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Though known for its rich mining history, gas exploration and production is an enterprise that lacks a regulatory framework in Minnesota.
Since Pulsar Helium’s historic helium discovery in February near Babbitt, the state has been scrambling to devise a regulatory framework to capitalize on potential gas production profits.
“We have an exciting opportunity in northern Minnesota. We have found a gas pocket of helium in Lake County along the North Shore,” said Sen. Grant Hauschild (DFL-Hermantown). “(The pocket) contains somewhere between 12 and 14 percent helium, which is some of the highest in the entire world.”
Pulsar Helium’s lab results showed the helium content of samples up to 13.8%, well above the 0.3% threshold for helium projects to be economically viable.
The DNR estimated Pulsar Helium could extract up to $1 million per day from the natural gas pocket.
“With no history of gas or oil production in the state, Minnesota lacks a framework that would support these emergent industries and properly conserve natural resources protect human health, and develop a fair royalty structure on our state lands with regards to gas,” said Hauschild.
Earlier this month Hauschild proposed bill HF5350, which would create a framework for extracting the helium so the state can receive royalties and taxes.
The bill proposes amendments to existing statutes and new laws that would protect the ongoing discovery drilling that is occurring along the north shore and set a minimum production royalty of 18.75% of gross sales prices.
Additionally, it would give the DNR power to require royalties for gas production that draws from state-managed lands and require Pulsar to get a permit from the DNR before extracting gas.
At the Senate hearing, there was some confusion about how helium is extracted, and why it was important to set up royalties and taxes for Pulsar with a drill pad less than an acre in size.
“Think of it as a straw in a bowl,” said Aaron Vande Linde, director of the Minnesota Office of School Trust Land. “They’re going to put a straw in, and they’re going to suck out all of the helium. The helium doesn’t care about our property boundaries.”
Though Pulsar’s operation is small, the helium in the underground gas pocket could extend miles underground under state land, tribal land and school trust land.
There is a fear in the House and Senate that Pulsar could extract the helium from private land at a commercial level, and the state would get no royalties.
“The rule of capture goes to the mineral discoverer. If Pulsar Helium does not have leases on tax-forfeited land, non-registered severed minerals, or school trust within a three-mile radius, they can extract all of that resource, and the state will get nothing,” said Linde.
Though the state is working to get this bill into law so it can see royalties and taxes from a potential helium extraction enterprise, there is no guarantee the endeavor for Pulsar Helium will be profitable enough to pursue.
Pulsar Helium still doesn’t know exactly how big the underground natural gas pocket is, and is currently doing a study to figure out how much helium there is.
Though the feasibility study could extend into 2025, Pulsar Helium CEO Tom Abraham-James said he and his company “welcome the introduction of the bill and look forward to continuing to work with the State and people of Minnesota on this exciting development.”
“Wednesday’s hearing was a critical next step in making sure that a regulatory framework is in place so that continued exploration and eventually extraction can take place here in Minnesota,” said State Rep. Roger Skraba (R-Ely).
“Thank you to organizations like Friends of the Boundary Waters and the Minnesota Center for Environmental Advocacy who have worked with us to make sure this legislation has broad support. While this year’s legislative session is winding down, I am working with DFL leadership in the House and Senate to make sure this bill has the necessary waivers so that it can continue its path and ideally be approved and signed into law by Governor Walz by the end of May.”
“The entire region will benefit from this helium discovery with new job opportunities for residents, additional tax revenue for our local communities, and a robust domestic supply of a critical element needed to produce several modern technologies. The future is bright for the Northland, and I look forward to continuing to work with local and state officials to make sure this gets done,” said Skraba.
