The world’s helium industry has oscillated from one of tight supply starting in 2012 to an over-supply situation that developed in early 2014, wreaking havoc on supply chain management.
The culprit was new large sources that came on-stream in Qatar and Algeria in late 2013 causing a surplus in supply to develop in 2014. Persistent economic weakness across the globe has slowed helium demand in most regions. Helium recovery, recycle, and substitution have further eroded helium demand permanently in some applications. Access to plentiful supply has put downward pressure on retail helium prices. The net effect of all this was the world’s helium demand-supply relationship changed in the short span of a year from one of acute shortage to one of surplus in supply that is expected to last for at least a couple more years.
The US Bureau of Land Management (BLM) reduced supply from CY2013 to CY2014 by approximately 650 million cubic feet (mmcf) because of forecast depletion and reduced demand for crude on the crude pipeline. The BLM held their second public auction on August 26, 2015 and sold 275 mmcf at an average price of $104/Mcf — in line with the world’s crude values. The auction price was then set as the FY2016 conservation sale price, a decline of $2/Mcf from last year. This is the first time the BLM’s conservation sale price has ever declined.
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