To help answer the most frequently asked questions (FAQ) about helium and the Federal Helium Program, we’ve divided the questions and answers into three sections;
What is Helium?
Helium is the second most abundant element in the universe after hydrogen. It was actually discovered on the sun before it was found on the earth. It has also been detected in great abundance in hotter stars. It is a colorless and odorless inert gas that has unique properties such as the lowest boiling and melting points of all the elements.
Where does it come from?
Helium is a non-renewable natural resource that is most commonly recovered from natural gas deposits. Geologic conditions in Texas, Oklahoma, and Kansas make the natural gas in these areas some of the most helium-rich in the United States. International sources of natural gas tend to have lower helium concentrations.
What is helium used for?
Helium is an essential resource for the aerospace industry, aluminum helium arc welding, computer chip and optical fiber manufacturing, scuba diving mixtures, and for medical uses including MRI magnet cooling, lung tissue visualization, heart catheterization methods, and medical lasers. Helium is also used in rocket engine testing, scientific balloons, and blimps. Surveillance devices, air to air missile guidance, and chemical warfare testing systems are just some of the military uses for helium. The most recognized uses for helium gas are party and parade balloons. However, these make up a very small percentage of the overall demand for helium.
What is the Bureau of Land Management’s (BLM) role in the Federal Helium Program?
Amarillo, Texas is home to America’s Federal Helium Program (Program). The BLM Amarillo Field Office staff operates and maintains the only government helium storage reservoir and pipeline system in the country. This Program supplies about 42% of the U. S. crude helium requirements and about 35% of the world’s demand for crude helium. The BLM supplies crude helium to the private helium refining companies. These companies refine the helium and market it to the consumers. Distribution of refined helium is controlled by private industry as authorized by Congress.
Which companies supply federal helium to end users?
There are several major refiners of helium including Praxair, Linde, Air Products Helium, Inc. to name a few. A list of current federal helium suppliers can be found here. The government does not endorse any particular vendor(s).
Is there currently a worldwide shortage of helium?
Yes. The current global shortage of helium is real. In the simplest terms, the shortage is based on rising demand outpacing supply. Contributing factors to the 2012 helium shortage include:
- Maintenance issues at plants in Qatar, Algeria, and Australia;
- A new plant in Wyoming that has been delayed; and
- A drop in natural-gas prices which has reduced helium production.
Can BLM produce more helium to help ease the shortage?
No. BLM is producing crude helium at maximum production rate, currently 5.8 million cubic feet per day. In 2012, production from the Federal Helium Reserve was 2.1 bcf, while total domestic sales volume was 4.0 bcf.
Is the BLM annual plant maintenance closure contributing to the shortage?
The BLM coordinates its once-a-year preventative maintenance shutdown of the Crude Helium Enrichment Unit with all the private refiners to minimize disruption of the helium supply. Unit shutdowns are typically about 10 days long and are based on manufacturer’s maintenance recommendations. There are short-term reductions in the supply of crude helium during the shutdown that may result in reduced allocations from private companies to their customers. However, once the plant is back online, private refiners can make up volume and restock their helium inventories typically within one week. Preventative maintenance is a good business practice that reduces the risk of longer, unscheduled shutdowns.
Will this shortage improve anytime soon? What about the future?
The present, acute shortage is expected to continue into 2013 until new supply sources come online in the U.S. and overseas. Long- term trends are more difficult to pinpoint. If demand for helium remains strong, shortages may become more commonplace. However, that same demand may encourage new technologies for extracting and refining helium that would bring new sources of helium to the market, thus reducing future shortages.
Have there been previous global helium shortages?
Yes, there have been previous shortages but none that have lasted as long as the current situation because not all of the factors occurred at the same time or to the same degree as now (Winter 2012-2013).
Media inquiries about helium should be directed to Paul McGuire at 405/794-9624 or firstname.lastname@example.org
What is the relationship between helium and natural gas?
Hydrogen and Helium are the two most abundant elements in the universe. Helium escapes from the Earth and is slowly depleting over time. The current theory for helium found on earth is that it is a decay product from radioactive elements found in the mantle and crust. Over time, this helium-migrates up through the ground and may or may not be trapped in the rock formations that also trap natural gas and oil.
Helium occurs in natural gas deposits. In fact, all natural gas has small amounts of helium trapped in it, but for those formations with 3/10th of 1 percent helium concentration, it usually can be economically extracted. Because helium supplies in the United States have been at higher natural concentrations they are less susceptible to natural gas pricing than the international sources at lower helium concentrations.
