Perth-based explorer Grand Gulf Energy (OTCQB: GRGUF) has received regulatory approval to drill a second pure-play well at the Red Helium project in the prolific Four Corners region of Utah’s Paradox Basin.
Approval came from the Utah Division of Oil, Gas and Mining (UDOGM) and places Grand Gulf in a position to spud the Jesse-2 helium well this quarter.
It is located 2.4 kilometres southeast of the Jesse-1A discovery well and within the same structure which intersected a 60m logged gross gas column and returned 1% helium concentrations to surface.
Jesse-1A also encountered a productive and strongly pressured reservoir measuring 2,465 pounds per square inch (psi).
Best of three locations
Jesse-2 was selected as the best of three mature prioritised locations along the Jesse structure, derived from an extensive review of historic well data plus results from Jesse-1A.
It included calibrated 2D seismic targeting a structural high location to maximise the thickness of the gas pay zone.
Jesse-2 will home in on gas zones discovered in Jesse-1A, and incorporate managed pressure drilling through the primary Leadville formation.
The total depth is expected to terminate at least 15m above Jesse-1A’s identified gas/water contact.
If significant helium in-flow is identified, a bottoms-up flow test will be conducted to characterise the reservoir.
Jesse-2 is immediately adjacent to an existing pipeline connected to an offtake partner to allow potential and near-term monetisation if it is deemed commercial.
Grand Gulf managing director Dane Lance said the company was keen to apply lessons learned following the drilling of Jesse-1A.
“Our well engineering has incorporated lessons from evaluation of the maiden [Jesse-1A] helium exploration well to minimise risk of water production by staying high in the column,” he said.
“Coupled with managed pressure drilling to maximise well deliverability and preliminary flow evaluation while drilling, we expect this will be an exciting period for our company.”
Based on analogue performance, Mr Lance said the Jesse discovery could potentially support more than 20 wells within the areal extent of the closure.
He said the “compelling fundamental commercial pillars” of the Red Helium project would allow the company to quickly monetise a commercial well to generate near-term free cashflow with minimal time and cost.