis courts.” He told the ABC he expects it to be up and running within 18 months.<\/p>\n The company’s modeling puts the helium rate at up to about 37,000 cubic feet a day per well, about 37 percent above the 27,000 cubic feet a day per well that an independent Worley study in May identified as the point where a two-well development could pay. Both of those are modeled numbers. The 20,000-barrel pump rate that the modeling assumes hasn’t been demonstrated in a flow test yet, and the company says all the field helium readings are preliminary until the lab work, including analysis by CSIRO and Oxford University, comes back.<\/p>\n Then there’s the permitting. Commercial production in South Australia needs approvals the company doesn’t have yet, and the first formal step is a Contingent Resource, which is the industry’s way of saying “we’ve measured enough of this to call it a reserve in waiting.” Gold Hydrogen is targeting a sign-off on that in November. It’s a small-cap with a market value under $100 million Australian, so none of this is guaranteed, and the stock dropped about 4 percent on the day the flow results came out.<\/p>\n McDonald told ABC Rural that just one of the company’s seven exploration permits holds an estimated 41 billion cubic feet of helium, and that the world consumes about 5 billion cubic feet a year. The USGS output figure I mentioned above is closer to 6.7 billion, but either way, if the estimate holds, there’s six to eight years of global demand sitting under one patch of South Australian farmland.<\/p>\n I’d read that with the usual caution. The 41 billion is the company’s own estimate, not a certified resource, and the November sign-off is the first time anyone independent will put a number on it. At 37,000 cubic feet a day per well, a two-well plant would make about 27 million cubic feet a year, against 41 billion in the ground.<\/p>\n So the pilot is tiny next to the number everyone will quote. Over the next 18 months I’ll be watching whether a plant the size of two tennis courts can sell enough helium to pay for the next well.<\/p>\n Gold Hydrogen says it’ll release the natural hydrogen results from Ramsay 3 once its lab data is back, and it’s targeting its maiden helium Contingent Resource for November. McDonald told ABC Rural on October 21 that he expects to be producing helium commercially on the peninsula within 18 months.<\/p>\nWhy is the helium in the water?<\/h2>\n
How much helium is actually in it?<\/h2>\n
Why does Qatar matter to a well in Australia?<\/h2>\n
A plant the size of two tennis courts<\/h2>\n
So how much is 41 billion cubic feet?<\/h2>\n