Foreign plants must process higher volumes to make their helium recovery process economic. If there is low demand for liquefied natural gas the foreign plants shut down those streams and consequently the associated helium production.
Are there alternatives to helium, and if so, what are they?
Finding alternatives for helium will be very difficult and in some cases technically impossible depending upon the application. Helium has many useful properties, some can be substituted (some welding applications) others cannot (very low temperature cryogenic research).
Helium is the coldest liquid known and there is no known substitute. Helium does not become radioactive; helium will not freeze at liquid oxygen and liquid nitrogen temperatures, so replacement would be difficult for these applications.
Why doesn’t the BLM offer to sell more helium than it currently does if there is a global helium shortage?
- Under current law, the BLM is required to offer for sale the helium in the Federal Helium Reserve (Reserve) on a straight-line basis, and the BLM-operated helium extraction plant (Plant) is running at maximum capacity.
- However, this is no longer a sustainable means to draw down the Reserve.
- A slower drawdown would be more efficient and result in lower amounts of unrecoverable helium.
- The BLM has testified in support of legislation (S. 2374, the Helium Stewardship Act) that would slow the drawdown of the Reserve upon full repayment of the helium debt.
When will the helium debt be paid off?
The helium debt balance is about $43 million. This balance should be paid in full by October 2013. Since 1996, the Federal Helium program has repaid to the US Treasury about $1.2 billion from sales of helium and other related products.
What happens after the helium debt is paid off and what are the impacts on the operation of the Reserve?
Once the helium debt is paid off and the Helium Production Fund is terminated in accordance with current law. The BLM may have to undertake an orderly shutdown of the Reserve unless there is discretionary funding appropriated for crude helium sales and Reserve operations.
Will the Secretary of the Interior be able to sell crude helium from the Reserve after the helium debt is paid off?
Current law provides indefinite authority for the Secretary to sell crude helium. However, current law also terminates the Helium Production Fund upon repayment of the helium debt. Therefore, any continued crude helium sales and Reserve operations would have to be paid for with discretionary funding or other approved funding source.
When did the Federal government stop accumulating crude helium?
The Federal government stopped accumulating helium in 1973 when the Federal helium program was still under the management of the Bureau of Mines.
How much helium is currently stored in the Federal Helium Reserve?
As of the beginning of Fiscal Year 2013, there was a total of 15.14 billion cubic feet (Bcf) of crude helium stored in the Reserve. Of this total, 11.44 Bcf was conservation helium and 2.43 Bcf was in the native natural gas. Additionally, there was 1.27 Bcf of privately-owned helium in the Reserve.
In what year did sales pursuant to the 1996 act begin?
The first open market crude helium sale began in March 2003.
Given current sales, how much helium does the BLM project will be left in the Federal Helium Reserve in 2015?
If sales continued at the current rate, there would be approximately 9 Bcf of Federally-owned helium in the Reserve at the beginning of FY 2015.
Is it true that it would be difficult to produce at the 600 million cubic feet (MMcf) of helium that the Helium Privatization Act of 1996 (HPA) mandates the BLM maintain?
- The average federal demand for helium has been approximately 200 million cubic feet per year; the permanent reserve as mandated by the HPA would last about three years at this demand level.
- Generally, there is a law of diminishing returns when it comes to producing a gas field. It is likely that a reserve of 600 MMcf of helium would be difficult and costly to produce, and would be generally of a lower quality than what is currently being produced.
What are the BLM’s prices for crude helium? What will the helium prices be next year?
- The FY 2013 price is $84.00 per Mcf.
- The cost of helium sold for federal purposes will continue to be the minimum allowed by the HPA. For FY 2013 the pricing has been adjusted to $67.75 per Mcf up from $65.50 per Mcf in FY 2012.
- For more information about pricing methodology, please see questions and answers in the Industry section below.
There are six private helium refineries connected to the Federal Helium Reserve. These refineries process the crude helium drawn from the Reserve. Can you explain when these refineries were built and under what circumstances?
The six private helium refineries connected to the Reserve have always been private plants built and operated by the helium industry.
|Year Built ||Original Company ||Current Company|
|1968 || Jayhawk ||Praxair|
|1979 || Bushton ||Praxair|
|1982 ||Sherhan||Air Products|
|1991 ||National||Air Products|
Are there any legal obstacles for other private entities to build new refineries connected to the Reserve? If so, what are those legal obstacles?
