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56-392 PDF 2010

UP IN THE AIR: 

THE BLM’S DISAPPEARING 

HELIUM PROGRAM 

OVERSIGHT HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

Thursday, May 13, 2010 

Serial No. 111-52 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

or 

Committee address: http://resourcescommittee.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL, II, West Virginia, Chairman 

DOC HASTINGS, Washington, Ranking Republican Member 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Frank Pallone, Jr., New Jersey 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

Gregorio Sablan, Northern Marianas 

Martin T. Heinrich, New Mexico 

Ben Ray Luja ́n, New Mexico 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Donna M. Christensen, Virgin Islands 

Diana DeGette, Colorado 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Joe Baca, California 

Stephanie Herseth Sandlin, South Dakota 

John P. Sarbanes, Maryland 

Carol Shea-Porter, New Hampshire 

Niki Tsongas, Massachusetts 

Frank Kratovil, Jr., Maryland 

Pedro R. Pierluisi, Puerto Rico 

Don Young, Alaska 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Jeff Flake, Arizona 

Henry E. Brown, Jr., South Carolina 

Cathy McMorris Rodgers, Washington 

Louie Gohmert, Texas 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Doug Lamborn, Colorado 

Adrian Smith, Nebraska 

Robert J. Wittman, Virginia 

Paul C. Broun, Georgia 

John Fleming, Louisiana 

Mike Coffman, Colorado 

Jason Chaffetz, Utah 

Cynthia M. Lummis, Wyoming 

Tom McClintock, California 

Bill Cassidy, Louisiana 

James H. Zoia, Chief of Staff 

Rick Healy, Chief Counsel 

Todd Young, Republican Chief of Staff 

Lisa Pittman, Republican Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

JIM COSTA, California, Chairman 

DOUG LAMBORN, Colorado, Ranking Republican Member 

Eni F.H. Faleomavaega, American Samoa 

Rush D. Holt, New Jersey 

Dan Boren, Oklahoma 

Gregorio Sablan, Northern Marianas 

Martin T. Heinrich, New Mexico 

Edward J. Markey, Massachusetts 

Maurice D. Hinchey, New York 

John P. Sarbanes, Maryland 

Niki Tsongas, Massachusetts 

Nick J. Rahall, II, West Virginia, ex officio 

Don Young, Alaska 

Louie Gohmert, Texas 

John Fleming, Louisiana 

Jason Chaffetz, Utah 

Cynthia M. Lummis, Wyoming 

Doc Hastings, Washington, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on Thursday, May 13, 2010 ............................................................. 1 

Statement of Members: 

Costa, Hon. Jim, a Representative in Congress from the State of 

California ....................................................................................................... 2 

Prepared statement of ............................................................................... 4 

Lamborn, Hon. Doug, a Representative in Congress from the State of 

Colorado ......................................................................................................... 5 

Prepared statement of ............................................................................... 6 

Statement of Witnesses: 

Burke, Marcilynn, Deputy Director, Bureau of Land Management, U.S. 

Department of the Interior ........................................................................... 7 

Prepared statement of ............................................................................... 9 

Map of ‘‘Major Gasfields of the U.S.’’ ....................................................... 11 

Groat, Charles G., Ph.D., Chair in Energy and Mineral Resources, 

Department of Geological Sciences, The University of Texas at Austin, 

on behalf of the National Research Council of the National Academies .. 37 

Prepared statement of ............................................................................... 25 

Mittal, Anu K., Director, Natural Resources and Environment, U.S. 

Government Accountability Office ............................................................... 12 

Prepared statement of ............................................................................... 13 

Richardson, Robert C., Ph.D., Vice Provost for Research, Emeritus and 

Senior Science Advisor to the President and Provost, Cornell 

University, on behalf of the National Research Council of the National 

Academies ...................................................................................................... 25 

Prepared statement of ............................................................................... 25 

Additional materials supplied: 

Haynes, Mark, President, Concordia Power, on behalf of the NGNP 

Alliance, Letter and attachment submitted for the record ........................ 48 

Map of ‘‘Major Gasfields of the U.S.’’ .............................................................. 11 

(1) 

OVERSIGHT HEARING ON ‘‘UP IN THE AIR: 

BLM’S DISAPPEARING HELIUM PROGRAM.’’ 

Thursday, May 13, 2010 

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:10 a.m. in Room 

1324, Longworth House Office Building, Hon. Jim Costa [Chairman 

of the Subcommittee] presiding. 

Present: Representatives Costa, Holt, Sarbanes, and Lamborn. 

Mr. COSTA. The oversight hearing with the Subcommittee on 

Energy and Mineral Resources will now begin. The subject matter 

for this morning’s oversight hearing is on the Bureau of Land Management’s efforts with regard to the disappearing Helium Program, 

and we will get into that in a moment. 

But before I do, let me indicate that this is the Subcommittee’s 

first hearing since the tragic accident that took place in the Gulf 

of Mexico, with the loss of lives. Certainly I, and I believe members 

of the Subcommittee, want to extend our sympathy and concerns 

for the families who lost their loved ones in that tragic accident. 

And obviously, the impacts of that accident with regard to the environmental spill is something that we are all focused on. The 

Department of the Interior, I believe, has sent over 13,000 personnel, together with the Coast Guard, Homeland Security, and 

others who are now out on the Gulf in Louisiana and Alabama and 

the other states, trying to assure that we do everything that is 

humanly possible to stop the spill and work in conjunction with the 

private sector, with British Petroleum and the other parties to the 

impacts of this pending horrific spill that is taking place. 

Chairman Rahall and I have spoken a number of times with 

regard to this entire incident. The full Committee will be holding 

hearings later this month, with Secretary Salazar reporting to the 

full Committee. And hopefully by that time, the leak will have 

been, if not completely stopped, significantly reduced; and the efforts to do the remedial applications so that we can minimize the 

impact to the environment will be taking place. 

In June, it is the intention of the Subcommittee Chair to hold at 

least one hearing, if not a series of hearings, to look at the proposal 

that the Department of the Interior is considering with regard to 

dividing the responsibility of the Minerals Management Service as 

it relates to both the Royalty Program and the inspection of these 

facilities throughout the Gulf and other places offshore in American 

waters. We will do our due diligence. 

2 

It is also the desire of this Chairman, in working with the full 

Committee Chairman, to provide an opportunity for members of 

the full Committee and Subcommittee to actually go down and 

visit, and see firsthand what has taken place. 

It is this Chairman’s view that going down there now would not 

be helpful to the process. We want them to fix it, and to do all the 

corrective action. We can do our due diligence and the appropriate 

oversight once they have hopefully stopped the leak, and they begin 

to deal with the remedial efforts that clearly must be done. 

But at this point, with all the efforts that are taking place, I 

think I would not want our visit to be counter-productive or get in 

the way of what needs to be happening right now. But we certainly 

want to provide that opportunity for Members at the appropriate 

time. And I hope that will be within the next month. 

So I wanted to put that in perspective because, obviously, it is 

central to the focus and the jurisdiction of this Subcommittee. And 

while we are holding this hearing this morning, this had been 

scheduled a month ago, and I don’t want anyone to think that simply because we are holding this hearing today, that we are not focused on what is a very, very critical issue for our country, for this 

Subcommittee, and for the full Committee. And I know Chairman 

Rahall takes the responsibility and the jurisdiction of his full Committee very, very, very seriously, and he will be obviously doing everything he can, working with all the members of the Subcommittee. He is going to be sending out a letter to the members 

of the Subcommittee that basically outlines a course of action for 

the full Committee, and what he would like us to focus on with the 

Subcommittee here soon. 

So I just wanted to put that in perspective because this catastrophe is obviously on the news every day, and it is on the minds 

of many Americans who are concerned about the focus of our 

energy policy in this country. And it is the appropriate jurisdiction 

both of this Subcommittee and the full Committee, and we intend 

to fully discharge our responsibilities in those areas. 

So with that understood, I will begin my opening statement with 

regard to today’s subject matter at hand. 

STATEMENT OF THE HON. JIM COSTA, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. COSTA. The Federal Helium Program is something that has 

existed for decades, and I think oftentimes people have an interesting sense of what the Federal Helium Program may or may not 

be. 

