Blue Star Helium secures approval for another five development well locations

Blue Star Helium ties up another five helium development well locations at Galactica/Pegasus
Approval from the ECMC allows company to submit final drilling permit applications
New well locations are expected to form part of the initial gas gathering into the planned Galactica helium production facility

Special Report: Blue Star Helium continues to build up its portfolio of prospective helium development well locations at the Galactica/Pegasus project after approval was received for five new locations.

The Colorado Energy and Carbon Management Commission (ECMC) has approved the Oil and Gas Development Plan (OGDP) relating to the proposed Jackson 27 SWSE, Jackson 31 SENW, Jackson 29 SWNW, Jackson 2 L4 and Jackson 4 L4 development well locations.

These are located to the south and southwest of Blue Star Helium’s (ASX:BNL) successful State 16 well, which was found to be capable of stabilised production of 250,000-350,000 standard cubic feet of gas per day (Mscf/d) and tested 1.9% helium, and towards the proposed Galactica plant site.

Along with State 16, these wells are expected to form part of the initial gas gathering into the Galactica helium production facility being developed in conjunction with farm-in partner Helium One Global.

The approval from the ECMC allows the company to submit final drilling permit applications for these well locations.

Helium is a rare gas valued for its irreplaceable use in semiconductor manufacturing, nuclear energy production, solar panels, optic fibre and the cooling of superconducting magnets in MRI scanning machines.

This rarity and value is clearly highlighted by spot prices that range from US$450-$3000 per Mcf and between US$400 and US$500/Mcf for longer-term contracts.

Helium development well locations. Pic: Blue Star Helium

Road to helium production

The approval for the five well locations is another key step in BNL’s progress towards becoming a helium producer.

Besides the successful State 16 well, which is production-ready, the company had previously made four discoveries across two prospects with gas-bearing columns of up to 230 feet and helium content up to 6%.

Flow rates of up to 412,000Mscf/d were also recorded at these wells.

BNL currently has an inventory of 10 development well locations approved at Galactica/Pegasus with drilling approvals in place for the State 09, 35 and 36 helium wells.

Drilling of development wells is expected to start in Q4 2024.

Helium One Global is paying US$1.5m and funding costs for six development wells to earn a 50% interest in the project.

Further de-risking Galactica is the adjacent third-party Red Rocks project that produces raw gas into an IACX-operated helium recovery plant and sells helium gas into the market.

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.