Helium is more than just fuel for advertising blimps during sports events or how birthday balloons can float up, up and away into the clear blue sky.
Without helium, astronaut Neil Armstrong would never have taken one giant leap for mankind after landing on the moon in the late 1960s. There would be no magnetic resonance imaging, better known as MRI scans, in the hospital for patients. Cryogenic research, the science that studies the production and effects of supercold temperatures, and even nuclear power wouldn’t be possible without the natural element.
In 1999, there were six companies that relied on helium production in metro Phoenix, it was a time when the Valley of the Sun was on the cusp of unprecedented growth as a haven for developing technology industries.
Now 23 years later, there are 47 such companies that tie their fate to the abundance of helium, dubbed as a "critical mineral" by the U.S. Geological Survey in 2018.
But unlike the seemingly endless stream of new building construction projects in Downtown Phoenix, helium supply has a foreseeable end as a nonrenewable element buried deep underground.
Arizona has one significant advantage for wildcatters interested in making expensive bets to extract the element from state lands, private property or federally controlled public lands.
The state has been branded as the “Saudi Arabia of helium,” riffing on the ease and volume of crude oil under the Middle Eastern desert nation.
At least that’s what individuals looking to make money from extraction of yet another natural resource are banking on. What remains to be seen is how communities and the environment across Arizona may fare during this extraction process.
The Wild West
Before the allure of the California Gold Rush drew 90,000 people to the Golden State, prospectors toted their pans, picks, and trowels to Arizona to unearth gold ore in Wickenburg and pan for flecks at Lake Pleasant.
Arizona’s gold rush ended in 1849 and its last operational gold mine near Kingman boarded its mineshaft in 1998.
But a modern-day gold rush could be burgeoning in Arizona if the helium wildcatters strike it big. This time, prospectors aren’t looking for shiny yellow nuggets. They’re seeking a gaseous kind of gold.
“This is like the wild west,” Kirk Jalbert, an acclaimed helium researcher and professor at Arizona State University told Phoenix New Times. “There are prospectors looking for helium.”
It’s the second-most abundant element in the universe. But in an ironic twist on Earth, the colorless, odorless, non-flammable gas is not only rare — it is also diminishing as more and more bleeds into the atmosphere every day, never to return.
That’s what led a flock of speculators like Desert Mountain Energy Corp. to the Holbrook Basin in East-Central Arizona, about 200 miles northeast of Phoenix and 90 miles east of Flagstaff.
“We haven’t hit peak oil. We definitely haven’t reached peak helium.”
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The Vancouver, British Columbia-based Desert Mountain Energy is a publicly-traded company that is “primarily focused on exploration, development, and production of helium,” according to CEO Robert Rohlfing, who lives in Surprise.
“It’s the largest deposit of helium in the world that we know of,” Rohlfing told New Times. “The purest helium field ever found in the world.”
The company is leasing more than 85,000 acres of helium prospects in Coconino, Navajo, and Apache Counties, three of the four sprawling counties along Arizona’s border with Utah.
As of December 2021, the company spent more than $6 million on exploration and land rights acquisition costs, according to Canadian Securities Administrators online document system.
About 30,000 acres are privately owned. The rest is state land, which means the state coffers are poised to earn royalties on zephyrs of helium slipping out of the ground.
For the state, leasing mineral rights to companies like Desert Mountain Energy is “a fair amount of its revenue,” Jalbert said.
Surface rights and mineral rights are no package deal in Arizona. Some landowners have bought properties without realizing the mineral rights were owned by others. That means hundreds of homeowners in the Valley could see an excavation rig spawn in their own front yard without recourse.
That’s what happened in Flagstaff last year.
The city of Flagstaff filed a temporary restraining order against Desert Mountain Energy to stop the further drilling of wells near Red Gap Ranch, a 23,500-acre property the city purchased in 2005.
At the time, city officials assumed the mineral rights were included in the deed. They were wrong.
The case is pending before the Arizona Court of Appeals.
Surface rights and mineral rights are usually separate, just like in Texas and Louisiana.