Notwithstanding the challenges, many challenges that we face 

with energy, I think it is important to note that, while we may 

think of helium as something that we put in balloons or that used 

to have an impact on dirigibles decades ago, the helium that we are 

familiar with, a box on the periodic table when I was a student, 

I guess when many of us were students, is more than just that 

party balloon that we may associate with it. 

Helium is a very important natural gas. It is contained in most 

natural gas fields in the United States, but not always in commercial quantities, as our expert witnesses will tell us. 

3 

Only some natural gas fields have high-enough concentrations of 

helium to make its extraction economically attractive to the private 

sector. Most of those fields, about two-thirds of our domestic supply 

of helium, reside in certain localities of our country: North Texas, 

Oklahoma, and Kansas. The rest is located in Wyoming and the 

Ranking Member’s State of Colorado, as well as Utah. 

Those who are not aware may be interested that the U.S. 

Government stores significantly what is taxpayer-owned, as well as 

privately owned, helium in a unique natural dome that is located 

just outside of Amarillo, Texas, maintained by the American taxpayer, which is, in part, why we are having this hearing today. 

So here is the thing. Helium isn’t just the gas used for party balloons or for deep-sea diving. Helium is, in fact, essential to a common medical diagnostic tool, which many of us are familiar with, 

and our families or friends have benefitted from, namely MRIs, or 

magnetic resonance imaging. These MRIs, of course, are a common 

tool that we use in medical diagnostic practices for a host of diseases and injuries that we deal with. 

Helium is also essential for numerous other applications, from 

optical fibers to space rockets to the next generation of nuclear reactors. It is an important natural element, it is an important natural gas. And therefore, we think it is important that we have this 

hearing today. 

Our space agency, NASA, needs helium, up to 107 million cubic 

feet a year, to pressurize and purge the engines of the space shuttles. The Department of Energy relies on helium in its research 

laboratories to operate super-conductors. In many scientific and 

medical uses, there is absolutely no substitute for helium because 

of its unique properties. It has a low boiling point, high thermal 

conductivity, and inertness. These are all things that if I had paid 

more attention to it as a student when I was learning about the 

table, I would know better today. But they are important factors 

nonetheless, and that is why we are holding this hearing. 

We are fortunate that the United States has major helium resources, at least 20 percent of the identified resources worldwide. 

We are the number-one producer of helium. Our domestic helium 

assets include the Federal stockpile of helium, also known as the 

Federal Helium Reserve, which contains approximately 24 billion 

cubic feet of helium, enough helium to meet our domestic needs for 

years if we manage it wisely. 

But there are some warnings, and that is why we want to have 

the panel of experts testify this morning. Future shortages of affordable helium would be an obstacle for the U.S. for advances in 

medicine, science, and aerospace, as well as other critical applications. Which brings us again to what we will hope to learn today. 

In 1996, Congress made attempts to privatize and sell the helium 

resources. That circumstance has changed, as the National Academy of Sciences’ report so clearly illustrates. In that National Academy of Sciences’ report, it says that we should, and will, consider 

whether a new direction is needed for the Federal Helium 

Program. 

The questions that I will be looking at answers for today are 

whether or not we should continue to sell off the Federal Helium 

Reserve, is that appropriate? If a stockpile should be maintained, 

4 

is that appropriate? And if, in fact, we should maintain a stockpile, 

what is the prudent size of that stockpile? 

Also, are the prices and fees for Federal helium and storage of 

private helium appropriate? The price structure, some indicate, is 

impacted because, in fact, we have this reserve. Would it change 

greatly if we no longer had this reserve? 

Should the government policies adequately encourage conservation of helium? Again, we have this distinguished panel of experts, 

including the Co-Chairs of the National Academy’s most recent 

report of the Helium Program, former Director of the U.S. Geological Survey, Dr. Charles Groat; Dr. Robert Richardson, winner of a 

Nobel Prize in Physics in 1996. Congratulations, Doctor. I know all 

Americans are proud of that achievement, and as certainly I am. 

So we look forward to the testimony. And I will defer to my colleague, the Ranking Member of the Subcommittee, the gentleman 

from Colorado, Mr. Doug Lamborn. 

[The prepared statement of Mr. Costa follows:] 

Statement of The Honorable Jim Costa, Chairman, 

Subcommittee on Energy and Mineral Resources 

Before we begin, let me simply state our sympathy for the families who lost loved 

ones in the Gulf of Mexico disaster. 

I want all of the Members of this Subcommittee and the entire Committee on Natural Resources to know that since several hours after the explosion, we—Chairman 

Rahall, and I, and the staff—have been monitoring the Joint Command’s efforts to 

contain the oil flow. We pray that the worst of the environmental impacts can be 

averted and we have already begun our own investigation into not only the cause 

of this catastrophe, but also the implications it has on our Nation’s energy policy. 

As you all know, the Committee on Natural Resources has primary jurisdiction 

over offshore drilling. So, while other Committees hold hearings into the potential 

causes of this incident, if—I reiterate if—changes are needed in the regulatory regime which governs offshore drilling, those changes will emanate from this Committee. 

Meanwhile, we should not ignore our oversight responsibilities in other areas, including today’s issue—the Federal Helium Program. I would note that this hearing 

was scheduled before the Gulf incident occurred on April 20. Still, even without the 

horrific accident we still see unfolding in the Gulf, one might reasonably ask ‘‘Why 

Helium? Why now?’’ 

So, let’s begin with a little background on helium and its importance. 

Helium, a box on the periodic table for me when I was a student, is more than 

just the party balloon with which we all associate it. Helium occurs as a constituent 

of natural gas in most natural gas fields in the United States—-but not always in 

commercial quantities. Only some natural gas fields have high enough concentrations of helium to make its extraction economically attractive to private industry. 

Most of those fields—about two-thirds of our domestic supply of helium—reside in 

North Texas, Oklahoma, and Kansas. The rest is located in Wyoming, Colorado, and 

Utah. 

You may be interested to know that the United States government stores significant tax payer-owned as well as privately-owned helium in a unique underground 

natural dome located just outside of Amarillo, Texas, maintained by the American 

taxpayer. 

So, here’s the thing——helium isn’t just a gas used for party balloons and deep 

sea diving. In fact, helium is essential to a common medical diagnostic tool with 

which many of us are familiar—MRIs, or ‘‘magnetic resonance imaging.’’ Helium is 

also essential to numerous other applications, from optical fibers to space rockets 

to next-generation nuclear reactors. Our space agency, NASA, needs helium—107 

million cubic feet a year—to pressurize and purge the engines of space shuttles. The 

Department of Energy relies on helium in research laboratories to operate superconductors. In many scientific and medical uses, there is no substitute for helium 

because of its unique properties—a low boiling point, high thermal conductivity, and 

inertness. 

We are fortunate in the United States to have major helium resources—at least 

20% of the identified resources worldwide—and we are the number one producer. 

5 

Our domestic helium assets include a Federal stockpile of helium, also known as 

the Federal Helium Reserve, which contains approximately 24 billion cubic feet of 

helium—enough helium to meet our diverse domestic needs for years, if managed 

wisely. 

At a glance, this may sound like a rosy situation. Yet a new report by the National Academies, which we will hear more about today, has assessed supply and 

demand for helium and the Federal helium program and finds that: • The 1996 Helium Act’s directive to sell off the Federal Helium Reserve by 2015 

is detrimental to the taxpayer. • We would be selling off a valuable natural resource commodity too quickly and 

too cheaply. • And, finally, and I think most importantly, the report warns that the U.S. is 

at risk of becoming a net importer of helium in the next 10-15 years if we do 

not amend the 1996 law. 

These are stark warnings. Future shortages of affordable helium would be a major 

obstacle in the U.S. for advances in medicine, science, aerospace and many other 

critical applications. 

Which brings us to the purpose of and need for today’s hearing. 

In 1996, it made sense to Congress to privatize and sell off its helium resources. 

Circumstances have changed, as the National Academies report so clearly illustrates. We should and will consider whether a new direction is needed for the Federal Helium Program, and discuss such key questions as: 

• Whether the continued sell off of the Federal Helium Reserve is appropriate. 

If a stockpile should be maintained, how do we determine a prudent size? 

• Whether the prices and fees for Federal helium and storage of private helium 

are appropriate. 