The BLM is not aware of any legal obstacles that would prohibit other private entities from building new refineries connected to the Reserve.
Who can I contact with technical questions about helium?
Joe Peterson, Assistant Field Manager, Helium Resources, (806) 356-1030
Samuel R.M. Burton, Assistant Field Manager, Helium Operations, (806) 356-1025
Industry Questions and Answers
About the Federal Helium Reserve:
Will there be changes to the prices other crude helium extractors charge for their product entering the conservation pipeline?
The BLM does not control or have input into those private market transactions.
How is In-kind helium price calculated?
In fiscal year (FY) 2013, the minimum In-kind price was determined by adjusting for inflation using the Consumer Price Index (CPI) to establish a price for helium to Federal Suppliers. In subsequent years, the In-kind price will continue to be adjusted annually for inflation and will include a small unit amount to cover estimated administrative costs.
What is the new calculation methodology for determining the Conservation Crude Helium Price (CCHP)?
The BLM has historically captured costs for infrastructure improvements, inflation, and maintenance. The BLM is currently working with the Office of Mineral Evaluations (OME) to develop a new price methodology. This new methodology would take into account current open market value for crude helium.
Has there been an increase in crude helium prices over the years?
Prior to the passage of the Helium Privatization Act of 1996 (HPA), all of the helium stored and paid for by the government was for federal uses. The HPA mandated that the government to sell off its reserve. Based on a National Academy of Science (NAS) report dated May 23, 2000, it was determined that selling off the reserve was not adversely affecting the helium market; therefore only a one price system was developed. Ten years later in 2010, BLM asked the NAS for a follow-up study and it was determine that the selling of the reserve was having an unexpected adverse impact on the helium market. Based on the NAS report, BLM was selling helium below market value. Since the helium market price was difficult to obtained, due to proprietary information and the increasing cost in bringing helium to market, BLM created the two price system. Since the helium was originally purchased for federal uses, the In-Kind price would continue to use the minimum price strategy stated in the HPA. Also, the CCHP would be calculated by adding to the minimum price the cost for all new infrastructure and unexpected losses to deliver the helium to market. For an example, in 2010 the In-Kind and CCHP was $64.75 per thousand cubic feet (Mcf). For FY 2013, the In-Kind Price is $67.75 and the CCHP is $84.00 per Mcf.
What should be expected in future helium price increases?
In FY2012, the Office of Inspector General audited BLM’s pricing methodology and agreed with the 2010 NAS study that the BLM price should not be based on cost but on market value. Proposed legislation in the Senate and the House of Representatives also agree that the BLM price should be based on market value. Based on these recommendations, BLM is currently working with the Office of Minerals and Evaluation to develop a new market value methodology. This new price methodology is expected to be release for the FY2014 price unless new legislation mandates a different pricing strategy.
Who are the contractors that make up the Cliffside Refiners Limited Partnership?
In 2013, the Cliffside Refiners Limited Partnership (CRLP) is a one person “company” appointed by the partnership. The general manager of the CRLP represents the CRLP in dealings with the BLM concerning matters relating to the management of the various agreements between the CRLP and the BLM.
Who are the partners that built the Cliffside Helium Extraction Unit?
The original CHEU partners were Air Products, BOC, Praxair, and El Paso Natural Gas. The current partners are Air Products, Linde (formerly BOC), Praxair, and Kinder Morgan (formerly El Paso).
When does the current contract with CRLP end?
The CRLP “agreements” end in April 2018, 15 years from the date of acceptance. (Acceptance letter signed January 7, 2004, Acceptance date after first payment April 2003).
Can anyone access the helium pipeline and store helium in the Cliffside storage facility?
You must have a helium storage contract with the BLM or have a storage agreement with a company who has a helium storage contract.
Who do I contact to ask about a storage contract?
Amarillo Field Office, BLM
Attn: Storage Contracts
801 South Fillmore, Suite 500
Amarillo, Texas 79101-3545
Phone Number: 806-356-1000
When is it a requirement to buy crude helium from the Federal Government?
If you sell 200,000 standard cubic feet of helium, or more, in a year to a single federal agency, you must buy crude helium from the BLM. To view current regulation, please go to: www.access.gpo.gov/nara/cfr/waisidx_99/43cfr3195_99.html
If you have any further questions on this determination, please contact us directly to discuss.
