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The Impact of Selling the Federal Helium Reserve
FIGURE 1.1 Annual helium recovery and sales, 1960-1997. The area between the curves is the net amount that was added to or removed from the reserve (courtesy of the Bureau of Land Management).
Although helium in the ground was owned by the federal government and could only be purchased—unlike oil and gas, which could be leased—the Girdler Company built two commercial helium plants in 1927-1928: one at Dexter, Kansas, and the other at Thatcher, Colorado. These plants made Girdler the only private helium producer in the world at the time. Over the next 10 years, Girdler produced some 14 million scf (380,000 scm), almost 90 percent of which went to the Navy airship program. The Girdler plants were sold to the U.S. government in 1937, returning helium to the status of a federal monopoly. Later, BOM built a fourth plant, the Exell facility in Texas, which eventually became its last operating plant.
Considerable optimism about future markets for helium developed in the 1950s, and helium began to be considered as a resource for the Cold War. As a result, Congress enacted the Helium Act Amendments (P.L. 86-777) in 1960, which in essence directed the secretary of the Interior to (1) accomplish the acquisition and conservation of helium, using the partially depleted Bush Dome reservoir in the Cliffside field for storage and (2) buy commercial crude helium, using funds borrowed from the Treasury. The act also permitted private helium production, so that BOM would become a buyer of last resort. As a direct result of the 1960 Act and on the basis of 22-year contracts with BOM, several private oil and gas producers built five new helium extraction plants. It soon became apparent, however, that the optimistic market projections were not going to be met. BOM had 35 billion scf (970 million scm) of crude helium in storage by 1973 (see Figure 1.1), plus a large and growing debt to the Treasury. Under the circumstances, the government cancelled the contracts, touching off several years of litigation, and most private helium production was suspended during that period. What had begun as an effort to assure the government of sources of helium at a time when there was no private production evolved first into a program to promote helium conservation by encouraging private companies to extract it