Senate bill would preserve US helium reserve

Following a hearing by the Committee on Energy and Natural Resources, a bipartisan Senate bill that would ensure continued operation of the US helium reserve is likely headed for consideration by the full Senate. Committee chairman and bill sponsor Jeff Bingaman (D-NM) warned that if Congress doesn’t act, the helium reserve “will disappear altogether in less than three years, leaving our hospitals, national labs, domestic manufacturers and helium producers without an adequate supply.”

The bill, S. 2374, would set aside 3 billion standard cubic feet of helium, an amount expected to meet the needs of federally sponsored researchers for 15 years. The legislation would replace a 1996 law that mandated the sale of all but 800 million cubic feet of the 30.5 billion cubic feet that were held in the reserve at that time. Since the 1960s the US Department of the Treasury has loaned the Interior Department’s Bureau of Land Management (BLM) $1.3 billion to purchase the gas. Sales from the reserve have paid back most of that. The reserve now supplies about half of the US demand for helium and about 30% of the world’s demand. The bill, said cosponsor John Barrasso (R-WY), “is an important step forward to ensure a stable, and predictable, helium market.” Wyoming has more than half of the country’s proven reserves of helium.

Helium is found in natural gas deposits where uranium is present, and only a few places on Earth have sufficient concentrations of the inert gas to warrant its extraction. Over decades, a hybrid government–industry system has developed in which four US companies operate helium refineries alongside a 420-mile-long pipeline owned by BLM. The pipeline links the Bush Dome Reservoir near Amarillo, Texas, with privately owned helium-producing natural-gas fields in Oklahoma and Kansas. Walter Nelson, director of helium sourcing and supply chain at Air Products and Chemicals Inc, told the committee that that infrastructure is the source for two-thirds of the world demand for helium, about 6 billion cubic feet annually. Modeling indicates that when the 1996 law expires, about 10–12 billion cubic feet of helium will remain in the formation. Without a follow-on statute, BLM will have no authority to continue operating the reserve, and 30% of the world demand will be locked up. That shortage could cause price spikes and market chaos, he warned. Those problems could come sooner, given that BLM’s authority runs out when the $1.3 billion debt is repaid. After that, an appropriation would be required to continue operations.

Moses Chan, a physics professor at the Pennsylvania State University, told senators that small-scale scientists were hard-hit by helium price shocks and supply interruptions that occurred in 2006 and 2007. Even brief interruptions in supply can have major repercussions on research that requires helium, Chan said, because grants generally aren’t designed to cope with volatility in pricing or availability of the gas. Chan, a member of a National Research Council (NRC) committee that in 2010 reviewed US helium policy , said that sales from the US reserve grew rapidly beginning in 2002 and by 2010 amounted to half of US demand. The sale price for helium from the reserve was established by the 1996 act and today is the dominant price worldwide.

The NRC’s 2010 committee report concluded that selling off the reserve on the pace ordered by the 1996 law would lead to the US becoming a net importer of helium within 10 to 15 years. The committee recommended that small-scale researchers be allowed to participate in an existing program for government users of helium. Participation in that program would give them priority when a helium shortage develops. The committee also urged that funding agencies help those researchers acquire equipment that would reduce their net helium requirements.

The committee had recommended that the BLM offer to sell helium to more buyers. To do so, the BLM and the four helium refiners should negotiate terms that would allow third parties to purchase crude gas and to pay for its refining, a process known as tolling. David Joyner, president of Air Liquide Helium America, complained that the four refiners have access to 94% of the reserve’s crude helium, and his company must compete for access to the remaining 6%. But Nelson asserted that Air Products has no spare refining capacity to offer companies such as Air Liquide. Air Products and the other refiners made “enormous investments” to build refineries, said Nelson. “Those industrial gas companies that chose not to make similar investments presumably made what to them were sound business decisions, and spent their capital elsewhere. For Congress in 2012 to give those companies the ability to force the refiners to sell at a set price would be totally un-American and contrary to the basic principles of capitalism,” he noted.