A Different Kind of Gas Shortage
The politics of helium
May 5, 2014, Vol. 19, No. 32 • By KELLY JANE TORRANCE
At a Harris Teeter in suburban Washington, what used to be Harry’s Balloon Corral is, to young eyes, disappointingly empty. The grocery store has posted a notice explaining why. Children accustomed to alleviating the boredom of the weekly trip to the supermarket with the serious task of keeping a helium-filled balloon from floating out of their reach aren’t likely to understand it, however. “Due to a national helium shortage, we are currently unable to offer Harry the Dragon balloons to our customers in training. We apologize for the inconvenience.”
Few of their parents will get the sign, either. Helium is one of the most common elements in the universe, second only to hydrogen. How could there possibly be a shortage? It seemed plentiful enough back in high school, when everyone took a turn at the helium tank, inhaling just enough of the gas between giggles to sound like Donald Duck.
The end of free balloons might be the first sign you see of the helium shortage—which is global and not just, as Harris Teeter has it, national. It’s unlikely to be the last. If you’ve read anything about the helium shortage, you might know that the element in its liquid form is crucial for cooling the magnets that power the MRI scanners used to diagnose disease. But, ever since airplanes displaced airships, what else do we need helium for?
“The real answer is everything,” says Richard Shoemaker, a research professor in the department of chemistry and biochemistry at the University of Colorado Boulder, and director of its nuclear magnetic resonance (NMR) facility. Scientists engaged in NMR spectroscopy use giant magnets—one in the Colorado facility is 10-feet wide and almost 30-feet tall—to study the properties of matter. “In my lab, I have people from chemistry who are synthesizing molecules that might be used eventually to cure a disease—more than one of our research groups are working on ways of curing cancer. People are doing molecular research on extracting more energy out of solar cells.” NMR, he explains, is used to study the structure of everything from pollutants in air and water to the polymers that could purify them, from our DNA to the liquid crystals that make up the displays in the electronic gadgets that have practically become new appendages.
Few people appreciate, Shoemaker says, how much now depends on helium, a nonrenewable resource that is found in usable amounts only in certain natural gas fields, is expensive to extract and refine, and is one we can’t just make more of (until we master nuclear fusion, anyway). He rattles off a list: “science and technology, aerospace, construction, fabrication, building cars out of lighter alloys for better gas mileage—you can’t weld the frames together without helium.” He speaks without exaggeration when he says that “at the core of everything we hold dear in society, NMR is in the background. NMR makes it possible for you to go to the drugstore to get your Lipitor if you have high blood pressure. Pharmaceutical companies cannot make drugs and sell them if they’re not characterized by NMR because of the FDA’s requirements for proving purity.”
Once you begin to realize how much of modern civilization depends on this noble gas, it’s not surprising that free balloons disappear during a shortage—it’s surprising that helium balloons still spot the skies at all. “Every time I see a party balloon, it makes me mad,” Shoemaker fumes. “Every time I watch the Macy’s parade, I get furious.” The giant floating figures in the annual Thanksgiving procession through Manhattan require about 400,000 cubic feet of helium, which is simply released into the atmosphere to dissipate into space when the day is done.
Macy’s has a big budget. But with hospitals, research laboratories, pharmaceutical companies, industrial plants, and even government agencies competing for part of a scarce supply, shouldn’t the price of the lighter-than-air gas have risen so high that almost no one would pay for a balloon full of the stuff? It hasn’t. And the reason goes a long way toward explaining why there’s a shortage in the first place. The world’s biggest supplier of helium, you see, has been selling it at a cut-rate price that has no connection to its actual value. That might sound like an imprudent business decision that should soon correct itself, but, of course, it wasn’t a business decision at all. The world’s biggest supplier of helium is the United States government.
The U.S. government recognized the potential of helium early, not long after the element was first detected during a solar eclipse in 1868 and formally isolated in 1895. Second in the periodic table, the helium atom has less mass than that of any other element except hydrogen; as the Earth’s atmosphere is made up mostly of heavier nitrogen and oxygen, helium is lighter than air. The Navy began experimenting with helium during the First World War to hoist airships, and its strategic possibilities were soon apparent; the Department of Defense still uses it for surveillance blimps. But it was the liquid form that would eventually soar in importance. Dutch scientist Heike Kamerlingh Onnes liquefied helium in 1908, using it to discover superconductivity three years later. He won the Nobel Prize in physics in 1913 for his work, which led directly to the research that’s given us MRIs.
