The Big Sky Carbon Hub project is an integrated industrial gas and carbon management facility being developed by U.S. Energy Corp. at the Kevin Dome structure in Toole County, Montana, targeting commercial operations in Q1 2027. In a significant commercial milestone not included in the original announcement, U.S. Energy executed a five-year, 100% take-or-pay helium sales agreement on April 27, 2026, with an investment-grade global industrial gas company. The contract is structured at a fixed plant-gate price of US$285 per thousand cubic feet, with CPI-linked escalation commencing March 1, 2028, and a year-three pricing redetermination clause, providing the project with contracted revenue certainty from first operations.
Capital Stack Closed and Construction Moving Toward Summer Commissioning
With the offtake secured, U.S. Energy completed its Phase 1 capital stack in April 2026 by amending its senior secured credit agreement, doubling the borrowing base to US$20 million at a fixed margin of 200 basis points over the alternate base rate, and suspending quarterly financial covenant testing through March 31, 2027. The facility matures May 2029 with no prepayment penalties, and the company suspended its equity line of credit concurrently, removing any perceived dilution overhang. As of April 30, 2026, USEG held US$10.4 million in cash with total liquidity of approximately US$27.9 million. On the construction front, gathering infrastructure installation is now scheduled for summer 2026, with facility commissioning targeted for late 2026 ahead of first gas in Q1 2027. Both Monitoring, Reporting and Verification applications covering the Big Rose and Cut Bank sites are in active EPA review, with approvals expected during summer 2026 to unlock the Section 45Q tax credit framework. Montana’s broader industrial build-out provides additional context: the state is simultaneously hosting the US$800 million Janicki Industries aerospace manufacturing campus announced for Great Falls in June 2026, reflecting the depth of Montana’s current investment momentum.
Project Overview
- Project Name: Big Sky Carbon Hub Phase 1 Processing Facility
- Location: Kevin Dome, Toole County, north-central Montana, USA
- Developer/Owner: U.S. Energy Corp. (NASDAQ: USEG)
- Total Cost/Value: Not disclosed; Phase 1 capital stack fully funded as of April 2026; total available liquidity approximately US$27.9 million as of April 30, 2026
- Scale/Capacity: 8.0 MMcf/d inlet capacity; approximately 14 MMcf annual helium production; approximately 125,000 metric tons refined CO2 per year at initial operations; 80,000 net acres at Kevin Dome; resource base of approximately 1.3 Bcf helium and 444 Bcf CO2
- Construction Start: Capital spending commenced March 18, 2026; gathering infrastructure installation scheduled summer 2026
- Expected Completion: Facility commissioning targeted late 2026; commercial operations Q1 2027
- Funding/Financing: Phase 1 capital stack completed; senior secured credit facility (borrowing base US$20 million, matures May 2029); underwritten equity offering completed Q1 2026; equity line of credit suspended April 2026; approximately US$130 million in Section 45Q tax credit value expected over first 12 years (pending EPA MRV approvals)
- Current Status: Under construction; gathering pipeline installation scheduled summer 2026; EPA MRV approvals expected summer 2026; five-year helium offtake agreement executed April 27, 2026
- Key Milestone: Five-year 100% take-or-pay helium offtake agreement signed at US$285 per Mcf fixed plant-gate price (April 27, 2026); Phase 1 capital stack closed and equity line of credit suspended (April 20, 2026)
Project Team
- U.S. Energy Corp. (NASDAQ: USEG) — Developer, Owner and Operator
- Ryan Smith — President and Chief Executive Officer, U.S. Energy Corp.
