With the news that draft legislation has been unveiled that could safeguard the future management of the US Federal Helium Reserve, there are hopes that the feared prospect of the Helium Cliff will be averted.
So what might the Responsible Helium Administration and Stewardship Act entail?
According to an official press release, the proposed discussion draft of the Responsible Helium Administration and Stewardship Act will prevent global shortages, increase transparency as to availability of supply, and establish research on helium-3 isotope.
The act would:
· Prevent global helium shortages and promote market-based reforms by implementing a three-phase system for operating the Federal Helium Reserve over the next decade until the Reserve is emptied of helium.
· Increase transparency and prevent unexpected supply disruptions by requiring the Bureau of Land Management to make more information available online regarding planned maintenance closures of the Reserve, the duration of the closure and efforts to minimise any impacts to the supply chain.
· Require the federal government to work with state geological surveys to complete a national helium gas assessment.
· Establish coordinated research on helium-3 isotope that could be used for national defense and clean energy development.
The three-phase system to be implemented would be structured as follows:
Phase A – The Federal Helium Reserve will continue operating under current law until October 1, 2013 or the date, if later, when the debt is paid off.
Phase B – A quarterly helium auction will be established to promote competition and ensure a better return for taxpayers.
60% of the crude helium will be made available to refiners and those with existing tolling agreements. 20% of the crude helium will be available to any bidder (including refiners) that is pre-approved by the Secretary and has a proven interest in helium.
As the helium sold to other bidders (as outlined in the point above) is refined, then an additional amount of the crude helium, up to the full remaining 20%, will be made available by auction to refiners and those with existing tolling agreements.
The Secretary of the Interior will set a minimum sale price for auctions based on a confidential survey of current market crude helium prices and a review of action prices. The Secretary has the authority to increase or decrease the minimum price based on market conditions. Funds from the auctions will go to the Helium Production Fund, used to operate and maintain the Reserve. Excess revenue will be directed to the general Treasury.
Phase C – Starting when there is 3 billion cubic feet of helium remaining in the Reserve, commercial sales of helium will end and the remaining helium will only be available for federal national security and scientific needs.