Over the past year, helium has been arguably the most publicised single industrial gas. The furore was catalysed in August 2010 when the US Bureau of Land Management (BLM) revised its methodology for calculating the price of crude helium for open market sales, and in doing so incited a global 15.8% price hike of the inert but undoubtedly invaluable substance.
However, keen observers will be aware that this finite resource has not yet reached stasis. Indeed, projects such as Qatar Petroleum’s Qatar-2 Helium Plant, which once on stream in 2013 will constitute the world’s largest helium refining unit, are indicative of an imminent shift at the very core of the helium industry.
Poised between dependence and demand
Before addressing this shift, it is necessary to appreciate the delicate balance at the heart of today’s helium industry – namely, its dependence upon natural gas. Unlike many resources, which can be preserved for use at a later date, helium is a by-product of the natural gas supply chain.
In order to be used it must be extracted otherwise ‘venting’ occurs where it remains with natural gas and is lost to the atmosphere at the end-user stage. Dr William Nuttall co-editor of the yet to be released, ‘The Future of Helium as a Natural Resource’, and Senior Lecturer at Cambridge Judge Business School, University of Cambridge helped to explain, “Fundamentally there is a certain irony that a material that is so important for a future low-carbon society is itself a by-product of natural gas.”
Despite this heavy reliance on natural gas, a somewhat commonplace fuel, the demand for helium is steadily increasing as other high technology applications emerge. Dr Nuttall describes the relationship between helium and energy applications in particular as an, “interesting thing”, pitted between being a product of one of the 20th century fuels, yet extremely important for low-carbon energy options to the second half of the 21st century.
But just what can this low density, extremely cold, inert element offer the energy sector? According to business experts the answer lies in nuclear technologies. Indeed, commentators such as Dr Nuttall have narrowed the field to two relevancies. “It is of relevance in the future not only for fission nuclear power – today’s kind of nuclear power, for use as a heat extraction fluid; but it is also of relevance to fusion energy, which utilises very large magnets, which in turn could be cooled with ultra-cold helium,” he advised.
The long-term problem
While helium relies upon the natural gas cycle for its commercial production, the very same fact is also its downfall. Commentators such as Dr Nuttall are alert to this but are also quick to differentiate between short-term issues, such as that seen in 2010, from the long-term problem.
Dr Nuttall remarked, “I am willing to say that there is a long-term problem looming with regard to helium over a period of many decades, but this should not be confused with intermittent short-term crises that occur from time to time. Those are supply crunches and not indicative of the long-term problem. The long-term is a consequence of helium being a finite resource, exacerbated by the idea that it is associated with a fuel, natural gas, with an uncertain future and the helium business is too small to be able to shape the long-term future of the natural gas industry… The helium community must live with whatever trends develop in natural gas.”
Is this depressing news for helium? No, on the contrary, as natural gas technologies increase so too does the noble gas’ security. With current biases growing toward liquefied natural gas (LNG) and shale gas, it is hard not to agree with Dr Nuttall that the natural gas industry will “shape the future of helium”.
Nevertheless, with annual global consumption estimated at 6 billion cubic feet, helium is big business and undercurrents within the industry itself are inciting more autonomy. For example, helium conservation is gaining uptake while concurrently venting is avoided. But more exciting still, are the ‘first glimmers’ of helium-centred exploration. Indeed, experts anticipate that over the course of twenty years we will see a marked growth in autonomous helium production, rather than as an adjunct to the natural gas sector.
Similarly to many aspects of the industrial gases sector, the future of helium looks bound to geography, as Dr Nuttall was keen to highlight.
“Though the demand for helium is dominated by the US and Europe. It is moving East, in terms of both supply and demand. I understand from one leading Industrial Gases Company that their strongest demand growth in the period between 2006-2010 has been in Asia, where around 40% of global demand growth is expected to have occurred in this region.”
Dr Nuttall is dubious of the US’ capacity to meet shifts in helium demand, he said, “The relationship of the US to helium will be very interesting: Will the US really ramp down their strategic supplies… Will they be largely replaced by new international entrants from the liquefied natural gas industry?”
Experts believe so, indeed Nuttall commented, “Helium is going to be coming from more and more places from around the world, it’s going to come from perhaps a larger number of players and there’s even the prospect that some adventurous companies might move from extracting helium as a by-product of natural gas, to looking just for the helium – and there’s the first signs that this is underway. I think looking ahead there will be change. There will be change on the demand side for helium, there will be change in helium supply, but the next ten years are going to be very interesting indeed.”
Prices and plateaus
Given the change afoot within the helium sector, it must be difficult to gauge future prices?
According to recent research undertaken at the Cambridge Judge Business School, the answer is no. Dr Nuttall revealed the findings of Cai Zhiming’s seminal PhD research, “Here at Cambridge University we’ve been conducting a System Dynamics study jointly between Cambridge Judge Business School and the Department of Materials Science and Metallurgy, under the support and sponsorship of two entities; the industrial gases company BOC/Linde and the Culham Centre for Fusion Energy.”
“It looks at the predicted future dependence of price and quantity of helium supply and as a consequence of that modelling, the broad conclusion is that helium won’t really reach a peak – it will reach a plateau, from around the year 2030, and that plateau will be at substantially higher volumes than the market today, perhaps around 10 billion cubic feet. Then that plateau will gently slope away until about the year 2080, at which point helium supply into the market will decrease quite markedly,” Dr Nuttall concluded.
The notion of a plateau might seem anticlimactic, but it should be remembered that this is linked intrinsically to helium’s reliance upon natural gas production. Right up until 2080, system dynamics modelling anticipates a helium price rise by a factor of six.
Concurrently, it is no secret that investment in autonomous helium facilities, such as that in Qatar, is mounting. With these factors in mind, and given helium’s nuclear potential, the next century could be a very exciting era for this inert but increasingly expensive gas.