The world is currently gripped in a global helium deficit and the issue of a lack of supply can be sourced back to the initial resource at the natural gas field, according to the recent sentiments of John C. Bigham, Director of Helium Product Management and Global Logistics for Matheson Tri-Gas.

Nearly two thirds of the world’s helium supply is found within a 250-mile radius of Amarillo, Texas – dubbed the ‘Helium Capital of the World’ – and as a by-product of billions of years of radioactive decay, helium is distilled from natural gas that has accumulated in the presence of uranium and thorium deposits.

If it’s not extracted during the natural gas refining process, the helium is simply lost and Bigham appears to see this issue at the source as part of the fundamentals for the global shortage.

Speaking about the current industry climate, he says, “It is perhaps important to look very briefly at where helium comes from, in order for readers to fully appreciate why there is currently a worldwide shortage.”

“Though helium in principal is abundant, it is produced as a by-product of natural gas processing, its value is considerably less and is therefore secondary – it isn’t valuable enough, to those making billions from the natural gas extraction, to justify developing a natural gas field and building a gas processing plant purely to extract helium, the helium distillation plant is an add on.”

Following World War I up to 32 billion cubic feet of helium gas were bunkered underground by the US government at the Cliffside Field, called the ‘Federal Helium Reserve’. This stockpile was then set up to be privatised after the Helium Privatisation Act (HPA) of 1996 was passed and is being sold off at a constant rate (2.2 billion feet per year) intended to deplete the Federal Reserve, except for a permanent strategic reserve of 600 million cubic feet by 2015.

Bigham explains, “The US Bureau of Land Management (BLM) pipeline and the associated private crude Helium plants were designed to produce 4 billion cubic feet per year of crude helium to supply the 6 private helium refineries located along this pipeline system. Due to depletion of the Hugoton Natural Gas field, we believe that these refineries can no longer operate, simultaneously, at full capacity.”

“This is a recent phenomenon and we believe this decline reduced available BLM network supply by approximately 300 million cubic feet in 2007. We expect that this gap will continue growing each year.”

In terms of new supply, there is an abundance of helium bearing natural gas in the Middle East, with the Qatar helium plant beginning production in 2005 but ramping up slower than anticipated production, at only at 40% - 60% of capacity through much of 2007. The Skikda helium plant in Algeria started production in 2007, but will not reach full capacity until sometime in 2011 when the natural gas trains previously destroyed by an explosion have been replaced.

A number of other significant projects involving companies as notable as The Linde Group, Matheson Tri-Gas and Air Products have all been revealed over the past 6 months and beyond, with the escalating problem of supply and demand expected to keep supply tight for the foreseeable future.

This is affirmed by Bigham, though with a redressing of the balance expected once the next 2-3 years have passed, as he says, “Global demand was estimated at 6.3 billion cubic feet per year in 2007. Due to the shortfall in the BLM pipeline system, maintenance outages and delays associated with new production capacity, available helium supply has not kept pace with the demand.”

“At a minimum, the current helium shortage is expected to continue into 2010. While the shortage persists, prices are expected to continue rising in order to ration scarce molecules.”