Supply of helium to the worldwide market has been tight since early 2011 and will remain so until the second half of 2013 or early 2014, when three new supply sources will have begun operations. Uncertainties relating to the timing of future helium sources, projecting market demand during periods of economic uncertainty, and the United States’ Bureau of Land Management’s (BLM) changing role in helium supply make this a challenging market to manage.
Tight supply has caused the BLM to transition from serving as the “fly wheel” to the worldwide helium market, to the position of a primary supplier. This year, helium supply was particularly tough to manage. The continued supply disruptions affecting most of the major sources of helium across the globe forced many refiners to put customers on extended supply allocations. As the BLM’s role as the “fly wheel” has ended, there is now recognition that a private sector “spinning reserve” to provide helium during periods of peak demand and plant outages is needed.
CryoGas International spoke with the helium experts and managers at major industrial gas companies as well as those at the BLM to get the insider’s view of this critical market. An important point noted by all is the changing role of the BLM in the global supply chain, as that reserve begins to decline. John Hamak, Lead Petroleum Engineer, BLM Amarillo Field Office stated, “We are producing everything we can from the Helium Enrichment Unit (HEU). However, the production rates are declining and even with the addition of centralized compression by late 2013, our production will continue to decline.”
US Government’s Role in Helium
The Helium Privatization Act of 1996 directs that substantially all of the helium stored at the BLM reservoir be sold off by the beginning of 2015 at prices sufficient to repay the federal helium program debt. To manage this effort, the US government operates the crude helium pipeline system that includes the storage reservoir at the Cliffside Bush Dome and a 425-mile pipeline system originating at Cliffside and ending near Bushton, KS. The government manages this system through the US Department of the Interior BLM Amarillo Field Office. The pipeline connects the nine privately-owned crude helium plants and six privately-owned helium purification/ liquefaction plants located in the Hugoton Field. The current withdrawal rate from BLM storage (operationally capped at 2.1 billion cubic feet (Bcf/year), with unaccounted-for losses and depletion in the Hugoton, will bring the Cliffside Reserve contained helium to an estimated 10 Bcf by 2015.
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