Saturday, February 09, 2013

Arizona could help avoid global helium shortage

Arizona's helium reserves could become a critical global resource if Congress acts to open the market to competition.

 The debt on the Federal Helium Reserve near Amarillo Texas, will be paid off this year from proceeds from the sale of helium but once that happens, there will be no further funding mechanism to run the FHR and it's expected to shut down.   Congressional geoscience Fellow Kelly Kryc has written an analysis in GSA Today of the unintended consequences of the 1996 legislation that mandated the sale of helium from the reserve prices much below market rate.  Kelly notes that "the low federal price of helium meant that the FHR became the source of choice for 50% of domestic and 30% of global helium demand. Furthermore, because the federal government sells helium so cheaply, private industry has not been incentivized to develop new helium sources." 

She warns that "any disruption in the supply from the FHR could have a debilitating impact on
American industries and businesses because of the lack of a diverse supply chain."

Why does this matter?   Kelly points out that "It is inert, has high thermal conductivity, low
viscosity, and high ionization potential, which makes it highly valued for many applications, including high-tech manufacturing (e.g., semiconductors, optical fibers, and LED lights); cryogenics
(e.g., magnetic resonance imaging and fundamental science); pressurization and purging (e.g., space and defense rocket launches); lifting (e.g., weather and party balloons); and welding, leak detection, and commercial diving, among others."

Legislation to set market prices for helium from FHR stalled in Congress last year.

Arizona has historically been a major supplier of helium but none is currently produced.  The St. John's field could produce significant helium in conjunction with carbon dioxide.   Kinder Morgan is developing the field to supply CO2 for enhanced oil recovery in aging oil fields of New Mexico and Texas.

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