Air Products has started up the ‘world’s largest storage cavern’ in Texas, it was revealed during session one of the gasworld Helium Super Summit at the Westin Memorial City in Houston.
Walter Nelson, Vice-President of Global Helium and Rare Gases at Air Products, revealed the news first at the gasworld event and an official announcement is expected soon from the major industrial gas company.
“It’s the largest helium storage cavern in the world,” Nelson said.
“It’s fully operational as of 2021. It’s physically the size of the Empire State Building. The injection and withdrawal rates exceed the current capacity of the BLM system which enables us to back up any planned or unplanned outages at any sources around the world. If the ExxonMobil goes down with Hugoton, helium can be pulled from the cavern.
“It’s the first one [helium storage cavern] in the US and it’s located thousands of feet below the surface.”
Air Products confirmed later that it holds exclusive rights to the helium cavern through a long-term storage services agreement.
The new cavern marks Houston-based Caliche Development Partners’ second to go online in just three years, bringing the company’s total capacity at its Beaumont storage complex to 8.0 million barrels.
Creation of a third cavern at the facility is underway. After John Raquet, gasworld’s own Publisher and CEO, opened the sell-out event of 270 delegates from multiple countries, Nelson focused on the opportunities and challenges the helium business is likely to face in the next five years.
The decline of the BLM federal helium reserve and the uncertainty it brings is one challenge facing the industry, but Nelson also outlined the opportunities within the helium business.
Nelson pointed out there are at least 14 publicly traded helium stocks and there could be more in the future. Nelson said there could be 200+ years of supply at current demand rates if all the known gas fields were produced.
“But it’s all about timing, and helium will only be produced if the natural gas is being produced,” Nelson said.
Nelson stressed that diversification brings reliability and referred to Helium 3 Qatar, Helium Salt Cavern Storage US [Air Products], Gazprom Amur Russia and HELIOS Algeria. Air Products is involved with all of those projects, which Nelson says is helping to secure a reliable supply for the major industrial gas company.
“The BLM has declined and Qatar is now the second largest supplier in the world with 2.2 Bcf,” Nelson said.
“There’s an awful lot of helium coming into the market but we need know that these projects end up hitting delays.”
Uncertainty over demand versus supply and disruption caused by supply chains dominated session one.
Maura Garvey, Principal and Director of Market Research at Intelligas Consulting, explored the outlook for supply versus demand 2021-2026, including how some companies have struggled for availability in the second half of 2021.
“Beginning in July 2021 several unplanned plant shut-downs, especially the BLM, created a sudden tightness in supply that continues today, that remains in some markets today,” Garvey said.
“As new large sources of helium come fully on-stream, Qatar 3, Amur, and Irkusk, supply and demand balance will return with the potential for oversupply. However, uncertainties remain, such as demand on existing supply will be difficult with planned and unplanned plant shut-downs; ISO turnaround time lengthened because of supply chain issues and port bottlenecks driven by the pandemic and there is very little inventory remaining in the Bureau of Land Management (BLM) reservoir as of October 1, 2021. Crude deliveries will continue to decline yearly. Demand on supply is a monthly, not yearly, logistics issue.
“Uncertainty is the nature of our helium business. There’s so much going on that could disrupt our supply chain.”
Garvey said worldwide supply is in balance with demand - 5.9 Bcf in 2021 – but that US sourced helium will decline from 51% of worldwide supply in 2021 to 37% of worldwide supply in 2026. Emerging overseas sources include Gazprom’s Amur gas processing plant (GPP) in the far southeast of Russia, which is about 80% complete with the first two of six trains now in operation, and the total capacity of that helium project will be 2.1 Bcf. Qatar 3 came on-stream in mid-2021.
“What’s important to note is the big dip in 2020, we went from tight supplies to a surplus, it took about 10% of supply off the market, but we are back in balance now,” Garvey said.
“Demand will grow by 3% over the next decade and it will grow faster over the next five years, coming out of the pandemic, so it could grow at a faster rate for a short while.
MRI (17%), lifting (16%), semiconductors and analytical/labs (both 13%) are the leading applications, according to figures from Boston-based Intelligas.
“The fastest growing segment is electronics in the US at 13% of consumption and it will grow to 17% in the next three of four years because of all the semiconductors fabs coming to the US,” Garvey said.
“Surprisingly lifting – helium balloons – held up very well in the US during Covid at 16%.
Intelligas predicts that by 2026 ExxonMobil (US) will supply 18% to the global market, as will the GPP (Russia), and Qatar 32%.
