Issue Date: September 16, 2013
Dean Olson has started planning for the worst. He’s deciding whether to shut down several of the 11 nuclear magnetic resonance (NMR) machines he oversees for the University of Illinois, Urbana-Champaign, to preserve the precious helium that cools the instruments’ powerful magnets.
Taking steps to safely shut down this equipment, Olson says, will save him from disaster if the helium supply is abruptly cut off. “If my magnets go down, I’m out hundreds of thousands of dollars in restart costs,” he says. A shutdown or other impact from a helium shortage will affect some 350 campus users, including chemical scientists who use the machines in their research.
The cause of Olson’s dilemma—and that of hundreds of thousands of people who use helium—is the uncertainty surrounding the future of the Federal Helium Reserve, which is scheduled to cease operations on Oct. 7 unless Congress intervenes.
The helium reserve is stored in a geologic formation called the Bush Dome Reservoir just outside of Amarillo, Texas, strategically located near many helium-rich natural gas fields. The reserve was created in the 1920s when blimps were the next big thing in national defense. In the decades that followed, the Bureau of Land Management (BLM) continued to inject helium into the reservoir, which at its peak held 32 billion cu ft of helium.
Today, the helium reserve includes an underground storage site as well as a facility that extracts the helium and sends it through a pipeline to private refiners. Those refiners process the gas for sale to end users like Olson.
The reserve today contains more than 10 billion cu ft of the inert gas. And although helium is no longer considered a national security need, it is important to a large range of sectors, including chemical companies, semiconductor makers, airplane assemblers, and laboratory instrument manufacturers. It is also important for scientists who work with NMR and other instruments with superconducting magnets, who must keep samples cryogenically cooled, or who require an inert gas for any of a number of reasons.
Helium supplies have been tight for several years, and prices have been rising. Because the reserve provides 42% of the U.S. helium supply and 30% of the world supply, its sudden closure would exacerbate the supply issues and force already volatile prices even higher, observers say.
The possible shortage “is astonishing to me because the issue is so simple,” says Olson, who works in the University of Illinois School of Chemical Sciences.
In the past few months Olson has gone from hoping that Congress will pass a bill that keeps helium flowing to figuring out what to do in the event that legislators fail to act. Around the U.S., other scientists in academe and their colleagues in industry and government are planning for bad news too.
Scientists and others have been lobbying Congress to prevent closure of the helium reserve for several years, but with less than a month before a shutdown, the issue has reached a crisis point. Some helium suppliers are already carefully controlling supplies of helium.
Congress doesn’t have much time to act. It is only in session for a handful of days before Oct. 1, when BLM, which oversees the helium reserve, plans to start shuttering the facility.
“This is not about party balloons and parade floats. This is about strategic and technological uses of helium,” explains Donna Hummel, a BLM spokeswoman.
Legislators have several options to stop the shutdown. They could pass legislation that addresses the issue for the long term and keeps the facility running. But, with time running out, they also could opt to amend federal budget legislation to keep the reserve operating in the short term.
The House of Representatives has already passed a bill (H.R. 527) that would keep the facility open until the government could auction off the remaining helium to the highest private-sector bidder. But the chemical industry opposes this plan, saying it would be disruptive.
A companion bill, S. 783, is moving in the Senate. Like the House version, it would close the Federal Helium Reserve but auction off the helium gradually over years.
A spokesman for the Senate Committee on Energy & Natural Resources says committee members have heard the concerns of the community and are pushing the Senate bill forward.
In fact, the Senate bill has been approved in committee and is waiting for a vote by the full Senate. Because the two chambers are likely to pass different versions of the bill, a compromise would have to be passed in both the House and Senate before it could be signed by the President.
This is not the first time Congress has meddled in the fate of the Federal Helium Reserve. In 1996, after deciding that the government had no further defense need for helium and shouldn’t be in the business of providing helium for the nation, Congress passed the Helium Privatization Act. This law required BLM to sell the helium until it had paid off around $1.3 billion in debt that the facility had accrued over the years. Once that debt was paid off, the facility would be shut down, which Congress anticipated would happen in 2015.
