Investing in Helium

Helium is a noble gas. It is lighter than air, and often used in airships and balloons because it is not flammable like hydrogen. Even though it is the second most abundant element in the universe, the concentration in the atmosphere is very low because most of it escapes into space. Most commerical helium is extracted from natural gas by fractional distillation. The major domestic end uses of helium were cryogenics (26%), controlled atmospheres (22%), pressurizing and purging (17%), and welding (17%). Other uses included chromatography, lifting gas, and heat transfer (12%); leak detection (4%); and synthetic breathing mixtures (2%) (fig. 3). In cryogenics, magnetic resonance imaging applications dominated liquid helium use.

Domestic Production and Use: The estimated value of Grade-A helium (99.997% or better) extracted domestically during 2010 by private industry was about $730 million. Nine plants (five in Kansas and four in Texas) extracted helium from natural gas and produced only a crude helium product that varied from 50% to 99% helium. Ten plants (four in Kansas, and one each in Colorado, New Mexico, Oklahoma, Texas, Utah, and Wyoming) extracted helium from natural gas and produced an intermediate process stream of crude helium (about 70% helium and 30% nitrogen) and continued processing the stream to produce a Grade-A helium product. Of these 10 plants, 6 (4 in Kansas, 1 in Oklahoma, and 1 in Texas) accepted a crude helium product from other producers and the Bureau of Land Management (BLM) pipeline and purified it to a Grade-A helium product. Estimated 2010 domestic consumption of 54 million cubic meters (1.9 billion cubic feet) was used for cryogenic applications, 32%; for pressurizing and purging, 18%; for welding cover gas, 13%; for controlled atmospheres, 18%; leak detection, 4%; breathing mixtures, 2%; and other, 13%.

Price: The Government price for crude helium was $2.33 per cubic meter ($64.75 per thousand cubic feet) in fiscal year (FY) 2010. The price for the Government-owned helium is mandated by the Helium Privatization Act of 1996 (Public Law 104-273). The estimated price range for private industry’s Grade-A gaseous helium was about $5.05 to $5.77 per cubic meter ($140 to $160 per thousand cubic feet), with some producers posting surcharges to this price.

Recycling: In the United States, helium used in large-volume applications is seldom recycled. Some low-volume or liquid boiloff recovery systems are used. In Western Europe and Japan, helium recycling is practiced when economically feasible.

Government Stockpile: Under Public Law 104-273, the BLM manages the Federal Helium Program, which includes all operations of the Cliffside Field helium storage reservoir, in Potter County, TX, and the Government’s crude helium pipeline system. The BLM no longer supplies Federal agencies with Grade-A helium. Private firms that sell Grade-A helium to Federal agencies are required to purchase a like amount of (in-kind) crude helium from the BLM. The Helium Privatization Act of 1996 mandated that all Federal Conservation helium stored in Bush Dome at the Cliffside Field be offered for sale, except 16.6 million cubic meters (600 million cubic feet).

In FY 2010, privately owned companies purchased about 4.8 million cubic meters (172 million cubic feet) of in-kind crude helium. In addition to this, privately owned companies also purchased 59.2 million cubic meters (2,130 million cubic feet) of open market sales helium. During FY 2010, the BLM’s Amarillo Field Office, Helium Operations (AMFO), accepted about 13.3 million cubic meters (479 million cubic feet) of private helium for storage and redelivered nearly 60.5 million cubic meters (2,180 million cubic feet). As of September 30, 2010, about 12.9 million cubic meters (466 million cubic feet) of privately owned helium remained in storage at Cliffside Field.

Events, Trends, and Issues: During 2010, some helium suppliers announced price increases of 5% to 10% in response to continued increased raw material, energy, and distribution costs. The price of pure helium is expected to continue to increase as production costs, including the price of crude helium, increase. The BLM raised the FY 2011 price of open-market crude helium to $2.70 per cubic meter ($75.00 per million cubic feet) based on recommendations from a report from the National Research Council of the National Academies. During 2010, helium consumption increased by about 15% compared with that of 2009. During FY 2010, the AMFO conducted four open market helium offerings, selling a total of 59.2 million cubic meters (2,133 million cubic feet). The Skikda, Algeria, helium plant continued to experience operational problems, and the plant in Arzew, Algeria, experienced production problems related to the liquefied natural gas trains. The Qatar helium plant experienced no major operational problems and maintained the same rates of production as in 2008 and 2009. A new helium plant in Australia started up in March. Worldwide, eight new helium plant projects were scheduled for startup between 2011 and 2017. Two projects were scheduled for startup in the United States during 2011–14 near Riley Ridge, WY, and St. Johns, AZ. The other plants were planned for Algeria, China, India, Indonesia, Qatar, and Russia.

