Special Report: A helium supply crunch is coming. As part of plans to tap this lucrative market, first-mover Big Star Energy is rapidly homing in on exciting prospects in an established US helium province.

Last week, Big Star Energy (ASX: BNL) announced the acquisition of its first helium lease in in the Mountain States region of the US at a prospect called Enterprise.

There’s potential for multiple helium reservoirs at Enterprise, which is about 15 miles from and on trend from previous shallow, high-grade production.

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Big Star managing director Joanne Kendrick says onshore US has a long history of high concentration helium production – usually a by-product of gas production — going back to the 1920s and a well-developed supply chain and market.

“A helium discovery in the Mountain States region could potentially be brought onto production within six months using modular, off-the-shelf technology,” she says.

But Enterprise is just the start. Recently completed technical work on 30 helium prospects and leads has confirmed a large, active helium system beyond previously drilled wells in the region, Kendrick says.

In this well-known helium province, previous wells have tapped subsurface helium accumulations with concentrations above 5 per cent.

Those are solid grades, considering helium becomes economically viable to extract from natural gas at concentrations as low as 0.1 per cent.

Big Star’s recently completed soil gas sampling program returned helium anomalies at concentrations around 50 per cent greater than atmospheric levels over seven of its prospects and leads

These anomalies prove that this active helium system extends considerably beyond the wells that were previously drilled.

Detailed results from the 188 soil gas samples collected from across the focus area are expected in September.

Big Star also engaged a specialist geophysical group to produce a basement depth ‘map’ to home in on potential helium traps.

The work identified volcanic intrusions and deep-seated bodies — most likely magma chambers — that have fed the volcanic intrusives.

These help Big Star identify helium reservoirs, because it is believed that these chambers provide the mechanisms for significant release of helium from the basement.

Big Star will use these results to further its ongoing program to lease prospects and leads identified, ahead of a three-to-five well drilling program in the first quarter next year.

Helium is ‘irreplaceable’

Helium is used in space exploration, rocketry, high level science, in the medical industry for MRI machines, fibre optics, electronics, telecommunications, superconductivity, underwater breathing, welding, and nuclear power stations.

For many of these applications, helium is irreplaceable, which could see it subject to steady, price inelastic demand growth.

Price inelastic means that buyers will keep buying even as prices rise.

This is already happening; in September last year, the BLM annual helium auction fetched an average price of $US280/mcf ($416/mcf) — up 135 per cent from the previous year.

That’s a hefty spike:

Supplied.

But now desperate end users are already paying up to $US1,000/mcf, Big Star’s Kendrick says.

“The commodity has seen three supply shocks in the last decade resulting in helium’s end users being rationed as demand outstrips supply,” Kendrick says.

“The helium price is now 100 times greater than the hydrocarbon gas price in the USA.”

 

 

 

This story was developed in collaboration with Big Star Energy, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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