• Whether government policies adequately encourage helium conservation. 

We have a distinguished panel to help us address these questions, including the 

co-chairs of the National Academies’ most recent report on the helium program— 

-the former Director of the U.S. Geological Survey, Dr. Charles Groat, and Dr. Robert Richardson, winner of the Nobel Prize in Physics in 1996. 

I look forward to all the witnesses’ testimony, and now recognize the distinguished Ranking Member of the Subcommittee. 

STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. LAMBORN. Thank you, Mr. Chairman. I want to thank you 

for holding this hearing today, and for the witnesses for being here. 

But before we start, I, too, recognize that this is the first hearing 

of the Energy and Minerals Subcommittee since the tragic explosion of the Deepwater Horizon rig in the Gulf of Mexico. I would 

like to express my sympathy, as well, and offer my condolences to 

the workers whose lives have been cut short and their families, 

whose lives will never be the same. 

I also hope that the environmental and economic damages can be 

kept to a minimum. 

The Natural Resources Committee has oversight on this offshore 

leasing spill, and the natural resource damages caused by it, and 

it is critical that we continue active engagement on this matter. I 

know that we have hearings planned on this disaster, and that the 

Committee has been actively engaged in working to address the crisis, as well as to answer the questions about what happened, and 

if the government has responded appropriately. This is a major 

concern for us as a committee and for the entire nation, and we 

will continue to keep the residents of the area in our thoughts. 

Today’s hearing is on our nation’s Helium Program and the National Academy’s recent report about the effects of the 1996 Helium 

Privatization Act. Since the Helium Program’s inception in 1925, it 

has changed substantially. The program has served a broad range 

of interests over nearly a century, including providing for our naVerDate Nov 24 2008 10:21 Oct 19, 2010 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 L:\DOCS\56392.TXT Hresour1 PsN: KATHY
6 

tion’s defense, scientific research, medical needs, and aerospace 

technology. 

The National Academy’s examination of the privatization of the 

helium industry has generated a number of important questions. 

Should the U.S. finish the privatization of the helium industry, or 

should we revisit the privatization issue in light of changing demands for helium and the nation’s growing import dependence on 

energy and mineral resources? 

Should the Bureau of Land Management continue to maintain 

the long-term storage facility for crude helium? Should the reserve 

be completely depleted by its current schedule of 2015? And at 

what rate should the government continue to sell off its helium reserve? 

Also, in our current economic state, it is critical to examine the 

projected worldwide supply and demand of helium over a long 

term. And after such examination, what course of action should the 

government take for a long-term policy? 

Our Helium Program has proved to be a great asset to our defense, and to our technological development over the past century, 

and we must continue with its responsible management. 

To close, I will have a few questions for our witnesses, and I am 

looking forward to hearing their testimony. Thank you, Mr. Chairman, and I yield back. 

[The prepared statement of Mr. Lamborn follows:] 

Statement of The Honorable Doug Lamborn, Ranking Republican, 

Committee on Natural Resources 

Thank you, Mr. Chairman; I want to thank you for holding this hearing today. 

But before we start I would like to recognize that this as the first hearing of the 

energy and mineral resources subcommittee since the tragic explosion of the Deepwater Horizon in the Gulf of Mexico. I would like to express my sympathy and offer 

my condolences to workers whose lives have been cut short and their families whose 

lives will never be the same. 

The Natural Resources Committee has oversight on this offshore leasing spill and 

the natural resource damages caused by the spill, and it’s critical that we continue 

active engagement on this matter. I know that we have hearings planned on this 

disaster and that the Committee has been actively engaged and work to address the 

crisis as well as to answer the questions about what happened and if the government has responded appropriately. This is a major concern for us as a committee 

and for the entire nation and we will continue to keep the residents of the area in 

our thoughts. 

HEARING 

Today’s hearing is on our nation’s helium program and the National Academies 

recent report about the effects of the 1996 Helium Privatization Act. Since the 

helium program’s inception in 1925 it has changed substantially. The program has 

served a broad range of interests over the including: providing for our nation’s defense, scientific research, medical needs and aerospace technology. The National 

Academies examination of the privatization of the helium industry has generated 

a number of important questions: 

• Should the U.S. continue to finish the privatization in the helium industry? 

• Should the Bureau of Land Management continue to maintain the long-term 

storage facility for crude helium? Should the reserve be completely depleted by 

its current schedule of 2015? And at what rate should the government continue 

to sell off its helium reserve? 

• Also, in our current economic state it is critical to question what the demand 

and supply of helium is worldwide over a longer term. And after such examination what course of action should the government take for a long-term policy? 

Our helium program has proven to be a great asset to our defense and our technology development over the past century and we must continue with its responsible 

management. 

7 

CLOSE 

I will have a couple of questions for our witnesses and I am looking forward to 

hearing their testimony. 

Mr. Chairman I yield back. 

Mr. COSTA. Thank the gentleman from Colorado for your kind 

words, and we both share in the loss of lives that took place as a 

result of that accident, and to the families. 

So we will now proceed with our witnesses. And we have four 

that we will hear testimony from. 

I believe most of you, if not all of you, have testified before a 

Congressional panel. You know the rules. You have a five-minute 

statement to make. There are three lights there in front of you. 

The green light stays on for four minutes, and then the yellow light 

goes on on your fifth minute. And when the red light goes on, hold 

onto your chair. No, not really. 

The Chairman tends to be fairly benign about those things, but 

we do want to keep it within the five minutes, please, if at all possible. 

And then, when we finish with our four witnesses, we will then 

give the opportunity for members of the Subcommittee to ask questions. 

So our first witness is Ms. Marcilynn Burke, Deputy Director of 

the Bureau of Land Management. She is accompanied by I believe 

Mr. Tim Spisak, is that right? 

Ms. BURKE. Spisak. 

Mr. COSTA. Spisak, OK. Deputy Assistant Director for Minerals 

and Realty Management for the Bureau of Land Management. Let 

us begin with you, and we will proceed on to our other witnesses. 

Welcome. 

STATEMENT OF MARCILYNN BURKE, DEPUTY DIRECTOR, 

BUREAU OF LAND MANAGEMENT, U.S. DEPARTMENT OF THE 

INTERIOR; ACCOMPANIED BY TIM SPISAK, DEPUTY ASSISTANT DIRECTOR FOR MINERALS AND REALTY MANAGEMENT, 

BUREAU OF LAND MANAGEMENT, U.S. DEPARTMENT OF THE 

INTERIOR 

Ms. BURKE. Thank you, Mr. Chairman, and good morning to the 

other members of the Subcommittee. I want to thank you for this 

opportunity to testify on the Bureau of Land Management’s Helium 

Program. 

The BLM plays a key role in the management and stewardship 

of the nation’s helium resource. And as you said, I am joined here 

by Mr. Tim Spisak. And he managed the BLM’s helium operations 

from 1997 to 2004. 

I will briefly summarize my written testimony, and ask that the 

written testimony in its entirety be made a part of this record. 

Helium is a critical non-renewable natural resource that has an 

increasingly important role in the scientific, medical, and engineering fields. The Federal government’s interest in helium dates back 

to World War I and its potential to lift military reconnaissance devices high above battlefields. 

8 

Recognizing the importance of helium, the Mineral Leasing Act 

of 1920 reserved to the Federal government all helium produced on 

Federal land, a reservation that remains in effect today. 

There have been three key legislative actions regarding the 

Helium Program. In 1925, Congress created the Federal Helium 

Program under the Bureau of Mines, which allowed for Federal 

production, storage, and refinement of helium from the Hugoton 

Gas Fields in Texas, Oklahoma, and Kansas. 

The Helium Act of 1960 changed the program’s mandate from exclusive government production of helium to conservation of the resource. This legislation granted the Bureau of Mines the authority 

to borrow money from the U.S. Treasury, to purchase helium from 

private gas producers in order to store the helium at the Bush 

Dome Reservoir near Amarillo, Texas. 

The proceeds from the sales of helium were expected to allow the 

Bureau of Mines to repay the debt. Demand for helium rarely, if 

ever, however, met the expectations underlying the terms of the 

Treasury’s loans to the Bureau of Mines. When the 1995 deadline to pay off the debt arrived, the $252 million the Bureau had spent on privately produced helium had increased, with interest, to $1.3 billion. Congress then passed the 

Helium Privatization Act of 1996, which requires the BLM to make 

available for sale the vast majority of the stockpile of crude helium, 

with the goal of paying off the helium debt by 2015. 