In 1925, the U.S. government created the Federal Helium Reserve in a giant cave near Amarillo, Texas. (The natural formation containing the gas is now called the Bush Dome Reservoir.) Helium contributed to the development of the atomic bomb during the Second World War, but it wasn’t until the Cold War that the feds began stockpiling the element in earnest. After 1989 brought, as one commentator had it, the End of History, politicians soon began to see the reserve more as a liability than an asset. You might not be able to put a price on national security, but bureaucrats can: The helium reserve had cost the Treasury $1.5 billion, and spending had begun to matter again. The federal government shut down in 1995 when the Republican Congress and the Democratic president couldn’t agree on how many more years of unbalanced budgets were permissible (an argument that seems quaint now). “There was a large stockpile of a good commodity sitting in a reserve in the government coffers here in Amarillo, Texas,” recalls Robert Jolley, a civil engineer and head of the Amarillo field office of the Bureau of Land Management, the Department of the Interior agency in charge of the Federal Helium Reserve. So in 1996, Congress passed and Bill Clinton signed the Helium Privatization Act.
Even in Washington, where doublespeak is common, to privatize usually means to expose a product or service to the forces of the market—for the benefit of taxpayers and consumers alike. But the legislators who wrote the Helium Privatization Act didn’t really care how much the government got for the crucial commodity that had helped win wars. The bill instructed the secretary of the interior to sell helium at a price that “shall be adequate to cover all costs incurred in carrying out the provision of this Act and to repay to the United States by deposit in the Treasury all funds required to be repaid to the United States as of October 1, 1995.” In other words, the government just wanted to recoup the costs of its investment. Rather than sell its helium to the highest bidder, Interior was instructed to find a minimum price by “dividing the outstanding amount of such repayable amounts by the volume (in million cubic feet) of crude helium owned by the United States . . . at the time of the sale concerned.” Interior was to adjust that amount, as time went on, only by the Consumer Price Index.
“The price of helium should go up and down as a commodity from year to year,” Jolley notes. “We were just recovering costs. We were charging a set amount for the year without doing any market survey data. We paid back $1 billion to the U.S. Treasury for the operation of the helium plant, the cost of storing it in the ground, all that.”
Keep in mind that, as the National Academy of Sciences (NAS) observed in its 2010 report, “Selling the Nation’s Helium Reserve,” the Federal Helium Reserve was “the only significant depository of crude helium in the world.” In 2004, 84 percent of the world’s helium production came from the United States; by 2011, it was still 77 percent. You can probably guess what would happen if the world’s primary supplier of a resource began pricing it based on cost rather than market value. But lawmakers in 1996 didn’t.
“An unintended consequence of the act is that we would publish our crude helium sales price every year, and soon after we started doing that, almost all the helium contracts were tied to the BLM-published price,” says Sam Burton, biochemist and chief of helium operations at the BLM’s Amarillo field office. The BLM price, in other words, became the world price: The NAS report declared that the “legislatively set price for federally owned helium is now setting the price for crude helium, and there is no assurance that this price has any relationship to the current market value of that helium.” Burton thinks the price the BLM initially set—$47 per thousand cubic feet—was a little higher than what it would have been on the open market. But since the legislation directed BLM only to recover costs—and to raise the price only in line with inflation—helium was soon being sold for below what it would have been were it dictated by the product’s actual value. BLM’s 2014 price is $95 per thousand cubic feet.
It’s Economics 101: As prices fall, demand increases. But in this case, demand was already beginning to increase because whole new categories of customers had emerged. In 1972, Raymond Damadian had developed the first magnetic resonance imaging machine. The American doctor, who’d spent his boyhood studying the violin at Juilliard, hadn’t yet figured out how to use the technology to scan the body to get images that would detect tissue changes like those indicative of cancer. But others would. In 1980, a Scottish team used an MRI machine to produce the technology’s first diagnosis of cancer. The breakthrough wouldn’t have happened without helium; the powerful MRI magnets can’t function without it.
“When I started doing MRI research back in 1979 to ’83, my undergrad work,” Shoemaker recalls, “it wasn’t even called MRI.” That technology “was discovered by accident” by people doing NMR—nuclear magnetic resonance—which itself had been discovered in the 1950s, Shoemaker says. “Since the 1960s, there has been no chemistry-related research that doesn’t have NMR at the core of it.” And helium is at the core of NMR.
