Brian Zinchuk is editor and owner of Pipeline Online
In January, 2021, Royal Helium drilled its first well in Saskatchewan. Now, they’ve announced plans for their first helium purification facility, which will allow for commercial production. Photo by Brian Zinchuk
SASKATOON – A Saskatchewan First Nation is getting into the helium game in this province, buying a non-operating stake in a new helium development near Val Marie, Saskatchewan. The new economic partnership with Royal Helium, announced on April 16, in turn will expand the number of helium producers operating in this province.
And along the way, this development, along with other recent announcements from other players, will assist in bringing the province two-thirds of the way towards its stated goals in its 2021 Helium Action Plan.
Royal Helium Ltd. (TSXV: RHC) (TSXV: RHC.WT.A) (OTCQB: RHCCF) and Sparrow Hawk Developments Ltd. announced that they have entered into an economic participation agreement and a letter of intent (LOI) for a $25 million joint venture investment by Sparrow Hawk in the development of Royal’s Val Marie helium project located in southwestern Saskatchewan.
Under the terms of the agreement and the LOI, Sparrow Hawk will invest $25 million into the drilling and completion of new wells, as well as the construction of the associated helium purification facility. Pursuant to the LOI terms, Sparrow Hawk will have an approximate 57.5 per cent non-operating working interest in the wells and an approximate 46 per cent non-operating interest in the processing facility.
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The road to Val Marie
Royal Helium began drilling helium exploration wells in southwest Saskatchewan in January, 2021, first at Climax, then Ogema in southeast Saskatchewan, and most recently, at Val Marie, again in the southwest. The company purchased Imperial Helium which had a project in the works for the Brooks area of Alberta, at Steveville. (The photo at the top of the Pipeline Online masthead is of Royal Helium’s first well at Climax.)
Royal Helium’s property map for their Saskatchewan assets. Royal Helium
Royal chose to build its first helium purification facility at Steveville. That project went online in late 2023, and is still ramping up production. It was significant because that plant marked the transition of Royal from a helium explorer to helium producer. And before it even went online, Royal had already locked in contracts for all of its helium production. One of those offtake agreements will see Steveville helium production used for space launches.
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Sparrow Hawk Developments
And now Royal has turned to Saskatchewan for its next production facility, partnering with Sparrow Hawk Developments, the economic development arm of Peepeekisis Cree Nation.
“Located in Southern Saskatchewan’s picturesque Qu’Appelle Valley, our corporation represents the strength and unity of over 3,000 members,” says Sparrow Hawk’s website. “The Cree word Peepeekisis (ᐲᐦᐲᑭᓰᐢ pîhpîkisîs) means Sparrow Hawk in English.”
Peepeekisis First Nation #81 (PCN) is a Cree First Nation located 113 kilometres northeast of Regina and 40 kilometres northeast of Fort Qu’Appelle, Saskatchewan.
The First Nation is part of both the File Hills Qu’Appelle Tribal Council and FSIN, covering 11,257.8 hectares, with an additional share in the 37.1 hectares of the Treaty 4 Reserve Grounds of Fort Qu’Appelle. Chief Canahhachapew (Making Ready the Bow) signed Treaty 4 on September 21, 1874.
In 2022, Sparrow Hawk Developments purchased the Moose Jaw Temple Gardens Hotel and Spa, and embarked on an ambitious redevelopment of the facility, expected to be completed in 2025.
Getting into helium is spreading its wings, as it were, and marks a significant diversification of investment.
Andrew Davidson, chief executive officer of Royal Helium said, “This joint venture represents an exciting next step in Royal’s mission to advance the development of its extensive helium resources and bring additional facilities online each year. Of equal importance, this partnership highlights Royal’s commitment toward further inclusion of First Nations groups in the resource development activities and the economic growth in the province. This historical partnership with Sparrow Hawk to advance the economic development in the Treaty 4 Territory is an important first step toward these objectives. This important Agreement and LOI ensures First Nations participation at the earliest possible stage for resource development in the province with a shared commitment to economic reconciliation and benefit.”
Alex Fallon, CEO of Sparrow Hawk, said in a release, “This partnership and our planned ownership in helium production plants and of the helium resource itself, is not only a form of economic reconciliation, but it also sets the path for a multimillion-dollar investment to develop Saskatchewan’s helium sector and export helium to customers around the globe.”
“This is a historic partnership that will provide Sparrow Hawk with ownership in a major critical minerals project and honours the spirit of Treaty 4 which was to share the resources in this land,” Fallon continued.
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Val Marie Project
The Val Marie helium project comprises a 32,000-acre, 21 year lease land package representing approximately 3 per cent of Royal’s current helium permit and lease lands across Saskatchewan and Alberta. Val Marie is located immediately north of the Saskatchewan-Montana border sitting atop the Bowdoin Dome, a large geological uplift system that has been a prolific natural gas production area with successful helium production wells recently drilled on the Montana side of the structure. The company drilled its initial well at Val Marie in August of 2022 with some of Royal’s highest helium showings to date from drill bit gas detection equipment from multiple stacked zones – the Duperow, Souris River and Deadwood formations.
Sparrow Hawk – Royal Partnership
According to the Royal press release, the partnership agreement will also see Sparrow Hawk support Royal’s economic reconciliation strategy:
- Sparrow Hawk and Royal will work together to advance economic reconciliation in Treaty 4 territory and seek to create employment opportunities for Peepeekisis Cree Nation and First Nations people in Saskatchewan’s growing helium sector.
