Pulsar reports positive helium flow

Catie Clark

BABBITT – Pulsar Helium, the Canadian company exploring for the coveted noble gas near Babbitt, has now received its first estimate of the helium deposits in the Precambrian rocks of the Duluth Complex in the Arrowhead region – and the result is encouraging. The most reliable but conservative estimate suggests there are 22.9 million standard cubic feet (MMcf) of recoverable helium in the ground. Using the U.S. Geological Survey's average helium price for 2024 of $14 per cubic foot, Pulsar's most conservative helium estimate is worth $320.6 million. That's six times more than the $50 million projected to cost to build a gas extraction plant in the region.
In addition, Pulsar's helium has a “chance of commercialization” of 0.65. That is the probability that Pulsar's Jetstream No. 1 exploration well can produce commercial quantities of the gas “in a timely manner.”
The calculations for the chance of profitability are made on a scale of zero to one. A probability of 0.65 therefore means a chance of over 50 percent that Pulsar will achieve a return on its investment if the company decides to build a gas recovery plant in the region.
The resource estimate released last week states: “Given the location, there are no significant environmental or logistical barriers to commercialisation. Given the resource base, the chance of commercialisation for an early stage project is therefore quite high at 0.65.”
Conservative estimate
The resource estimate and probability of commercialization figures were prepared using standard techniques used by oil and gas reservoir engineers. The probability of commercialization is based on preliminary flow results data from a single well. This is a positive result as the Pulsar geophysical data indicates the presence of much more helium than just in the area around the Jetstream No. 1 well.
Pulsar believes the resource assessment released last week represents just a “drop in the ocean” for the region's helium reserves, said Pulsar CEO Thomas Abraham-James. The resource estimate was prepared by the Denver office of international minerals and petroleum engineering company Sproule. The estimate was based on just 13 percent of the land area leased by Pulsar.
Pulsar's assumption that there is more helium is based on the seismic tomography study from last year and the two smaller surveys completed this spring. “The seismic data we have gives us great confidence that the resource is laterally continuous,” Abraham-James said.
The estimate does not include data from the 20.5-kilometer seismic survey that Pulsar conducted just last month and reported in the Aug. 16 issue of Timberjay. Data from the July seismic survey along Dunka River Road have not yet been analyzed and will not be available for several months due to the large scope of the survey.
Deciphering the choice of words
Sproule's resource estimate was written in the technical language that geoscientists use when talking about economic resources in the ground, definitions used primarily by investors to judge where to risk their money.
Pulsar's reserves are not yet proven. Many factors go into estimating proven reserves; one of the most important is comprehensive knowledge of the reservoir, and this knowledge does not yet exist for the helium in the Duluth Complex rocks. Pulsar is still working on characterizing the reservoir. New reservoirs that have not yet produced profitable products are never considered proven at such an early stage of an exploration campaign.
Sproule classified Pulsar's helium as contingent. Contingent resources are those that can be extracted from known deposits using existing or developing technology, but whose commercial exploitation is not yet considered certain. For technological, business, economic, political or environmental reasons, the commercial exploitation of these resources may be prevented.
Contingent reserves can be thought of as follows: They are more likely than certain.
There is a third category, called prospective reserves. Prospective reserves are less reliable and carry the highest risk. Sproule provided estimates for Pulsar's contingent and prospective reserves around its leases around the Jetstream No. 1 well, which Pulsar plans to deepen by year-end.
CO2 as a bonus good
Pulsar's peak concentration of helium was measured at over 14 percent. Most of the gas is carbon dioxide, and is the icing on Pulsar's cake, because carbon dioxide is also a commodity. Minnesota's large food industry, the largest consumer of the gas, can't get enough of it. Rather than releasing the CO2 into the atmosphere, Pulsar believes it can sell its carbon dioxide profitably in the region.
In his report to Pulsar, Sproule stated: “Due to the ongoing CO2 shortage in the US, where bulk CO2 purchases are rising to as much as $32 per thousand cubic feet, this could be an additional and valuable byproduct of Pulsar's helium production.”