Helium is the second most common element in the universe after hydrogen.
But, just as a helium-filled balloon floats up and away if you let go of it, helium doesn’t like to remain earth-bound. Most of it escapes into space, leaving us with very little of the precious element.
And it’s a non-renewable resource—a by-product of radioactive decay and natural gas production. But very few natural gas wells contain enough of the element to make it economically viable to separate helium from natural gas, in order to replenish reserves.
Which means we’re running out.
It’s used for far more than just party balloons and silly voices
Helium is a pretty important element, and there are a lot of reasons why we should be concerned about a diminishing supply.
Helium is the only element that doesn’t freeze, making it key for reaching temperatures near absolute zero. This makes liquid helium an essential cooling medium for LHC and superconducting magnets in NMR spectrometers and MRI machine scanners
Segmentation of noble gas market by gas type
Source: Technavio, 2015
According to a new report from Technavio, the global helium market is expected to grow at a CAGR of 8.52% from 2015-2020 and reach a total value of $1.52 billion in 2020. A lot of this growth is due to higher demand for both MRI and NMR systems.
High demand and low supply are not a recipe for success. But to understand why the helium market looks the way it does, we have to take a look at one of the element’s key producing countries—the US.
The US reserve is the lynchpin in the global helium industry
The helium industry in the US has a long, fraught history, and we can’t fully get into the nitty gritty here. However, there are some key points that are essential to understanding the past, present, and future of helium supplies.
The helium act of 1925 saw the creation of a federal reserve of helium in the US.
This strategic reserve holds over 1 billion cubic meters of helium in a facility known as the Bush Dome Reservoir, near Amarillo Texas. The original point of the act was the secure the resource for use in airships (until the Hindenburg disaster) and later as a coolant for military vehicles and spaceships.
In 1996, Congress tried to privatize helium.
In an attempt to alleviate the staggering debt the Bureau of Land Management (BLM) had incurred with the federal helium reserve, Congress mandated that all government reserves be sold off (regardless of the market price) by 2015.
That didn’t really happen, and it turns out that not many private companies are interested in producing helium. This has led to massive fluctuations in the price, and less supply to go around.
“In 1996, while the BLM had lots of helium, it was deeply in debt, so Congress passed a law, and the reserve began to sell the resource to private companies as fast as possible, artificially lowering the price and depleting the helium supply.” Miriam Krule for Slate
In 2013, Congress stepped in again, this time to rescue the federal helium reserve with the Helium Stewardship Act of 2013.
The purpose of the act is still to complete the privatization and sell off the federal helium reserve. But this amendment established an auction system that aims to ensure the stability of helium prices and supply. It also extends the deadline to September 30, 2021.
The Helium Stewardship Act might not be working
It turns out that the act that was meant to save the helium market might be having the adverse effect. Competition in the helium market in the US is down, and prices are far from stable.
Adrian Cho recently wrote in Science Insider that last year, the number of companies buying from the federal helium reserve fell from eight to four, leading some to declare the Stewardship Act a failure. However, since the gas sold went for significantly higher prices than the previous year, some are claiming that it’s been a success.
It’s a matter of perspective—whether you believe that more competition is healthy in a market or that a high price tag is the mark of success.
For example, the BLM called 2015’s helium auction—which yielded $28.54 million—a success.
“This year’s auction was again successful in achieving a key objective of the Act, to maximize the value of Federal helium through a market-driven process,” said Robert B. Jolley, BLM Amarillo Field Office Manager in a press release.
It remains to be seen whether this will be enough to incentivize private helium producers to take up the cause to ensure the helium supply after the reserve’s depletion.
