The supply side of the helium market presents its own complexities. First of all, helium is a derived product (a term that will be defined shortly), which makes assessing the consequences of various options difficult. Helium is also a niche market with high barriers to entry, such that much of the supply chain is dominated by a few companies. This raises transparency and responsiveness issues when assessing the steps this committee might recommend and BLM might undertake. Finally, the existence of the Helium Reserve itself, which currently satisfies over one-half of the annual U.S. demand for helium and supplies approximately one-third of the annual global consumption, is a complicating factor. Any significant change in the amount of helium supplied from the Reserve could greatly impact its availability and pricing. All of these factors must be taken into account in assessing whether selling off the Helium Reserve in the manner prescribed by law has had any adverse effect on important users of helium in the United States.

This chapter begins with a discussion of why helium has become so important to such a disparate set of activities. It goes on to briefly describe the sources of helium and how it is extracted from natural gas, refined, and moved through the supply chain to the end users. Next, the chapter proceeds to the market issues surrounding helium and how they affect the committee’s assessments and recommendations. The important role played by the Reserve in meeting both domestic and foreign needs is then discussed, including how BLM’s operation of the Reserve affects the market. In response to the charge to the committee, included in this discussion is an assessment of the predictions of the 2000 Report (National Research Council, 2000) in light of developments in the helium market during the last decade. The chapter ends with recommendations that address some of the shortfalls in current actions and some final, concluding remarks.

DEMAND FOR HELIUM

Applications

The many uses for helium arise from its unique physical and chemical characteristics—specifically, its stable electronic configuration and low atomic mass. Among those unique characteristics are the temperatures at which helium undergoes phase transitions. Helium has the lowest melting and boiling points of any element: It liquefies at 4.2 Kelvin and 1 atmosphere and solidifies only at extremely high pressures (25 atmospheres) and low temperatures (0.95 Kelvin). These characteristics have led to many cryogenic applications for helium in science, industry, and government, and those uses make up the largest single category of applications by percentage of helium consumed.



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