"Helium doesn’t want to be a liquid; it wants to be a gas. To get it to be a liquid, you have to get it really cold. Liquid helium is the coldest substance that exists on Earth,” Shoemaker explains. Or, as Jolley puts it, “When everything else is frozen solid, helium is still a liquid. That specific chemical property makes it absolutely an invaluable resource.” It’s essential, in fact, to bring the winding wire on a magnet below what’s called its critical temperature, the point at which the wire becomes not just a conductor of current, but a superconductor. The stronger the currents conducted through the wire, the stronger the magnetic field. That field interacts with the atoms that make up every substance—such as the human body—to give a detailed image of the structure within. So doctors can now see tumors growing inside the human body. And scientists can examine the substances that treat those tumors.
“My brother’s wife just finished her chemotherapy. They used Taxol in the second round. It’s one of the number-one drugs for several cancers, but it’s huge for breast cancer,” Shoemaker says. Taxol was discovered in 1967, in the bark of a rare strain of yew tree. A very rare strain. “If you used all of those yew trees, you would have enough to cure two people,” Shoemaker says. Studying the molecule using NMR, researchers figured out how to manufacture it. The FDA approved the drug in 1992.
It’s further advances in medical technology—and other fields—that make Jolley ambivalent about the Helium Privatization Act. “Imagine that 1996 act was there to address a need and a desire just at the point where technology was taking off with helium research and helium activities,” he muses. “Congress released helium to private industry at a time when demand for helium was very high. Politically, their constituents benefited by them releasing that helium.” If Congress hadn’t started selling the government’s helium reserve, the world would look a bit different today. “You might have had a delay in the development of MRIs. You probably wouldn’t have had iPhones and iPads,” he says. (Less dramatic, but perhaps no less life-changing, is the use of superconductors in electronics.) “Keep in mind, that was back when researchers were using helium to come up with the tools we’re using today. If that helium were not readily available or cost a lot of money, you’d have still had phones and that sort of thing, but you might have delayed that technological growth.”
Did we trade, then, some of our national security for the ability to watch, anywhere and at any time, cats doing crazy things on YouTube? Jolley wouldn’t put it quite that way. Congress, he says, “did sell off part of a natural resource, a strategic natural resource. But it did it at a time when it did a lot of good for the technology sector.”
In return, the technology sector—along with the scientific, the medical, and the defense—has had to deal with regular shortages. Shoemaker will sometimes see two- and three-week delays in delivery of the liquid helium used to cool his University of Colorado facility’s giant magnets. His worry isn’t that his research will have to wait—it is that the millions of dollars of equipment it requires will be knocked out. If the coiled wire around a working magnet heats to its critical temperature—even for a fraction of a second—that magnet will “quench,” as the technical term has it. It’s no longer superconductive, and the resultant resistance, after a loud bang, turns what’s left of the cooling liquid into gas. The helium immediately escapes into the room and can displace the oxygen, causing asphyxiation. (A warning on Colorado’s NMR website promises researchers, “If you remain calm, there is plenty of time to leave the room safely.”) It can take weeks to bring the magnet back online. And it takes a lot more helium to start a magnet up than it does to maintain it—up to 10 times as much. “It’s hard to explain to people who are in government,” Shoemaker says. “They think everything is fixable.”
So imagine how Shoemaker—and magnet masters around the world—felt when they discovered the Federal Helium Reserve was slated to end operations last year. It wasn’t that the Bush Dome Reservoir had run out of the crude gas that refiners turn into liquid. “We started with 30-some-odd-billion cubic feet,” Jolley reports. “We’re now down to probably 9 billion cubic feet.” But enough helium had been sold under the privatization act that the debt to the Treasury was about to be paid off in full. “We actually made our last payment on that in October 2013 and were set to close,” Jolley recounts. All of Jolley’s 50 employees in Amarillo were going to lose their jobs. And the helium on which so many sectors had come to depend would simply sit (well, float) in a cave.
“All of a sudden, our entire health care system is interrupted,” Shoemaker says. And beyond: “NMR is used in so many different ways in our society.” Jolley states, “NASA had to delay some of its launches, because they didn’t know what the status of the helium was going to be at that time.” Shoemaker began writing letters to his congressman and senators, urging them to keep the reserve operating. Lobbyists representing everyone from chemists and physicists to MRI operators sounded the alarm directly in D.C. They were heard: The Helium Stewardship Act became law on October 2, 2013, five days before the facility would have been shuttered. The bipartisan bill was one of the few to pass during last year’s government shutdown.
