On Wednesday, the Alberta government announced it is setting a new helium royalty rate. The Kenney government says the change, retroactive to April 1, will provide investor certainty to help develop an untapped resource that could help diversify the province’s economy.
Canada has the fifth largest helium reserves in the world but currently Saskatchewan is the only commercial helium producer in the country.
Demand for helium is ballooning due to its use in medical imaging, electronics and space exploration.
“Removing this barrier unlocks the potential to develop helium deposits in southeastern Alberta and sets us up to take advantage of the close proximity to the United States, the world’s largest helium consumer,” said Sonya Savage, Minister of Energy.
She added “Economic diversification is an essential part of the province’s recovery efforts and sets a course towards future prosperity.”
The Kenney government is setting the new rate at 4.25 per cent. According to a press release issued by the Alberta government, several companies have expressed interest in investing in Alberta’s helium industry, “but the lack of a royalty rate has been a disincentive”.
This royalty rate will initially be in effect for five years. The government says that it will review the rate at the end of five years to “ensure it remains competitive and allows for any necessary adjustments”.
According to the Kenney government, the helium royalty rate is being established through amendments to two regulations: Natural Gas Royalty Regulation, 2009; and Natural Gas Royalty Regulation, 2017.