When Congress passed the Act, there was approximately 30.5 billion standard cubic feet of helium in storage in the Bush Dome 

Reservoir. The Act mandated that the BLM offer for sale all of the 

helium in excess of 600 million standard cubic feet of permanent 

reserve. 

The Act requires the BLM to use the amount of the helium debt 

and the helium in storage as parameters for its sales of crude 

helium. To this end, the BLM offers for sale 2.1 billion cubic feet 

of crude helium each year. The Act also mandated that the Federal 

government stop refining helium; thus, privatizing the refining 

helium market. 

The BLM currently operates the Federal Helium Program based 

in Amarillo, Texas, with the primary goal of paying off the helium 

debt. To this end, the BLM has paid over $750 million to the Treasury. In addition to operating a storage and pipeline system, the 

program operates a crude helium enrichment unit that helps draw 

down the helium reserve in a more uniform manner. 

The program also manages helium extracted from Federal resources not connected to the Hugoton Fields, including the management of associated fees and royalty contracts. 

Another major component of the Helium Program is the In-Kind 

Program, which supplies helium to Federal agencies such as NASA 

and the Department of Energy for scientific research, aerospace 

projects, and defense purposes. 

Under the In-Kind Program, Federal agencies purchase all of 

their refined helium from private suppliers, who in turn are required to purchase an equivalent amount of crude helium from the 

Federal Helium Reserve. The National Academies of Science has 

completed two studies of the BLM’s Helium Program, one in 2000 

and another this year. The BLM is currently reviewing this 

9 

version, pre-publication version of this report, and looks forward to 

future discussion about its recommendations. 

The BLM welcomes further discussion about the Helium Program and the BLM’s role in meeting future helium needs for the 

country. The expansion of helium-dependent technology and declining domestic reserves means the importance of helium as a strategic resource is likely to increase. We look forward to working 

with this committee in order to address this important issue. 

Thank you. 

[The prepared statement of Ms. Burke follows:] 

Statement of Marcilynn A. Burke, Deputy Director, 

Bureau of Land Management, U.S. Department of the Interior 

Mr. Chairman and members of the Subcommittee, thank you for the opportunity 

to testify on the Bureau of Land Management’s Helium Program. I am Marcilynn 

Burke, Deputy Director of the Bureau of Land Management. Tim Spisak, BLM’s 

Deputy Assistant Director for Minerals and Realty Management, is accompanying 

me today. 

Background 

Helium is a critical non-renewable natural resource. While best known for filling 

celebratory balloons and adjusting the pitch of the human voice, helium also plays 

an important role in medical imaging, space exploration, military reconnaissance, 

underwater diving, and fiber optics manufacturing. According to the National Academy of Sciences (NAS), helium’s best known property—being lighter than air— 

means ‘‘that every unit of helium that is produced and used today will eventually 

escape Earth’s atmosphere and become one less unit available for use tomorrow.’’ 

The BLM plays a key role in the careful management and stewardship of the nation’s important helium resource. 

The most common and economical way of capturing helium is by stripping it from 

natural gas during gas production. Geologic conditions in Texas, Oklahoma, and 

Kansas make the natural gas in these areas some of the most helium-rich in the 

United States, ranging from 0.5 to 1.5 percent of the gas extracted during production. After World War I, recognition of the potential for helium recovery in the 

Texas Panhandle, Western Oklahoma, and Kansas area (collectively, the ‘‘Hugoton’’ 

field) led to the development of the Federal helium program focused in that area. 

In 1929, the Bureau of Mines built the Cliffside Storage Facility near Amarillo, 

Texas, to store helium in a naturally occurring geologic storage field known as the 

Bush Dome Reservoir. 

The Federal Helium Program/Congressional Authorities 

The Federal government’s interest in helium dates back to World War I and its 

potential to lift military reconnaissance devices high above battlefields. Recognizing 

this key military use for helium, the Mineral Leasing Act of 1920 reserved to the 

Federal government all helium produced on Federal lands—a reservation that remains in effect today. Soon after the passage of the Mineral Leasing Act, Congress 

recognized the need to ensure that helium would be available for defense needs, and 

created the Federal helium program in 1925. By 1929, the Bureau of Mines began 

operating helium extraction and purification plants in the Texas panhandle. 

After World War II ended, Federal use of helium shifted towards space exploration, and in 1960 Congress passed the Helium Act. This Act changed the program’s mandate from exclusive government production of helium to conservation of 

the resource by encouraging private natural gas producers to sell extracted helium 

to the Federal government for storage in the Bush Dome Reservoir. The Helium Act 

granted the Bureau of Mines the authority to borrow funds from the U.S. Treasury 

to purchase the helium, with the expectation that the proceeds from future sales of 

helium would allow the Bureau of Mines to repay the debt. This borrowing authority, established by Congress in lieu of a direct appropriation, required the Bureau 

of Mines to repay the loan by 1985. Subsequent legislation extended the deadline 

to 1995. 

Demand for helium rarely, if ever, met the expectations underlying the terms of 

the Treasury’s loan to the Bureau of Mines. When the 1995 deadline to pay off the 

debt arrived, the $252 million the Bureau had spent on privately-produced helium 

had increased to $1.3 billion (principle and interest), and the Bureau of Mines appeared to have little prospect of ever repaying the debt. In his 1995 State of the 

10 

Union address, President Bill Clinton stated that it was his Administration’s goal 

to privatize the Federal helium program. 

Congress then passed the Helium Privatization Act of 1996 (HPA), which required 

the BLM (which assumed jurisdiction over the program after the termination of the 

Bureau of Mines) to make available for sale the vast majority of the stockpile of 

crude helium. The mandate allowed the BLM to begin selling helium as late as 

2005, in order to avoid market disruption. The BLM was to make a consistent 

amount of helium available every year at a price based on the amount of remaining 

helium debt and the amount helium in storage. When Congress passed the HPA, 

there was approximately 30.5 billion standard cubic feet (scf) of helium in storage 

in the Bush Dome Reservoir. The HPA mandated the BLM to make available for 

sale all of the helium in excess of a 0.6 billion scf permanent reserve. 

Additionally, the HPA required the BLM to cease all helium production, refining, 

and marketing activities to effectively privatize the refined helium market in the 

United States. Finally, the Act provided for the NAS to review the impacts of the 

1996 Act. The NAS published its first study in 2000, and recently released a prepublication copy of its 2010 report. 

The BLM’s Helium Operations 

The BLM currently operates the Federal Helium program with a primary goal of 

paying off the ‘‘helium debt.’’ To this end, the BLM has paid over $750 million dollars to the Treasury, a substantial step towards eliminating the helium debt, which 

the HPA froze at approximately $1.3 billion dollars. BLM anticipates repaying the 

helium debt by the end of 2015. According to the HPA, once the helium debt is retired, the Helium Fund (used to fund the BLM’s helium program operational expenses) would be dissolved and all future receipts would be deposited directly into 

the Treasury. 

The BLM’s current helium program, with its 55 full-time employees, operates not 

only the original storage and pipeline system, but also a crude helium enrichment 

unit, owned by private industry refiners that facilitates transmission of helium to 

private helium operations on the BLM’s helium pipeline. 

The BLM is responsible for administering helium extracted from Federal resources, including management of fees and royalty contracts. These operations are 

not limited to the Hugoton gas field, but also occur in fields in Colorado, Wyoming, 

Utah, and any other state where producers extract helium from natural gas. Additionally, the BLM is responsible for administering the sale of crude helium to private refiners. These sales make the most significant contributions toward paying off 

the helium debt. The agency also conducts domestic and, to a lesser extent, international helium resource evaluation and reserve tracking to determine the extent 

of available helium resources. 

Another major part of BLM’s helium program is the ‘‘In-Kind’’ program, which 

supplies helium to Federal agencies (e.g., the Department of Energy and NASA) for 

operations and/or research. Before the Helium Privatization Act, Congress required 

Federal agencies to purchase their helium supplies from the Bureau of Mines. 

