One junior explorer - Central Petroleum - is months away from drilling a natural gas and helium prospect in the Northern Territory's remote Amadeus Basin where it holds about 200,000 square kilometres of exploration acreage,.

Central managing director John Heugh believes the Mt Kitty prospect in EP125 holds up to 180 billion cubic feet of helium in place and up to 100Bcf of recoverable helium.

He told PetroleumNews.net that Central plans to drill Mt Kitty in August and the prospect could help meet world requirements for about 8-10 years.

Helium occurs in association with natural gas, but it requires a much stronger seal than methane and even when found in gas reservoirs, it tends to be in proportions of less than 1%, much too small to support a helium extraction operation.

Best known for its use in balloons, this lighter-than-air gas is prized for being chemically unreactive.

It enhances safety in operations such as arc welding and nuclear power generation, and is also useful in cryogenics and various medical applications.

But as demand for helium grows, supplies of the gas diminish.

The world's primary source of the gas has been from the United States oil and gas industry's Federal Helium Reserve, but the stockpile is being sold off at a constant rate of 2.2Bcf per year.

Matherson Tri Gas director of helium product management and global logistics John Bigham recently said that if maintained, the current sell-off rate would deplete the Federal Reserve by 2015.

Available helium supply has not kept pace with demand due to the shortfall in the US Bureau of Land Management pipeline system, maintenance outages and delays associated with new production capacity, he said.

"Nearly two thirds of the world's helium supply is found within a 250-mile radius of Amarillo, Texas - the helium capital of the world," Bigham said.

"At a minimum, the current helium shortage is expected to continue into 2010."

Australia is poised to take advantage of this hungry market. BOC Limited, a subsidiary of the Linde Group, is building Australia's first helium plant, which is due to start production in late 2009.

The Darwin plant would produce up to 150 million cubic feet of helium per year using the vent stream from Darwin LNG as feedstock.

This facility, as well as helium plants that have recently come online in Qatar and Skikda, Algeria would help replace a portion of the world's requirements, but larger sources would be required to fulfil global demand, Bigham said.

Meanwhile, Heugh says he is optimistic that Central's exploration drilling will produce positive results.

Seismic acquired over the Mt Kitty prospect identified a significant structural trap prospective for helium, gas and condensate.

The data interpretation points to a 400sq.km structural trap at the Heavitree Sandstone level under the Gillen salt member, a play type that produced helium and wet gas in the nearby Magee-1 exploration well.

Magee-1 flowed wet gas to the surface from the Heavitree sandstone reservoir, with a helium content of 6.3%.

According to Heugh, this is a high figure compared to commercial helium wells in the US of around 1%.

"If the same percentage of helium applies throughout the basin as was examined by Magee-1, by the time we remove nitrogen and natural gas content, we would have a gas of about 80 percent helium," Heugh said.

"That makes our task of refining helium to the stage where it's ready to market much easier than other parts of the world."

Heugh said the Amadeus Basin's geology is almost directly analogous to that of southwest US, Poland and Russia where high concentrations of helium have been retained beneath an extensive salt blanket.

"That's a very important play type for us," he said. "The Gillen salt member [which overlies the Heavitree Sandstone] appears to be pervasive across the whole basin."

Heugh anticipates wherever there is a structural closure underneath the salt layer, there is a chance of discovering gas, condensate and helium.

If Central's exploration in the Amadeus and nearby Pedirka Basin is successful, the company plans to jointly develop the helium reserves in tandem with the gas reserves it develops in the basins, Heugh added.

"We have a memorandum of understanding with BOC, who are keen to work with us on exploiting any helium reserves we may prove," he said.

"Our long-term plan is to put into effect a major gas-to-liquids plant in Alice Springs. And after extracting the natural gas, we would concentrate on the helium."