SASKATOON, SK, May 12, 2021 /CNW/ - Royal Helium Ltd. ("Royal"
or the "Company") (TSXV: RHC) is pleased to announce a
significant helium discovery at the Climax helium project, located in SW Saskatchewan, Canada. Royal has discovered
a 39 meter contiguous helium bearing zone at Climax-3 in the basal Deadwood Regolith
("Regolith") which was a previously unknown helium bearing
sequence. The same Regolith zone was also intersected at
Climax-2 and Royal has seismically
mapped the Regolith over a total area of 32 square kilometers (12.3
mi2) ("Prospective Area"). Based on
internal estimates, Royal estimates total helium in-place within
the Regolith zone across the Prospective Area to be between
approximately 2.5 billion cubic feet ("Bcf") (low-case) and 6.0 Bcf
(high case). In addition, Royal will commence production planning
shortly on Climax-1, with the
intent of producing and monetizing each of the helium,
CO2, and nitrogen gas streams discovered within the
Souris River and Wymark
zones.
Climax -3 Discovery and
Helium-in-Place
At the Climax-3 well, Royal has
discovered economic grades of helium over a contiguous 39 metre
zone in the basal Deadwood Regolith zone.
The internal estimates of helium resource-in-place are:
- High: 6 Bcf of helium for the Prospective Area, comprised of
0.5 Bcf of helium per square mile
- Low: 2.5 Bcf of helium for the Prospective Area, comprised of
0.2 Bcf of helium per square mile
Completed and production tested in sequence, the zone returned
gas analyses including the following:
- Helium: 0.55 – 0.65%
- Nitrogen: 71.97 – 95.95%
- Hydrogen: 0.02 – 14.97%
- Methane: 0.02 – 40.00%
Following the discovery of the Regolith zone at Climax-3, Royal reinterpreted its existing 2D
seismic and has mapped the areal extent, thickness, and rock mass
volume of the Regolith Sequence. Royal has utilized this mapping,
along with helium concentrations identified within Climax-3 to estimate a total
"helium-in-place". The Prospective Area of the Regolith is
interpreted extend across 32 km2 (12.3 mi2),
flanking both the local uplifted cratonic block penetrated by
Climax-1 and the regional massif.
The high estimate of 6.0 Bcf of helium-in-place assumes a 0.65%
helium gas concentration, net porosity of 8%, and an average
thickness of 39m (as discovered at
Climax-3) across the entirety of
the Prospective Area. The low estimate of 2.5 Bcf of
helium-in-place assumes 0.55% helium gas concentration, net
porosity of 5%, and an average reservoir thickness of 20m across the entirety of the Prospective
Area. These estimates assume a 25% water saturation but do
not include any adjustment for recovery factor, deduction for
unidentified reservoir-level anomalies, or deduction for plant and
process losses. The estimate is also presented in the form of
helium gas-in-place per section (mi2), and helium
gas-in-place for the Prospective Area. The Regolith initially
appears to be a low permeability zone and the Company will be
working on completion and stimulation methodologies to initiate
long-termed sustained flow rates.
The reader is cautioned that while this statement of
helium-in-place volume is based upon current data and uses a
calculation method published by the Government of Saskatchewan, helium is not included in either
the NI 43-101 or the NI 51-101 guidelines. Additional data,
including production testing and recovery factor, is required for
the deposit contained within the Prospective Area to justify its
classification as a resource.
Andrew Davidson, President and
CEO of Royal states, "we are exceptionally pleased with this
discovery at Climax. The Regolith appears to be helium
charged over a significant interval and, once the production
methodology is determined, it has the potential to be one of the
largest helium discoveries in Saskatchewan history. Entering this
drill program, we were targeting conventional helium production,
which we have found in Climax-1,
Climax-2 and potentially
Climax-3. We are now
evaluating the completion methodology of the Regolith which may
include horizontal drilling and/or fracture stimulation in order to
maximize the productive capacity of this zone."
Climax-1
At Climax-1, potential
production zones consist of the Souris River and the Wymark Member
of the Duperow Formations of the Upper to Middle Devonian
era. Through the various gas tests performed, the following
sample results were received:
- Helium: 0.33 – 0.39% (Souris River)
- Nitrogen: 86.6 – 95.6% (Souris River and Wymark)
- CO2: 89.8 – 94.7% (Wymark)
These zones showed shut-in pressures, measured at surface, of up
to 3,726 kPa and the presence of a water drive typical of
conventional helium developments, with both gas and water samples
being further analyzed for helium and other gases. Flow rates
at Climax-1 peaked at 1.15
MMcf/day. Actual production flow rates will be optimized in
production planning.