BLM has been gradually selling the helium to private refiners since. Those companies refine the crude helium and then sell it; about 10% goes to federal users, who get first priority, and the remaining 90% goes to private users.
The 1996 bill is partially responsible for the current crisis, says Moses Chan, a physics professor at Pennsylvania State University who was on a committee that studied the helium reserve for the National Research Council (NRC). The bill set helium sales from the reserve at artificially low prices, in part because helium wasn’t in high demand when the measure was passed. Even though BLM has raised prices since to keep pace with rising demand, “it is cheaper to buy federal helium than to develop new fields,” Chan explains.
BLM is on track to pay off the reserve’s debt two years earlier than anticipated. When BLM realized this several years ago, agency officials notified Congress. The companies that refine and sell the helium soon reacted by lobbying Congress to keep the reserve open.
Keeping the reserve open won’t be a long-term fix for helium suppliers. It would keep this helium source running for 10 more years, BLM’s Hummel says. Gaining that breathing room is important to helium users because new sources of the inert gas are scheduled to come on-line during that time frame.
The 2010 NRC study recommended shutting down the Federal Helium Reserve gradually so as not to trigger a huge disruption in the helium market. “We are not proposing that the helium reserve keep going on forever, but since the plant is operating, there is no reason to shut it off suddenly,” Chan says.
In fact, now that the helium reserve facility debt is paid off, it should earn about $150 million to $200 million in profit each year for taxpayers, supporters point out.
But as the closure of the Federal Helium Reserve appears imminent, more people are realizing the potential impact. “Catastrophic” is the word used by Nick Haines, head of global helium source development for the industrial gas company Linde.
If the reserve shuts down it would leave around 10 billion cu ft of helium stranded underground, including around 2 billion cu ft of helium owned by refiners like Linde, which have been paying rent to BLM to store and deliver their helium inventory. That will possibly result in lawsuits against BLM from the companies, who want to remove their helium from the reserve, Haines explains.
The refiners have a clause in their storage contract that they thought would avoid just this type of problem by allowing the industry to pay to continue running the federal helium system, Haines explains. But BLM says that the federal law takes precedence over any clause in companies’ contracts. “The storage contract holders requested that the government at least enable the industry to fund it,” he says.
Haines believes Congress does understand the seriousness of the situation, but that doesn’t necessarily mean the helium legislation will be passed or funding to continue running it will be provided. “There are so many substantive issues outside helium that are absorbing Congress’ focus that there is a chance funding will be approved, and there is a chance it won’t,” he says.
If funding is not approved, the worst impact could be on federal helium users who will no longer get first priority for helium, Haines explains. The Department of Defense and the National Aeronautics & Space Administration are the major federal users of helium, but most of the gas goes to nonresearch uses.
The effects are already being felt. Just last week, Steven Ashby, deputy director of science and technology at the Department of Energy’s Pacific Northwest National Laboratory, got a notice that a magnet the lab ordered for a high-resolution mass spectrometer will be two or three months late because the vendor won’t be able to get enough helium. “For us, this will mean two or three months of lost productivity,” he says. “The same story is playing out at many other laboratories.”
Ashby leads a group of the chief research officers from 17 DOE labs, which collectively use 2.3 million L (about 800,000 cu ft) of helium a year. Last fall, this group sent a letter to Congress outlining how disruptive a helium shortage would be to the national labs. Ashby points out that 27,000 federal and university scientists use lab facilities every year, so it’s not slowing down just one or two research projects.
“It just doesn’t register in most people’s minds that helium is so important to our science and national security,” Ashby says.
Chan is especially concerned about the effect on academic labs. Many already spend 30% of their grant budgets on helium, and if the prices rise too high too quickly then it will mean cutting graduate students or just shutting down projects altogether. “If the helium prices jump by a factor of three, we just cannot do any research,” he says.
And it’s this threat of rising costs that has Olson from the University of Illinois especially concerned. “If the price goes up a lot, we’re all screwed,” he says. “There is a limit, and I don’t know what the limit is.”
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