Blue Star Helium’s latest US helium well hits richest gas yet as global shortage rolls on

Blue Star Helium (ASX:BNL) is well on track towards its US helium play’s resource upgrade as the company hits high concentrations of the crucially needed gas downhole its fourth JSXN series well, JSXN-4. 

Early afternoon shares have climbed over 6% in turn.

The JSXN wells target the ‘Galactica’ target on-site overlying the geological Lyons formation; part of Blue Star’s overall acreage. 

Another area of interest called ‘Pegasus’ is also a key target in the geotech team’s ongoing exploration; the boundaries of both targets overlap. 

Results of the wells completed across both targets will comprise a maiden contingent resource for the project, due in the coming months. 

Best results yet 

Worth noting is that today’s result reflects the highest quality helium gas the company has found so far. 

Broken down per well by concentration, Blue Star has previously found: 

• JSXN-1: helium gas concentration of 1.98%

• JSXN-2: helium gas concentration of 3.14%

• JSXN-3: N/A

• JSXN-4: helium gas concentration of 6.5%

The company awaits further compositional analysis results from a laboratory which it expects to receive in the next two weeks. These more in-depth analytics will provide the drilling team a better idea of the underground geology. 

Wireline logging results, due later this week, will also give the company an idea of how groundwater interacts with the gas underground. 

Two-tier system 

JXSN-4 was drilled to a total depth of 1,043 feet intersecting both the upper and lower lying Lyons sand formation. 

The top sands formation commences at 756ft depth and ends at 859ft, reflecting some 100ft of gas-bearing sands at the site where JSXN-4 was spud. 

The lower Lyons sand starts at 898ft, but the company has not yet published a determination of how thick the lower sand truly is. 

High-priority development: management 

“The results confirm Galactica/Pegasus as one of our high priority development areas in Las Animas…this is reflected in our current development well scheduling activities for this field,” Blue Star CEO Trent Spry said. 

“The results of this well will be integrated into the current resource update process which is expected to culminate in the declaration of [a] contingent resource.” 

“We are delighted to have hit high-concentration helium from a fourth consecutive exploration well.” 

Shortage gives context to ASX helium players

Much of the world’s helium supply comes from mines in the US; large concentrations are also kept in Russia, but access to that supply has reduced due to sanctions following Russia’s invasion of Ukraine. 

Even before the invasion, a large plant in Russia that was set to supply world markets went under for maintenance.

Then the war began. In short: helium is in short supply right now, and that is part of the reason why a few pure play helium explorers have popped up on the ASX in recent history.

Blue Star competitors Grand Gulf Energy (ASX:GGE), located in Utah, are also seeking to produce helium for sale into the US markets as companies scramble to extract more of the gas from the ground. 

 Blue Star and Grand Gulf are joined on the bourse by Noble Helium (ASX:NHE) in Tanzania. 

What is the helium shortage impacting?

Helium is a crucial and often overlooked material in the manufacturing of many high-impact products—fibre optics cables and microchips among them.

As the microchip (semiconductor) sector continues to recover, it is likely helium demand will only increase. 

Then there's kids balloons. US company Dollar Tree, which sells helium balloons for parties among other products, earlier this year published a statement on its website apologising for the shortage of helium balloons to American consumers. 

And if that wasn't bad enough, there are more concerning implications for a global helium shortage: in April, the US National Weather Service noted it wasn't able to release as many weather balloons.

That situation has only deteriorated since early 2022: last week, the US state of Denver stopped launching weather balloons altogether. 

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