FN Media Group Presents Oilprice.com Market Commentary
London – May 4, 2021 – It’s a global issue that could soon disrupt every industry from technology to medicine and much more. With the global supply of one commodity at its lowest level in years… while demand is spiking to all-time highs…It could send prices for this much-needed resource higher yet. Mentioned in today’s commentary includes: Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Microsoft Corporation (NASDAQ: MSFT), Teck Resources Limited (NYSE: TECK), Turquoise Hill Resources Ltd. (NYSE: TRQ).
Already, prices had been steadily climbing in recent years. But one small company, Avanti Energy (AVN.V; ARGYF), has seen its share price increase more than 2.5x over just the last few months.
Forbes is saying, “Helium is soaring on red-hot demand, shrinking supply.” CNBC points out, “The worldwide helium shortage affects everything from MRIs to rockets.” And the Wall Street Journal is saying, “The gas is crucial in high-tech and medical device manufacturing […] operations.”
With top media outlets now turning their attention to this supply squeeze, it’s clear that the world is facing a potential shortage. Big Tech companies like Amazon, Alphabet, Facebook, and many others all rely heavily on this valuable gas. That’s incredibly important when you’re keeping electronics from overheating.
- This is crucial for Big Tech’s data centers, as they run around the clock, crunching more data than ever.
- It’s essential for creating computer chips we rely on in every computer and smartphone we own.
- And the health sector requires them to cool the magnets inside MRI machines.
Helium even plays a critical role in space exploration, quantum computing, and nuclear power. In today’s high-tech era, it’s needed nearly everywhere you look.
That’s why it’s such a concern that supply levels are reducing to the lowest level we’ve seen in years. Those in the medical field even went as far as to ask balloon retailers to give up 10% of the helium supply recently to help address the shortage. If helium levels run out altogether, the effects could be very expensive.
Imagine the impact on fiber optic cables for high speed internet. On cell phones or computers. On MRIs. And even on airbags for our cars. That’s why this precious gas is now much more valuable than natural gas, at prices of $14.6/Mcf versus just $2.80/Mcf. And that’s great news for little-known helium exploration companies like Avanti (AVN.V; ARGYF).
The junior mining company has already seen shares soar over 2.5x in just three months. But with the looming deadline of the September 2021 event, Avanti Energy (AVN.V; ARGYF) seems to be on the right track.
World-Class Team Jumping On A Massive Opportunity
Avanti recently acquired the license for 6,000+ acres of land in Alberta, Canada that the experienced team says is highly prospective for helium. Around the world, most of the largest supplies of helium have had one thing in common. They were discovered in areas where there’s been drilling for natural gas. That’s a major reason why Avanti has targeted the site where the government of Alberta previously explored for oil and gas wells. But it’s also positioned in an area where there’s been multiple drill system tests with analyzed natural gas. And it’s got the potential to be high-grade gas as well.
When it comes to commercially viable grades of helium, experts consider anything from 0.3% to 1% helium to be high-grade. But on the Alberta property, historical drilling is reported to have showed up to 2.18% helium in some locations.
For prospective helium plays like these though, even when there’s great potential, many fall apart just due to poor leadership or lack of experience, in addition to other reasons. That’s why it’s essential to only back projects led by teams that have already proven they can deliver the goods. And that’s exactly what we think Avanti Energy (AVN.V; ARGYF) has on their side.
Team of Experts with a Proven Track Record
Their world-class management team was responsible for identifying and developing one of the largest oil and gas discoveries in all of North America. That’s where they helped discover natural gas in the Montney, which has been producing almost 300,000 boe/d over the past 15 years. And now, Genga Nadaraju, Dr. Jim Wood, and Ali Esmail have keyed in on the Alberta property because of the incredible potential they’ve seen there.
They’ve probably already developed a plan for identifying the structural traps and high points for drilling. But many are eagerly waiting to see how these world-class experts will do it.
They’ve already revealed that they’re pursuing an 80-20% targeted model approach. The 20% will follow standard industry conventional strategies. But the remaining 80%, which could be the key to helping unlock the opportunities at the Alberta property, is being kept strictly confidential.
It’s expected that they’ll plan to follow their own models, just as they did at the Montney. And they’re hoping they’ll see similar results with another world-class discovery in their new property, this time of a different kind of gas.
Expanding Quickly Throughout North America
With such a highly-respected team behind this project, it’s beginning to draw attention within the industry. That’s especially true after Avanti moved to grow their land package across the border into the United States earlier in April.
They’ve entered into an LOI to add another 12,000 acres of land in Montana to this already impressive land package in Alberta. And they’re supposedly eyeing another roughly 55,000 acres around the midwestern United States with potentially very large helium reserves.
Altogether, they’re said to have identified around 20 additional proprietary targets around Alberta, Saskatchewan, and Montana. And over the coming months, they’ve made clear that they are planning to aggressively start acquiring more land to build a long-term pipeline of opportunities and projects.
That’s massive news as the supply squeeze for helium has a lot of different industries seeking what Avanti is looking to be able to supply. And once the Helium Stewardship Act expires in September 2021, that’s only expected by some experts to push helium prices higher.
