Engineering firm announced for Jesse-3 Target

Our US helium Investment, Grand Gulf Energy (ASX: GGE), announced today that it had secured the services of Walsh Engineering for its upcoming Jesse development program.

The good news here is that Walsh has successfully completed a number of wells in the Four Corners helium area - which we think bodes well for GGE’s prospects.

It always helps working with contractors that have local knowledge - Walsh was behind the Tocito Dome helium field - which produces at 7-8% helium concentrations and is owned by the Navajo Transitional Energy Company.

Today’s update also notes that GGE has “received bids from multiple drilling contractors” - which we see as a good sign that GGE is gearing up to drill its Jesse-3 target - and produce a previously elusive flow rate.

Below is a map of the Four Corners area which is the intersection of Colorado, New Mexico, Utah and Arizona:

(Source)

GGE is working in a prime location in an area of southeastern Utah which is proximal to the Doe Canyon Helium field:

Previously, GGE has drilled the Jesse 1A and Jesse 2 wells and on the next well, Jesse-3, GGE will hopefully finally hit the reservoir in the sweet spot to deliver enough of a flow rate such that it makes commercial sense to plug it into the existing processing infrastructure… and start generating cash flow.

Today’s announcement outlined the following as well:

“Walsh has completed a review of the Jesse-1A completion and Jesse-3 new drill well plans

incorporating a case, cement and perforate (C&P) methodology allowing for zonal isolation,

including isolation of any water bearing zones. The zonal isolation allows for individually focussed and optimized stimulation programs for all encountered helium bearing formations to be tested independently.”

We think this is promising given that last year GGE first made its helium discovery, however it couldn’t produce a flow rate. The issue was that GGE drilled into the “water contact zone” which prevented it from producing a flow rate.

(Source)

In this update from GGE, we also learned more about the scope of GGE’s forward works with Walsh which includes:

• A new Jesse-3 drill which will be targeting a structural high on seismic and proximal to the historic Redd1 which already has proven gas/reservoir
• Jesse-1A completion and testing programme (which could add to the overall economics of the project all going well)
• Evaluation of stimulation/remediation and full flow-testing options for Jesse-2
• Evaluation of a 3D seismic programme at the Red Helium which GGE says could exceed 20 wells

All up, we see today’s announcement as indicative of GGE’s ambitions to make the Red Helium project a significant source of helium in the US market.

What’s next for GGE?

Drilling Jesse 3 well 🔲

GGE already has permits in place to drill the Jesse-3 well.

GGE thinks there is a good chance the reservoir characteristics improve where the company plans to drill Jesse-3 and so we think it makes sense to drill here.

For some context, GGE is looking to emulate the success achieved at the Doe Canyon helium field next door which has produced helium from over 20 wells.

Jesse-1A/2 workover 🔲

Another option for the company could be to remediate the Jesse-1A/2 wellbore for a cost of less than ~US$1M before trying to produce a flow test from this well again.

Potential to drill the company’s Earp Prospect 🔲

GGE also has permits in place to drill its Earp prospect.

Earp sits on ground similar in size to Doe Canyon and already has two historic wells which have produced helium grades of up to 1.1%.