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‘Unity’ Of New Helium Developers Association To Open ‘A Lot Of Doors’

Calgary, October 23, 2023 – Via Daily Oil Bulletin

Balanced tax treatment is one of the areas a new association dedicated to helium developers is pursuing through regulatory advocacy.

The Helium Developers Association of Canada (HeDAC) was established earlier this autumn, with former long-time Encana Corporation executive Richard Dunn tapped as executive director.

Currently with five members, the group represents companies that explore, develop and produce helium in Western Canada.

Government and regulators are “a lot more receptive when it’s an industry group than an individual company coming forward, so there is not an individual company gaining an advantage or anything like that,” Chris Bakker, CEO of Avanti Helium Corp., told the DOB.

Avanti is a member company of HeDAC, and Bakker serves as a HeDAC co-chair. He worked for Encana previously, as well. 

“This is an industry approach,” he said of the new association. “That sort of unity opens a lot of doors and things are well received on the government front.”

Fellow co-chair Ed Bereznicki agreed. He’s president and CEO of First Helium Inc., another member company. His career expertise includes gas pipelines and capital markets.

“It started with realizing we had some common goals as it related both provincially and federally with respect to regulatory and fiscal (matters),” he said. “We have been doing a tremendous amount of work … furthering the group’s causes, if you will, and interests.”

One of those causes relates to taxation.

“Spending on helium exploration and development sourced from the Western Canadian Sedimentary Basin (WCSB) does not receive equal treatment of tax measures provided other Canadian mineral developers, namely the Canadian Exploration Expense (CEE) or the Canadian Development Expense (CDE),” HeDAC wrote in a submission to the federal government for pre-budget consultations in advance of the 2024 federal budget.

This is related to a clause in the Income Tax Act that the groups says inadvertently precludes minerals sourced from sedimentary deposits in Canada (including the WCSB) from receiving CEE and CDE deduction treatment.

“Of the 31 critical minerals in Canada, only one, helium, doesn’t receive this standard tax treatment,” Dunn told the DOB.

“It is a problem. It affects project economics, it affects the certainty in terms of handling of tax deductions….”

It also restricts the ability for junior explorers to access at-risk financing, he added.

On this, Bakker added: “We are kind of competing for the same dollars for exploration, in some senses … and we don’t feel the playing field is level at this point. We are trying to raise awareness of that at the federal level.”

At the provincial level, Saskatchewan has had a “head start” on helium, noted Bakker. Until recently, it has not received the same sort of focus in Alberta, leading to some things that need to be caught up on.

“We are primarily working in the southern, southeastern part of Alberta,” he added. “There has not been a lot of oil and gas activity and there has been some, I’d say, challenges on surface land access down there that we are working through.

“It is just more reflective of the fact that we are an early-stage deep exploration game, and what typically has happened in southeast Alberta was a shallow gas, fairly rapid cycle history down there. The regulation side in place down there does not necessarily fit our business today.”

With that said, Bakker called the Alberta government receptive and very good to work with. He pointed to positives in the mandate letter to Alberta’s Energy and Minerals Minister Brian Jean.

One of the tasks detailed in the letter was: Developing and improving regulatory regimes to incentivize investment in hydrogen, ammonia, helium, lithium, liquefied natural gas, small modular reactor, geothermal and mineral development in the province.

“We really appreciate the engagement there,” said Bakker.

Canada’s helium resources are estimated to be the fifth largest in the world, according to the Saskatchewan government.

Helium is commonly used in MRIs and electronics.

Bereznicki said helium will potentially play a big role in the energy transition, citing its use as a cooling mechanism for small modular reactors.

“The other avenue being tested is a replacement gas within heat pumps, which are becoming very topical in Canada,” he added. 

Dunn supported this point.

“It fits with government priorities in growing a diversified, green economy,” he said.

“A lot of people think nuclear is going to be one of the key methods of lowering the carbon footprint on the electricity system. The latest generation small modular reactor going in at Chalk River in Ontario is designed around helium cooling. (There’s) a lower carbon opportunity there.”

Other member companies include Global Helium Corp.Royal Helium Ltd. and Thor Helium.

Read the original article here.

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