“It’s a potentially burgeoning problem that this industry is going to have to solve,” Jalbert said.
But landowners leasing their mineral rights to companies like Desert Mountain Energy are cashing out with lease fees and 12.5-percent royalties on the price of crude helium — $119 per thousand cubic feet.
Based on the company’s self-reported numbers, a private landowner could make at least $79,000 per year on a single helium well from royalties alone.
Royalties collected by natural resource extraction in Arizona on state lands are later doled out to schools, state hospitals, and state prisons.
Who Else is Cashing Out?
Those looking for the biggest payday are Desert Mountain Energy’s investors, who have held out hope since the company went public in 2008. The price of helium has increased by 250 percent since then.
But money is not guaranteed.
Desert Mountain Energy “has not yet determined whether these properties contain deposits that are economically recoverable,” according to financial statements filed with the Canadian government.
That’s the nature of the business.
“Until you get the dirt off, you just can't see it,” Rohlfing said. “You’re dealing with the smallest molecules in the universe.”
The price per share of the company's penny stock dropped by 50 percent since August 2021, its 52-week peak of roughly $4 per share.
The pink sheet company hopes to transition to trade on the NASDAQ, which is one of the two major American stock exchanges.
By the end of last year, the company's total assets was $26.7 million U.S. dollars, which is considered the value of the business.
The business has not turned a profit as it keeps spending cash to get operations going. During fourth quarter last year which ended in December, the company was $827,000 in the red. That's deeper in the hole compared to $634,000 net loss during fourth quarter 2020.
Desert Mountain Energy is consistently losing money, but there’s plenty more to burn through. The company reported $20 million in cash and cash equivalents on hand as of December 2021.
Even as oil and gas prices skyrocket across the U.S. with Arizona’s average price of $4.55 per gallon making it the seventh-most expensive state for gasoline and a high natural gas rate, helium remains 100 times more expensive than natural gas.
“I don’t know yet what happens in the helium industry,” Jalbert, the researcher said. “Maybe operators dig a bunch of holes and realize it's not sustainable long-scale. Only time will tell.”
Early fundraising effort documentation on file with the U.S. Securities and Exchange Commission shows that most of the early investors in the company lived abroad while others resided in America. All promised about the prowess of Arizona's potential helium deposit.
The global helium market was worth $10.6 billion in 2019 and is projected to grow to $15.73 billion by next year.
Investors were told to expect returns in three years, U.S. Securities and Exchange Commission records show. Rohlfing, the CEO, isn’t earning a base salary from the company yet but his compensation is in stock.
Environmental Woes
Desert Mountain Energy announced it discovered a new helium field in Arizona earlier this month. That’s nothing new for Rohlfing, who has been looking for helium in Arizona as a geologist since before the dot-com era bubble burst.
The executive transferred Desert Mountain Energy’s interest in his native Oklahoma to another company to focus all his attention on Arizona.
After all, helium concentrations in the Holbrook Basin are as high as 10 percent. It only takes 0.6 percent for an operation to be profitable.
One well, which can cost up to $1 million, churns up more than 24 million cubic feet of gas, mostly nitrogen, per day.
In it is contained 720,000 cubic feet of carbon dioxide.
If every single car in metro Phoenix drove three miles, less than 720,000 cubic feet of carbon dioxide would be produced.
Instead of flaring the CO2 into the air, an environmentally polluting safety procedure to burn off excess hydrocarbons for hydrogen and natural gas wells, prospectors trap and sell the gas to be made into dry ice.
As Jalbert puts it, “Even carbon dioxide has value.”
Traditional helium extraction is a filthy process that researchers have described as “dirtier than coal.”
Desert Mountain Energy’s proprietary drilling method uses air and water to produce “green helium,” the company claims. But Arizona’s dwindling water supply threatens even such a method during drought. The state lost 8 percent of its total water supply in January.
“I get painted with a broad brush as some kind of a jerk,” Rohlfing admitted. “But I've worked hard to do things responsibly.”
