Wedoany.com Report-Jan 15, Blue Star Helium is progressing plans to become a helium producer at its Galactica/Pegasus field in Colorado with the completion of site works at the Jackson 31 and Jackson 04 development wells.

All casing has been delivered to site and the drilling contractor is preparing to mobilise equipment and the rig up at the Jackson 31 site early next week with drilling to start immediately once it is in place.

Once drilling at Jackson 31 is completed, Blue Star Helium (ASX:BNL) will move the rig to drill Jackson 04 as part of a broader five-well development drilling program.

The sequence for the three additional approved wells will be confirmed after Jackson 04 is drilled.

First production is targeted for H1 2025.

Helium producer

BNL is drilling the development well as part of the initial gas gathering system into the Galactica helium production facility being developed with farm-in partner Helium One Global.

Helium One is earning 50% in Galactica/Pegasus after making an upfront payment of US$1.5m in cash and free-carrying the costs for six wells to a cap of US$450,000 each.

The company has already proven the helium prospectivity of Galactica/Pegasus with the initial discovery wells intersecting gas bearing columns of up to 230 feet containing gas with between ~2-6% helium and initial recorded flow rates of between 125-412 thousand cubic feet per day (Mcf/d).

In June 2024, it drilled the State 16 well that flowed gas at rates of 285Mcf/d with 1.9% helium and 70% CO2, which is expected to be a valuable co-product in its own right.

Helium is a rare gas that is irreplaceable in semiconductor manufacturing, nuclear energy production, solar panels, optic fibre and the cooling of superconducting magnets in MRI scanning machines.

It typically commands a price of between US$400 and US$500 per thousand cubic feet of gas (Mcf) for longer-term contracts and has seen spot pricing of up to US$3000/Mcf.

While demand remains consistently high, supply has become increasingly constrained due to geopolitical forces, production faults, or planned maintenance shutdowns from major producers such as Russia, the US and Qatar.

As a result, any helium that BNL produces will have no difficulty finding buyers.