The pending closure of an underground U.S. helium depot in the Texas Panhandle is raising concerns that a gas used in everything from party balloons to medical imaging equipment could be in short supply.
High-tech companies and manufacturers including General Electric Co. are pushing Congress to act quickly to extend the life of the reserve, which could shut down as early as October, years before supplies are depleted.
“There is still a considerable reserve left, and to just shut it off and leave it in the ground wouldn’t make sense for any end-user,” Tom Rauch, a global sourcing manager for GE Healthcare, said in an interview.
The U.S. first sought to protect its helium supplies in the 1920s to keep a steady supply for military dirigibles. While the blimp business didn’t take off as expected, by the 1960s helium had become critical to the space program and in other applications leading the U.S. to begin storing the gas in an underground reservoir 20 northwest of Amarillo, Texas. Congress mandated its phaseout in 1996, concluding it was an unnecessary relic.
However, GE, headquartered in Fairfield, Connecticut, and others say the facility should remain open until all the reserves are sold off. Shutting it down could take the air out of U.S. helium sales, about a third of the global supply, raising costs and making supplies more scarce, Rauch said.
GE uses helium to cool magnets on its magnetic resonance imaging, or MRI, machines that provide internal images of the human body. Maintaining the equipment could be harder if Congress doesn’t act, Rauch told a House panel in July.
Other companies that rely on helium include Munich-based Siemens AG, which also makes medical imaging equipment, and Santa Clara, California-based Intel Corp., which uses it to make computer processors.
The Bureau of Land Management, the division of the U.S. Interior Department that operates the reserve, estimates it holds five year’s worth of supply, Joe Peterson, assistant field manager for helium resources, said in an interview. In fiscal year 2012, the U.S. raised about $200 million in revenue through its helium reserve program, he said.
One issue facing lawmakers is whether to scrap the current system in which BLM sets the price, or to allow more companies to bid in an open auction, which supporters say may bring higher prices and more government revenue.
Rauch said GE worries such a change could lead to disruptions in the helium market.
The 1996 law, called the Helium Privatization Act, required the U.S. to sell its helium stores to pay the $1.3 billion in debt that had accumulated over a 10-year period during which the reserve had been buying helium for storage. Opponents of the program described it as a boondoggle and said federal agencies could procure helium more cheaply from private suppliers, such as the company now known as Exxon Mobil Corp.
The books could be clear by October, Peterson said, and the law doesn’t allow for continued sales outside of contracts BLM already has with companies to refine the unpurified helium it sells.
Fixing the problem will be an early test to energy committees in Congress also grappling with issues such as natural gas exports and offshore oil drilling. The looming deadline may elevate helium ahead of those other high-profile issues this year, congressional aides said.
“This is not something where you can kick the can down the road,” said Richard Goodstein, who lobbies for Allentown, Pennsylvania-based Air Products & Chemicals Inc., one of four companies that refine helium for customers. “If this doesn’t get done essentially by the end of the fiscal year there is going to be chaos among all these high-tech manufacturers.” The federal fiscal year ends Sept. 30.
Lawmakers say they’ll try to move quickly to ensure U.S. helium sales continue unabated after the operating debt is paid.
So far, the Republican-led House Natural Resources Committee and the Senate Energy and Natural Resources panel, run by Democrats, have offered different solutions, which could delay action on the issue.
GE prefers Senate legislation offered last year that would allow the U.S. reserve to keep operating until the helium was depleted, Rauch said. That measure was not voted on.
Draft legislation from the House Natural Resources Committee released in December would require BLM to set up quarterly auctions and sell the gas to the highest bidder and shut down the facility when the reserves are sold.
By expanding the pool of potential buyers, the U.S. could get a higher price for its helium, Representative Doc Hastings, a Washington Republican, said in a statement in December when the “discussion draft” was released. He called the current helium program outdated.
“A helium auction ensures taxpayers receive a fair return on federal helium sales while promoting greater participation and free market competition,” said Spencer Pederson, a spokesman for the committee. Hastings plans to introduce a bill in “the near future,” Pederson said.
Under the current system, more than 90 percent of the helium sold by the U.S. goes to four refiners along pipelines in Texas, Oklahoma and Kansas: Air Products & Chemicals, Linde GR, Praxair Inc., and Keyes Helium Co., a private company based in Keyes, Oklahoma. They take out impurities and sell the helium to customers like GE or Siemens.
BLM sets the price, currently at $84 per thousand cubic feet.
About 6 percent is available to companies including Air Liquide SA that distribute helium but don’t refine it. These companies have to contract with refiners linked to the U.S. reserve to purify the helium for sale.
Passing helium legislation is a priority for Senator Ron Wyden, an Oregon Democrat and the new chairman of the Senate Energy and Natural Resources Committee, said Samantha Offerdahl, a spokeswoman for the panel.
“Any legislation will need to address supply stability as to not disrupt the operations of our health care providers, high-tech manufacturers, basic science researchers, and space missions,” Offerdahl said in an e-mailed response to questions.
The debate comes as helium prices are already on the rise. BLM’s Peterson said a cylinder of helium to blow up party balloons used to sell for as much as $125 and now costs up to $195.
While GE is paying more for helium, Rauch said the company’s biggest concern was access to supplies.
Helium from Qatar, which is building the world’s largest processing facility, will alleviate some supply concerns. Even so, a closure of the U.S. reserve “would ripple through the world,” Rauch said.