Under the current In-Kind program, Federal agencies purchase all of their refined 

helium from private suppliers who, in turn, are required to purchase an equivalent 

amount of crude helium from the Federal helium reserve. In 2009, Federal agencies 

purchased just over $8 million of helium through the In-Kind program, down from 

$11.6 million in 2008. 

Finally, the program is in the final stages of disposing of facilities no longer needed for the storage and transmission of crude helium as required by the HPA. 

The National Academy of Sciences Reports 

In 2000, the NAS published its first analysis of the impacts of the HPA. Its general finding was that the Act would not have an impact on helium users. Additionally, the NAS report concluded that because the price-setting mechanism was based 

on the amount of the helium debt, and not the market for helium, the government’s 

significantly higher price would mean the helium refining industry would buy crude 

helium from the BLM only as a last resort for fulfilling private contracts. However, 

private helium refiners would still be required to purchase crude helium from the 

BLM under the In-Kind program. 

Over the course of the last decade, however, it has become apparent that assumptions underlying the 2000 NAS Report are not accurate. First, the NAS’s assumption that ‘‘[t]he price of helium [would] probably remain stable through at least 

2010’’ has proven faulty. The market for helium has seen significant fluctuations on 

both the demand side—which dropped significantly in 2008 after peaking the prior 

year—and on the supply side, which experienced a significant decline in private supplies between 2006 and 2008. In the face of this volatility, prices for helium rose 

11 

steadily over the course of the decade. By 2008, the market price for helium began 

to hover near the BLM’s price, leading to greater withdrawals from the Federal reserve than the 2000 NAS Report anticipated. 

Another market impact that the 2000 NAS Report did not address was international supply and demand for helium. According to the U.S. Department of Commerce, domestic consumption of helium decreased 2.7 percent per year from 2000- 

2007, while exports to the Pacific Rim grew 6.8 percent annually, exceeding the 5.1 

percent growth rate in Europe. The international market also experienced supply 

issues because of refining capacity problems at plants in Qatar and Algeria, which 

would normally help supply both Europe and Asia. 

In February 2010, the NAS released a prepublication copy of an updated assessment of the impact of the HPA. The BLM is currently reviewing the NAS’s prepublication document, and are providing feedback. The BLM welcomed the recommendations in the 2000 NAS report, and we anticipate working closely with the 

authors of the 2010 report. Additionally, the BLM looks forward to working with 

this Committee, its counterparts, and partners in discussing NAS’s recommendations related to the helium program. 

Conclusion 

The BLM welcomes further discussion about the BLM’s helium program and the 

Bureau’s role in meeting future helium needs for the country, especially for Federal 

agencies that depend on helium for scientific research, aerospace projects, and defense purposes. Since its discovery in the early 20th Century, helium has proven to 

be an increasingly important resource for scientific, medical, and engineering purposes. The expansion of helium-dependent technology and declining domestic reserves means the importance of helium as strategic resource is likely to increase. 

The BLM continues to serve the country by effectively managing the Federal helium 

reserve, and working with natural gas producers to efficiently extract helium from 

natural gas. 

Mr. COSTA. Thank you. And you were within the timeframe, so 

the Chairman appreciates that. 

Our next witness is Ms. Anu Mittal, is that correct? 

Ms. MITTAL. Yes. 


56392.012.eps
12 

Mr. COSTA. The Director for Natural Resources and Environment 

for the U.S. Government Accountability Office. So please begin 

your testimony. 

STATEMENT OF ANU K. MITTAL, DIRECTOR, NATURAL 

RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT 

ACCOUNTABILITY OFFICE 

Ms. MITTAL. Thank you, Mr. Chairman. Mr. Chairman and 

members of the Subcommittee, I am pleased to be here today to 

participate in your hearing on the Federal Helium Program. 

As you know, the Federal government has played a role in the 

production, storage, conservation, and use of helium for over 80 

years. In the early 1990s, GAO reported on various aspects of the 

Helium Program, and made recommendations to Interior and the 

Congress regarding possible changes to the program. 

The passage of the Helium Privatization Act of 1996 and the construction of the Helium Enrichment Unit in 2003 have changed the 

program since our work in the early 1990s. My testimony will focus 

on these changes, and the key issues that we believe that the Congress will need to address before 2015. 

I would like to first summarize some of the key effects of the 

1996 Act. First, with regard to the helium debt, as you know, the 

1996 Act effectively froze the debt as $1.37 billion. Because interest 

stopped accruing on the debt, Interior has been able to pay off a 

large portion of this amount, and expects to pay off the entire debt 

by 2015. When the debt is paid off, the Helium Fund that Interior 

uses to operate the program will also be terminated. 

Second, the 1996 Act required Interior to offer for sale all but 

600 million cubic feet of crude helium in storage by 2015. Interior, 

however, has not been able to sell all of the helium that it has offered for sale, and only about 68 percent of the helium offered for 

sale has been sold. Therefore, about 9 billion cubic feet of crude 

helium is expected to remain in storage in 2015. 

Third, the Act required Interior to set the price for crude helium, 

using a formula that would cover program costs, pay off the debt, 

and account for inflation. As a result, the initial minimum selling 

price for Federal crude helium after the Act was passed was higher 

even than the private price for refined helium. 

Over time, however, private helium prices have continued to increase, and are now almost double the Federal crude price. 

Fourth, the Act established an In-Kind Program to meet Federal 

needs for helium. While total Federal demand for helium has fluctuated from year to year, it represents only about 10 percent of the 

total domestic demand. However, since 2001, the total domestic demand for helium has generally decreased, and total foreign demand, on the other hand, has consistently increased. 

Finally, a key development which has addressed the helium purity concern that we reported in the early 1990s is the construction 

and operation of the Cliffside Helium Enrichment Unit. According 

to Interior officials, as we have just heard, the enrichment unit has 

allowed them to better manage the draw-down in purity of the 

helium in storage. 

As you would expect, some of these changes have led to concerns 

about the future availability of helium for Federal and other uses. 

13 

1Pub. L. No. 86–777, 74 Stat. 918 (1960), codified as amended at 50 U.S.C. §§ 167–167m. 2 ‘‘Crude helium’’ is a gas containing approximately 50 to 85 percent helium. 

3GAO, Mineral Resources: Federal Helium Purity Should Be Maintained, GAO/RCED–92–44 

(Washington, D.C.: Nov. 8, 1991); GAO, Mineral Resources: Meeting Federal Needs for Helium, 

GAO/RCED–93–1 (Washington, D.C.: Oct. 30, 1992); GAO, Mineral Resources: Meeting Federal 

Needs for Helium, GAO/T–RCED–93–44 (Washington, D.C.: May 20, 1993); GAO, Mineral Resources: H.R. 3967 – A Bill to Change How Federal Needs For Refined Helium Are Met, GAO/ 

T–RCED–94–183 (Washington, D.C.: Apr. 19, 1994); and GAO, Terminating Federal Helium Refining, GAO/RCED–95–252R (Washington, D.C.: Aug. 28, 1995). 

And because the 1996 Act does not provide specific direction for the 

Helium Program past 2015, we have identified three key issues 

that the Congress will need to address within the next five years. 

First, how should the helium remaining in storage after 2015 be 

used? In light of the changing demand for helium and the potential 

for future shortages, we believe that the Congress will have to decide whether the 9 billion cubic feet of crude helium expected to be 

in the reserve by 2015 should be sold, or should be conserved. 

Second, how will the Helium Program be funded after 2015? If 

the helium debt is paid off in 2015 and the Helium Fund is terminated, it is not clear how the operations of the program will be paid 

for. Currently, the program does not receive any appropriated 

funds. Instead, the revenues generated by the program go into the 

Helium Fund, and the program has access to those funds to pay 

for day-to-day operations. The Congress will have to decide how the 

program’s operations will be funded after the Helium Fund is terminated. 

Finally, at what price should Interior sell the remaining crude 

helium in storage? Interior’s price for crude helium since 1996 has 

been tied to the program’s operating costs and debt. Once the debt 

is paid off, it will no longer be a factor in setting this price; and 

therefore, raises uncertainty about how Interior will or should set 

the price for remaining crude helium in storage. 

The price set by Interior is important because it affects the private industry price for both crude and refined helium. 

Mr. Chairman, as you can see, these uncertainties demonstrate 

that it is time once again for the Congress to step in and decide 

the future direction and operation of the Helium Program. 

