Low Volume Helium Extraction and Commercialisation
Central Petroleum (ASX: CTP) has advised that subject to the discovery and proving of sufficient reserves and flow rates, relatively low volumes of helium may be commercially extracted and sold from the company’s interest areas in central Australia.
Dependent on quality, volumes and prices of helium and whether the product is sold FOB Darwin or CIF to a nominal North Asian destination the main conclusions of the report are that:
· There is a robust international market for helium which sells at bulk wholesale prices for up to AU$200/thousand cubic feet equivalent (Grade A 99.99% pure, liquid form).
· Global average helium prices are expected to rise at 5-6% per annum for the next ten years.
· Annual demand growth has risen as high as 16% in China in recent years and with no expected domestic commercial production China is likely to remain dependent on imported helium.
· About one third of the world’s demand for helium recently was supplied from the US Federal Reserve which is expected to only last for a further 10-15 years.
· Estimates of new extraction plants required vary from 11 to 19 by the year 2020 at an estimated 5-6% per annum projected growth in demand.
· Asia is the fastest growing helium market in the world with total sales of 1,130 million cubic feet projected for the year 2010, up from 596 million cubic feet in 2005.
· Total global demand for helium is in excess of 6,000 million cubic feet per annum.
· Demand growth is primarily being driven by the electronics industry (particularly in flat panel display production)while fourth generation gas cooled nuclear plants are projected to add significantly to demand growth (benefitting from helium’s ability to contribute to increase electrical efficiency from 30% to 50% as well as safety and environmental considerations).
· The capital expenditure (capex) of a commercial helium extraction plant processing 20 million cubic feet per annum of total gas feedstock, inclusive of owners’ costs, royalties, equity finance, commissions, insurance and other costs associated with plant and ancillary equipment would be about AU$420 million.
· The operating expenditure (opex) would vary between AU$33-38 million per annum.
· The gross revenue would vary from AU$98-$143 million.
· The net present value (NPV) of such a project at an 8% discount rate could range between AU$111 and AU$556 million.
Considerable savings in capex of up to 30% could be achieved if plant component manufacturers fabricate in Asia. Further savings could be achieved if the plant is replicated and or higher throughputs are achievable.
