Helium is starting to LIFT OFF. Here’s why
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As clearly highlighted by Grand Gulf’s recent performance on the ASX following its confirmation that helium is present at its Jesse#1A well, the market is keeping a close an eye on helium plays – what few are actually listed at least.
There is very good reason for them to do so.
Helium is a critical – and often irreplaceable – component in modern technology applications such as cooling semiconductor magnets in MRIs, manufacturing semiconductor chips and in fibre optics and welding.
It is also incredibly rare on Earth despite being the second most abundant element in the universe.
Most helium produced to date has been the result of uranium and thorium decay in the Earth’s crust that was subsequently trapped in the same rock formations where hydrocarbons accumulate.
In fact, more than 95% of all production comes about as a by-product of natural gas production.
And that is a problem all in itself.
Not only is natural gas production declining in many parts of the world, Russia – a major supplier of inert gases such as neon and helium – has banned its export in the ongoing tit for tat that it has been exchanging with Western countries over its invasion of Ukraine.
These factors have come together to impact on helium supply, sending the price of the gas up to about US$600 per thousand cubic feet, more than 90 times higher than the current price of natural gas on the Henry Hub.
And that is decidedly conservative with indications that prices could climb even higher.
Which also means we are likely to pay a pretty penny for our floating party balloons or learn to without them.
So just how do we address this shortfall?
Several companies, including Blue Star Helium and Grand Gulf, believe the answer is to explore for gas resources with substantial helium content – enough to drive standalone helium developments.
Renergen, which is taking a slightly different tack by integrating natural gas into its operations, is also a fair bit further ahead with commissioning of its Phase 1 plant already underway.
Blue Star has been busy drilling both exploratory water wells and helium exploration wells across its acreage in Las Animas County, Colorado.
The former have provided invaluable data, proving the presence of helium in substantial gas columns at its Galactica/Pegasus and Voyager prospects – and more planned.
At Galactica/Pegasus, JXSN 3 returned a larger than expected 230ft gas column with a helium concentration of 2.14% while BBB#1 at Voyager intersected a 134ft gas column with helium concentrations of about 8.8%, which is comparable to that found in the nearby Model Dome helium field.
A workover rig is also on its way to its Enterprise 16-1 helium exploration well which it had previously failed to flow test due to water inflow into the well bore.
Other wells are also on the cards with a rig contracted to drill the maiden Sammons 315310C helium exploration well within the Serenity Area of Mutual Interest.
Meanwhile, Grand Gulf has picked up a fair bit of attention after well head sampling at its Jesse#1A exploration well returned helium concentrations of between 0.44% to 0.65% helium.
This compares very favourably with Doe Canyon, has about 0.4% helium content in the same target Mississippian Leadville dolomite formation.
Along with strong reservoir pressures, this raises the likelihood the company’s gross unrisked prospective resource estimate of 10.9 billion cubic feet of helium is on the money.
Unfortunately, water ingress and reservoir pressures being sub-hydrostatic made it difficult for the company to attempt flow testing at this stage, with work now underway to fix this issue when it re-enters the well next quarter.
A relative newcomer to the scene that listed in April, Noble Helium is still at an early stage of exploration for its suite of assets in the United Republic of Tanzania.
It recently executed a contract for 3D seismic to be shot over each lead in North Rukwa and fill critical data gaps from the legacy 1980’s 2D seismic data.
This will help ensure selection of the two most prospective structures for drilling.
South Africa-focused Renergen is a lot closer to producing helium than other of the other two ASX plays with the company noting late May that substantial progress has been made on commissioning the Phase 1 plant for its Virginia project in South Africa.
The company is taking a cautious tack in its road to production with its commissioning team electing not to put combustible gas through the system until it is ready for commercial operation – using nitrogen instead to complete the commissioning.
Phase 1 is expected to produce about 350kg (about 74,620 cubic feet) of helium per day.
The company previously flagged proved (1P) reserves of 7.2Bcf of helium.
At Stockhead we tell it like it is. While Blue Star and Grand Gulf are Stockhead advertisers, they did not sponsor this article.