This October gasworld celebrates its 20th anniversary, charting key moments, events and industry stakeholders over our last two decades.
It’s been a progressive period of activity marked by multiple milestones and product launches, but it’s also been a timeline of rapid advancement in technologies and various sectors of the industry.
Chief among those has been the global helium business, where no less than four major shortages in supply have been witnessed in the last 20 years and a proliferation in new-age helium exploration activity has dominated headlines in recent years.
In the thick of it when it comes to sourcing and securing new helium supply to fortify the market’s future, is Desert Mountain Energy.
Here in the first of gasworld’s then and now profiles of the company’s driving change in the gases business, we look at the journey of Desert Mountain Energy (DME) to a vertically integrated exploration, development, and production company specialising in helium and assorted gas sales.
In 1998, Desert Mountain Energy’s current CEO Robert Rohlfing took gas samples from an oil and gas blowout well being drilled in Meteor Crater. He noted helium content in the gas samples, it perked his curiosity and would start him on a 25-year journey trying to understand the geology of Arizona’s nitrogen/helium fields.
For context, in 1962 the world’s highest grades of helium were discovered and produced out of the Pinta Dome Field until the field was closed down; the helium price was $6.50/mcf and the economics no longer allowed continued production.
Rohlfing’s long and curious journey into helium had spanned 20 years when he was hired by DME in 2018 as Vice-President of Exploration. At that time, the company started to acquire mineral leases that had been identified by him as having helium exploration potential. The first two helium wells were drilled in July 2020 and when sampled, returned grades of +7% and +4%. Meanwhile, the downhole cement had been achieving structural integrity, prior to testing.
Management and board changes occurred, with Rohlfing becoming the Executive Chairman and CEO. The company raised $13m at $1.60 with warrants that were later forced to realise a total of $29m, allowing for more wildcat drilling. Wildcat Well #4 was drilled in mid-2021 and when sampled, identified the McCauley Field, three offset wells grading 3.511% helium, and led to the decision to put the field into production.
A modular solar-powered helium processing facility was delivered in December 2022 with plans of starting production in May 2023. When the company went to put the four McCauley Field wells into production, the permeability in the formation required a near-well bore stimulation and regulatory roadblocks required the company to pivot into an asset acquired in New Mexico. The company continues to work with the state and is planning on producing in Arizona but a lack of guidance in respect to time, cost and assurances of receiving the permits in the near term forced the difficult decision to move the plant.
Today, Canada-based Desert Mountain Energy Corp. is a fully-fledged helium explorer in a market striving for far greater diversification of sources and security of supply.
On 1st July 2023, DME announced the closing of the acquisition of the West Pecos Slope Abo Field near Roswell, New Mexico. The asset was acquired for a cash price of $2.5m including 188 natural gas wells, 50 miles of collection system and 120 sq miles of contiguous mineral claims with the potential of drilling an additional 70 to 100 wells.
Recent testing by the previous owner demonstrated helium percentages as high as 1.374%. There are a number of lower and upper helium zones that have not been tested for helium.
The company is currently working on improving efficiencies in the field to improve natural gas sales while the helium processing plant delivery is being disassembled, transported and delivered to New Mexico. Revenue from helium and condensate sales is anticipated by the end of September 2023 in addition to current natural gas sales.
The geologic team is currently working on identifying helium opportunities in virgin pay zones in existing wells while looking at future potential drill targets. The plant will operate on natural gas as opposed to the solar farm. It has been designed to be able to process the raw gas and isolate the helium in the field.
Fortunately, the plant had been fabricated and designed in a modular format allowing for the plant to be moved. The combined gas sales should allow the company to continue to grow without returning to the equity market for money. The issues in Arizona may take a couple of years to resolve, but the move to New Mexico buys DME the time needed to solve the AZ regulatory issues.