GGE planning to re-enter US helium well next month
Today, our US helium Investment Grand Gulf Energy (ASX: GGE) announced its intention to re-enter the Jesse-1A well in December 2023, with the aim of establishing a flow test.
That’s next month.
We think a successful flow test could unlock production at the GGE’s southeastern Utah helium project, which is very close to the Doe Canyon Helium field:
Doe Canyon is the second largest helium discovery in North America over the last 70 years.
GGE hit a greater than 200 foot gross gas column with 101 feet of net pay (independently audited3) and 1% helium in the primary target.
A good summary of Doe Canyon can be found in GGE’s latest presentation:
(Source)
To successfully get helium out of the project and eventually into production - GGE will need to make the company’s targets work for them.
The latest analysis that GGE has is that the lowest intersected Leadville zone was interpreted as potentially water bearing.
As a result, GGE is aiming in this re-entry to isolate the lower Leadville, while flow testing the upper Leadville reservoir for helium.
Today’s announcement said that:
“The Jesse-1A work program will isolate the lower, potentially water-wet Leadville member with a cement and packer system to facilitate a comprehensive helium gas flow test of the upper Leadville. The total cost of the operation is modest and will be met with existing funds.”
Short, simple version: separate the lower, water bearing section of the target from the good stuff (helium) so that gas can flow to surface.
Below is the Jesse-1A well and the relevant formations that GGE is working with:
(Source)
Success at Jesse-1A could have an important flow on effect for a Jesse-3 well which we wrote about recently.
Namely, the Jesse-1A program could inform and optimise the proposed well at Jesse-3.
The ultimate goal here, is to drill a string of successful wells that produce helium to generate revenue via an already agreed offtake with Paradox Resources which has the nearby Lisbon Helium Plant.
This is our Big Bet for GGE:
GGE makes a commercial helium discovery, ties it into the existing local processing infrastructure, and becomes a USA helium producer - or gets taken over.
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our GGE Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.
What’s next for GGE?
Jesse-1A re-entry 🔄 (December 2023, next month)
Isolate the water bearing zone, and flow helium to surface.
Ideally for early production - that’s the goal.
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.
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%.
