The Bureau of Land Management’s Amarillo Field Office will host a helium auction Wednesday as part of a plan to eventually sell off government-owned helium and privatise operations.
Doubt surrounding the future of the BLM’s Federal Helium Reserve, near Amarillo in Texas, was rife throughout the majority of last year. But this quashed thanks to The Helium Stewardship Act, which was passed on the 25th of September 2013. The Senate’s version of the bill was backed unanimously, 367 – 0, and the potential cease in operation of the FHR (set for October 7th 2013) was averted.
The agreement was praised by the major gases companies like Linde, Air Products, and Praxair.
Nick Haines, Linde’s Head of Helium Source Development, said at the time of the Helium Stewardship Bill being passed, “Phasing in the auction will ensure that the government receives fair market prices for helium while preventing market disruptions in existing supply chains. Gradually phasing in an auction of the federal helium will attract bidders, will establish a market price, and, just as importantly, will help discourage hoarding, speculation, and other disruptive behaviors that occur in unpredictable markets.”
But now, these companies who were unified in their support for the passing of the Helium Stewardship Act, will seemingly be bidding against each other at tomorrow’s auction.
However, it has been reported that the helium program has paid off a $1bn debt incurred when the reserve was created and now generates money for the US Treasury – stating it costs $20m in operating costs to run the reserve but it makes £200m so will send $180 to $190m back to the Treasury this year.
Tomorrow’s auction is the first to be held since the Bill was passed, though more are expected to be held to gradually reduce the Federal Helium Reserve - which will be depleted (except for a 3 BCF stockpile) by 2020, if not before. Further, the recovery of helium from the Federal Reserve is becoming more difficult as the reservoir depletes and the pressure declines. While good news for the industry, the security of the Federal Helium Reserve merely averts an even bigger crisis.