“We need new sources in the US, otherwise we become a net importer of helium,” Garvey said.
“US production will meet US demand for the next decade, but new sourcing will be needed within the US to avoid importing helium thereafter.”
Supply chain strains
Steve Eckhardt, Vice-President, Global Helium at MATHESON Tri-Gas, helium demand dropped about 25% in the immediate aftermath of Covid-19, but demand slowly and gradually rebounded and is now at or near pre-Covid levels.
Eckhardt explained the impact of the pandemic on the supply chain, and how it has impacted helium logistics. Increased demand for consumer goods has resulted in US and Asian port congestion, significant delays at some ports.
“Transport of helium containers has become problematic, the ISO container fleet is stretched,” Eckhardt said.
Eckhardt said impact on helium logistics to include: increased transit times; increased transport costs, and the ISO container fleet is stretched.
“Container supply is limited as some suppliers have experienced container shortages while others have no spare capacity,” Eckhardt said.
“Delays in shipments result in some customers keeping containers for longer periods of time. ISO container suppliers quoting record long lead times.
“A big percentage of helium has to go on the ocean and that’s led to delays which has stretched and strained the ISO container fleet.”
Eckhardt added, “A very frustrating point I have to make is that ocean shipping companies’ vessels have left LA or Long Beach ports empty to expedite lucrative Asia to US bookings. You can make bookings only to find out at a few days notice that the boat will sail empty and your helium containers will not be on that boat.”
Many helium plants have been impacted by Covid, with delayed plant start-ups and restarts, and Eckhardt concluded by saying supply chain bottlenecks are expected to persist into 2022. Qatar 3 was delayed from a 2018 start-up, and then was delayed further before its start-up this year. Irkutsk has been delayed to late 2022 start-up due to Covid, while Eckhardt said Gazprom has been delayed by about four months. The BLM plant was delayed by several months in part due to government imposed Covid restrictions.
“Our helium supply chain team at MATHESON, and our rivals, have managed to get ISO containers shipped over the ocean and it has taken a bit of creativity and without them we would be in trouble,” Eckhardt said.
Shift in helium supply away from US
Phil Kornbluth, President of Kornbluth Helium Consulting, told delegates that Gazprom’s Amur Gas Processing Plant (GPP) in the far southeast of Russia is now 80.9% complete and, once complete, will consist of six trains with a capacity of seven billion cubic meters (bcm) annually – a 42bcm/year design capacity.
Focusing on the helium aspect, he said, “There’s going to be three helium trains, with a 700 million cubic meters (mcm)/year each capacity each. Each helium train will process the feed from two of the six processing trains.
“The first train started up in September 2021, the second train is scheduled to start up in the first quarter of 2022 and train three will start up in 2024, with full capacity expected in 2025.”
Kornbluth said, “Russia will become the world’s third largest supplier of helium in 2022. The Amur supply is going to be relatively low cost initially, it’s going to be quite competitive with the other major sources in the US and Qatar. It will reduce US exports to both Asia and Europe. The helium business is going to continue to become less US-centric.”
Jassem Al-Mulla of QatarEnergy, has just told Helium Super Summit attendees that Qatargas will start up its fourth helium plant, dubbed Helium 4, in 2027.
Once operational, the plant will take feed gas from four LNG trains associated with the North Field Expansion Project, the Helium Super Summit heard.
Already, Qatargas has three other major helium plants onstream. “Qatar’s growing helium production has been critical to meet the growing helium demand,” Al-Kubaisi told delegates.
He continued, “Qatar’s helium production is defined by its reliability and high quality. Our first helium plant started production in 2005 and has a capacity of 700 mcfa.”
Helium demand drivers
Day two’s first session focused on markets, applications and equipment. Mike Corbett, Managing Partner of Linx Consulting, is the first speaker today and is looking at electronics.
“The semiconductor industry is a major driver of demand for helium,” said Corbett, who went on to explain the semiconductor industry will be worth $1 trillion by 2030. “We expect 100 million Bcf growth in 2022 and we don’t think it’s a one time growth event. We see it as more sustainable growth.”
On the market growth, Corbett said, “2021 was a record year for the semiconductor industry, and Covid-19 has had a tremendous impact on the industry. Strong growth in virtual connectivity has led to a global chip shortage with large economic impacts.”
Of course, as well as growth in demand, the complexity and requirements for semiconductors has continued to grow. On this, Corbett said, “Moore’s Law has driven increase functionality and new applications. However, it has also driven increased complexity in making a chip. Helium demand in the semiconductor segment has strong correlation with key vacuum processes, and helium intensity is increasing with the most advanced semiconductor devices.”
