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The Impact of Selling the Federal Helium Reserve
BLM should assist this continual review by improving its methods for tracking helium capacity and use. The following improvements would help ensure the timely identification of important shifts in the industry:
Develop and implement a consistent and credible taxonomy of helium uses.
Develop and implement better methods for tracking the international helium market.
Report helium reserves using the natural gas industry's classification scheme.
The Helium Privatization Act of 1996 stipulates that the Federal Helium Reserve eventually stabilize at 0.6 billion scf (17 million scm), which is approximately a 2-year supply at current demand levels. The committee believes that a study is required to determine whether this is an optimal long-term supply and whether this quantity of gas can remain in the Bush Dome reservoir at sufficient concentrations to be available for future refining.
Recommendation: The committee recommends that BLM study the adequacy of the Bush Dome reservoir as the reserves are depleted. The following study tasks should be considered:
Determine the optimal size of a federal stockpile of crude helium.
Develop models of gas extraction at the Bush Dome reservoir to predict the helium content of future extracted gas.
Determine whether the quantity of gas that remains in the Bush Dome reservoir will be adequate to meet future federal needs in the event of a temporary drop in private production.
Reassess the pricing structure for the storage of helium at the Cliffside facility so that it more accurately reflects the value of the facility.
To ensure the continued supply of helium into the future, research and development should be conducted in three main areas: new geological models and exploration technologies; improved helium storage systems; and enhanced technologies to conserve, recycle, and eventually replace helium.
The first area requiring research and development is the expansion of the information base and the development of methodologies to permit identifying and locating new sources of helium. The characteristics and processes that permit formation of helium-rich gas deposits are not well known, making deliberate exploration for helium difficult. This lack of knowledge has a number of explanations, including the relative youth of the commercial helium supply industry; the reliance of the industry on existing sources (the gas fields in the Hugoton-Panhandle area) and on sources that were discovered and exploited for other gases (the gas fields in the Riley Ridge area); and the economic standing of helium as a minor by-product of natural gas. The producers and operators of natural-gas processing plants are becoming increasingly aware of both the economic rewards of helium extraction and the long-term need for new sources. Research should be begun now to develop a base of knowledge and technology for identifying and locating new sources of helium, so that these capabilities will be available when they are eventually needed.
The second area requiring research and development is the development of long-term storage facilities for helium. The properties of helium that make it the ultimate leak detector (i.e., its high