Blue Star Helium Ltd (ASX:BNL, OTC:BSNLF) is trading higher after recovering helium from each of three exploratory water wells drilled at the Galactica/Pegasus prospects in Las Animas County, Colorado.
The company has observed helium concentrations up to 3.14% in larger than expected gas columns in the Lyons formation, sending shares as much as 27.6% higher to A$0.037.
Notably, these exploratory water wells were strategically planned to front-run helium exploration, appraisal and production drilling at the Galactica/Pegasus prospects.
Looking ahead, Blue Star is awaiting approval for four helium well drilling applications as immediate follow-ups to these discoveries and a further 29 helium wells are in the planning and permitting pipeline at Galactica/Pegasus prospects.
“Very successful”
Blue Star managing director and CEO Trent Spry said: “Our initial exploratory water well program at our Galactica/Pegasus prospects has been very successful with helium being discovered in each of the three wells drilled.
“The gas columns in each of the wells, including JXSN#3 which is located outside the Galactica P50 prospective resource contour, are larger than expected and show that the Lyons formation is helium bearing across a large part of the Galactica/Pegasus area where Blue Star has a dominant acreage coverage.
“Identifying helium bearing gas reservoirs with 3% helium is a high-concentration result.
“It is well within the range of helium grades we can expect within the vast Lyons helium play fairway in Las Animas, which spans some 4,000 square miles (2.6 million acres).
Blue Star’s Las Animas County lease holdings and key well locations.
Exploratory water well results
Blue Star has recovered helium from each of the JXSN#1, JXSN#2 and JXSN#3 exploratory water wells drilled in the Galactica/Pegasus prospects.
Samples most representative of the reservoir gas were selected for air-free calculation and normalisation yielding 1.98% helium at JXSN#1 (nitrogen 23.9%, CO2 74.13%) and 3.14% helium at JXSN#2 (nitrogen 22.76%, CO2 74.10%).
Initial flow rates exceeding 400 mcfd is a very strong result and consistent with data reported from the historic Model Dome field.
Spry adds: This concentration is also similar to many producing or historically producing US helium accumulations such as Ladder Creek, Concho Dome, Shirley Rother and the Keys field in Hugoton.
“Helium prices are at all-time highs with a number of commentators reporting helium spot sales at between US$2,000 and US$3,000 per mcf. Naturally, we are keen to sell helium into this market as soon as possible.
“We have submitted applications to drill four helium wells in the Galactica/Pegasus area, which were located to allow for prompt follow-up of potential water well discoveries.
“A further 29 helium wells at Galactica/Pegasus are in the planning and permitting pipeline.”
FEED study
Blue Star recently appointed consulting engineers SIGIT to prepare a plan of development including Front-End Engineering and Design (FEED) for an initial processing facility at the Voyager prospect.
SIGIT is now set to also prepare a FEED for a second processing facility at the Galactica/Pegasus/Serenity prospects.
The company has also engaged independent geological and engineering consultant Sproule to update the Galactica/Pegasus resource estimate.
Spry adds: “Our consulting engineers SIGIT are preparing a plan of development for our Las Animas prospects. Following these discoveries, they will now also commence an additional FEED study on a processing facility to be located in the Galactica/Pegasus/Serenity area.
“This is in addition to the FEED study we announced last week for a facility to be located on our Voyager prospect, which is similar to the Model Dome field that produced in the 1930s and lies 6 miles to the southeast.
“Helium bearing gas (~8% He) was discovered at the BBB#1 well during our first exploratory water well campaign last year, leading to the Voyager prospect being fast-tracked for development.
“Blue Star is advancing helium well permitting in parallel with the facilities engineering.”