Colorado’s Tumbleweed Midstream announced it has forged a new 10-year helium sales agreement with a global tier one helium supplier. The new take-or-pay contract delivers a top-rated global customer for Tumbleweed’s Ladder Creek plant’s helium production capacity and provides the customer a steady supply of helium through December 31, 2030.
Natural gas wells associated with a new 15,000-acre dedication, scheduled to be drilled and connected to Tumbleweed’s Ladder Creek gathering system in Q1 2021, will bring more raw helium into the plant for processing.
The gathering and distribution infrastructure associated with the Ladder Creek system includes approximately 730 miles of pipeline, divided as follows:
190 miles of FERC-regulated interstate pipeline;
23 miles of residue gas pipeline;
15 miles of pipeline to carry fuel gas back to producers;
42 miles of NGL pipeline;
460 miles of gas gathering pipeline; and
10 compressor stations.
"We are extremely pleased to be able to announce a new long-term contract with one of the world’s top tier suppliers of helium to global markets," said Tumbleweed Midstream Founder and CEO Durell Johnson. "With much speculation in the helium market related to new supplies coming on from Russia and Qatar in 2021 and 2022, this new contract provides the stability we need to ensure our producers that their helium will be sold at fixed prices."
According to reports, a unique aspect of the agreement gives Tumbleweed the option to sell up to 10% of its helium production to third-party buyers who need to make non-scheduled purchases of helium on the open market. "This is significant because every molecule of available helium anywhere in the world is under contract," said Johnson. "We have reserved a portion of our annual production specifically to help suppliers who encounter a supply hiccup and suddenly need to buy helium to satisfy customer contracts. Because there is no established marketplace where you can buy helium, we want helium buyers to know they can fill a temporary supply interruption with a single phone call to Tumbleweed Midstream."