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The Impact of Selling the Federal Helium Reserve
Helium is also a rare and nonrenewable resource. Unlike ordinary goods and services that can be produced virtually forever, every unit of helium that is produced and used today will eventually escape Earth's atmosphere and become one less unit available for use tomorrow.
Although the total terrestrial inventory of helium is estimated to be 17,000 trillion standard cubic feet (scf), equivalent to 470 trillion standard cubic meters (scm), most of this supply is in Earth's atmosphere at a concentration of only 5 ppm and would be very expensive to extract. Natural gas, some of which has helium concentrations as high as 8 percent, is the source for most of the helium we use. Generally, natural gas containing more than 0.3 percent helium is considered economic for helium extraction in the United States, although the economics of helium extraction often depend on other products in a natural gas stream. Most U.S. helium-rich natural gas is located in the Hugoton-Panhandle field in Texas, Oklahoma, and Kansas, and the LaBarge field in the Riley Ridge area of Wyoming.
In 1996, the U.S. Congress passed the Helium Privatization Act of 1996 (P.L. 104-273). The act directs the secretary of the Interior to commence offering for sale the approximately 30.5 billion scf (1 billion scm) of federal crude helium at any time before January 1, 2005, and to complete offering for sale all of the crude helium in excess of a 0.6 billion scf (17 million scm) permanent reserve on a straight-line basis not later than January 1, 2015. Furthermore, the act determines a minimum acceptable price for the helium by dividing the program's total debt (about $1.4 billion) by the volume of crude helium in storage. According to the Congressional Research Service, this would establish a selling price of approximately $43 per thousand scf ($1.50 per scm), which is roughly 25 percent higher than the current commercial price for crude helium.
Since helium is a nonrenewable resource, the prospect of liquidating the U.S. Federal Helium Reserve is a matter of concern to many in the commercial and academic sectors. In response to this concern, the Helium Privatization Act also mandated that the Department of the Interior "enter into appropriate arrangements with the National Academy of Sciences to study and report on whether such disposal of helium reserves will have a substantial adverse effect on U.S. scientific, technical, biomedical, or national security interests." This report is the product of that mandate. It was conducted by a committee of experts in helium usage, helium-based research and development, and resource economics that was convened under the auspices of the Board on Physics and Astronomy and the National Materials Advisory Board of the National Research Council (NRC), which is the operating arm of the National Academy of Sciences. The committee examined the helium market and the helium industry as a whole, to determine how the users of helium would be affected under various scenarios for liquidating the reserve within the constraints set forth in the legislation.
FEDERAL AND PRIVATE HELIUM FACILITIES AND CAPACITIES
The Federal Helium Reserve is controlled by the Bureau of Land Management (BLM) of the Department of the Interior and stored in the Bush Dome reservoir in the Cliffside gas field near Amarillo, Texas. The Bush Dome reservoir has a total capacity of approximately 45 billion scf (1.2 billion scm). The facility currently contains approximately 30.5 billion scf (850 million scm) of government-owned crude helium, or about an 8-year world supply at the current rate of use, and an additional 4 billion scf of helium that belongs to private industry. There is no comparable storage facility for helium anywhere in the world.