Fact check: Blue Star Helium and the Las Animas prospects

Whereas in the past most helium was found by accident when looking for natural gas, at the moment there’s a dozen companies or so exploring for it.

One of these companies is Blue Star Helium, who recently announced it had acquired “significant” new leasing at the Federal Bureau of Land Management’s (BLM) land auction in September.

Read more: Blue Star Helium acquires “significant” new leasing at BLM auction

gasworld reached out to Blue Star Helium, and its Managing Director/CEO Joanne Kendrick, for further information and to clarify the feasibility of this project.

gasworld (GW): The Las Animas region is described as ‘highly prospective’ – what evidence is there to support this?

Joanne Kendrick (JK): Blue Star’s interests in the Enterprise and Galileo prospects are located in Las Animas County, Colorado.

The prospective resources associated with these two prospects were assessed by Sproule to be 3 BCF recoverable helium (2U).

These prospects and other Blue Star leases are situated in the Lyons Formation Helium Play which has been proven in the area by the historical Model Dome field.

Model Dome has proven the play elements of helium charge, seal and reservoir at the Model Dome location. For example, the Hoff Heirs #2 well in the Model Dome field had a tested production rate from the Lyons Formation of 500 mcf raw gas per day containing 8% helium.

Petrophysical analysis of surrounding wells in combination with the regional soil gas sampling and geochemical analysis program conducted in Q3 2019 have proven the play elements of helium charge, high quality reservoir and the presence of a good top seal extend across our Enterprise and Galileo prospects.

Within this proven play fairway, each of the Enterprise and Galileo prospects are subject to independent trap risk.

Internal geologic modelling is based on reprocessed gravity and magnetic data, incorporated offset well data and surface and subsurface horizon and fault mapping.

The geological chance of success is assessed by the company to be moderate to high for an exploration target given the proven play elements.

The company remains positive that, based on the work it has done to date, the chance of development, upon a discovery, is strong.

Read more: Helium: Understanding the Market in 2020

Read more: Helium reserves or resources – What’s the difference?

The company has identified that several development options are available and detailed discussions with service providers are underway with a view to selecting a preferred option and supplier.

Skid mounted, modular surface processing equipment is readily available with six months delivery time and may be secured under a rental contract.

This equipment is standard-sized at 2 mmcf/d raw gas and would concentrate the helium in the raw gas stream to 98%+ gaseous helium which would then be loaded onto an off taker’s tube trailer for transport to a liquefaction plant or end-user.

The Las Animas location is within trucking distance to established liquefaction plants with significant available capacity.

If the company elects this type of rental option for the surface processing equipment, most of the development capital expenditure would be related to drilling and completing development wells.

GW: How long are the additional prospective resource assessments expected to take before that final decision is made on expanding the programme?

JK: We have commenced prospective resource assessments over several new prospects (in addition to Enterprise and Galileo) – Voyager, Prometheus, Galactica and Pegasus – to get them “drill-ready”.

Previously, we have said that our maiden drilling program for Enterprise would commence in Q4 2020.

We will update the market once we have completed the additional resource assessments and decided whether to expand our maiden drilling program.

GW: By extension, how far away is the program from A) actual drilling and B) helium production/supply to the market?

JK: I would refer you to my answer above in terms of the timeframe for our maiden drilling program.

In terms of production/supply to the market, skid mounted, modular surface processing equipment is readily available with six months delivery time and may be secured under a rental contract. As such, should the maiden well program prove-up economic helium flow rates, we can move to production and supply relatively quickly.

GW: Blue Star Helium now has a ‘high-net contiguous position’ over four of its preferred helium prospects. What are the collective prospects of these, how evidenced are they, and what estimated timeline would you put on their exploration?

JK: As per my earlier answer, we will now conclude in-field surveys and prospective resource assessments over the new prospects – Voyager, Prometheus, Galactica and Pegasus – to get them “drill-ready”.

Previously, we have said that our maiden drilling program for Enterprise would commence in Q4 2020. We will update the market once we have completed the additional resource assessments and decided whether to expand our maiden drilling program.