Worldwide helium deficit
Rising petrol prices has been the hot topic of late, but while the world has been distracted, another gas shortage has crept up on us - a worldwide helium deficit. We talk to Director of Helium Product Management and Global Logistics for Matheson Tri-Gas, John C. Bigham about the current industry climate.
“It is perhaps important to look very briefly at where helium comes from, in order for readers to fully appreciate why there is currently a worldwide shortage” explains John.
Nearly 2/3 of the world’s helium supply is found within a 250-mile radius of Amarillo, Texas - the ‘Helium Capital of the World’. A by-product of billions of years of radioactive decay, helium is distilled from natural gas that has accumulated in the presence of uranium and thorium deposits. If it’s not extracted during the natural gas refining process, the helium is simply lost.
“Though helium in principal is abundant, it is produced as a by-product of natural gas processing, its value is considerably less and is therefore secondary – it isn’t valuable enough, to those making billions from the natural gas extraction, to justify developing a natural gas field and building a gas processing plant purely to extract helium, the helium distillation plant is an add on.”
After World War I 32 billion cubic feet of the gas were bunkered underground by the U.S. government at the Cliffside Field, called the ‘Federal Helium Reserve’. This stockpile was then set up to be privatised after the Helium Privatization Act (HPA) of 1996 was passed and is being sold off at a constant rate (2.2 billion feet per year) intended to deplete the Federal Reserve except for a permanent strategic reserve of 600 million cubic feet by 2015.
“The US Bureau of Land Management (BLM) pipeline and the associated private crude Helium plants were designed to produce 4 billion cubic feet per year of crude helium to supply the 6 private helium refineries located along this pipeline system. Due to depletion of the Hugoton Natural Gas field, we believe that these refineries can no longer operate, simultaneously, at full capacity. This is a recent phenomenon and we believe this decline reduced available BLM network supply by approximately 300 million cubic feet in 2007. We expect that this gap will continue growing each year.
In terms of new supply, there is an abundance of helium bearing natural gas in the Middle East. The Qatar helium plant began production in 2005 but ramped up slower than anticipated producing at only at 40% - 60% of capacity through much of 2007. The Qatar plant is expected to hit full production in 2008. The Helium plant in Skikda, Algeria started production in 2007, but will not reach full capacity until sometime in 2011 when the natural gas trains which were destroyed by an explosion several years ago have been replaced. Together Qatar and Skikda were originally expected to produce 1.2 billion cubic feet per year in 2007. In reality, they contributed about half of that during 2007. Linde AG will be starting up a 150 million cubic feet per year plant in Darwin, Australia towards the latter half of 2009. Matheson Tri-Gas, in a partnership with Air Products, is building a plant in Wyoming expected to produce 200 million cubic feet per year initially, and later expanding to 400 million cubic feet per year.
“Global demand was estimated at 6.3 billion cubic feet per year in 2007. Due to the shortfall in the BLM pipeline system, maintenance outages and delays associated with new production capacity, available helium supply has not kept pace with the demand. At a minimum, the current helium shortage is expected to continue into 2010. While the shortage persists, prices are expected to continue rising in order to ration scarce molecules.
Helium is consumed in a wide variety of applications. Party balloons and blimps are what come to mind for most people. Currently, the greatest single use of helium is in MRI medical scanners because Helium is the only substance capable of reaching the very low temperatures required by superconducting magnets. Next in order of consumption are pressurizing and purging, welding protection and controlled clean atmospheres. Helium demand growth in Asian markets associated with manufacturing applications such as semiconductors, flat panel displays and optical fibre is also partially responsible for the present strain on supply.”
In summary, helium supply is expected to remain very tight as production from the BLM pipeline system continues to decline. The new sources mentioned will help to replace a portion of this lost capacity; however, some additional larger sources are required to fulfill global demand. Until that time, helium consumers will be subject to availability issues anytime a major helium source takes an unexpected or prolonged maintenance outage. The limited helium supply coupled with the demand growth in high-tech applications is expected to continue to drive pricing for the next 2-3 years. Once sufficient new capacity comes online, the supply vs. demand equilibrium should be re-established and pricing should stabilize.