- CANUSA EPC — Fixed-Scope Engineering, Procurement and Construction Contractor
- Investment-Grade Global Industrial Gas Company (unnamed) — Helium Offtake Counterparty (five-year 100% take-or-pay agreement, executed April 27, 2026)
- U.S. Environmental Protection Agency — Federal Regulator (MRV and Class VI injection well permitting; approvals expected summer 2026)
- Montana Department of Environmental Quality — State Environmental and Permitting Authority
- Montana State Historic Preservation Office — Cultural and Land Use Compliance
- Toole County Government — Local Planning and Host Authority
- Montana Facility Finance Authority — Public Infrastructure and Development Finance Support
- Big Sky Carbon Sequestration Partnership — Regional Carbon Storage Research Consortium
- Idaho National Laboratory — Federal Research Laboratory Partner
- Lawrence Berkeley National Laboratory — Carbon Storage Modelling and Monitoring Partner
- Lamont-Doherty Earth Observatory — Geological and Seismic Research Partner
- Los Alamos National Laboratory — Subsurface Science and Carbon Storage Research
- SLB (Schlumberger) — Carbon Storage Technical and Engineering Support
- Vecta Oil and Gas — Regional Industry and Field Data Partner
- Toole County Landowners and Community Representatives — Land Access and Surface Rights Partners
Reported 18th March 2026: Texas-based oil & natural gas company U.S. Energy Corp. has reached a Final Investment Decision (FID) to proceed with construction of its Big Sky Carbon Hub processing facility in Montana. Reaching FID for Big Sky Carbon Hub is a major milestone for U.S. Energy in industrial gas production, carbon management, and enhanced oil recovery in the Rocky Mountain region. The company also announced that it has started capital spending, executed a fixed-scope EPC (Engineering, Procurement, and Construction) agreement with CANUSA EPC, and is now advancing toward commercial operations targeted for the first quarter of 2027.
How Big Sky Carbon Hub Operates
Positioned at the heart of the Kevin Dome structure in north-central Montana, Big Sky Carbon Hub is an integrated industrial gas and carbon management initiative. It is designed to produce high-purity helium, capture and refine CO2 for sequestration and enhanced oil recovery (EOR).
The processing facility is designed for approximately 8.0 MMcf/d of inlet capacity, with initial annual outputs estimated at about 12 million cubic feet of high-purity helium and 125,000 metric tons of refined CO2. U.S. Energy expects these outputs to drive early revenue from helium sales, carbon management credits, and CO2-enhanced oil recovery on nearby acreage.
The company has also assembled about 80,000 net acres of operated leases at Kevin Dome. This is backed by independently evaluated resources of around 1.3 billion cubic feet (Bcf) of helium and 444 Bcf of CO2, supporting a multi-decade development horizon with minimal drilling risk in the initial phase.
Federal Tax Incentives
The project also unlocked federal tax incentives under the U.S. Section 45Q carbon credit regime. Federal incentives under Section 45Q which provide tax credits for carbon captured and sequestered are expected to contribute an estimated $130 million of value in Phase 1 economics. This is also a great tell of the project’s financial case.
Key Stakeholders Behind Big Sky Carbon Hub Processing Facility
- U.S. Energy Corp. – Developer, Owner & Operator
- CANUSA EPC – Engineering, Procurement & Construction Contractor
Research & Geological Characterization Partners
- Big Sky Carbon Sequestration Partnership – Regional Carbon Storage Research Consortium
- Idaho National Laboratory – Federal Research Laboratory Partner
- Lawrence Berkeley National Laboratory – Carbon Storage Modeling & Monitoring Partner
- Lamont-Doherty Earth Observatory – Geological & Seismic Research Partner
- Los Alamos National Laboratory – Subsurface Science & Carbon Storage Research
- Schlumberger – Carbon Storage Technical & Engineering Support
- Vecta Oil & Gas – Regional Industry & Field Data Partner
Regulators & Permitting Authorities
- U.S. Environmental Protection Agency – Federal Environmental Regulator (MRV & Injection Permits)
- Montana Department of Environmental Quality – State Environmental & Permitting Authority
- Montana State Historic Preservation Office – Cultural & Land Use Compliance
- Toole County Government – Local Planning & Host Authority
Finance & Regional Development Bodies
- Montana Facility Finance Authority – Public Infrastructure & Development Finance Support
Local Stakeholders
- Toole County Landowners & Community Representatives – Land Access & Surface Rights Partners
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