Blue Star secures key approval for helium exploration well

Blue Star is another step closer towards drilling its inaugural helium exploration well in Colorado with the receipt of a key approval.

The Colorado Oil and Gas Conservation Commission (COGCC), which acts to regulate development and production of oil and gas in the US state in a way that protects public health, safety, welfare, the environment and wildlife resources, approved the development plan for the Enterprise 16#1 well following an uncontested hearing.

This follows on the company being the first helium operator in Colorado to pass a completeness review with the COGCC back in August since regulatory changes were made that caused additional complexity and delay across drilling applications.

With approval of the Form 2A Oil and Gas Development Plan under its belt, Blue Star Helium (ASX:BNL) can now proceed with submitting the Form 2 Permit to Drill, which is typically approved within 30 days of submission.

Once this final approval is received, the company will then proceed with the drilling of Enterprise 16#1 well in Las Animas County as execution planning is already well underway.

Rare, high-value resource

Helium is a valuable gas that is essential for numerous modern technology applications such as manufacturing MRI machines, nuclear medicine, rocketry, and space exploration.

However, despite being both the second lightest element and the second most abundant element in the universe, helium is incredibly rare on earth.

Most helium found on earth is produced when uranium and thorium decay in the Earth’s crust, and subsequently trapped in similar rock formations to those responsible for hydrocarbon accumulations.

Unsurprisingly, most historical helium production has been a byproduct of natural gas production.

This rarity has seen prices for helium soar to more than US$285 per thousand cubic feet as supplies diminish while demand grows at an estimated rate of 11.25% per annum to an estimated market size of US$18.2bn in 2025.

By way of comparison, natural gas currently commands a price of about US$6.28 per million British thermal units (roughly equivalent to a thousand cubic feet) in the US.

The high price makes Blue Star’s unrisked prospective helium resource of 13.4 billion cubic feet of gas in the Galactica, Pegasus, Argo, Enterprise and Galileo prospects incredibly valuable if proved, which is exactly what the upcoming exploration well is aimed at doing.

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.