Billions worth of helium discovered on land bought for a dollar: world-class deposit

In 2013, the company paid $1 for the rights and began testing the composition of gas flowing from two rusty drill pipes that were installed years ago for mineral exploration, according to Renergen CEO Stefano Marani. What they found was an abnormally high concentration of helium.

Besides inflating party balloons, helium has a number of commercial uses, CNN reports. When helium condenses into liquid form, it is an important cooling component used in the production of microchips and in life-saving MRI scanning technology. However, global helium prices are volatile and supply inconsistent, with the gas produced in fewer than 10 countries worldwide.

Renergen unwittingly stumbled upon a gold mine. The company today says the gas project in South Africa’s Virginia has more than 7 billion cubic feet of proven helium reserves, which could be worth more than $4 billion and potentially up to $12 billion if additional possible reserves are included.

“We had modest hopes of building a small gas-fired power station that could generate a couple of megawatts for some nearby mining operations,” recalls Nick Mitchell, Renergen’s chief operating officer. “We had no idea of ​​the scale of this helium deposit and that it was a world-class deposit.”

The company successfully produced liquid helium at the plant for the first time in January 2023. After delays for a year due to a leak in the vacuum seal of a helium refrigeration chamber, the company hopes to begin commercial operations within the next month, extracting helium along with natural gas, then processing it and supplying it to clients such as global engineering firm Linde.

What makes Renergen’s natural gas reserves so special is its unusually high concentration of helium. Marani says the average is 3%, with some places reaching 12%. By contrast, the US, the world’s largest supplier of helium, averages 0.35%, and Qatar, another major player, averages 0.04%, according to the US Bureau of Land Management.

This could make Renergen’s helium more environmentally friendly, according to Chris Ballentyne, head of geochemistry at the University of Oxford in the UK. Typically, helium is produced as a byproduct of liquefied natural gas (LNG), a mixture of gases consisting mainly of methane, he explains, and only at a certain concentration (usually around 0.3%) does it become economically feasible to extract the helium itself.

This means that most of the time the helium supply is dominated by hydrocarbon producers who extract and sell helium outsourced, and therefore the production is carbon-intensive, he continues. But a higher concentration of helium means that less associated methane is produced, thereby reducing its carbon footprint.

“What makes Renergen’s prospects so interesting is that (while) there are hydrocarbons associated with their helium production, it’s a much smaller area. They actually found a system of primordial helium gas,” he says.

Ultimately, Chris Ballentine hopes the industry will move away from producing helium from LNG and toward sources such as gas fields, where helium occurs alongside nitrogen, as shown in a recent study he co-authored.

Another advantage of high concentration is cheaper production. “We are a much lower-cost producer of helium than most other players in the market,” Marani says. “We drill very shallow wells, probably around 1,000 to 1,500 feet—low ​​cost, small area—and then the gas comes out naturally of its own accord,” he says.

Because the world’s helium supply is often disrupted, a new player in a different geographic region is very welcome, Ballentyne says. “We are currently experiencing a supply crisis because we only have a few limited supply points… Places like Renergen’s will certainly ease the situation,” he says.

Currently, none of the world’s helium reserves are produced in Africa – helium-rich gas fields are located in Tanzania, but are not yet in commercial production.

Marani notes that the Renergen gas project has been declared a “strategic integrated project” by the South African government, which has helped speed up regulatory approval processes.

The company’s “phase one project”, a small pilot project funded by the US government, will produce about 350 kilograms of helium per day – enough to meet all of South Africa’s needs while maintaining a surplus, Mitchell said. Its “phase two project,” which is expected to come online in 2027 and has received funding from the US government and South Africa’s Standard Bank, is expected to increase production to 4.2 tons per day, allowing production of anywhere from 6% to 8% of the world’s helium supply. With Research and Markets forecasting the global helium market to be worth more than $6 billion in 2027, this would represent significant profits.

Despite the company’s ambitious forecasts, its stock price fell significantly in the last quarter of 2023, which CNN experts say may be due to criticism of the company’s transparency on social media. However, Marani is confident that Renergen will be able to overcome investor doubts thanks to developments that, in his words, “will not only significantly reduce the risks in promoting the project, but will also ensure its implementation.”

“Building trust will take a very long time, I have no illusions about it,” says Marani. “I believe that incorporating helium is the first step in this process.”