US helium system auction draws few bids

Privatization of the US Federal Helium System limped ahead yesterday as the General Services Administration concluded its auction with only one realistic offer. The industrial gas company Messer, which currently operates the system on a contract basis, bid $353,350,000.

The only other bidder was Lazarus Energy Holdings, a small petroleum firm that offered $30,100,000—less than a tenth of Messer’s bid.

About 28 million m³ of federally-owned helium contained in the system was also for sale; Messer placed the only bid, offering $21 million. Helium consultant Phil Kornbluth writes in the industrial gas magazine Gasworld that the price offered for the helium itself is far below current market values. “I believe there is a good chance that it will be rejected,” he writes.

The anemic auction, which began accepting bids in July of last year, went forward despite protests and lawsuits from the industrial gas, chemical, semiconductor, medical, and aerospace industries. “The bid opening was anticlimactic, to say the least,” Kornbluth says. “But in line with my expectations.”

Legislation pushed through by congressional Republicans in 1996 and 2013 mandated the sale of the assets, which include a large geological formation near Amarillo, Texas, capable of long-term helium storage. Also included are injection, extraction, purification, and liquefaction equipment and a series of pipelines.

Under the terms of the auction, the General Services Administration now has 130 days to make a decision, which could include rejecting the two bids. The agency also faces an ongoing lawsuit from Air Products. The industrial gas firm claims the sale will cause major disruptions to the US helium supply, which would violate the underlying legislation.

Messer itself has expressed concerns about the wisdom of the sale. In a recent press release celebrating a 99% reliability rate since it took over operation of the system in April 2022, the firm says, “The Federal Helium Reserve is a vital resource for the U.S. economy, and the planned privatization may impact reliable supply of helium. Therefore, Messer believes technical ability and expertise are critical requirements that must be prioritized over privatization to avoid supply disruption.”