SYDNEY, AUSTRALIA: Grand Gulf Energy (ASX:GGE) through its majority-owned incorporated JV firm Valence Resources LLC has entered right into a strategic alliance with helium refiner and vendor Paradox Resources LLC.
Paradox is the proprietor of the superior Lisbon Valley Helium Plant located 20 miles north of the Red Helium Project.
The alliance, designed to fast-track and optimise the numerous commercial alternatives that exist within the present buoyant helium market, comes on the again of the recent execution of a Gas Sales & Processing Agreement with Paradox, which provides Grand Gulf with a path to monetisation, with minimal CAPEX / time delay, for the Company’s maiden pure-play helium well, Jesse#1.
Managing Director Grand Gulf Dane Lance said, “The Strategic Alliance with helium offtake partner Paradox Resources is an enormous step for the Company because it turns into the potential precedence uncooked gas helium provider to the all-important high-purity helium market that currently instructions costs of round US$1,000/mcf.
The Company will additionally partner with helium plant proprietor Paradox Resources in marketing to high-tech finish customers such as semi-conductor producers and the space industry in addition to exploring any collective firm transactions/opportunities.
The Strategic Alliance has already recognized two potentially revenue-generating CO2 disposal options, each of which will be extra fully developed within the short term.”
Restart of Paradox Resources’ Helium Liquefier
The superior Lisbon helium processing plant has each a Liquefaction Plant and a Purification Plant. The Purification Plant produces 99.9989% helium purity gas while the Liquefaction Plant produces a superior 99.9995% helium purity product that instructions premium pricing, with the firm suggested of recent US spot market costs over US$1,000/mcf2.
Due to a lack of uncooked helium supply, Paradox has been unable to restart the Liquefaction Plant; a discovery on the Red Helium Project will help in offering the requisite/minimum volumes for the Liquefaction Plant to be restarted with helium from the Red Helium Project prioritised.
Collaborative Marketing to High Purity End Users
To optimise worth received for premium helium, Valence and Paradox have agreed to collectively identify and market helium to high-purity helium end-users within the semiconductor, medical, research, space and defence industries.
Expansion of Existing Offtake and Commercial Alignment
Expansion of the phrases of the recently executed Gas Sales & Processing Agreement by collectively with the processing of gas supplied by any profitable helium wells subsequent to Jesse#1. The events recognise that there are potential synergistic commercial advantages in assessing firm alternatives that contain each Paradox assets and the Red Helium Project and have agreed to collectively pursue such opportunities.
Options for CO2 Disposal – Enhanced Oil Recovery and Carbon Sequestration
The Strategic Alliance explores a number of pathways to dispose of, and derive income from, the Red Helium residual gas stream (primarily carbon dioxide and nitrogen) collectively with enhanced oil restoration at Paradox-owned oil fields and carbon sequestration (with potential income from the US Government under 45Q of the US Tax Code) along with different storage/disposal options.
The Lisbon Valley Gas and Helium Plant is currently sequestering CO2 and is well superior within the allowing course of to qualify for carbon seize tax credit under Section 45Q. The present understanding and laws within the United States values the tax credit at $50 per metric tonne (mt) of CO2 for sequestration and $35/mt for CO2 completely saved in enhanced oil restoration processes by 2026.3
The Strategic Alliance features a collectively funded US$75,000 carbon dioxide enhanced oil restoration feasibility study on Paradox Resources’ Lisbon hydrocarbon field. The Strategic Alliance is structured to discover mutually commercially advantageous income sharing arrangements, however the firm has been suggested CO2 is promoting for roughly US$1.5/mcf for similar projects within the area.
Appointment of Strategic Alliance Consultant
The firm has engaged a specialist helium consultant with appreciable expertise in helium processing, gross sales and marketing to facilitate and drive the Strategic Alliance. 13.5 million GGE shares will be issued as payment for the consulting services.
Helium Market – Brief Update
Ongoing supply-side points collectively with the outage on the US government’s BLM Cliffside facility (10% global supply) and the Amur facility incident (10 – 20% global supply) have put excessive pressure on the worldwide market, and in particular the US spot market, with the firm suggested of US spot costs in extra of US$1,000/mcf for analysis grade helium (160mcf tube trailer). Retail costs have elevated greater than 200% within the UK, and many suppliers within the US are now in Force Majeure.
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