Blue Star Helium’s strategy — to discover and develop high-margin helium projects — continues to gain momentum in 2020.
When you think of Helium don’t just think about party balloons. In fact, you should look at helium in the future as a technology commodity. Helium is a crucial component of a whole range of medical devices and scientific instruments from MRI machines in the medical industry to space exploration, rocketry, high level science, fibre optics, electronics, telecommunications, superconductivity, underwater breathing, welding, and nuclear power stations. And for a lot of these applications, helium is irreplaceable. In fact, a critical global shortfall of approximately 10-15% in helium supply emerged prior to COVID-19 has been tempered slightly as demand falls in sectors like party balloons and diving gas. However, demand still continues in critical applications including health, military, computing and communications. Meanwhile, supply has been negatively impacted by low gas prices. The demand and pricing of natural gas and LNG is a key factor in helium supply – the vast majority of both current helium supply and forecast new helium supplies are by-products of hydrocarbon production, and consequently, a reduction in LNG and natural gas production results in a reduction in the global supply of helium. Blue Star Helium (ASX:BNL) says. “A post-COVID world is difficult to predict with certainty, however, it is likely that major new LNG projects with associated helium will see delays as well as a lack of further investment and this will have a more lasting and significant effect than any short term impacts to demand.” “This would, in turn, have natural consequences to upward helium pricing in 2021 and beyond.”
Near term project objectives
Blue Star’s current focus is targeting world-class helium resources near the historical Model Dome helium field in Colorado. The Model Dome field — 6km from Blue Star’s leases — produced helium for a short time prior to WWII before it was acquired by the federal government for its strategic reserve. COVID-19 restrictions have yet to impede its forward momentum, the Company says. In fact the explorer has been very successful at recent government auctions, securing 28,643 additional net acres over its preferred prospects to the end of the March quarter, bringing its total lease position to 121,086 gross (64,924 net) acres. “In the short-term, we will conclude our independent prospective resources report which will estimate the recoverable helium resource and support the investment case for the Company’s Enterprise and Galileo prospects,” Blue Star says. “During the June quarter, the Company will also progress the permitting, drilling engineering, planning and development concept work ahead of our planned drilling program. “It is expected that drilling costs will reduce from previous estimates due to lower demand for oilfield services further strengthening the value proposition.”