Up from p 19 Arizona has one significant advantage for wildcatters interested in making expensive bets to extract the element from state lands, private property or federally controlled public lands. The state has been branded as the “Saudi Arabia of helium,” riffing on the ease and volume of crude oil under the Middle Eastern desert nation. At least that’s what individuals looking to make money from extraction of yet another natural resource are banking on. What remains to be seen is how communi- ties and the environment across Arizona may fare during this extraction process. The Wild West Before the allure of the California Gold Rush drew 90,000 people to the Golden State, prospectors toted their pans, picks, and trowels to Arizona to unearth gold ore in Wickenburg and pan for flecks at Lake Pleasant. Arizona’s gold rush ended in 1849, and its last operational gold mine near Kingman boarded its mineshaft in 1998. But a modern-day gold rush could be burgeoning in Arizona if the helium wild- catters strike it big. This time, prospectors aren’t looking for shiny yellow nuggets. They’re seeking a gaseous kind of gold. “This is like the Wild West,” Kirk Jalbert, an acclaimed helium researcher and professor at Arizona State University told Phoenix New Times. “There are pros- pectors looking for helium.” It’s the second-most abundant element in the universe. But in an ironic twist, on Earth the colorless, odorless, non-flam- mable gas is not only rare — it is also dimin- ishing as more and more bleeds into the atmosphere every day, never to return. That’s what led a flock of speculators like Desert Mountain Energy Corp. to the Holbrook Basin in east-central Arizona, about 200 miles northeast of Phoenix and 90 miles east of Flagstaff. The Vancouver, British Columbia-based Desert Mountain Energy is a publicly- traded company that is “primarily focused on exploration, development, and produc- tion of helium,” according to CEO Robert Rohlfing, who lives in Surprise. “It’s the largest deposit of helium in the world that we know of,” Rohlfing told New Times. “The purest helium field ever found in the world.” The company is leasing more than 85,000 acres of helium prospects in Coconino, Navajo, and Apache counties, three of the four sprawling counties along Arizona’s border with Utah. As of December 2021, the company spent more than $6 million on exploration and land rights acquisition costs, according to Canadian Securities Administrators’ online document system. About 30,000 acres are privately owned. The rest is state land, which means the state is poised to earn royalties on the helium slipping out of the ground. For the state, leasing mineral rights to companies like Desert Mountain Energy is Desert Mountain Energy Corp. CEO Robert Rohlfing of Surprise (right) works with Vice President of Land Jessica Davies (left) and Vice President of Engineering James Hayes (center) at one of the company’s Arizona sites in the Holbrook Basin. “a fair amount of its revenue,” Jalbert said. Surface rights and mineral rights are no package deal in Arizona. Some landowners have bought properties without realizing the mineral rights were owned by others. That means hundreds of homeowners in the Valley could see an excavation rig spawn in their own front yard without recourse. That’s what happened in Flagstaff last year. The city of Flagstaff filed a temporary restraining order against Desert Mountain Energy to stop the further drilling of wells near Red Gap Ranch, a 23,500-acre prop- erty the city purchased in 2005. At the time, city officials assumed the mineral rights were included in the deed. They were wrong. The case is pending before the Arizona Court of Appeals. Surface rights and mineral rights are usually separate, just like in Texas and Louisiana. “It’s a potentially burgeoning problem that this industry is going to have to solve,” Jalbert said. But landowners leasing their mineral rights to companies like Desert Mountain Energy are cashing out with lease fees and 12.5-percent royalties on the price of crude helium — $119 per 1,000 cubic feet. Based on the company’s self-reported numbers, a private landowner could make at least $79,000 per year on a single helium well from royalties alone. Royalties collected by natural resource extraction in Arizona on state lands are later doled out to schools, state hospitals, and state prisons. Who Else is Cashing Out? Those looking for the biggest payday are Desert Mountain Energy’s investors, who have held out hope since the company went public in 2008. The price of helium has increased by 250 percent since then. But money is not guaranteed. Desert Mountain Energy “has not yet determined whether these properties contain deposits that are economically recoverable,” according to financial state- ments filed with the Canadian government. That’s the nature of the business. “Until you get the dirt off, you just can’t see it,” Rohlfing said. “You’re dealing with the smallest molecules in the universe.” The price per share of the company’s penny stock dropped by 50 percent since August 2021, its 52-week peak of roughly $4 per share. The pink sheet company hopes to tran- sition to trade on the NASDAQ, which is one of the two major American stock exchanges. By the end of last year, the company’s total assets was $26.7 million, which is considered the value of the business. The business has not turned a profit as it keeps spending cash to get operations going. During the fourth quarter of last year, which ended in December, the company was $827,000 in the red. That’s deeper in the hole compared to $634,000 Desert Mountain Energy Corp. Desert Mountain Energy Corp. net loss during the fourth quarter of 2020. Desert Mountain Energy is consistently losing money, but there’s plenty more to burn through. The company reported $20 million in cash and cash equivalents on hand as of December 2021. Even as oil and gas prices skyrocket across the U.S. with Arizona’s average price of $4.55 per gallon making it the seventh- most expensive state for gasoline and a high natural gas rate, helium remains 100 times more expensive than natural gas. “I don’t know yet what happens in the helium industry,” Jalbert, the researcher, said. “Maybe operators dig a bunch of holes and realize it’s not sustainable long- scale. Only time will tell.” Early fundraising effort documentation on file with the U.S. Securities and Exchange Commission shows that most of the early investors in the company lived abroad while others resided in America. All promised about the prowess of Arizona’s potential helium deposit. The global helium market was worth $10.6 billion in 2019 and is projected to grow to $15.73 billion by next year. Investors were told to expect returns in three years, SEC records show. Rohlfing, the CEO, isn’t earning a base salary from the company yet but his compensation is in stock. Environmental Woes Desert Mountain Energy announced it discovered a new helium field in Arizona earlier this month. That’s nothing new for Rohlfing, who has been looking for helium in Arizona as a geologist since before the dot-com era bubble burst. The executive transferred >>p 23 21 phoenixnewtimes.com | CONTENTS | FEEDBACK | OPINION | NEWS | FEATURE | NIGHT+DAY | CULTURE | FILM | CAFE | MUSIC | PHOENIX NEW TIMES MARCH 24TH– MARCH 30TH, 2022
