Helium Purification & Marketing; IACX Otis Facility Case Study
IACX Energy operates a gas gathering and processing system in central Kansas (its ‘Otis’ system), which gathers gas from Barton, Rush, Ellsworth and Rice counties. The gas, which is, on average, 25% N2, 1.25% helium, is aggregated to a facility near Otis, KS, where nitrogen is removed, NGLs are extracted, and helium is purified before the residual methane is delivered to an intrastate pipeline system for sale. Before IACX took over operation of the gathering pipelines in 2008 and started up its Otis facility, gas from this system was shut in (the gas had previously been consumed as fuel in the Bushton gas processing complex; but that particular use for the gas evaporated in 2006). Once IACX's facility became operational, IACX not only began providing a market for the nitrogen-laden natural gas, it also began serving as a market for the helium contained in the gas. Between then and now, the price received by producers for the helium contained in their gas has steadily increased, significantly adding to the netback value of the gas. In some instances (depending on the specific helium concentration and wellhead volume), producers are realizing helium prices well in excess of $100/Mcf (1.25% helium at the wellhead and $100/Mcf translates to $1.25/Mcf of producers' realized value from helium alone). Helium prices, by and large, move independently of prices for hydrocarbons, and have served as a veritable hedge against natural gas and NGL prices in recent years.
AAPG Datapages/Search and Discovery Article #90221 © 2015 Mid-Continent Section, Tulsa, Oklahoma, October 4-6, 2015