Analysis: Tech firms, medical research, get helium reprieve in U.S.

LONDON Thu Sep 19, 2013 5:11pm EDT

A helium dewar holding 250 liters of helium at -269 degrees Celsius (4.2 Kelvin (4.2 degrees above absolute zero or -452.2 degrees Fahrenheit) is shown at a Quantum Physics laboratory at the University of Chicago in Chicago, Illinois, in this handout photo provided by the University of Chicago and taken on September 18, 2013. REUTERS/Courtesy Dr. Woowon Kang/University of Chicago/Handout via Reuters

A helium dewar holding 250 liters of helium at -269 degrees Celsius (4.2 Kelvin (4.2 degrees above absolute zero or -452.2 degrees Fahrenheit) is shown at a Quantum Physics laboratory at the University of Chicago in Chicago, Illinois, in this handout photo provided by the University of Chicago and taken on September 18, 2013.

Credit: Reuters/Courtesy Dr. Woowon Kang/University of Chicago/Handout via Reuters

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LONDON (Reuters) - Producers of high-tech products from MRI scanners to semiconductors are breathing a sigh of relief after U.S. lawmakers acted on Thursday to prevent the shutdown of a 90-year-old helium reservoir in Texas.

The U.S. Senate vote was hardly a squeaker, at 97-2, to keep the Federal Helium Program running past its scheduled closure on October 7.

The House of Representatives voted earlier in the year to keep the reserve running, but without action in the Senate panic set in, triggering some frantic lobbying.

More than 100 organizations, universities and companies, including Siemens, Philips, Samsung, and General Electric, wrote to Congress last week urging it to keep the reservoir open or risk a disruption to the U.S. economy, putting millions of jobs at risk.

Helium, best known as a party gas for filling balloons and making the voice squeaky, is also needed for aerospace and defense industries as well as smart phones, flat-screen TVs, medical equipment and deep-sea diving tanks.

The gas, which is the second most abundant element in the universe, is difficult to capture and store, making the U.S. reservoir a vital source.

The U.S. Federal Helium Reserve has been providing around a third of global crude helium and 40 percent of U.S. supply.

The reserve near Amarillo in Texas was opened in 1925 as a supply of helium for airships and then provided helium in the Cold War and the Space Race.

By 1995 the reserve was $1.4 billion in debt as a result of earlier purchases of helium from private producers. The debt is due to finish being repaid to the U.S. Treasury by the end of this month, and under current law, funding to the federal program would then have stopped, terminating operations.

Congress's actions will provide the Bureau of Land Management, part of the Interior Department, with the authority necessary to continue the program and allow for an orderly transition of the federal government out of the helium market.


Helium refiners have already been raising prices in anticipation of its closure, a trend that could now reverse.

GE Healthcare, which uses helium to make magnetic resonance imaging scanners, told Reuters the spot price of liquid helium has jumped to $25-$30 per liter from $8 last year.

"There is no question the situation is challenging. We are having to look at different sources of helium, not just the U.S. supply, and have invested $17 million in a plant to capture waste helium," said Richard Hausmann, president and chief executive of GE Healthcare's global magnetic resonance business.

The company uses around 5.5 million liters of helium a year in its production facility in South Carolina and another 6 million liters a year servicing MR systems at U.S. sites.

Using other gases instead can result in poorer quality goods or require costly and unproven re-fitting of processing or manufacturing machinery.

"If supplies were disrupted for a significant period it could even impact the overall economy," Rodney Morgan, vice president of procurement at computer memory manufacturer Micron Technology, told a hearing of the U.S. House Committee on Natural Resources earlier this year.


Helium remains liquid at extremely low temperatures, making it ideal for cooling superconducting magnets used in electronics manufacturing and in magnetic resonance imaging machines which help to diagnose diseases.

The cost of helium already makes up to 30-40 percent of research budgets so further price rises could be crippling.

Some university research projects in Britain were put on hold and brain-scanning equipment was shut down last year due to a helium shortage.

Helium is a by-product of natural gas production but once it is released into the atmosphere it cannot be captured. Demand for helium has risen, driven particularly by Asia's booming manufacturing industry.

Annual global production of helium was nearly 175 million cubic meters (mcm) in 2012, according to the U.S. Geological Survey, but demand is forecast to rise to over 300 mcm by 2030.

"Even if the reserve didn't go offline, things aren't good at the moment. There is definitely around a 3 percent shortage. Everything produced is being snapped up," said Richard Clarke, resources consultant and former helium specialist at the Culham Centre for Fusion Energy in Oxford.

The U.S. reserve is important because other countries' supplies, such as Qatar, Russia and Algeria, are still too erratic or not large enough to cover the U.S. shortfall.

Qatar could potentially supply around 20-25 percent of world helium when its two large liquefaction plants reach full capacity. Air Liquide started up a 38 million cubic meter per year plant last month but it is not yet operating at full potential.

Algeria already supplies 10 to 15 percent of global helium but could potentially provide more if it recovered helium from natural gas export pipelines to southern Europe.

Russia currently accounts for around 3.6 percent of global helium production, according to Ernst & Young, but it needs to build a lot of gas infrastructure in Siberia to enable its output to equal that of the United States by 2022-2025.

(Additional reporting by Ros Krasny in Washington; Editing by Jane Merriman and Leslie Adler)

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Comments (4)
AdamSmith wrote:
Something is being hidden here, out of either ignorance or greed.

Why does the natural law of supply and demand suddenly not apply to helium, but to everything else in the world?

If there is a shortage of helium, society should simply let the price rise naturally to whatever level is needed to provide an incentive to private producers to increase production capacity.

In this article we apparently have companies like GE Healthcare pushing for a free government handout. The article seems to be pushing the idea that the handouts should continue, hoping that Congress will take action.

Just more corruption at its best.

Sep 19, 2013 7:59am EDT  --  Report as abuse
MoBioph wrote:
A little searching on the web can help answer quite a few questions in general, and specific questions about the strategic helium reserve in particular. The Royal Society of Chemistry has an informative summary (helium-reserve-supply-shortage-price-rise) of the reserve’s history, for example.

Sep 19, 2013 3:26pm EDT  --  Report as abuse
gregbrew56 wrote:
Yet I can still go down to my local party store and buy a tank for less than $50. Something does not compute.

Sep 19, 2013 4:55pm EDT  --  Report as abuse
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