Who must buy crude helium from the authorized Federal suppliers?
Federal agencies and their contractors and subcontractors who buy 200,000 standard cubic feet of helium, or more, in a year must buy crude helium from a BLM authorized federal helium supplier.
What does the BLM do with the helium data and information that is collected?
The BLM uses the collected helium information to report salient statistics about helium to the general public, growth startup companies, professional investors and industry analysts. Helium statistics (i.e., sales of helium in the United States, use of helium, exports of helium, and identification of potential occurrences of helium resources in the United States) are collected and published annually to help determine current and future helium requirements.
Who pays for gas samples that are analyzed for helium content?
When an opportunity for a gas sample analysis arises, the BLM analyzes the gas sample at no cost to the person or company submitting the sample. The BLM maintains a database of domestic helium occurrences and associated helium concentrations. Samples analyzed for this program are to further the knowledge of potential helium resources within the United States.
Natural gas analyses and helium resources information from this database are routinely published. However, helium occurrences on private mineral estates require approval from the owner before the data can be released to the general public. In instances of requests for special gas analyses, the BLM analyzes gas samples on a cost reimbursable basis.
How often are plant shutdowns scheduled and why?
The BLM-operating crude helium extraction plant is shutdown typically 10 days a year for preventative maintenance, based on designer’s recommendations. Shutting down during the 10 days help ensure the plant avoids any unscheduled shutdowns due to equipment failures. Please see http://www.blm.gov/nm/st/en/prog/energy/helium/helium_operators_information.html for the next scheduled shutdown.
How much are the costs associated with maintenance?
The Crude Helium Enrichment Unit Agreement states for BLM to pay 2.4 percent (actual costs plus new modifications) in maintenance fees for the repair and maintenance for the Crude Helium Plant. For FY 2012, the Maintenance Fee was approximately $570,000 for the year.
About Federal Lease Lands:
Is all extracted helium reserved to the United States?
Helium produced from Federal acreage is reserved to the Federal Government. State owned or privately-owned minerals are not reserved to the United States. But if fee lands are included in an area that produces Federal helium, then a percentage (commensurate with Federal mineral ownership) of all the helium is deemed to be Federal.
Can anyone obtain rights to the helium produced from their own Federal oil and gas leasehold?
According to your Federal Oil and Gas lease, helium is reserved to the Federal Government. Special provisions to allow recovery of helium are allowed under the conditions outlined below. Rights to Federal helium are not granted on a lease-by-lease basis.
How is helium connected to natural gas prices?
When natural gas is processed, various impurities such as water vapor, carbon dioxide, and helium can be removed. This processing is required to make the natural gas meet various pipeline standards for transport and sale. If there is enough helium in the gas stream (usually about 0.3 percent or greater), special processing can be added to further extract and concentrate the helium and make it ready for sale. Therefore, helium production is actually a “by-product” of natural gas processing. Many years ago helium did not have a viable market and it was simply vented along with the other non-combustible components in the natural gas. This loss of helium prompted Congress to pass the Helium Act of 1960 to establish a helium conservation program.
What is the process to extract helium when building a natural gas processing plant?
The steps you must take are as follows:
- Contact the Federal Leased Lands Team, Amarillo Field Office, BLM
- Express your plans in writing; provide a map or listing of legal descriptions of acreage you plan to feed into the plant. (You will need to own the gas rights or obtain rights to process the gas stream using agreements with the oil and gas lessees.)
- Request rights to the Federal helium in the identified area.
- Negotiate an extracted Federal helium sales contract with the BLM.
How is the percentage of extracted Federal helium production determined?
Currently, the government ownership percentage is determined by using acreage and mineral ownership. The BLM uses acreage from Federal oil and gas leases and from agreement areas. The formula is as follows:
How are extracted helium production volumes and sales revenues allocated?
Both helium production and sales revenues are allocated based upon the helium content of the metered wellhead volumes.
Where are extracted helium sales and royalties payments sent to be processed?
Helium payments are sent to the following address:
Amarillo Field Office, BLM
Attn: Federal Leased Lands
801 S. Fillmore, Suite 500
Amarillo, Texas 79101-3545
Whom can I contact with questions?
Helium Resources: Joe Peterson, Assistant Field Manager, (806) 356-1030
Helium Operations: Samuel Burton, Assistant Field Manager, (806) 356-1025
Media inquiries: Paul McGuire at 405/794-9624 or email@example.com