The Helium Crisis
Why the Crisis?
There are several factors creating the helium crisis:
Pricing of the Federal Reserve Helium to refiners is well below market cost while the demand for helium has increased with the introduction of new technologies and expanding markets. Existing refiners are not able to keep up with the production of helium as it is derived from the production of natural gas. New sources of supply have been plagued with production issues and are located in foreign countries, owned by their governments with supply constraints.
Solutions
One of the most promising source of helium is the giant liquefaction plants used to produce LNG. Helium is left as a gas when methane is chilled to become a liquid. LNG facilities may be able to extract helium commercially at concentrations of just 0.04 percent. Other solutions include recycling of helium, new technologies requiring less helium, use of alternative gases for different uses and allocations.
What is Helium?
Helium is the second element of the periodic table and an inert gas and one of the most abundant elements in the universe however rare on Earth. Helium is a byproduct of natural gas processing and found as a trace element in the atmosphere.
“The most vocal advocate for helium conservation is Professor Robert Richardson of Cornell University in Ithaca, New York. Professor Richardson won the Nobel Prize for Physics in 1996 for his work on superfluidity – an unusual property of ultra-cold helium that makes it behave like a frictionless liquid.
Professor Richardson warns that the US stockpile sell-off has resulted in cheap helium being consumed at an unprecedented rate – and that the world available reserves of the gas could become seriously depleted within 25 to 30 years. He believes the realistic price for helium should be 20 to 50 times higher than it is now – which would make it profitable for suppliers to extract and refine helium, and cost-effective for industrial users to recycle it. At that price, a typical party balloon filled with the helium would cost around $100." Kidela Interview.
"Well, we've been on allocations, like everybody in the country, and the allocation decreased another 5%, meaning . It's really hard to say, because there are so many different kinds of helium sales, different customers, and we've aggressively raised price, because of the shortage and because of the extra expense that we've incurred. Transferring helium supplies, where they're available, to places where we have demand by critical -- from critical customers in the petrochemical industries or the medic, health care, or things like that.
Unfortunately, a lot of the helium that's refined in this country, much of which is owned by the US taxpayers, is being exported, and it's hurting US jobs. And it's a real shame.
And we're trying to get the word out that that's not right. That the US economy has enough problems without allowing for -- not giving the US
businesses access to this helium. And so we'll see what happens.We don't expect this to be over soon.
We've had to shed some customers, but in the long run, usually when there's a shortage, price does offset volume losses and expenses, and we
still have the biggest and best supply chain in the United States for delivering helium to customers. So we don't see permanent damage to our
helium business from this, but it is a hassle to move all this helium around for critical customers.
Peter McCausland - Airgas Inc - Chairman & CEO
Where should we go from here!
Ten years ago, the elimination of the government’s stockpile of helium seemed like a cost-efficient proposal, but today this is not a sustainable solution. With prices rising and ongoing supply disruptions , the preservation of the helium reserve provides the nation an opportunity, at least for several years, to increase domestic production capacity. It has been recommended that the U.S. Government should stop the sale of the helium reserve and begin plans to increase the strategic reserve and become a helium bank for the domestic private sector.
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