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Gas Industry Members Testify On Helium Bill

BLM Helium Enrichment

The Bureau of Land Management's crude helium enrichment facility near Amarillo, Texas.

It’s quickly becoming more apparent that the Helium Privatization Act of 1996 has a few flaws. The act called for the Bureau of Land Management to sell off the nation’s helium reserve by 2015. 16 years later—and only 3 from the Helium Privatization Act’s end target—we are amidst a helium shortage. Just recently, legislation was introduced to address the shortcomings of the Helium Privatization Act. The Helium Stewardship Act of 2012 seeks to preserve the supply of helium and reconsider how the government approaches the sale of this precious resource.

Last week, the Senate committee held a hearing regarding the new legislation. Two GAWDA member companies, Air Liquide and Air Products, were represented at the hearing. Many more member companies will be impacted by its outcome.

Walter Nelson, director of helium sourcing & supply chain at Air Products, testified on the urgency of this new legislation. “Unless BLM has the authority to continue to operate the federal reservoir— which it won’t if there is no successor statue—all of the helium that remains in the reserve will be inaccessible. That means that 30 percent of the worldwide supply will be essentially locked up, causing prices to skyrocket, some users with no ability to access helium, and chaos in the economic sectors that now rely on helium.”

Nelson expressed Air Products’ support for the new legislation, but asked the Senate committee to reconsider how the BLM sets the price of its crude helium supply. “Guidance must be established for the Department of Interior and BLM to ensure the market-based price methodology is sound and fair,” he stated.

Air Liquide Helium America President David Joyner also commented on the pricing of helium, noting that recent price increases from the BLM have been “sudden, significant jumps, leading to an irregular domestic pricing mechanism.” He adds, “To complicate matters further, helium sourcing agreements beyond the closed BLM system reference the BLM crude price as an index for their own pricing formulas. This, in effect, drives up the price of helium for all consumers not only here in the United States but also around the world.” Ironically, the BLM price increases have been made in an effort to bridge the gap between federal and market pricing, creating a cycle in which prices will only continue to climb.

Both Joyner and Nelson made interesting points, and it’s clear that action from the government is required to bring the helium situation under control until a sufficient privatized system can be put in place. Within their testimonies is an interesting debate about the sale of helium to refineries, and whether the government should reconsider its 94 percent allocation to six domestic refineries.

You can read or watch an archive video of the full testimonies of Air Products and Air Liquide here.

Is the Helium Stewardship Act the answer the gas industry needs? Let me know what you think of the new legislation.

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