Production planning will commence shortly on Climax-1, with the intent of producing and
monetizing the helium, CO2, and nitrogen gas
streams. Discussions with potential processing partners are
underway and Royal will report once a gas processing agreement and
off-take agreement(s) are in place.
Climax-2
At Climax-2, completion
operations were halted due to the onset of break-up. The
Regolith sequence is present in Climax-2, and remains untested to date. Once
the optimal completion and production methodology is determined for
he Regolith in Climax-3, the same
methodology will be applied at Climax-2. The Wymark zone in Climax-2 was perforated before moving off
location, but an acid stimulation treatment has yet to be
completed. This zone is prospective as a helium production
zone and further completion testing will be conducted in due
course.
Geological Summary
The highest helium concentrations were measured within a
sequence of rocks believed to be sedimentary in origin that
underlie the Cambrian Deadwood Formation and overlie the
Archean-age granitoid Wyoming Craton. This sequence,
internally referred to as the Regolith, is some 100m thick in the Climax-3 well and consists of interbedded
strata consisting of igneous (granitoid) minerals, quartz of
sedimentary origin, weathered igneous minerals, clays, and possibly
anhydrite and traces of tuffaceous material. This sequence
has been anecdotally reported in other parts of southern
Saskatchewan however its
distribution and origin is poorly understood. The Regolith
was penetrated by both the Climax-2 and Climax-3 wells, which flank an uplifted block
of Wyoming Craton penetrated by the Climax-1 well.
All wells were drilled to total depth and cased to total depth
(except the Climax-1 well in which
casing could only be run to a depth of 2,394.55mKB due to hole
instability). Evaluation of wellsite mud gas chromatograph
and cuttings descriptions, borehole geophysical logs, and drill
penetration rates identified 22 zones of interest worthwhile of
further testing with eight zones selected for initial completions
testing. Each of the eight zones were systematically tested to
confirm the presence of economic grades of helium, and testing
operations included perforating through casing, acidizing to
enhance flow, swabbing, measuring tubing and casing pressures, and
measuring static gradients where possible.
During the testing program 212 gas cylinder samples and 65 water
samples were collected, including duplicate cylinders for each
sample taken throughout the duration of the program. All original
and duplicate samples were run by two independent third party
analytical laboratories to ensure strict QA/QC guidelines were
followed.
A re-interpretation of 2D seismic was undertaken after
completing the drill program, and it suggests that the
helium-bearing Regolith sediments are part of a pre-Deadwood basin
that onlaps onto a regional cratonic massif that may underlie the
regional Val Marie Uplift or Arch, which is the northern extension
of the Bowdoin Dome of northeast Montana. Within the Project
area, the Regolith onlaps a local uplifted block of granitoid
craton that underlies the Royal Climax-1 well. The
helium-bearing Regolith may be a separate reservoir compartment
from the overlying Deadwood, since none of the tested zones are
connected to the strong water flow identified in a test of the
overlying Deadwood BAU sands in the Climax-2 well.
Steven Halabura, VP of
Exploration for Royal states "the discovery of the Regolith is a
major moment for Royal. The sheer scale of this formation and
the fact it is consistently helium charged is a significant step in
proving long-term and large-scale helium production in
Saskatchewan. When combined with the conventional production
planned at Climax, the further
development of the Regolith has the ability to move Royal from a
small explorer to a large producer in the relative near-term."
About Royal Helium Ltd.
Royal is focused on the exploration and development of primary
helium production in southern Saskatchewan. With over 400,000 hectares of
prospective helium lands held under permits, leases and
applications, Royal is one of the largest helium leaseholders in
North America. Located next to
highways, roads, cities and importantly close to existing oil and
gas infrastructure, Royal's projects were methodically evaluated
for helium potential for over two years, and have been vetted by
helium experts, professional geologists and engineers.
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forward-looking statements. Although management believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance, and actual results or developments may differ
materially from those in the forward-looking statements. The
Company undertakes no obligation to update these forward-looking
statements if management's beliefs, estimates or opinions, or other
factors, should change. Factors that could cause actual results to
differ materially from those in forward-looking statements, include
market prices, exploration and development successes, continued
availability of capital and financing, and general economic, market
or business conditions. Please see the public filings of the
Company at www.sedar.com for further information.
SOURCE Royal Helium Ltd.