A family business located in the helium hotbed of Amarillo is hoping to transform its operation in response to a changing market. Tex-Air Gas supplies helium to welding supplies distributors across the US, and has also fueled projects like launching a box of Kentucky Fried Chicken into space and illusionist David Blaine’s ascent above the Arizona desert with the help of around 50 helium balloons last year. But now Tex-Air Gas hopes to become more than just a helium distributor, and have its own source.
The US Bureau of Land Management (BLM), which operates and maintains a helium storage reservoir, enrichment plant, and pipeline system not far from Tex-Air in Amarillo, Texas, once supplied over 40% of domestic demand for helium, but is in the process of decline. Various exploration projects in the US and Canada hope to result in new helium sources to ease concerns that the US will soon have to rely on overseas sources in Qatar and Russia to meet demand.
Jim Prowell, whose dad Jim Sr. founded the company as a welding supply business in 1952, runs Tex-Air with son Joe (President). Executive Vice-President Jim has seen enough in the business to recognize how significant a moment this is in the evolution of the helium market, and an opportunity for Tex-Air to become more than just a helium distributor.
“It’s going to be a huge change with the BLM, depending on the success of the exploration,” Jim told gasworld. “I think it’s a good thing for the industry overall, especially in the western US there’s a lot of exploration right now that can be finished out and you’ll have some independent plants and as long as they don’t do multi-year contracts with the majors at dirt cheap agreements. Weil Group, Desert Mountain Energy, Tumbleweed have all had some degree of success. I feel the eventual way to proceed in this business is to have your own source and be 100% vertically integrated. If we are to ever grow our business, and do more than nibble around the edges of what majors don’t want, we will have to have our own source and refinery.”
Pricing is one of the main reasons Jim and Joe are hoping to secure their own helium source.
“Different geographical areas seem to have different pricing for helium from the same major producers, i.e. Messer, Air Products, Praxair, MATHESON Tri-Gas,” Jim said. “The prices are just all over the place. It makes it quite difficult in that we are sole product distributor, just of helium, so if I don’t have a good supplier at a good price, it makes it extremely difficult to compete. That’s why we are looking to become vertically integrated and have our own source of supply – to have a helium gas well, purification plants and trailer filling facilities.”
Joe, who joined the family business in 2018 after serving in the US Navy and then as a Defense Contractor, is working with a partner to make the Prowell dream a reality.
“With the gold rush all you needed was a spade, a floppy hat and pair of burlap sack overalls and you had a chance, but with helium it’s more like the gold rush for millionaires,” Joe told gasworld.
“I got an oil and gas attorney out of Amarillo to team up with us, Patrick Weir [of McCarn & Weir, P.C.], and with him we have been navigating the waters of what is the best way to find your own source of helium. We’ve had meetings in Oklahoma, Texas, and we’ve hit a lot of speedbumps along the way. We looked at potentially acquiring a plant that was already built, but we finally came down to doing a bit of wildcatting, with the help of geologists to find the best area, and just go drill for helium. Then Covid happened.”
After attending an energy capital conference in Dallas and speaking to investors and banks, the Prowells had a rethink of what they could do in the short term. The company has a fleet of jumbo gaseous tube trailers which are all configured the same, rated at 3,165 PSI, and hold approximately 163,000 SCF. Joe wanted to add a liquid trailer to the fleet before streamlining the company’s production process further by securing its own source.
“We then just focused on our distribution business and we’ve taken a couple steps to help us get better deals,” Joe said. “We wanted to either get into either the liquid helium business or get our own liquid helium trailer and build our own transfill plant here in Amarillo. But there’s only one manufacturer of liquid trailers in the US, Gardner Cryogenics, there’s over a year long wait to order one of these trailers too. But I found a used trailer in Denver, we bought it, had a new chassis fitted, and pretty soon they are going to start testing it, inspecting it, replacing valves. If that works out the plan is to invest in our own transfill plant in Amarillo and streamline the business that way. Hopefully that will allow us to be a little bit more competitive in such a volatile market where every one of the major industrial gas suppliers just decide what price it’s going to be today.”
Plans aren’t on hold to find their own helium source for Tex-Air, they are just evolving.
“My partner in exploration, a company called Five Nines Energy, LLC, and I are having meetings again about potentially acquiring some wells,” Joe said. “The demand for helium is only going to go up so we do need to find a way to increase supply otherwise the price of helium is going to skyrocket. I love space exploration and I want Star Trek to be real one day, but I also want early cancer detection and MRIs to be affordable to anybody. I don’t want to see helium pricing continue to go through the roof and people can’t then afford an MRI because it’s too expensive and they die.”
With demand for helium driven from high-tech applications, Jim believes supply could tighten again in 2022 before independent wells are started up.
“I feel as if there’s been a loosening of the market recently but it’s going to come to a screeching tightening around the first part of 2022, when I think the pricing is going to continue to stay high, the amount of product that is coming to market is going to be throttled back for a variety of factors,” Jim said.
“If those new fields in Canada and the US don’t come to fruition to some volume that makes sense, and if they market that product all to the major industrial gas suppliers, then that cartel is going to control the pricing of the product to keep it extremely high. That’s just the law of supply and demand. I think there will be opportunities for independents like Tex Air, which you can count on one hand.”