Apr 163 min
After disappointing results on its Voyager project Blue Star has suspended development due to lower expected returns compared to other portfolio projects. Instead, Blue Star has decided to advance its Galactica/Pegasus project in Las Animas County, Colorado. The Gal/Peg project is set for drilling this quarter, with funding from existing cash reserves. The drilling site, State 16 SWSE 3054, has been prepared in collaboration with the landowner, with construction for the pad and access upgrades scheduled to start this week. The Gal/Peg project benefits from significant geological de-risking, evidenced by high helium concentrations (2.0 - 6.1% He) from its JXSN#1, #2, #3, and #4 wells, and the successful commercialisation of the nearby Red Rocks helium project. Furthermore, discussions are ongoing to monetise the CO2 by-product, with plans for development configuration and commercial strategies to be finalised and announced soon.
Press Release:
Blue Star Helium Limited provides an update on key project activities across its high-grade helium acreage in Las Animas County, Colorado.
Galactica / Pegasus project
Drilling of Blue Star’s maiden helium development well at the Galactica/Pegasus project, State 16 SWSE 3054, is on track to be undertaken during the current quarter and will be funded from the Company’s existing cash reserves.
State 16 SWSE 3054 is located 3 miles southeast from the Red Rocks project that is currently producing from the Lyons Formation being targeted by Blue Star. The driller is expected to mobilise to site during May. Blue Star’s COO was on location with the landowner last week to prepare for access and plan the construction of the drilling pad which is expected to commence later this week.
The Galactica/Pegasus project has already been significantly de-risked geologically. Four Blue Star exploration wells, JXSN#1, #2, #3 and JXSN#4, delivered gas flowing at 125 - 412 mcf/d with high air-corrected helium concentrations of 2.0 - 6.1% He. These wells also proved the Company’s previous interpretations of gas on logs at historic wells, Denton B #1 and Colorado #B-1, also located on the Galactica and Pegasus structures.
Potential development of the Galactica/Pegasus project has also been de-risked by the successful third-party commercialisation of the adjoining Red Rocks helium project, which is being delivered via an IACX midstream leased process facility arrangement.
There is a range of development pathways under consideration for the Galactica/Pegasus project, including a leased plant and third party operated option. Engineering and market work continues to refine the initial planned development configuration, including forecast helium and by-product CO2 output volumes and cost estimates.
Voyager project
Following the analysis of BBB #33 and Bolling #4 development well results, Blue Star has determined that commercialisation at Voyager should not proceed as originally planned.
Independent engineering reports after applying the revised geological and operating parameters to the current plan of development still forecast multiple scenarios delivering a profitable all-in project. This plan of development was adopted due to the forecasted capital-lite high-margin project for Blue Star. However, development of Voyager via this route is no longer expected to be the highest-returning project in the available well portfolio and Blue Star will now undertake a full review of potential commercialisation pathways for Voyager. This will include evaluating developments that include connection to grid power as well as a variety of gas processing sizes and solutions.
Remapping of Voyager will also be undertaken with data gathered during the recent drilling being incorporated into future models. Consideration is being given to potential pressure leak points (faults or intrusive dykes) while also considering the top seal potential locally. It is expected that this work may result in additional prospective areas on the greater structure for future drilling consideration.