considered. These will ensure that the legislation has no adverse long-term effects, beyond 2020, and that sufficient supplies of helium continue to be available after 2020 to satisfy the needs of known and potential users.

Studies

The committee's assessment of the impact of the Helium Privatization Act of 1996 was based on three assumptions about the future. The first was that demand for helium will continue to rise at a steady pace, albeit much more slowly than between 1985 and 1995. Although the committee could not identify any imminent technology that would drive new, large-scale use of helium, the advent of such a technology could have a major impact on the market. An abrupt increase in demand would probably cause an abrupt increase in the price of helium, an acceleration in the rate at which current sources are produced and depleted, and a reduction in the time available to locate new sources and develop technological alternatives.

The second assumption was that there will be no drastic reductions in capacity, such as might occur if a natural disaster, plant disaster, or market decision caused a plant off the BLM pipeline to cease production. Replacing lost capacity would probably require increasing the rate of production at the current reserves. This, too, would increase the price of helium and reduce the time available to locate new sources and develop technological alternatives.

The third assumption was that no new sources of helium will be discovered. The addition of new low-cost sources of helium would serve to extend the life of the Federal Helium Reserve and provide more time to find additional sources and develop technological alternatives.

The Helium Privatization Act of 1996 mandates that its impact should be reassessed in 2015. A mechanism should be developed, however, to ensure that a review can occur sooner, especially if anything happens that would invalidate the three assumptions. The safest approach would be for the helium industry to be reviewed periodically, say, every 5 or 10 years.

Such reviews will require credible data on domestic and international capacity and consumption. The Department of the Interior currently releases annual reports that track supply and demand for helium. These reports provide crucial information on the helium market and are the primary public source of data on helium use. They should be enhanced in two ways to ensure that they register any dramatic changes in the market. First, a credible taxonomy of helium uses should be developed and consistently tracked. In the 1980s, the Department tracked 13 categories of helium use. In the 1990s this was increased to 18, but only 7 were commonly released. Such changes severely hamper efforts to identify trends in helium use that might dramatically change helium capacity and demand. Second, international consumption and production need to be tracked with the same precision as domestic consumption and production to permit the identification of any sudden changes in foreign capacity or demand. The current system tracks foreign demand primarily on the basis of U.S. export data.

Furthermore, the terminology used by BLM to describe helium reserves makes it difficult to understand how much helium is potentially available. The classification scheme used by the natural gas industry is clearer, and all new helium resources are coming from that industry.

Recommendation: The committee recommends that future reviews of the helium industry be commissioned by BLM either (1) in response to drastic increases or decreases in helium capacity or use or (2) regularly, every 5 or 10 years.



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