What goes up might be coming down

Congress Deadline Looms; Is Helium Doomed?

American Association of Petroleum Geologists (AAPG)
Major helium-bearing natural gas fields in the United States, adapted from the U.S. Geological Survey, 2010 Minerals Yearbook, Helium.
Major helium-bearing natural gas fields in the United States, adapted from the U.S. Geological Survey, 2010 Minerals Yearbook, Helium.

The helium shortage is not a household topic, but it could be in 2013 if the Bush Dome Federal Helium Reserve shuts down as mandated under the Helium Privatization Act of 1996 (Public Law 104-273).

The looming crisis has been known for a while, but the reality is now fast approaching.

A helium shortage would not just affect the Macy’s Thanksgiving Day Parade and party balloons. It would make producing a microchip, running and producing a magnetic resonance imaging (MRI) scanner, launching a weather balloon or space ship and running CERN’s Large Hadron Collider more expensive – if not impossible.

For some applications, like balloons, helium can be replaced. But for other applications, such as producing an MRI, helium is irreplaceable.

Earlier this year the Senate Committee on Energy and Natural Resources held a hearing to discuss legislative options to avoid shutting down the reserve and have introduced the bipartisan Helium Stewardship Act to extend the life of the reserve.

There is still time for Congress to act – but time is running out.

A Unique Resource

Some history: The federal government began stockpiling helium in the 1920s for national defense, mainly for early blimps. As required by the Helium Privatization Act of 1996, the Bureau of Land Management (BLM) has been selling helium from the Bush Dome Federal Reserve, located north of Amarillo, Texas, in the Cliffside gas field, to pay off a $1.3 billion debt accrued from stockpiling the helium.

The price of helium is a flat rate calculated to pay off the debt with the volume in the reserve over a 15-year time period, and adjusted over the years by the consumer price index.

At the time, this price was higher than the market price – but since 1996 the value of and demand for helium has increased as new and existing technologies have skyrocketed.

Under the Helium Privatization Act of 1996, the Federal Reserve will shut down upon payment of the helium program’s debt, which could occur as early as mid-2013 – and would cause chaos in the helium market.

Helium has become ubiquitous in a variety of industrial, scientific and medical markets because of its unique chemical and physical properties:

As the second element on the periodic table, helium is very small. Unlike its neighbor hydrogen, helium is an inert noble gas making it the best gas to use for leak detection, mass spectrometry and for controlling atmospheres.

Helium is used for growing semiconductor crystals and preserving important documents – including, for example the Declaration of Independence.

Liquid helium is the coldest substance on Earth and commonly used in cryogenics applications and research, where physicists study the behavior of materials at very low temperatures. The largest market for helium is in cryogenics, making up 28 percent of its use in the United States, followed by its use pressurizing and purging equipment, which accounts for 26 percent of its use in the United States.

Finally, helium is lighter than air, which is why the federal government originally began stockpiling it in the 1920s, and why the only economically feasible way of obtaining helium is by extracting it from the ground.

Helium forms in locations where the radioactive decay of uranium occurs along with the formation of natural gas – however, it is so light that once it escapes the ground, it floats through the atmosphere to space.

The only economically feasible way to obtain helium is as a by-product of natural gas extraction.

Helium is only a byproduct of natural gas in helium-rich fields, which do not exceed 4 percent helium by volume. Extracting helium from a natural gas field is considered economically viable when the field is higher than 0.4 percent helium.

In most shale gas, the helium has already escaped. Helium usually is vented to the atmosphere when other impurities such as nitrogen, water vapor and carbon dioxide are removed from natural gas.

Currently the Federal Reserve sells helium for such a low price, it is not economical for a natural gas company to capture it while producing natural gas – and as a result, the helium is lost to space.

Disruptions in the Force

Almost a century after the government’s dreams of helium blimp-aided wars, not only is a third of worldwide crude helium supplied by the Federal Helium Reserve, but two thirds of the worldwide supply originates from the BLM crude helium pipeline system.

The BLM connects a series of private helium extraction and refining plants to the reserve through a 420-mile pipeline system that runs from the reserve in northern Texas through Oklahoma to Kansas. The pipeline provides six private refining plants with crude helium from the reserve as well as from natural gas plants, which extract helium that are connected to the pipeline upstream of the refiners.

Refiners then produce high-purity gaseous and liquid helium from both the private and federal crude helium supply. Under the Helium Privatization Act of 1996, the BLM pipeline will shut down as well as the Federal Helium Reserve upon payment of the $1.3 billion debt.

Even with the uncertainty of Bush Dome’s future, there are other helium supply disruptions that users are facing – users are experiencing a shortage due to a combination of external events and preferential allocation to federal users.

For example, the ExxonMobil Shute Creek plant in Wyoming, the world’s largest single-source helium plant, went temporarily offline in 2011, and another larger plant in Algeria has been offline since an explosion in 2004.

A disruption in the helium supply is felt almost immediately by end-users, as the average amount of time between separation from natural gas and delivery to the end-user is 45 to 60 days – and the Federal Helium Reserve is the only significant depository that stores helium for the long-term in the world.

The Gathering Storm

While U.S. demand has leveled off in recent years, the worldwide demand has boomed. In 2007, in fact, the worldwide consumption of helium overtook U.S. consumption.

Currently the United States comprises 40 percent of the worldwide demand followed by Asian nations at 26 percent. The top three runners-up to U.S. helium resources are Qatar, Algeria and Russia.

Expansion is planned internationally – the world’s largest helium-refining unit is planned to come online in 2013 in Qatar.

The worldwide demand can be met for the next five years by resources overseas but by relying on these resources the United States would become a net importer instead of exporter for yet another critical resource.

U.S. Senators Jeff Bingaman (D-N.M.) and John Barrasso (R-Wyo.) have introduced the Helium Stewardship Act (S. 2374), which would continue to fund the Federal Helium Reserve while the BLM establishes a market price for helium and transitions the reserve to a source exclusive to federal users.

The bill provides a softer landing for a helium market in danger of crash landing; it accomplishes this by ensuring a responsible and beneficial drawdown of helium in the Federal Reserve in such a manner that protects the interests of users such as private industry, the scientific, medical and industrial communities, commercial users and federal agencies.

If the helium debt is paid-off in mid-2013, and a bill has not passed by then, the Federal Helium Reserve and BLM pipeline will shut down.

The Helium Stewardship Act was introduced in Congress in April 2012 and is awaiting further action. If the bill is not passed in the lame duck session of the 112th Congress, it will have to be reintroduced in the 113th Congress.

Companies that require large supplies of helium, such as General Electric, are addressing the issue by investing in recycling and conservation technologies, which likely will be a trend that continues. There always has been a need for improvement in helium stewardship, but now like never before, there is an incentive.

At present, the fate of the United States as a supplier of helium is up in the air.

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