A surge of inbound helium interest is giving Canadian producers an early signal of a looming global shortage, but industry leaders say policy gaps are limiting the country’s ability to scale supply.

Disruptions to Qatar’s natural gas processing during the Iran conflict have sharply reduced global helium supply and escalated prices, according to a Reuters report. Because helium is a byproduct of liquefied natural gas production, major facility outages can affect international markets.

Producers outside the Middle East region, including those in Canada, are already seeing the effects.

“We’re getting all kinds of inbounds,” Brad Borggard, chief financial officer at North American Helium (NAH), told DOB Energy.

NAH is a Calgary-based company that produces helium from non-hydrocarbon-linked nitrogen reservoirs.

The inquiries, noted Borggard, are not only from customers, but people in political positions in Asia “wondering where they’re going to be getting their helium from … in the near future.”

The impact of the shortage is not immediate, he added, due to the lag between shipments and delivery.  

Over the next few months there will be suppliers that are not “going to be able to supply their customers … and they’re going to be claiming force majeure.”

Helium is used in semiconductors, fibre optics, advanced medical imaging equipment, as well as space exploration and defense applications.

Unlike oil and gas, helium lacks a transparent benchmark price.  

Helium doesn’t have a “price on the screen that you can point to,” said Borggard, noting this leads to marketing largely driven by direct outreach. Even so, the recent call volume has been in a “completely different realm” relative to typical conditions.

Despite the increase in demand, Borggard said meaningful supply growth would take time.

 “There’ll be a little bit here and there that you can do,” he said, adding that significant shifts in supply are not “…going to happen overnight.”

He added: “Most new incremental supply that’s material is going to require a new facility and … the infrastructure that goes along with that. It’s not like oil and gas where you can drill somewhere near existing tie‑ins…. The cycle-time in oil and gas is quite a bit shorter.”

Canada’s ability to meet rising demand is limited by current federal policies, says Richard Dunn, executive director, Helium Developers Association of Canada [HeDAC].

He said helium needs to be aligned with other critical minerals in Canada’s tax system. This includes competitive depreciation eligibility for the flow-through share (FTS) program, and targeted measures to bolster critical mineral activity that have been introduced by the federal government in recent budgets.

“Currently, helium falls between the cracks,” Dunn told DOB Energy. “It doesn’t get to participate in a number of supportive programs that Canada has to develop critical minerals.”

Borggard agrees that there’s a need to address investment conditions.

Similar to the policy approach taken with other critical minerals, he said there’s a need to institute incentives that attract investor support, adding that “waiting until there’s a massive shortage and then looking around for how we can mitigate the supply-chain impact is really not a great strategy.

“We need to be looking through the troughs and valleys and recognizing that this happens way too regularly, and that we need to be doing the groundwork in both the good times and the bad times to have a more steady and reliable supply chain.”

Borggard, who highlighted the sector’s recurring shortages, said policymakers need to recognize the significance of the current situation, no matter how long it lasts. 

“This is going to be the fifth global shortage in the last 20 years,” he said, attributing its frequency to the “highly concentrated nature of international helium supply.”

In addition to tax changes, HeDAC is calling for policy support to build helium liquefaction plants in Canada. Much of helium produced in Canada is currently liquefied in the U.S., creating costs and risk.

Domestic liquefaction facilities would enable a strong Canadian supply chain, said Dunn.  

Quick response

If these measures are addressed, Dunn said he expects an immediate reaction from industry.

“Once we’ve got the drilling starting to prove up results, you’re going to get domestic processing facilities within a year,” he continued, adding this would be followed by a domestic liquefaction facility, “possibly within a year and a half, two years — that kind of a timeframe.

“So, a very quick reaction, given the right policy treatment.”

With policies addressed, Dunn said he expects Canada will become a preferred long-term helium supplier to industry. He notes that existing major helium suppliers, including Qatar and Russia, carry geopolitical risk.

The opportunity in Canada fits the federal government’s “narrative of creating strong domestic supply chains of critical minerals that also can provide a security to supply for our allies,” he added.

Late last year, the association presented to the House of Commons standing committee on Natural Resources about helium supply-chain risk.

“At that time, we were probably focused … a little bit more on Russia,” said Dunn, adding with the situation in Qatar, “it’s ramped that up.”

He said HeDAC is now seeking “high-level” meetings in Ottawa, potentially this April.