World Resources: As of December 31, 2006, the total helium reserves and resources of the United States were estimated to be 20.6 billion cubic meters (744 billion cubic feet). This includes 4.25 billion cubic meters (153.2 billion cubic feet) of measured reserves, 5.33 billion cubic meters (192.2 billion cubic feet) of probable resources, 5.93 billion cubic meters (213.8 billion cubic feet) of possible resources, and 5.11 billion cubic meters (184.4 billion cubic feet) of speculative resources. Included in the measured reserves are 0.67 billion cubic meters (24.2 billion cubic feet) of helium stored in the Cliffside Field Government Reserve, and 0.065 billion cubic meters (2.3 billion cubic feet) of helium contained in Cliffside Field native gas. The Hugoton (Kansas, Oklahoma, and Texas), Panhandle West, Panoma, Riley Ridge, and Cliffside Fields are the depleting fields from which most U.S.-produced helium is extracted. These fields contain an estimated 3.9 billion cubic meters (140 billion cubic feet) of helium.

Helium resources of the world, exclusive of the United States, were estimated to be about 31.3 billion cubic meters (1.13 trillion cubic feet). The locations and volumes of the major deposits, in billion cubic meters, are Qatar, 10.1; Algeria, 8.2; Russia, 6.8; Canada, 2.0; and China, 1.1. As of December 31, 2010, AMFO had analyzed about 22,000 gas samples from 26 countries and the United States, in a program to identify world helium resources.

Substitutes: There is no substitute for helium in cryogenic applications if temperatures below –429° F are required. Argon can be substituted for helium in welding, and hydrogen can be substituted for helium in some lighter-than-air applications in which the flammable nature of hydrogen is not objectionable. Hydrogen is also being investigated as a substitute for helium in deep-sea diving applications below 1,000 feet.

Helium Producers
Air Products (NYSE: APD) - The largest producer and supplier of liquid and gaseous helium.
BP America - crude helium extraction plants in Sunray, Texas and Ulysses, Kansas
DCP Midstream
EnCana Oil & Gas
ExxonMobil Gas & Power Marketing
IACX Energy
K-L Energy Partners
Linde Global Helium
Midstream Energy Services
Nacogdoches Oil & Gas
ONEOK Field Services
Pioneer Natural Resources
Praxair (NYSE:PX) -

National Helium Reserve - (wiki)

National Academy of Sciences - (nas) - Selling the nation's helium reserve - Properties and History, U.S. Federal Helium Reserve and the Helium Privatization Act, Uses of Helium, Helium Supply, Present and Future, Economics of the Helium Market, Impact of the Implementation of the Helium Privatization Act

Helium News
2011-11-18 - (rig) - Helium to move from byproduct to primary drilling target
2011-07-06 - (aic) - Helium in the adult critical care setting
2011-07-03 - (bg) - Denbury makes $191 million deal for methane-helium plant
2011-06-29 - (ibt) - Mining moon for helium-3: Future perfect power source?
2011-06-28 - (bj) - Denbury buying Wyoming gas, helium plant
2011-06-13 - (pt) - Communications failure at DOE blamed for causing helium-3 crunch
2011-06-12 - (gw) - World exclusive: Helium shortage 2.0
2011-05-31 - (wp) - America's looming helium crisis (no, really)
2011-05-29 - (nyt) - Agencies' lack of coordination hindered supply of crucial gas, report says
2011-05-23 - (ufl) - UF receives $1.8 million to upgrade helium-supplying facility on campus
2010-10-26 - (am) - Amarillo Natural Gas buys old helium plant
2010-10-12 - (pr) - Air Products and Matheson break ground for new Wyoming helium plant
2010-08-23 - (tel) - World helium reserves are running out, Nobel laureate claims
2010-08-16 - (wsj) - Air Products gets FTC pact, extends Airgas offer
2010-02-26 - (wsj) - Worries balloon over helium
2010-02-05 - (wsj) - Air Products bids $5.1 billion for Airgas
2010-01-27 - (pw) - Helium sell-off risks future supply

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