Blue Star Helium flows gas from sixth well, begins transition to commercial helium production

• Blue Star Helium’s State 9 well marks best gas flow rates to date from the Galactica field
• Gas flow rates over 360,000cfd with helium and CO2 concentrations of 1.52% and 80.48%
• JV now advancing work streams to bring Galactica development wells into commercial production

Special Report: With the successful flow of gas from the State 9 well marking the successful completion of development drilling for 2025, Blue Star Helium is now transitioning to become a commercial helium producer.

During testing the State 9 well, which flowed gas naturally during drilling and at total depth, has seen gas flow rates increase to over 360,000 cubic feet per day (cfd) – the highest of the six development wells.

Strong pressure build-up post-testing indicates high permeability and good reservoir communication.

Based on a previous engineering study and the observed flow rate, Blue Star Helium (ASX:BNL) believes that State 9 can flow gas up to a maximum rate of 600,000cfd with stabilised rates of between 400,000cfd and 500,000cfd to optimise production.

Adding interest, initial laboratory analysis of gas samples from the well in the far eastern extent of the Galactica field has returned a helium concentration of 1.52%, carbon dioxide of 80.48% and nitrogen making up the rest of the gas.

“Blue Star Helium is delighted to announce another, in fact, the strongest producing well on the eastern flank of our Galactica project area,” managing director Trent Spry said.

“The insights gained into flow potential and reservoir gas composition in this region are crucial as we advance our development plans.

“This well, the sixth successful well this year for the company, marks the end of this initial drilling campaign.”

Spry added that with strong results observed across the program, BNL will now move to bring the Galactica wells online with the goal of producing helium in H2 2025.

Commercial production

The six well development program – a key component of the broader Galactica-Pegasus project development strategy, was carried out in joint venture with Helium One Global.

It delivered encouraging results, consistently encountering good helium concentrations in the target formation and demonstrating promising flow potential.

This is expected to deliver a broad resource base across the Galactica development area.

BNL and its partner will now seek to tie-in the development wells, which include the earlier State 16 appraisal well, into its planned Pinon Canyon helium and CO2 processing plant.

Work is currently underway to advance engineering design studies for the plant by integrating flow data and gas analysis from the recent drill program.

Final design of the plant will be determined once all the gas analysis and flow modelling has been completed.

Civil works will begin at the approved plant site once the final plant layout is determined. This will be followed by the mobilisation of plant equipment.

Tie-in of the production wells – including any necessary well-site gas compression – will occur alongside plant site civil works.

Once the plant is completed and wells tied in, the plant will be tested and commissioned.

Initial production is designed to provide early cash flow and invaluable operational data, which will be instrumental in optimising full-field development plans for both the Galactica development and the broader Galactica/Pegasus project.

A marketing and offtake strategy is being developed by the JV to establish operating partners across the entire helium supply chain, securing distribution partners for transportation, pursuing direct sales to end-users, targeting buyers who prioritise continuity and security of supply and aiming for long-term agreements.

Watch: Blue Star Helium shoots for more flow rate success at Galactica gas

Increased production

Following the successful commissioning and ramp-up of initial helium production, BNL will then focus on Phase 2, where the company will seek to increase helium production and monetise the CO2 content.

This will involve the drilling of additional production wells within the Galactica development area with the company having already identified an initial additional 6 to 10 infill and expansion drilling locations.

A further 20-30 potential drilling locations have been identified within the greater Galactica-Pegasus project area.

Adding interest, while all production wells have been completed within the Upper Lyons sandstone, further infill and expansion drilling will consider strategies for accelerating and optimising production from the Lower Lyons formation, in conjunction with the Upper Lyons formation.

The JV is currently evaluating the sequencing and prioritisation of future drilling to maximise efficiency, production scalability, and resource recovery.

Meanwhile, integrating additional CO2 purification and liquefaction at the Pinon Canyon to enable commercialisation of the project’s significant CO2 resources is expected to require just minor additional plant to enable the product to be produced into trailer transport.

High purity CO2 is used in the food and beverage sector.

Based on the performance of the Pinon Canyon plant and ongoing appraisal drilling success, the JV will also assess the potential for establishing a second processing facility at a new location to further develop the extensive resources within the Galactica/Pegasus Project area.

This article was developed in collaboration with Blue Star Helium, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.