Just as MRI machine technologies have evolved and shrunk in size through more recent years, so too has the level of liquid helium required, while gradual. On this topic, Nick Haines, Head of Helium at Messer Americas, said, “Superconductivity enables extremely high levels of current to generate high magnetic fields, achieved with a bath of liquid helium around the magnet coils.”
“The MRI segment has been a significant portion of helium demand since the first usage of liquid helium to create superconductors.”
Speaking on demand at present, Haines explained that small MRI helium reservoirs have further reduced demand.
“Magnet manufacturers have installed helium recovery and reliquefication systems, and this has reduced demand by hundreds of mmscf/year,” he told delegates.
Moving onto the trends in the market, Haines said that Messer predicts that approximately 5,000 MRI units are installed annually.
On this, he said, “Most developed economies are only installing ‘4K’ MRI’s largely as a replacement, however, some deploying of older systems are still happening in developing countries.”
Antonie Mazas, General Manager of Air Liquide Global Helium, told the event how Air Liquide has been contributing to the space industry.
“Air Liquide sees as the possible market evolution for the space industry to grow from $450bn in 2020 to $1,000bn in 2040,” he said.
Air Liquide has 50 years of experience in the space industry and is involved in a number of space programs, including Ariane 5, a European heavy-lift space launch vehicle developed and operated by Arianespace for the European Space Agency (ESA)
He said, “Air Liquide has designed and manufactured the liquid oxygen tank and helium sphere for the Ariane 5 program. We [Air Liquide] also developed and installed cryogenic lines and a propellant management device and the helium sphere for Ariane 6.”
Non-hydrocarbon-based helium supply in North America can meet increasing demands for more sustainable and lower emission production solutions, North American Helium’s Marlon McDougall told attendees during the last session on day two.
North American Helium (NAH) claims to be the most active helium exploration company in the world and is the largest helium producer in Canada.
NAH has been the most active helium driller in Saskatchewan with 37 wells drilled to date, and earlier this year started up its $32-million Battle Creek helium plant near Consul, Saskatchewan, the largest helium purification facility in Canada, three months ahead of schedule and under budget.
“Our land size in Saskatchewan is about the size of New Jersey,” McDougall said.
“The helium supply hub is shifting away from North America which is highlighting the fact that the BLM is in decline and this presents an opportunity for us to supply reliable and geopolitically secure helium. Also, most of the global supply of helium comes from hydrocarbon sources. There’s many places around the world where ESG concerns and carbon footprint reduction are required so we think non-hydrocarbon helium supply in North America can meet those demands.”
McDougall, North American Helium President and Chief Operating Officer, explained that processing non-hydrocarbon gas costs less.
“There are no difficult products to handle which decreases operating costs,” McDougall said.
“High pressure gas supply reduces compression in the processing facility, with limited rotating equipment. No egress /pipelines need to be built – and the off gas gets vented.
“Providing helium from non-hydrocarbon-based sources that results in significantly lower emissions is a significant opportunity.”
Another sizable source for helium in North America is located at Ladder Creek, Cheyenne Wells, Colorado, which has liquefaction capacity of 1.5 MMcfd of helium. Durell Johnson, Tumbleweed Midstream CEO, outlined the Ladder Creek Expansion Plan and the potential growth of the plant.
Johnson said Tumbleweed is currently engaged with about 20 new entrants to the play at various stages of leasing, new 3D seismic and preparing drilling permit applications. By 2025, Johnson says he hopes Ladder Creek will produce just under 3.5 MMcf/d of helium.
Johnson said helium concentration in the area is 3-5%.
“Right now we can do 1.5 ISOs per day but we believe that can grow north of 400 ISOs per year,” Johnson said. “It’s just about getting the drills bits in the ground and get flowing.”
Beyond North America, Helium One is continuing to make progress in its aim to become a major helium producer in Tanzania. Helium One has a 4,512km2 license area over three project areas, 100% owned, with high-grade surface seeps up to 10.6% of helium.
Elsewhere in Africa, Renergen is advancing and developing flagship Virginia Gas Project, located in Free State in South Africa and expects helium production from Virginia phase one by first quarter 2022 (February). Phase one helium reserves increased by 610% to 7.2Bcf and phase one methane reserves by 427% to 215.1 Bcf; commercial operation will begin in February 2022 with capacity of 350kg/day. Phase two, and 2024 turn on, is anticipated to build up to 44 Mmscf per day at full production and Marani said 65% of phase two anticipated production is pre sold to clients including Linde, Meser, Helium 24 and iSi.