This time, a Republican Congress and Democratic president meant to show they had learned their lesson: The mission, as the bill’s opening words state, is to “amend the Helium Act to complete the privatization of the Federal helium reserve in a competitive market fashion that ensures stability in the helium markets while protecting the interests of American taxpayers.” Buyers have until May 5 to submit their requests to purchase the 210 million cubic feet of helium the reserve is selling at $95 per thousand cubic feet for the remainder of 2014. Starting with the next fiscal year, the reserve must sell through auctions increasing amounts of the helium it still has: from 10 percent of helium sold in 2015 to 100 percent in 2020. The first auction, Burton and Jolley disclose, will take place in late June or early July. The rest of the 2015 fiscal year’s helium supply will be sold in the traditional manner after that, but by August 1.
Burton is pleased with the new legislation. “It allows us the leeway and the flexibility to manage the reserve better than we had been managing it,” he says. Jolley is more circumspect. “Its intent was to maximize revenue for the federal treasury and the American people, and I think it meets that intent,” he says. “My job’s not to like it a lot, it’s to implement it.”
The act requires that the price of all helium sold, auction or no, be based on “recommendations and disaggregated data from a qualified, independent third party who has no conflict of interest, who shall conduct a confidential survey of qualifying domestic helium transactions.” BLM is collecting that data now. But how can it come up with a truly “market-based price” when it has distorted the market that it still practically controls? BLM continues to provide about a third of the world’s helium—42 percent of the domestic market. The adapted pricing mechanism can’t end the shortage, in any case. Under the new legislation, the Federal Helium Reserve must sell almost all of its remaining supply. Or perhaps all—nobody is clear on what happens to the final 3 billion cubic feet of helium left when the reserve is statutorily slated to close on September 30, 2021.
Jolley thinks the name of the bill meant to solve the shortage is ironic—though he isn’t laughing. “The Helium Stewardship Act is still selling 10 billion, or 7 billion, cubic feet of helium to the private industry,” he notes. “It’s like, anytime you see an act called the American Freedom Act, you know you just lost some of your freedom.”
Helium, being lighter than air, is a difficult element to trap. And by mandating the sale of helium at what a document prepared by the U.S. Senate Committee on Energy and Natural Resources last year called “fire sale” prices, the Helium Privatization Act removed any incentive for private companies to find and extract new sources of it. “From an engineering standpoint,” Jolley says, “if we were selling helium at a price lower than what the market could bear, then we weren’t putting the pressure on the R&D and the exploration that we would have had we been charging a higher price. What you’re seeing in the Helium Stewardship Act is Congress recognizing that, and by charging a market-rate price for helium, they’re going to spur research and development and get these factories online that can produce helium, at least by 2018, 2019, when we get down to a very low volume of helium.” That assumes, of course, that helium starts selling at a “market-rate price.”
Most of the helium in the reserve and elsewhere comes as a byproduct of natural gas extraction. “The problem with gas fields is that there are only certain ones that have enough helium to make it practical enough for processing,” explains Martin Lovas, an account executive in Peace River, Alberta, for Air Liquide, the world’s second-largest supplier of industrial gases. The same geological formations that trapped natural gas also trapped helium. But the money is in the energy, not the element. Most of the money, that is. “There’s a depression in natural gas availability due to the low natural gas prices,” Burton explains. When companies can’t make money drilling for natural gas, the helium that accompanies it also goes untapped. “When natural gas usage becomes more prevalent, there will be more available helium,” Jolley says optimistically. “You look around the United States, you don’t see a lot of natural gas-powered buses. We are moving that way; we’re just moving slower than anticipated.”
But a lot of the energy exploration that is taking place these days focuses on “fracking” natural gas and oil out of shale rock formations—which don’t offer extractable helium. “Shale is a very porous material,” as Burton says. “It will not trap helium, but it will capture natural gas. Helium is a very small molecule.”
Helium is actually used in extracting natural gas, and so Air Liquide needs some of the product to extract more of it. When welders create pipelines, as they do in the oil sands of Alberta near Lovas’s base, a gas mix that includes helium shields the welding area from atmospheric gases that hinder the process. Lovas doesn’t get his helium from the U.S. reserve—but a shortage of any commodity is felt worldwide.