- Sparrow Hawk and Royal commit to partnering on future helium opportunities in Saskatchewan as and when they materialize.
- Sparrow Hawk will engage First Nation’s training organizations to provide Indigenous culture training and education opportunities to Royal and its subcontractors.
- Sparrow Hawk will play a lead role in engaging other First Nation organizations and partners to work together on economic opportunities that may arise as a result of this partnership.
- The agreement and LOI are subject to final financial arrangements, provincial, regulatory and TSX Venture Exchange approvals.
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Royal CEO provides details
Davidson told Pipeline Online they were excited to be getting back into Saskatchewan after their foray into Alberta.
He said at Val Marie they’ve got one well already, which they will come in and complete, and drill one or two more. “And then depending on the results of the flow rates, we’ll have the facility in construction to handle what we think it’s going produce in terms of a top end throughput, so that we don’t need to drill all the wells and then put the shovels down and wait. We’ll get indicative rates and then we’ll start building the plant.”
He said they will start drilling those wells as soon as possible. “The designs are pretty well done. We’ve gotten ahead of things and started the plant design already, understanding that the design cannot be finalized until gas composition and flow rates are known with certainty.”
Asked if it would be a clone of the Steveville plant, Davidson responded, “It doesn’t have to be.” The plant design will be based on what comes out of the wells. Carbon dioxide and methane content, for instance, will impact processing plant design. If there’s no carbon dioxide or methane, it may not make sense to build a cryogenic plant, for instance. In that case, their purification plant may end up being similar to what North American Helium has built in Saskatchewan.
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Making the connection
Asked how they ended up hooking up with Sparrow Hawk, Davidson said, “We had our first discussion a little over a year ago with a general expression of interest in working together on a project.”
“We spent a lot of time fleshing out what we think we could do, and what we think it would look like. That led to deal structure. We went through a super rigorous due diligence period; three, four months of due diligence. We did a lot of it and then finalized.
“I would say it took a while, just to get down to a structure that made the most sense to both firms. The economic terms have been set for a while.”
It’s too early to line up an offtake agreement for Val Marie yet, but Royal will be working on it soon. Davidson said, “We’ll go through and we will define the scale of the resource, or at least get a good idea of what it is, and then we’ll go on and we’ll sign an offtake agreement for a portion of that, which will make the whole project bankable. (Then) we can walk down the street to a bank and say, “Hey, we need to secure some term financing to build this facility based on this.’”
Until testing is completed at Ogema, Royal can’t say where their third plant will go. But they definitely are looking at a third purification plant after Val Marie.
Royal Helium drilling near Ogema in late 2021. Photo by Brian Zinchuk
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Helium Action Plan
This announcement is part of a broader push to dramatically increase helium production in this province. For decades, Saskatchewan had produced helium from one solitary well near Swift Current. But in recent years, things have picked up dramatically.
Currently there are seven helium purification facilities in Saskatchewan, all operated by North American Helium. Helium Evolution has a farm-in agreement with North American on some helium development in the Mankota area which currently has a drilling program in the works. North American has recently announced its intentions to add another two processing facilities in Saskatchewan by the end of the year, bringing their total to nine. That’ll be up from just three at the beginning of 2023. Once completed, the new Royal Helium/Sparrow Hawk facility at Val Marie in addition to North American’s fleet will bring the total number of helium processing facilities in Saskatchewan to ten.
In the fall of 2021, then-Minister of Energy and Resources Bronwyn Eyre announced the province’s Helium Action Plan, which set a goal of Saskatchewan reaching 10 per cent of global helium production by 2030, with the intention of this province becoming a world player.
In announcing the Helium Action Plan, Eyre said, “Helium is a key new area of diversification in the province of Saskatchewan. And we’re emerging as a new helium hub. We’ve done our homework. We’ve done extensive geological surveying of some 88,000 oil and gas wells, and conducted close to 6,500 gas analysis tests. And they confirm that Saskatchewan has world-class helium concentrations. And we fully expect we can achieve up to 10 per cent of global market share by 2030. That’s the goal – 150 wells, 15 purification and liquification facilities, as part of an integrated helium sector, and quite a few five hundreds; $500 million in forecast capital investment, $500 million in future exports, 500 jobs. Thousands of associated service jobs. And as we get there, reservoir discoveries are continuing as we speak, and exploration and production for helium are being ramped up.”
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Now, 2.5 years later, Saskatchewan is on track to having ten helium purification facilities within the next year. That’s two-thirds of the way to the stated goal of 15 facilities by 2030.
At that time, the Saskatchewan Petroleum Innovation Incentive (SPII) was expanded to include support for innovative new helium projects. SPII was extended until March, 2029, in this spring’s provincial budget.
Current Minister of Energy and Resources Jim Reiter told Pipeline Online, “The recent announcement of a $25 million joint venture investment by Sparrow Hawk Developments Ltd. in the development of Royal Helium Ltd.’s Val Marie helium project in southwestern Saskatchewan is a testament to the helium potential in this province.
“In pursuit of our goal to capture 10% of the global helium market by 2030, the Government of Saskatchewan will continue to support this sector through our royalty credit programs and other initiatives under the Helium Action Plan.”
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