Bruin Point Helium Corp. (TSX-V: BPX), Mr. Frank Jacobs, CEO is pleased to provide an overview of the helium industry as well as forecast targets made by industry analysts and experts. Our goal here is to offer a compilation of third-party information for shareholders and potential shareholders.
The price of helium has doubled over the past decade1 and experts predict demand for the gas will continue to grow. According to research firm, Technavio, the helium market is expected to see a compound growth rate of circa 9% for the next 3 three years2. And market dynamics signal further potential upswings in the price of the gas.
Helium quickly escapes the earth's atmosphere, meaning recovery is only viable from underground deposits. Often a by-product of natural gas extraction, economically viable helium concentrations may begin at 0.5%.
Helium's boiling and melting points are the lowest of any element, meaning it only exists as a gas on earth except in the most extreme cold conditions. This makes helium unique and increasingly important for cooling applications such as in nuclear reactors, semiconductors, lasers, light bulbs, superconductivity, instrumentation, and cryogenics.
Healthcare applications make up the largest share of helium consumption today, with MRI machines alone accounting for over 20% of total helium demand. MRI machines continue to become more commonplace in hospitals throughout the world, providing a clear opportunity for the commodity and a stable outlook for the helium market.
More recently, new applications have emerged that elevate helium market forecasts even higher. Innovative aerospace projects, such as Lockheed Martin's hybrid airships that offer a more efficient and effective way of transporting freight to and from remote areas, and Google's Project Loon, which aims to provide internet throughout the world though helium filled balloons, promise long-term potential in the market.
Helium is also increasingly being used in technology and electronics applications. Major firms, such as Western Digital and Netflix, are using helium to increase the speed and density of hard drives to provide faster access to data. The benefits of helium to electronic hard drives are immense – helium hard drives can reduce weight-to-data ratio by 30% and energy consumption by 23% and run four to five degrees cooler, vastly improving performance and product lifetime. According to Western Digital, whose subsidiary HGST released the first helium hard drive, the storage density results in a significantly lower cost per gigabyte and a lower total cost of ownership.
Transcending specific industries, the increasing use of helium in research and development for future technologies is also proving to be a strong driver of growth for the commodity. A 2016 report published by the American Physical Society, American Chemical Society, and Materials Research Society states that around 400 US researchers experiment at liquid-helium temperatures, while thousands of scientists use NMR spectrometers, superconducting quantum interference devices, and other instruments that require liquid helium3.
Conversely, poor reliability of supply and the volatility of helium prices is a hindrance to these research institutions. The growing need for reliable, affordable helium for R&D adds to Bruin Point's bullish stance on the element.
The United States remains the world's leading helium supplier with a 55% share of global supply in 2016, followed by Qatar with 32%, according to the USGS4. The recent closure of two helium plants in Qatar due to geopolitical tensions in the Middle East, alongside uncertainty created by the impending closure of the National Helium Reserve owned by the Bureau of Land Management (the largest supplier of the gas), due to congress ordering that the gas reserves are to be sold off to private companies. Commercial supplies of helium from the reserve will cease in 2021, according to the U.S. Department of the Interior's Bureau of Land Management; underline the fragility of helium supply and the need for more reliable sources. "Major concerns remain regarding the future of the domestic helium market," Energy and Mineral Resources Subcommittee Chairman, Paul Gosar, said. "We need to ensure our country will have access to such a necessary resource. Without a domestic source of helium, American industries will be forced to rely on foreign sourced helium."
Leading players in the helium market include RasGas of Qatar and their partner, Exxon, that has a number of operations worldwide. Gazprom and PGNiG represent the Russian and Polish markets respectively, while French firm Air Liquide, German firm Linde and LNG Japan join a host of North American firms to make up the global helium market. In the U.S., Texas has been the traditional source of domestic helium but Utah is poised for an increased share of the market.
"The helium business is a highly consolidated business, with only 10 companies—mostly industrial gas companies, having direct access to sources of helium—which keeps the market very competitive and extremely tight," said Ralf Gubler, director at IHS Markit5. "These companies control access to almost the entire global production of refined helium, and as a result, we've seen a great deal of recent consolidation and M&A activity in the market."
"The concentration of production among a handful of countries will continue to be the leading driver of uncertainty of helium supply and volatilit. New U.S. helium discoveries with roduction potential offer a reliable source of helium for to meet the rapidly growing demand, and the Company is e excited for what this future holds."
Additional details regarding Bruin Point's operations and timeline will be available in the coming months. For more information about Bruin Point, please visit http://www.bruinpoint.com/.
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