Brian Zinchuk is editor and owner of Pipeline Online
Royal Helium’s first well, Climax-1, has been full of surprises. Helium, natural gas and now lithium. Photo by Brian Zinchuk
CALGARY – Royal Helium Ltd. is focused on developing helium in Saskatchewan, and now Alberta, but along the way, it’s found other commodities in its initial exploratory wells.
In addition to recently disclosed gas, Royal announced on Aug. 22 that they have found lithium in their first well – Climax-1.
And that lithium concentration is significant.
Royal reported that it has sampled up to 84.9Mg/L lithium in brine underlying the Climax helium project. Accordingly, the company has provided notice to the Province of Saskatchewan that it intends to acquire the lithium mineral rights, with the intent to advance a lithium brine project alongside the ongoing helium development operations.
According to several presentations at the Williston Basin Petroleum Conference in Regina this last May, the concentrations reported by Royal would be among the highest reported in Saskatchewan to date. And Royal came about it despite not specifically exploring for lithium.
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Royal Helium president and CEO Andrew Davidson, left, at the drilling of their Climax-1 well, the company’s first. Photo by Brian Zinchuk
Andrew Davidson, president and CEO of Royal said in a release: “In the Climax-1 well, drilled in January 2021, one of the zones that we tested showed significant inflows of brine water and gas. Samples of both were taken and sent to lab for assay, returning elevated levels of helium and significant concentrations of lithium in brine. With recorded lithium grades of 84.9 mg/litre, combined with flow rates in the range of 1.85 MMCF per day equivalent, Climax is set to not only become a cash generative helium play, but also now presents potential additional value to stakeholders with a lithium exploration and development project.”
Pipeline Online spoke to Davidson on Aug. 22. He said that with the grades of lithium being the second highest reported in Western Canada, “It’s important that it’s meaningful. So we decided we better talk about it.”
The zone in question is the Duperow formation, one which had helium shows. “There was helium there, but it was a water-bearing formation,” he said. The Duperow, known as the Leduc formation in Alberta, is the same formation several lithium explorers in Saskatchewan have been pursuing.
The other three wells drilled at Climax have not been tested for lithium yet. But this discovery could lead to an interesting prospect – producing helium, natural gas and lithium, as well as capturing the nitrogen. Davidson said they could possibly produce this well for lithium, and drill another for helium. “The way it was flowing, and the grade that it got, it’s a pretty compelling argument to make that a lithium producer,” he said.
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The Duperow formation, at that well, is on the low end of economic for helium.
The situation raises a key question for the province – in areas where there could be competing products – lithium, helium, oil, gas or even geothermal potential – who takes priority? This was a question Pipeline Online posed to Premier Scott Moe in a year-end interview last December, and he said the province was working on it.
And indeed they have been. Davidson said that this is being dealt with through some new regulation right now that is currently out for industry comment until the end of the month. This situation has been something of a stickler for the two wells Royal drilled north of Ogema, and the changes should hopefully resolve that. “That one was dealing more specifically with overlapping tenures of helium and oil and gas,” Davidson said.
Royal Helium Climax-1 in early January, 2021. Photo by Brian Zinchuk
But as for Climax, he said, “The way it stands now, we’re the only ones who can acquire this ground, these rights.”
That means they already have dibs on that formation on their land. “And the same is true everywhere, where they don’t already exist. Only one group who can acquire them over zones where we already have helium rights. And that’s us,” he said.
But there are cases where there can be conflicts. Davidson said in parts of southeast Saskatchewan, you can’t get a helium permit for the Red River, only oil and gas. But that’s a specific issue that’s being corrected with this legislative change.
He pointed out the province is trying to ensure companies do not acquire helium permits as a backdoor method into oil and gas.
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Helium permits, to date, have been extraordinarily inexpensive compared to typical oil and gas Crown land sales. Its one of the reasons helium explorers in Saskatchewan have snatched up multiple-million hectare permits.
As Royal has discovered natural gas in addition to the helium discovery, they can negotiate for natural gas rights – but only for a limited acreage, Davidson explained.
As for the other three wells drilled at Climax, Royal is going to take another look at them for lithium, he noted.
As for the natural gas found, the plan would be to use the natural gas, possibly for power production.
Asked what’s next, Davidson said, “We’re just driving ahead with the helium stuff, and we’re developing our strategy for hot to develop lithium. I’m in Calgary right now, talking to a couple different groups, and lithium is part of the conversation.”
That includes discussions with investment banks.
Royal Helium Climax-1 well. Photo by Brian Zinchuk
Royal is not looking to become a lithium producer itself, but it is interested in possibly doing a joint venture with one of the lithium exploring companies working in the province.
Royal said it will provide a further update as and when the mineral rights are granted by the Government of Saskatchewan. Under the provisions of mineral tenure ownership, Royal said it is the only party who can be granted rights over the zone of interest in the Climax area, as competing rights over the same zones cannot be granted.
The Climax project is approximately 60,000 hectares in size, which would make for one of the largest lithium exploration projects in Western Canada, Royal said. The company will explore all options for developing the lithium project, such that the focus of the company will remain on exploiting the helium already discovered at Climax and elsewhere.
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