This concludes my prepared statement. I would be happy to respond to any questions that you have. 

[The prepared statement of Ms. Mittal follows:] 

Statement of Anu K. Mittal, Director, Natural Resources and Environment, 

U.S. Government Accountability Office 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to participate in this hearing to discuss the federal 

helium program currently managed by the Department of the Interior’s (Interior) 

Bureau of Land Management (BLM). As you know, helium is an important nonrenewable natural resource that has a variety of uses. The federal government uses 

helium for, among other things, the space program, national security applications, 

and scientific research. For many of its uses, helium has no substitute. 

During the 1960s and early 1970s, to fulfill the conservation objective of the 

Helium Act Amendments of 1960, 1 Interior purchased about 34 billion cubic feet of 

helium from private crude helium producers. 2 In the 1990s, we reported to, and testified before this Subcommittee on Interior’s management of the helium program. 3

In May 1993, we testified that Interior had enough helium in storage to meet federal needs until at least 2070 and that a reassessment of the objectives of the 

Helium Act was needed. 

Since our reports in the early 1990s, key changes have affected the federal helium 

program and a recent report by the National Academies’ National Research Council 

14 

4 National Research Council, Selling the Nation’s Helium Reserve (Washington, D.C.: National 

Academies Press, prepublication copy released on Jan. 22, 2010). Last accessed at http:// 

www.nap.edu/catalog.php?recordlid=12844 on April 20, 2010. 5 In addition to New Mexico, BLM’s New Mexico State Office also has jurisdiction over Kansas, Oklahoma, and Texas. The helium program is administered by BLM’s Amarillo Field Office 

in Amarillo, Texas. 6 Helium in this statement refers to helium-4, the most abundant naturally occurring helium 

isotope. Helium-3, which has its own supply and demand issues, is not the focus of this statement. We currently have an ongoing review looking into the implications of shortages in helium3. 

concluded that it is time once again to reassess the program. 4 My testimony today 

will (1) summarize the findings and recommendations from our work in the early 

1990s, (2) highlight key changes that have occurred in the areas that we reported 

on in the early 1990s, and (3) describe some of the issues facing BLM’s helium program in the near future. 

To address these issues, we reviewed our prior reports and testimonies from the 

early 1990s. To identify key changes that have occurred in the areas that we reported on in the past and some of the issues facing BLM’s helium program in the 

near future, we reviewed applicable laws and regulations, relevant studies, and data 

on the helium program from BLM and Interior’s U.S. Geological Survey. In addition, 

we interviewed BLM officials associated with the helium program located at BLM’s 

headquarters in Washington, D.C.; BLM’s New Mexico State Office in Santa Fe, 

New Mexico; 5 and BLM’s Amarillo Field Office in Amarillo, Texas. To assess the 

reliability of data used in this statement, we examined the data to identify obvious 

errors or inconsistencies, interviewed knowledgeable BLM officials, and, to the extent possible, compared the data with other sources. We determined the data to be 

sufficiently reliable for the purposes of presenting overall trends. Officials with 

BLM’s helium program concurred with the new information presented in this testimony and provided technical clarifications, which we incorporated as appropriate. 

We conducted this performance audit from April 2010 to May 2010 in accordance 

with generally accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 

Background 

Helium is an inert element that occurs naturally in gaseous form and has a variety of uses (see table 1). 6 Helium’s many uses arise from its unique physical and 

chemical characteristics. For example, helium has the lowest melting and boiling 

point of any element and as the second lightest element, gaseous helium is much 

lighter than air. 


56392.001.eps
15 

7Pub. L. No. 68–544, 43 Stat. 1110 (1925), originally codified at 50 U.S.C. § 161 et seq. These 

sections of the United States Code were completely amended, renumbered, revised, or repealed. 

The current citation is 50 U.S.C. §§ 167–167m. 8The Bureau of Mines was established in 1910 and abolished in 1996. The helium program 

was transferred to BLM. 9 National Research Council, The Impact of Selling the Federal Helium Reserve (Washington, 

D.C.: National Academy Press, 2000). 

Certain natural gas fields contain a relatively large amount of naturally occurring 

helium, which can be recovered as a secondary product. The helium is separated 

from the natural gas and stored in a concentrated form that is referred to as crude 

helium because it has yet to go through the final refining process. 

The federal government has been extensively involved in the production, storage, 

and use of helium since the early part of the 20th Century. The federal government 

and private sector cooperatively produced helium before 1925, specifically for military uses. The Helium Act of 1925, 7 as amended, assigned responsibility for producing helium for federal users to the Department of the Interior’s Bureau of 

Mines. 8 The act provided that funds from helium sales be used to finance the program. From 1937 until 1960, the Bureau of Mines was the sole producer of helium. 

The 1925 act, as amended, also established a revolving fund known as the helium 

production fund for the program. Such revolving funds are used to finance a continuing cycle of government-owned business-type operations in which outlays generate receipts that are available for continuing operations. In the federal budget, 

this fund is referred to as the Helium Fund and it is used to account for the program’s revenues and expenses. 

The Helium Act Amendments of 1960 stipulated that the price of federal helium 

cover all of the helium program’s costs, including interest on the program’s debt. 

The 1960 act required the Secretary of the Interior to determine a value for net capital and retained earnings and establish this value as debt in the Helium Fund, and 

to add subsequent program borrowings to that debt. The program’s borrowings were 

authorized by subsequent appropriations acts and recorded as outlays in the federal 

budget in the years in which they were expended. In addition, the interest was 

added to the debt in the Helium Fund. However, the interest is simply a paper 

transaction, not a government outlay. The Bureau of Mines determined that the 

value of the program’s net capital and retained earnings was about $40 million in 

1960. Subsequent borrowings from the U.S. Treasury totaling about $252 million 

were used to purchase helium for storage. By September 30, 1991, the debt had 

grown to about $1.3 billion, of which more than $1 billion consisted of interest because the interest accrued faster than the program could repay the debt. 

The government’s reserve of crude helium is stored in the ground in an area of 

a natural gas field that has a naturally occurring underground structural dome near 

Amarillo, Texas. The purity of the stored crude helium diminishes (degrades) over 

time as it mixes with the natural gas that is present in the storage area. Moreover, 

when extracted at an excessive rate, the degradation is accelerated because the natural gas surrounding the helium is pulled toward the extraction wells faster than 

the helium. This causes the helium to mix with the natural gas more rapidly. As 

a result, larger volumes of the mixture of natural gas and helium must be extracted 

to obtain the needed helium. In addition to the government’s reserve of crude 

helium, private companies that are connected to BLM’s pipeline and pay a storage 

fee are also able to store and retrieve their own private crude helium reserves from 

the same storage area. 

As directed by the Congress, the National Academies’ National Research Council 

reviewed the helium program and released a report in 2000 that evaluated changes 

made in the program, effects of these changes on the program, and several scenarios 

for managing the federal helium reserve in the future. 9 Because of subsequent 

changes in price and availability of helium, in 2008, the National Research Council 

convened a committee to determine if the current implementation of the helium program was having an adverse effect on U.S. scientific, technical, biomedical, and national security users of helium. The committee reported on these effects in early 

2010 and concluded that the current implementation of the program has adversely 

affected critical users of helium and was not in the best interest of the U.S. taxpayers or the country. 

16 

10GAO/RCED–92–44 (helium purity); and GAO/RCED–93–1 (helium debt, pricing, and alternatives). 11GAO/RCED–93–1. 12GAO/RCED–93–1. 

