Last September, Cold Facts examined the then-ongoing third global helium shortage (Cold Facts, Vol. 35, Number 4) as it forced the world to reconsider the myriad applications and processes utilizing helium. Now, as the pandemic slows the global economy, helium users and experts are reconsidering what the future of helium may be. On July 21, Cold Facts spoke with Phil Kornbluth, founder and president of Kornbluth Helium Consulting, about the new landscape of the industry and whether or not the industrial gas community can safely claim the end of the helium shortage.

Classified by the US Department of the Interior as one of 35 elements or materials “critical for national security and economic stability,” helium has many applications. Prior to the pandemic, the US Geological Survey reported that over 32% of all helium produced goes to cryogenic applications. Liquid helium is used to cool superconducting magnets and sensitive scientific instruments that only operate at cryogenic temperatures, including accelerators, space telescopes and satellite technology.

Last year, the largest source of worldwide helium consumption was its use in the cooling of superconducting magnets for MRI technology—accounting for 20% of all global use. Electronics and welding use followed with 15% and 12%, respectively. Other helium applications include fiber optics, leak detection, pressurization, laboratory use and artificial breathing systems—each accounting for less than 6% of usage.

“Before the pandemic, we were seeing a lot of volatility between supply and demand,” said Kornbluth, who has over 37 years in the helium industry including time with BOC, Taiyo Nippon Sanso and Global Gases. “The US Bureau of Land Management (BLM) stockpile had been sold off and depleted, reducing deliverable capacity; it reduced their ability to be the industry flywheel. They were responsible for the flexibility of the supply, but their pipeline system has lost more than half of its capacity. What was once four billion cubic feet (BCF) of helium [per year] was reduced to two BCF and is now down to less than one BCF.”

Part of the BLM’s reduction is due to the Helium Stewardship Act, which, according to the Department of Energy, “seeks to mitigate a helium shortage by enabling the Secretary of the Interior, acting through the Director of the Bureau of Land Management, to continue to sell crude helium from the Federal Helium Reserve. The legislation draws on recommendations from a wide variety of stakeholders to establish a responsible management strategy for the Federal Helium Reserve.” Under the Act, the BLM will transfer ownership of the Federal Helium Reserve to the GSA after September 30, 2021 and the assets are expected to be privatized sometime in 2023.

The “pre-pandemic shortage” was not an anomaly: it was the third sustained shortage in recent years. The 2006 to 2007 shortage lasted until the Great Recession reduced demand in 2008. Then, the 2011 to 2013 shortage lasted until the Qatar 2 project opened up.

Headlines tended to blame the shortage that existed before the global shutdown on helium-filled party balloons and the “party” stores that sold them. What was overlooked was the continued decline of production from plants connected to the BLM pipeline.

But, whenever the pandemic inevitably ends, helium will remain. What happens to the helium industry as the world “reopens”? Will the effects of the shortage still be felt as normalcy returns?

“It will take about a year or more to get back to the same consumption rates once COVID has been dealt with,” Kornbluth says. “Demand will gradually recover. Inherently, new supplies will offset the recovery in demand, and I think we probably won’t go back into a shortage after the Siberian project opens up.”

Kornbluth is referring to Gazprom’s Siberian “Amur” gas processing plant (GPP). According to gazprom.com, “the Amur GPP will become the largest gas processing plant in Russia, and the second largest in the world, with an annual capacity of 42 billion cubic meters of feed gas. The plant will process multi-component gas from the Yakutian and Irkutsky gas production centers and extract valuable components—primarily helium, ethane, liquefied propane gas and pentane-hexane fraction—for the purposes of the petrochemical and other industries. The processed natural gas will then be exported to China via the Power of Siberia pipeline. The Amur GPP helium facility is to be commissioned in 2021 and will reach an annual helium output of 60 million cubic meters (2.1 BCF) by 2026–2027.”[1]

Siberia isn’t the only location experts are looking to for future helium production. “There is a lot of exploration activity in the southwest US and Canada. Outside of North America, Qatar has plans to expand production and Helium One in Tanzania has received a lot of publicity,” Kornbluth added. “The Noble Helium project, also in Tanzania, is another you hear about. Both are still early in exploration, so it’s too early to form a solid view—neither company has drilled any wells. The Renergen project in South Africa is in Phase 1 and planning to produce 25,000,000 ft. of helium. Phase 2 has been proposed, which would produce another 100,000,000 ft. The problem with helium projects like these is that they are expensive. But, because they can yield such high rewards, you see a lot of the smaller exploration companies trying to attract investors. Hopefully, money plus helium in the ground means a successful project.”

This influx of helium-producing projects has driven a demand for more individuals with helium business knowledge.

According to Kornbluth, “Generally speaking, each of the helium ‘majors’ like Air Products, Air Liquide (CSA CSM), Linde/Praxair, Messer and Matheson have experienced and competent teams. Still, after the ‘Big 5,’ most of the ‘Tier-2s’ see helium as just another product to sell. They may have one helium ‘expert’ on their team, but there’s a big gap in expertise between the major and minor players.”

With so many existing and developing helium projects around the world, why aren’t companies looking to add helium expertise to their rosters? “It’s just not a huge business,” Kornbluth remarks. “It’d be hard to justify extra training for a helium expert—usually you work at a gas company in some other specialty and learn that business or function before crossing over to helium.”

Where is all this new helium going? While cooling MRI machines represents arguably the most well-known and beneficial application of helium to the public now, the semiconductor industry will continue to drive demand. “Applications are increasingly high technology: things like fiber optics, aerospace applications and semiconductors,” Kornbluth explains. “The semiconductor industry touches so many industries like electronics and small tech, it’s hard to say which is more valuable. Personally, I think if these semiconductors are not already the largest application of helium, they will be shortly—most of the major MRI manufactures are recycling helium now and the new machines are much more effecient than earlier generations.”

Kornbluth sees this trend continuing. “As chip manufacturing gets more advanced, helium consumption will continue to rise,” he speculates. “The aerospace industry is also using more and more helium every year—there are more rocket launches now than ever before and more satellites going up every month. The lifting application—which includes party balloons and serious STEM projects like Google’s Loon [an Alphabet, Inc., subsidiary working to provide Internet access in rural and remote areas by using high altitude balloons in the stratosphere to create an aerial wireless network with up to 1 Mbps speeds]—will see considerable growth. It will also be interesting to see if new nuclear power plant designs consume larger quantities of helium.”

There are a number of helium production projects in the pipeline all over the world—but this is an ever-increasingly international industry. “With large new helium projects hopefully coming online in the 2020s, there should be a much more reliable supply than in the 2010s. I think we’re moving away from these sustained periods of shortages,” Kornbluth concludes.

References:
[1] Gazprom Export LLC signed contracts to supply helium from the Amur GPP. (2018, March 12). Retrieved August 1, 2020, from http://www.gazprom.com/about/subsidiaries/news/2018/march/article411480/ ■