Blue Star Helium wins drill approval for five development wells

Blue Star Helium secures approval for the drilling of another five development wells at Galactica/Pegasus
Development drilling program to start in Q4 2024
Wells to form part of initial gas gathering system into the Galactica helium production facility

Special Report: Blue Star Helium is now clear to start development drilling this quarter at its Galactica/Pegasus helium project in Las Animas county, Colorado, after securing permits for five additional development wells.

The Colorado Energy and Carbon Management Commission (ECMC) awarded drilling permits for the proposed Jackson 27 SWSE, Jackson 31 SENW, Jackson 29 SWNW, Jackson 2 L4 and Jackson 4 L4 development wells.

These well locations are south and southeast of the 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, that has been suspended awaiting tie-in into production.

Including the new well locations, Blue Star Helium (ASX:BNL) now has an inventory of 15 development well locations.

It also has Form 2 approvals for the drilling for eight development wells – the aforementioned well locations along with the State 09, 35 and 36 wells.

State 16 and the upcoming development wells will form part of the initial gas gathering into the Galactica helium production facility which the company is developing with its farm-in partner Helium One Global.

Helium producer

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

It typically commands a price of between US$400 and US$500 per thousand cubic feet of gas (Mcf) for longer-term contracts and has seen spot pricing of up to US$3000/Mcf.

Things certainly aren’t helped by shortages of the gas caused by geopolitical forces, production faults, or planned maintenance shutdowns from major producers such as Russia, the US and Qatar.

Most of the helium used today is a byproduct of natural gas production – particularly LNG where helium is concentrated to a point where it can be extracted separately from the liquefied natural gas.

It is no surprise then that BNL is keen to drill its development wells and get them into production as quickly as possible.

That Helium One Global is paying US$1.5m and funding costs for six development wells to earn a 50% interest in the project certainly helps de-risk this push.

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.