Avanti Energy (AVN.V; ARGYF) is in a good position to cash in if they achieve the discoveries they’re aiming for as they assemble a growing property portfolio that’s highly prospective for helium.
Now, with the success of this tech boom riding on companies like Avanti discovering and producing more helium in the coming months, the potential upside looks good to us.
So how does Big Tech use helium, anyway?
It’s used primarily for cooling in fiber optic manufacturing and semiconductor manufacturing. That means that companies with massive data centers like Google, Facebook and Microsoft are distinctly dependent on this rare gas.
Facebook (FB), as one of the world’s largest companies, has completely changed the game for energy use in the tech world. It has taken a particularly innovative approach in creating a more sustainable future and has become an example for the entire industry. Its data centers are some of the most efficient in the world.
Though Facebook may not have a ton of data centers compared to some of its tech peers, the facilities it does have are massive, and expanding every year. And that’s where helium comes in. The noble gas’ coolant ability is highly desirable for companies like Facebook. In fact, the heat transfer marketplace accounts for almost 10% of the world’s helium production.
Not to be outdone, Google (GOOGL) is rethinking how we approach energy use entirely. Despite being one of the largest companies on the planet, in many ways it has lived up to its original “Don’t Be Evil” slogan. Not only is Google powering its data centers with renewable energy, it is also on the cutting edge of innovation in the industry, investing in new technology and green solutions to build a more sustainable tomorrow.
Google had 21 data centers in 2020. These massive computer-filled warehouses fuel everything from web searches and advertising to its cloud services. And Google’s data centers are no joke. While they’re mostly environmentally friendly, they do have a hidden cost – water. And that’s exactly why helium use is on the rise.
Microsoft (MSFT) is also in the sustainability race, and in turn, will likely become an even bigger consumer of helium in the years to come. Not only has it always been on the cutting edge of innovation, it’s taking a serious stance on the climate crisis. In fact, it’s pushing so hard that it is aiming to be carbon NEGATIVE by 2030. That’s a huge pledge. And if anyone can do it, it’s Microsoft.
With over 160 data centers across the globe, Microsoft is becoming increasingly dependent on emerging tech, and the use of new coolants, including helium, to maintain its cloud services. And with its sustainable pledge front-and-center for the whole world to see, Microsoft needs this crucial gas more than ever.
Helium Isn’t The Only Resource Set To Blow Up This Year
Teck Resources Limited (TECK) is one of the world’s largest and most diverse resource and mineral companies. And it isn’t going to miss out on the global energy transition, either. While its primary mining and mineral development plays focus on steelmaking coal, copper and zinc, Teck also has a major stake in renewable projects with massive potential.
Explaining why investment in the new-energy industry, Teck states, “Flow batteries – such as the zinc-air battery developed by ZincNyx, with its flexible and low-cost scaling, long-term storage properties and the ability to separate the energy storage function from the power generation source – could provide a more efficient alternative for large-scale energy storage.”
Turquoise Hill Resources Ltd. (TRQ) is major player in Canada’s resource and mineral industry, and its bound to gain some major traction in the world’s push towards greener energy. Like Teck Resources, Turquoise Hill is a major producer of coal and zinc, two resources with distinctly different futures. While the end of coal is looming, zinc is a mineral that will likely grow exponentially in the future of energy for years and years to come.
But that’s not all Turqoise Hill has going for it in the energy transition. It’s also a major producer of Uranium. Uranium is a key material in the production of nuclear energy, which many analysts are suggesting could be a major component in the global transition to cleaner energy. While the mineral has not seen significant price action in recent years, there are a number of new projects set to come online across the globe in the medium-term, which could be a boon to Turquoise Hill.
By. Arakan Okada
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that prices for helium will significantly increase due to global demand and use in a wide array of industries and that helium will retain its value in future due to the demand increases and overall shortage of supply; that Avanti can pursue exploration of the recently acquired licenses of property in Alberta; that Avanti’s licenses in respect of the Alberta property can achieve drilling and mining success for helium; that Avanti will be able acquire the rights to helium on 12,000 acres of prospective land in Montana pursuant to its recently announced letter of intent; that the Avanti team will be able to develop and implement helium exploration models, including their own proprietary models, that may result in successful exploration and development efforts; that historical geological information and estimations will prove to be accurate or at least very indicative of helium; that high helium content targets exist in the Alberta and Montana projects; and that Avanti will be able to carry out its business plans, including timing for drilling and exploration. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that demand for helium is not as great as expected; that alternative commodities or compounds are used in applications which currently use helium, thus reducing the need for helium in the future; that the Company may not fulfill the requirements under its Alberta licenses for various reasons or otherwise cannot pursue exploration on the project as planned or at all; that the Company may not be able to acquire the helium rights to the Montana lands as contemplated in the letter of intent or at all; that the Avanti team may be unable to develop any helium exploration models, including proprietary models, which allow successful exploration efforts on any of the Company’s current or future projects; that Avanti may not be able to finance its intended drilling programs to explore for helium or may otherwise not raise sufficient funds to carry out its business plans; that geological interpretations and technological results based on current data may change with more detailed information, analysis or testing; and that despite promise, there may be no commercially viable helium or other resources on any of Avanti’s properties. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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