Grand Gulf unlocking greater helium prospectivity in Utah

Grand Gulf is expanding its helium exploration efforts at the Red Helium project in Utah with the identification of drill locations on three discrete independent additional prospects.

The Earp, Oakley and Kit prospects were defined using 315km of high-quality reprocessed 2D seismic and historical well control.

Importantly for Grand Gulf Energy (ASX:GGE), the confirmation of three additional discrete prospects de-risks the Red Helium project by providing independent targets outside of the currently targeted Jesse prospect.

The company has also identified four appraisal/development well locations at Jesse and is considering the drilling of a second well early in the third quarter to follow-up on the Jesse-1 well that will spud in the middle of this month.

It follows the Utah Division of Oil, Gas and Minerals approving the company’s application to drill the well – the first pure-play helium well to be drilled in the Red Helium project area.

New independent prospects

The Earp, Oakley and Kit prospects are considered to be separate from Jesse due to structure associated with well-defined and favourably-timed strike-slip faulting.

This faulting diversifies the company’s exploration portfolio while providing conduits for basement-derived helium and pathways for magnesium-rich geothermal brines.

Like the adjacent and analogous Doe Canyon field, these brines lead to hydrothermal dolomitisation and the potential for anomalously high porosities and permeabilities.

Six historical petroleum holes within the project area have proved trap, seal, reservoir presence, gas charge and a working helium system to differing degrees within each prospect.

Jesse prospect

The Jesse-1 well is the first pure-play helium well to be drilled in the Red Helium project area, which contains a gross unrisked prospective resource of 10.9 billion cubic feet of helium within a structural closure interpreted to be high to, and four to five times bigger than, the geologically analogous Doe Canyon helium field.

The primary reservoir target is the Mississippian Leadville dolomite formation, a prolific reservoir within the Paradox Basin, and a proven helium producing zone at Doe Canyon, which produces almost 20 million cubic feet of gas per day with about 0.5% helium content.

Helium is in high demand for its irreplaceable use in a growing number of high-tech applications from manufacturing MRI machines to nuclear medicine and space exploration.

However, supplies have become increasingly tight as it is typically produced as a by-product of natural gas production while supply from Russia’s Amur plant, which was being commissioned with potential capacity for up to 20% of global supply, has ceased until at least 2023 due to a fire/explosion.

While prospective resources have an associated risk of discovery and development, a commercial discovery could be a real game changer for the company as Paradox Resources’ Lisbon facility, which has an offtake agreement with Grand Gulf, currently sells the rare gas for US$605 per thousand cubic feet (mcf).

This might well increase further Edelgas Group chief executive officer Cliff Cain has said that US spot helium prices could climb up to US$3,000/mcf.

Retail prices of top grade helium have already hit a price of about US$9,600/mcf in the UK, which adds further to the company’s ambitions given that the Lisbon plant is capable of producing this product.

Grand Gulf is liable for the first US$1.5m of Jesse-1 costs – currently estimated at US$1.6m – to earn a 70% working interest in joint venture operator Valence Resources.

US listing imminent

In addition to its developments on the ground at Red Helium, Grand Gulf will soon list on the US-based OTCQB Venture Market, under the ticker GRGUF.

The company believes the location of its assets and its offtake agreement with Paradox means OTC trading will enhance its visibility and accessibility to North American shareholders and media partners.

OTC trading is non-dilutive to existing shareholders, with no new shares being issued to enable trading on the market. Grand Gulf will continue to trade on the ASX under the symbol ASX:GGE.

This article was developed in collaboration with Grand Gulf Energy, 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.