Thanks to insider information, gasworld can exclusively reveal that the world is again dealing with a shortage of helium. Jane Dawson explores the issue further.

Sources from within the heart of the industrial gases community have alerted gasworld to a current and worsening helium shortage. The deficit of helium is a subject that has received significant media coverage for over a year, but as we discovered the issue is a lot more imminent than previously realised.

Indeed, according to industry sources the outlook is less than rosy, with informants predicting, “a sustained period of tight supply at the best of times and helium shortages during times of plant outages.”

Contributing factors
Our sources emphasised that the current shortage, similar to the last major shortage which occurred in 2006/2007, is the result of a loss of capacity from the market rather than significant growth of demand. There are a number of factors contributing to the current loss of capacity.

The first, and most important, factor is that since the first quarter of this year, the U.S Bureau of Land Management (BLM) has been allocating crude helium feedgas to the six helium refining facilities that are linked to the BLM Pipeline & Storage System. The BLM’s allocation has been caused by several different factors including planned and unplanned outages of the BLM’s Crude Helium Enrichment Unit (CHEU) and high demand from the helium refiners as they sought to compensate for outages at other world helium sources. All of these factors can cause reduced pressure in the BLM Pipeline and force the BLM to allocate crude helium to maintain the minimum acceptable pressure in the pipeline. As a result of the BLM’s allocation, the six helium refining facilities, which collectively account for roughly 4 Bscf of the world’s 7 Bscf of capacity, have been unable to operate at their full capacities.

While the BLM’s allocation of crude helium has been a contributing factor to the current shortage, other plant outages have also come into play. There have been periods of curtailed helium production at the plants in Algeria and the source in Orenburg, Russia has been shut down for several months. These outages have directly taken capacity from the market and contributed to the high demand from the helium refiners connected to the BLM Pipeline.

As our source explained, “The helium supply chain is really all connected. An outage at a source in Algeria or Qatar takes supply out of the market and increases demand on the BLM Pipeline. This lowers the pressure in the BLM Pipeline and forces the BLM into an allocation situation.”

In the short-term, the helium supply situation looks set to worsen this August when ExxonMobil, responsible for around 20% of all global helium sources, is scheduled to take a three-week planned maintenance shutdown. Even companies that have been relatively impervious to the shortages thus far are likely to be effected by this shutdown, thanks to Exxon’s unrivalled size and the fact that they supply most of the world’s major helium suppliers.

In fact, as gasworld discovered during our May issue, helium supplies will remain relatively static until the next major facility, Qatar II, goes live in May 2013. But the period between now and then remains uncertain, so just what are the expected consequences?

Considerable consequences
With a decline in supply but a steady demand, it is only logical that firms will be unable to meet customer needs and just as the BLM allocates capacity, they too will inevitably have to allocate helium supplies and in doing so, regulate its availability. Our source explained, “Suppliers will be allocating product to customers and the impact on them will be two fold. They will receive less helium and may also experience delays in when they receive it.”

But just how companies allocate their product is a matter for individual firms to negotiate. Traditionally, some suppliers have allocated according to urgency with the less pertinent applications such as balloon gases seeing little to no allocation. Meanwhile those applications that are deemed more critical, such as helium needed for medical Magnetic Resonance Imaging (MRI), are often exempt from allocation.

But here we enter into the territory of speculation. Though the shortages between 2006 and 2007 can offer indication of the consequences to come, with such immediacy and global prescience as this shortage, impacts in terms of the price of helium and substitution of the element can only be wondered at. Certainly our sources remain sure of one fact: “The helium supply chain in the future looks less reliable than in the past.”

Tempered change
Nevertheless, the news is not all negative. As our sources explained, helium demand has a seasonal element with fluctuating usage that ties into Northern Hemisphere summertime. Consequently, we can expect a reprieve from the shortage after ExxonMobil returns to full production and demand tail-offs during the winter months.