GAO Reported on Helium Debt, Pricing, Purity, and Alternatives for 

Meeting Federal Helium Needs in the Early 1990s 

Our November 1991 and October 1992 reports included findings and recommendations on the helium program’s debt, the pricing of crude helium, the purity of 

helium in storage, and three alternatives for meeting federal needs for helium. 10

In 1992, GAO Recommended that Congress Cancel the Debt in the Helium Fund 

In October 1992, we reported that the Helium Fund debt had grown to about $1.3 

billion, as of September 30, 1991. 11 Section 6(c) of the Helium Act Amendments of 

1960 stipulated that (1) the price of federal helium should cover all of the helium 

program’s costs, including interest on the program’s debt; and (2) the debt should 

be repaid within 25 years, unless the Secretary of the Interior determines that the 

deadline should be extended by not more than 10 years. With the 10-year extension, 

the deadline for paying off the debt and accumulated interest was September 13, 

1995. In 1992, we estimated that, in order for the Bureau of Mines to repay the 

debt by the 1995 deadline, it would have to charge federal agencies with major requirements for helium over $3,000 per thousand cubic feet, compared with the 1992 

price of $55. These agencies, which were required under section 6(a) of the 1960 act 

to purchase helium from the Bureau of Mines, would have had no choice but to pay 

a higher price for helium. We concluded that this would have no net effect on the 

overall federal budget if those agencies received additional appropriations to pay for 

helium at a higher price because the appropriations would offset the increased revenues to the helium program. 

Because conditions affecting the Bureau of Mines’ helium program had changed 

since the Helium Act Amendments of 1960, one of the recommendations in our October 1992 report was that the Congress should consider canceling the debt in the 

Helium Fund. This is because we concluded at the time that it was no longer realistic to expect the agency to repay the debt by the statutory deadline of 1995, and 

canceling the debt would not adversely affect the federal budget as the debt consisted of outlays that had already been appropriated and interest that was a paper 

transaction. We reported that canceling the Helium Fund debt, however, would likely allow the Bureau of Mines to undercut private industry’s refined helium prices, 

thus adversely affecting the private helium-refining industry. 

In 1992, GAO Found That the Federal Price for Helium Affected the Private Helium 

Industry and Identified Alternatives to Foster the Private Helium Industry 

The Helium Act Amendments of 1960 also were intended to foster and encourage 

a private helium industry. In our October 1992 report, we found that the helium 

price set by the Bureau of Mines had an effect on the growth of the private helium 

industry. 12 After the 1960 act was passed, the Bureau of Mines’ refined helium 

price for federal users rose from $15.50 per thousand cubic feet to $35 in 1961 to 

cover the anticipated costs of conserving helium, which principally included purchasing helium for storage. This 126-percent increase in the federal refined helium 

price caused the private industry to believe that it could economically produce and 

sell refined helium. While private-sector prices fluctuated from a low of $21 in 1970, 

they gradually increased to $37.50 by 1983, which matched the Bureau of Mines’ 

1982 price. Over this period, the Bureau of Mines’ price for helium continued to be 

higher than or equal to the private-sector price, and from 1983 to 1991 it appeared 

to act as a ceiling for private-sector prices. In 1991, the federal price increased to 

$55, and private-sector prices gradually increased to about $45. These price trends 

led us to conclude in 1992 that once a private helium refining industry had developed, it was able to successfully compete with the Bureau of Mines’ program. 

However, in our October 1992 report, we also noted that if the Congress decided 

to cancel the Helium Fund debt then this would affect how the Bureau of Mines 

sets its helium prices and would likely allow it to undercut private-sector prices. 

Therefore, we noted that if the Congress decided that fostering the private helium 

industry was still an objective of the Helium Program then additional actions would 

be needed. One alternative we identified was to require the Bureau of Mines to price 

its helium comparably to private-sector prices by ascertaining private-sector prices 

and using a comparable price or by setting a price that covered the Bureau of Mines’ 

capital costs, operating expenses, estimated costs of a normal level of inventory, and 

an industry-like rate of return on its investment. A second alternative was to eliminate competition by requiring that all federal needs be met by the Bureau of Mines 

17 

13GAO/RCED–92–44. 14 Refined helium has a varying purity of 99.99 percent to 99.9999 percent helium. 15GAO/RCED–93–1. 

but prohibiting the federal helium program from selling helium to nonfederal customers. 

In 1991, GAO Made a Recommendation on the Purity of the Helium in Storage 

In our November 1991 report on helium purity, we found that the Bureau of 

Mines was not restricting the rate at which helium was being extracted from the 

helium reserve, causing the purity of the crude helium to degrade faster than would 

otherwise occur. 13 We noted that because of this accelerated degradation, the Bureau of Mines was incurring additional costs to extract and refine federal helium. 14

While some mixing with natural gas is inevitable, according to a study by the Bureau of Mines in 1989, the mixing should be minimized so that the crude helium’s 

purity can be maintained at as high a level as possible in order to avoid higher future costs of extracting and refining federal helium. In our 1991 report, we reported 

that, according to Bureau of Mines’ engineers, the accelerated degradation could be 

avoided by restricting total extractions to 3 million cubic feet of helium per day. At 

the Bureau of Mines’ request, an outside petroleum engineering consulting firm reviewed the Bureau of Mines’ engineering, geologic, and other studies and agreed 

that an extraction rate restriction of 3 million cubic feet per day was needed to protect the purity of the stored crude helium. 

In 1989, the Bureau of Mines decided to restrict total daily extractions to 3 million cubic feet but later rescinded that restriction after an industry association expressed concern to the Director of the Bureau of Mines that the restriction might 

adversely affect private companies’ ability to obtain crude helium to meet their 

needs. At the time of our 1991 review, the Director told us that he had not reviewed 

the Bureau of Mines’ study when making the decision to rescind the restriction and 

Bureau of Mines’ engineers estimated that if the helium continued to be degraded 

at the rate it was being degraded at that time, the Bureau of Mines would incur 

additional costs of as much as $23.3 million in 1991 dollars to extract and refine 

federal helium from the helium reserve through the year 2050. 

In 1991, we recommended that the Bureau of Mines determine if setting an acceptable extraction rate was warranted and, if so, to specify that rate. In addition, 

we noted that if an extraction rate was specified, the Bureau of Mines should either 

restrict private company extractions or impose a charge on private companies that 

store helium in the helium reserve when their extractions exceed the established acceptable rate. 

In 1992, GAO Recommended That Congress Reassess the Objectives of the Helium 

Program 

In our October 1992 report, we evaluated three alternatives for meeting federal 

needs for helium: (1) continue the Bureau of Mines’ existing program, (2) require 

that all federal needs be supplied by private industry, and (3) allow all federal agencies to choose to purchase helium from the Bureau of Mines or private industry. 15

These three alternatives had the potential to affect the objectives of the Helium Act 

Amendments of 1960, the program’s debt, the federal budget, and the total cost of 

supplying helium to the U.S. economy differently. For example, in 1992, we reported 

that the growth of a private industry capable of meeting federal needs created a 

competitive market where the federal helium prices directly affected the private industry. In this environment, if the Bureau of Mines priced helium to repay the 

Helium Fund debt by 1995, it would need to charge an extremely high price, which 

would likely drive the Bureau of Mines out of the helium business. On the other 

hand, if the debt had been repaid or cancelled, the federal price likely would be 

lower than private prices, which could have an adverse effect on the private helium 

refining industry. We concluded that the choice among these and other possible alternatives was ultimately a public policy decision that should consider many issues. 

We recommended that the Congress reassess the act’s objectives in order to decide 

how to meet current and foreseeable federal needs for helium. 

Two Key Developments Have Affected the Issues That GAO Reported on in 

the Early 1990s 

Since our reports in the early 1990s, two key developments—the Helium Privatization Act of 1996 and the construction of the Cliffside Helium Enrichment Unit 

in 2003—have caused considerable changes to the federal helium program. These 

two developments addressed or altered the areas that we had raised concerns about 

in the early 1990s. Specifically, the Helium Privatization Act of 1996 affected 

18 

16Pub. L. No. 104–273, 110 Stat. 3315 (1996), codified at 50 U.S.C. §§ 167–167m. 17The term ‘‘person’’ means any individual, corporation, partnership, firm, association, trust, 

estate, public or private institution, or state or political subdivision thereof. 50 U.S.C. § 167(2). 

helium debt and pricing, and it reset the program’s objectives. The Cliffside Helium 

Enrichment Unit addressed the issue of helium purity in storage. 

The Helium Privatization Act of 1996 Affected the Helium Debt, Pricing, and the 

Program’s Objectives 

After our reports in the early 1990s, the Congress passed the Helium Privatization Act of 1996, which significantly changed the objectives and functions of the 

Interior’s helium program. 16 For example, the 1996 act made the following key 

changes: 

• Interior was required to close all government-owned refined helium production 

facilities and to terminate the marketing of refined helium within 18 months 

of enactment (50 U.S.C. § 167b(b)); 

• the helium program’s debt was frozen as of October 1, 1995 (50 U.S.C. 

