Pulsar reports positive helium flow

BABBITT- Pulsar Helium, the Canadian firm exploring for the high-demand noble gas near Babbitt, has now received its first estimate of the helium hiding in the Arrowhead region’s Precambrian Duluth Complex rocks — and the result is encouraging. The highest-confidence but most-conservative estimate is that there are 22.9 million standard cubic feet (MMcf) of recoverable helium in the ground. Using the U.S. Geological Survey’s average 2024 price of helium of $14 per cubic foot, the most conservative estimate of Pulsar’s helium has a value of $320.6 million. This is six times greater than the projected $50 million cost of building a gas recovery facility in the region.
In addition, Pulsar’s helium has a “chance of commerciality” of 0.65, which is the probability that Pulsar’s Jetstream No.1 exploration well can produce economic amounts of the gas “in a timely manner.”
Chance of commerciality calculations use a zero to one scale, so a 0.65 probability is a better than 50 percent chance that Pulsar will see a return on their investment if the firm decides to build a gas recovery plant in the region.
The resource estimation study released last week stated: “There are no significant environmental nor logistical barriers to commercialization given its location. Therefore, given the resource base, the chance of commerciality is fairly high for an early-stage project with a value of 0.65.”
Conservative estimate
The resource estimate and chance of commerciality numbers were produced with the standard techniques used by oil and gas reservoir engineers. The commerciality probability is based on the preliminary data of just one well’s flow results. This is a positive result because Pulsar’s geophysical data suggests the presence of a lot more helium than just the area around its Jetstream No. 1 well.
Pulsar believes that the resource evaluation it released last week reflects a “drop in the bucket” of the region’s helium according to Pulsar CEO Thomas Abraham-James. The resource estimate was made by the Denver office of the international mineral and petroleum engineering firm Sproule. The estimate was based on just 13 percent of Pulsar’s leased land position.
Pulsar’s belief in more helium is based on the seismic tomography study from last year and the two smaller surveys done this spring. “The seismic data that we have gives a great deal of confidence that the resource is laterally continuous,” said Abraham-James.
The estimate does not include any of the data from the 12.7-mile-long seismic survey that Pulsar conducted just last month, as covered in the Aug. 16 edition of the Timberjay. The data from the July seismic survey along the Dunka River Road has not yet been evaluated and will not be available for several more months due to the large size of the study.
Unpacking the verbiage
Sproule’s resource estimate came dressed in the technical language that earth scientists use when talking about economic resources in the ground. The definitions are used mostly by investors to evaluate where to risk their money.
Pulsar’s reserves are not yet proven. Many factors go into a proven reserves estimate; one of the most important is extensive knowledge of the reservoir, and that knowledge doesn’t exist yet for the helium in the Duluth Complex rocks. Pulsar is still working on characterizing the reservoir. New reservoirs that have not yet produced any profitable products are never considered proven this early in an exploration campaign.
Sproule rated Pulsar’s helium as contingent. Contingent resources are estimated as those recoverable from known deposits using existing or developing technology but are not yet considered commercially proven. These resources may be prevented from becoming commercial due to technological, business, economic, political, or environmental factors.
One way to think of contingent reserves is that they are probable rather than proven.
A third category exists called prospective reserves. Prospective reserves have the lower confidence and the highest risk. Sproule provided estimates for Pulsar’s contingent and prospective reserves around their leases surrounding the Jetstream No. 1 well, which Pulsar intends to deepen before the end of the year.
CO2 a bonus commodity
Pulsar’s peak helium concentration was measured as over 14 percent. The bulk of the gas is carbon dioxide, and it’s the frosting on Pulsar’s cake, since carbon dioxide is also a commodity. Minnesota’s large food production industry, the largest consumer of the gas, can’t get enough of it. Instead of venting the CO2 into the atmosphere, Pulsar believes it can sell its carbon dioxide profitably in the region.
In their report to Pulsar, Sproule stated, “Due to an ongoing shortage of CO2 in the USA, with bulk CO2 purchases increasing up to $32 per thousand cubic feet, it has the potential to be a bonus and valuable by-product of Pulsar’s helium production.”