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US helium strategy threatens supply


28 January 2010

Rebecca Renner/Pennsylvania, US

The US should change the way it sells helium from its huge federal stockpile to remove its influence over the world market and avert national shortages of the material.

The government should let market forces set the price of its helium, sell reduced quantities over time, and provide priority access to helium for researchers, a 22 January report from the National Academy of Science (NAS) advises. 

Helium is produced commercially during the processing of natural gas and has unusual properties that make it essential in many technical applications; for example, as a carrier gas in chromatography, in its liquid form to cool superconductive magnets in magnetic resonance imaging equipment, and in the manufacture of computer chips.  

"Unpredictable fluctuations in helium prices have had an adverse impact on academic research"
- Gary Douberly, University of Georgia, US

In 1996, the US Congress ordered the government to sell off most of the federal helium reserve - 32 billion cubic feet of the gas stored underground in porous rock near Amarillo, Texas - by 2015. But rising global demand and recent supply shortages caused helium prices to rise dramatically during 2006-2007. The global recession disrupted the trend, but the NAS report predicts tight supply in the long-term. 

Meanwhile, these market issues have had no impact on the approach taken to sales from the federal reserve, as the Helium Privatization Act of 1996 dictates the price and quantity of helium sold from the stockpile.

If this pattern continues, 'the concern is that the US would become an importer, relying on sources in Russia and the Middle East tied to liquid natural gas production,' says NAS committee co-chair Charles Groat from the University of Texas in Austin, US. 'There is concern that the scientific community would not be able to compete with Asian markets for the supply,' he says. 

'Unpredictable fluctuations in helium prices have had an adverse impact on academic research, especially in the fields of experimental physics and experimental physical chemistry,' says Gary Douberly, who studies helium nanodroplets at the University of Georgia, US. 'I agree that some type of system should be established to protect university researchers from unpredictable price fluctuations and potential helium shortages', he adds. 

Subjecting the reserve to market forces and more market-savvy management also makes sense, says Phil Kornbluth, executive vice president of the global helium business at Matheson Tri-Gas, a world-wide gas supplier. Currently the US helium reserve supplies a third of global helium demand, but only four refiners have access to this crude helium which is priced below market prices. 'This creates a significant distortion of the market,' he says.

 

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