I have been writing about the helium shortage that users are presently experienced. Here is a great article examining all aspects of the present helium pricing and shortage. It also addresses the future of helium supplies.
Great Article Popular Mechanics Helium Supply Article
Thus far in 2012, the allocation of helium is a hot topic with a number of my customers. In a previous post, I brought up the Bureau of Land Management and how they handle a large portion of the helium supply in the country. From the BLM website, it is indicated that the BLM currently supplies 42% of domestic supplies and 35% of the worlds supply. Currently, the BLM uses about 2 billion cubic feet per year with a total supply in the reserve still untouched is 24 billion. In 2012, the cost of this helium to private companies like BOC is $84 per thousand cubic feet. Private sources of helium sell their helium for around $160 per thousand cubic feet. Yes, the US Goverment has the most helium and sells in at half price! Why? Because that is what Congress told them to do and Bill Clinton signed into law in 1996.
Recent hearings in Congress has centered around how to best manage helium supplies as the BLM has a finite amount of helium and is no longer re-plenishing the supply. My best guess is that the BLM facility will be sold to a private interest with stipulation on how the supply should be managed so that we have ample supply of helium for research and that MRI I might need in the future.
Also at stake is the price of helium. In that the US Government is deeply in debt, can we afford to give away at important resource at a 50% sale price? My guess is probably not. So given that a little less than half of the helium now is sold at half the market price, the chances of helium prices declining in the next 10 years is rather low. Also, as the world continues to develop, the amount of helium demand is expected to increase. For leak detection customers, using helium, many are looking for alternative tracer gases such as 5% hysrogen, 95% nitrogen. Other applications use helium for its cooling properties and there is no substitute.
So that’s that…only one other question lingers in my mind…if we have 24 billion cu. ft of helium in the ground, why is there a shortage?
When a helium supply shortage occurs, the media first focuses on party ballons and the effect that the lack of helium will derail party plans. But in reality, there many more important important uses of helium including physics research, display manufacturing and MRI’s that use liquid helium for cooling. Leak detection is not given a high priority status and users face allocation.
One question that is not known by many helium users is that helium is a mined, extracted in small concentrations with some natural gas wells. Not all natural gas wells have sufficient helium concentrations to be a viable source for helium. Most of these helium sources are in the north Texax and Oklahoma.
In 1925, the National Helium Reserve was established by the United States Goverment. This reserve was for primarily military airships. By 1995, a billion cubic feet of helium gas was in reserve in the Bureau of Land Management(BLM) facility in Amarillo,TX. The debt to store this helium totaled $1.3 billion. Thus the “Helium Privatization Act of 1996″ set in motion the directive to sell of the US helium reserve by 2015.
Currently, the Bureau of Land Management is the source for low cost helium. There are actually natural gas installations that wish to sell their extracted helium to the BLM but cannot do so because the law that the US Government is getting out of the helium business.
There are foreign sources for helium that may help supply. Unfortunately, it is not expected to help cost. In my next posting, I will examine the current helium supply and the expected cost increases in the future.
If you’d like to see an interesting video showing the BLM facility in Amarillo, see the following report from a Texas TV station