In 2019, a lawsuit was filed by the Center for Biological Diversity which halted Desert Mountain Energy’s plan to drill for helium after the company leased 3,000 acres of land near Arizona’s picturesque Petrified Forest National Park.
Since 2004, Congress has added more than 50,000 acres to the national park. That was before anyone knew the treasure trove of helium hidden underneath the painted desert sand.
“People should be rightfully skeptical and concerned,” Jalbert said.
Conservationists foresee a helium boom in Arizona, too. Environmental advocates view helium extraction through the lens of natural gas and oil fracking. As such, they are trying to stop it and instead push for responsible climate change policies and renewable energy.
But the situation is more nuanced than that, one scientist argued.
“Helium is so much more complicated,” Jalbert said. “To construct an argument against helium is to create an argument against cell phones and MRIs.”
Sandy Bahr, who heads up the Sierra Club's Grand Canyon Chapter, is skeptical of Desert Mountain Energy's methods.
Resource depletion and drilling of any kind are concerns for the Sierra Club, an Oakland, California-based nonprofit that focuses on environmental justice.
"There is a lot of greenwashing going on right now," Bahr said. "I am concerned that this could be more of that."
Where Does the Helium Go?
Whether or not the helium extracted from the Holbrook Basin stays in Arizona depends on who you ask.
Desert Mountain Energy only employs five Arizona residents, according to the company. Dozens more workers are subcontracted from out of state.
“There are not people in this state that do that kind of work,” Rohlfing said.
That’s because historically, the national helium industry was corralled into a small region of mid-America that included parts of the Texas and Oklahoma Panhandles and Southwest Kansas.
Over most of the past century, the federal government has maintained unilateral control over America’s helium. The Federal Helium Reserve near Amarillo, Texas, was long home to 40 percent of the nation’s helium reserve.
Helium from Arizona has almost always gone to this strategic site or to buyers authorized by the federal government, like the military, Jalbert said.
That’s about to change.
Congress passed the Helium Privatization Act in 1996 amid a surplus of the lighter-than-air element. The new law mandated the Federal Helium Reserve to close by September 30 this year.
The federal government is a customer of Desert Mountain Energy and buys some of the helium it produces. The rest is floated to consumers in Arizona.
“My goal is to keep it all right here,” Rohlfing said. “I want to help the industry here in Arizona.”
The Bureau of Land Management has just six more months to dispose of its leftover assets and shut down the Federal Helium Reserve. That could allow for Rohlfing’s vision of more helium remaining in Arizona.
But the surplus that led to that shutdown is far in the rearview.
In early 2018, the global helium market entered Helium Crisis 3.0, which stemmed from disruption in the Middle East. However, as demand dipped during the coronavirus pandemic, the industry saw a light at the end of the tunnel.
Then, the military attacks by Russia against Ukraine happened.
“Now we’re in a new helium crisis already,” Jalbert said.
The nascent war in Eastern Europe led to sanctions on Russia that have acutely affected the global and domestic helium markets. The U.S. buys 20 percent of its helium from its former Cold War foe.
The world has entered Helium Crisis 4.0, some industry experts say.
What’s Next?
While scientists have proven the existence of more than a century’s worth of helium, Earth’s helium supply could run out in as few as 25 years.
But if there’s a sudden incentive to go look for it, people might find a lot more, industry analysts say.
“The question is willingness to drill, dollars, and cents,” Rohlfing said. “We haven’t hit peak oil. We definitely haven’t reached peak helium.”
The future of the element is nebulous. For now, 10 percent of it fills party balloons and almost half is used to cool MRI machines to conduct vital, sometimes life-saving screenings.
There is an implied danger when the U.S. ties itself to industries that rely on incredibly finite natural resources, Jalbert said.
“This is why we’re talking about mining asteroids and mining the ocean bed,” he said. “Eventually, we’re just not going to find any more.”
Desert Mountain Energy and Rohlfing, who just turned 66 years old, are far from throwing in the towel.
They’re preparing for a second gold rush in Arizona.
“Everything we’re building is for the long term,” Rohlfing said. “I didn't work on this for so long to watch it gone tomorrow.”