“Last year, we only got 80 percent of what we got the year before,” he reports. His suppliers tell him, “Our production has dropped off, so you’re only going to have this much available to you.” That’s when Lovas is faced with difficult decisions. “Your market is increasing, and your product is disappearing,” he says. Worldwide, cryogenics—the fancy word for the field in which liquid helium is used as a coolant—accounts for 29 percent of helium use. That includes pharmaceutical research and MRIs. Welding uses 17 percent, while 5 percent is used to detect leaks, mostly in industrial manufacturing—a critical component of safety for those employed in the sector. Party balloons use up more—8 percent worldwide.
“You have to take a look at your market. If you look at the priorities of that particular gas, the number-one priority is medical,” Lovas says. “With one cylinder of, say, 300 cubic feet, you can do nine MRIs. Or you can fill 1,000 balloons.” Perhaps the decision isn’t that difficult. “It’s an ethical choice,” Lovas declares. “It’s a no-brainer. Say a friend of yours is going in to have an MRI that would maybe help them make a decision on a life-threatening situation, or you could blow up 1,000 balloons and let them go and five minutes later, most people don’t even know you did it.” He sounds almost angry when he reports that some in the balloon business treat it “like it’s life or death.” Last year, a party company offered him twice his usual price for a tank of helium so they could provide balloons for a wedding. “I turned them down.”
Shoemaker reports that researchers are working on ways to recycle helium. But the technology won’t become practical in time to help the current crisis. “The reason people didn’t recover and reuse helium before is because it was too expensive,” he says. With the federal government selling helium at cut-rate prices, it’s been cheaper to buy more helium than recycle what you’ve used. “Someday we’re going to regret not recovering it.”
Because, as he notes, “There are no viable alternatives for helium. There’s simply no substitute for it.” Lovas agrees. People at his company and others in the industry have been trying to figure out—for years—what they’ll do when the “limited life” of helium is over. “They have found ways to make it go further. But not really eliminate it,” he concludes. (We all know what happened when the highly flammable hydrogen was substituted for helium in airships.)
The Federal Helium Reserve currently holds about a third of the world’s total reserves. Might American users—research laboratories, medical institutions, the Department of Defense, NASA—just buy it elsewhere once that reserve is gone? That depends on a lot of things, of course, including one very uncertain factor: the state of global geopolitics. Almost all of the remaining helium reserves are located in two areas not currently known for their willingness to do favors for America: the Middle East and Russia.
To give just one example, the 2010 NAS report notes that “DOD must have ready access to helium to operate the balloon- and dirigible-based surveillance systems needed for national security.” Will the man who is sheltering NSA whistleblower Edward Snowden sell a nonrenewable resource to the United States so it can continue its surveillance? Congress seems to think so, judging by the law it passed last fall.
“The idea was that as this facility is declining in our ability to produce helium, these other big industrial processes in Qatar and Algeria and possibly even Russia would be standing up to be able to deliver that worldwide demand,” Jolley says. Shoemaker is concerned about the stability of places expected to be the next big exporters of helium: “We could go from ‘blood diamonds’ to ‘blood helium’ quite easily, and I don’t really think I’m being overly sensationalistic in saying that.”
The average American still pictures brightly colored balloons floating through the sky when helium comes up—if it comes up at all. But the shortage is real. And no one has a persuasive answer for how to cope with a dwindling supply of a nonrenewable resource on which millions of lives could quite literally depend. Shoemaker would like to see scientists like himself get more say in how it’s distributed. Jolley isn’t sure the country needs to keep a reserve, “but the United States needs to look at helium as a strategic resource and manage it as they do any of their other strategic resources for defense and technology purposes. They need to understand there’s a need for it in the foreseeable future. Do we depend on Qatar, and Algeria, and Russia to provide us that?”
Everyone does agree, however, that Congress needs to revisit the crisis—except Congress itself. Michael Tadeo, the press secretary for the House Committee on Natural Resources, which was responsible for the Helium Stewardship Act of 2013, is asked if a congressman from the committee can comment on the crisis. He declines to make one available. “We’re currently not in a helium crisis,” Tadeo says. “As far as I know, we passed a bill, which the president signed into law, to avoid a helium shortage.”
Kelly Jane Torrance is assistant managing editor of The Weekly Standard.
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