§ 167d(c)); 

• Interior was required to offer for sale all but 600 million cubic feet of the crude 

helium in storage on a straight-line basis—a depreciation method that spreads 

out the cost of an asset equally over its lifetime—by January 1, 2015 (50 U.S.C. 

§ 167f(a)(1)); 

• Interior was required to set sale prices to cover the crude helium reserve’s operating costs and to produce an amount sufficient to reimburse the federal government for the amounts it had expended to purchase the stored helium. The price 

at which Interior sells crude helium was required to be equal to or greater than 

a formula that incorporates the amount of debt to be repaid divided by the volume of crude helium remaining in storage, with a Consumer Price Index adjustment (50 U.S.C. §§ 167d(c), 167f(a)(3)). Furthermore, when the debt is fully paid 

off, the revolving Helium Fund shall be terminated (50 U.S.C. § 167d(e)(2)(B)); 

• Interior should maintain its role in the helium storage business (50 U.S.C. 

§ 167b(a)); and 

• established a modified ‘‘in-kind’’ program to meet federal needs for helium. 

Rather than purchasing refined helium directly from Interior, federal agencies 

were required to purchase their major helium requirements from persons who 

have entered into enforceable contracts to purchase an equivalent amount of 

crude helium from Interior (50 U.S.C. § 167d(a)). 17

These changes affected the federal helium program in various ways. For example, 

because the 1996 act effectively froze the debt at $1.37 billion and interest no longer 

accrued, BLM has been able to pay off a large portion of its debt. As of the end 

of fiscal year 2010, BLM expects to have paid off 64 percent of the debt; it expects 

to pay off the entire debt around 2015 (see fig. 1). 


56392.002.eps
19 

18 43 C.F.R. § 3195. 

In addition, since the 1996 act required a specific method for pricing crude 

helium, the initial minimum BLM selling price for crude helium after the act was 

passed was almost double the price for private crude helium at that time. However, 

after BLM started to sell its crude helium according to the method specified in the 

act, the market price for crude and refined helium began to change. According to 

the National Research Council, the private sector began using the BLM crude price 

as a benchmark for establishing its price, and, as a result, privately sourced crude 

helium prices increased and now they meet or exceed BLM’s price. Increases in the 

price of crude helium have also led to increases in the price of refined helium (see 

fig. 2). Refined helium prices have more than doubled from 2002 through 2008 pursuant to demand trends. One of the factors for recent price increases was a disruption in helium supply from plants closing because of weather-related issues. Prices 

increased around 2007 due to the decline in production capacity. 

As part of the resetting of the helium program’s objectives, the 1996 act established a revised approach for meeting federal needs for helium. In 1998, BLM began 

engaging in in-kind sales to federal agencies. The in-kind regulations established 

procedures for BLM to sell crude helium to authorized helium supply companies and 

required federal agency buyers to purchase helium from these approved suppliers. 18

Since the in-kind program started, the sales to federal agencies have fluctuated, primarily due to the National Aeronautics and Space Administration’s (NASA) unique 

requirement for large volumes of helium on a sporadic basis. Total federal in-kind 

sales for fiscal year 2009 were 175.67 million cubic feet (see fig. 3). 


56392.003.eps
20 

Since the act was passed, demand for helium has changed over time (see fig. 4). 

Total domestic demand has generally decreased since 2001. The vast majority of domestic sales are made to private industries, with federal agencies making up about 

10 percent of the sales. On the other hand, total foreign demand has consistently 

increased, and the amount of helium exported was approximately equal to the 

amount of helium removed from storage each year from 2000 to 2007. In 2008, the 

amount of helium exported exceeded the amount of helium removed from storage. 

The Cliffside Helium Enrichment Unit Addressed the Helium Purity Issue 

The second key development, which has affected the helium purity issue that we 

reported on in the early 1990s, is the construction and operation of the Cliffside 

Helium Enrichment Unit. In response to degrading helium supplies, in 2003, Cliffside Refiners Limited Partnership—a consortium of private-sector refiners—designed and constructed an enrichment unit to produce crude helium of sufficient 

concentration and pressure for further refining. According to BLM officials, the total 


56392.004.eps 56392.005.eps
21 

cost of building the enrichment unit was approximately $22 million and was paid 

for by the Cliffside Refiners Limited Partnership. BLM, in partnership with the 

Cliffside Refiners Limited Partnership, operates the unit. At full capacity, the enrichment unit supplies more than 6 million cubic feet per day or 2.1 billion cubic 

feet per year of crude helium. The crude helium that is produced from this process 

is either sold or retained in storage, depending upon demand. As part of the operation, pipeline-quality residual natural gas is also made available for sale. In addition to the proceeds from the helium sales, BLM uses proceeds from the natural gas 

sales to fund the Cliffside helium operations and the remaining revenues are returned to the U.S. Treasury. 

According to BLM officials, the enrichment unit has allowed BLM to better manage the drawdown and purity of the helium in storage because it is able to control 

the wells and the helium content of the feed. Without the enrichment unit, BLM 

would have to produce from high helium wells first to meet purity requirements and 

that would have a detrimental effect on the purity of later production, according to 

these officials. 

The Helium Program’s Direction after 2015 Is Uncertain 

Changes in helium prices, production, and demand have generated concerns about 

the future availability of helium for the federal government and other critical purposes. The Helium Privatization Act of 1996 does not provide a specific direction for 

the helium program past 2015—less than 5 years away. As a result of these factors, 

there is uncertainty about the program’s direction after 2015. Specifically: • How should the helium remaining in storage after 2015 be used? The Helium 

Privatization Act of 1996 required BLM to offer for sale substantially all of the 

helium in storage by January 1, 2015. While the required amounts have been 

offered for sale, only 68 percent of the amounts offered for sale have actually 

been sold (see table 2). If the past sales trends continue, BLM will still have 

significantly more crude helium in storage than the 600 million cubic feet target 

established in the 1996 act. In addition, the demand for helium has changed 

over time, with foreign demand outpacing domestic demand. According to the 

recent report by the National Academies’ National Research Council, the United 

States could become a net importer of helium within the next 10 to 15 years, 

and the principal new sources of helium will be in the Middle East and Russia. 

Given these circumstances, the National Academies’ report recommended that 

the Congress may want to reevaluate how the domestic crude helium reserve 

is used or conserved. It is uncertain at this point how the helium in storage 

after 2015 will be used. 


56392.006.eps
22 

• How will the helium program be funded after 2015? Regardless of whether BLM 

is directed to continue selling off the crude helium in storage after 2015 or conserve it, there will almost certainly continue to be some form of a helium program after 2015. However, if the helium debt is paid off in 2015 as currently 

projected and the revolving helium fund is terminated, it is not clear how the 

operations of the helium program will be paid for. Currently the helium program does not receive any appropriated funds for its operations. The revenues 

generated by the program go into the Helium Fund and the program has access 

to those funds to pay for its day-to-day operations. It is uncertain at this point 

how the helium program’s operations will be funded after 2015. 

• At what price should BLM sell its crude helium? Since the Helium Privatization 

Act of 1996 was passed, BLM has set the price for federal crude helium at the 

minimum price required by the act. However, because federal crude helium reserves provide a major supply of crude helium, we expect BLM’s prices will continue to affect private industry market prices for crude and refined helium. In 

addition, in recent years, the helium market has been influenced by other market forces as well as supply disruptions that have resulted in price increases. 

For example, in 2006, failure of a major crude helium enrichment unit process 

vessel led to unscheduled outages and eventually to a major plant shutdown. 

When BLM first set its price after the 1996 act, its price was estimated to be 

significantly higher than the market price, but now the reverse is true—BLM’s 

price is estimated to be at or below the market price. On one hand, BLM could 

consider raising its price to ensure that the federal government is getting a fair 

market return on the sales of its assets. On the other hand, raising the price 

could potentially further erode sales. Furthermore, the 1996 act, like the 

Helium Act Amendments of 1960 before it, tied the price to the program’s operating expenses and debt. If the debt is paid off in 2015 as projected, the debt 

will no longer be a factor in setting helium prices. BLM officials told us that 

the 1996 act sets a minimum selling price and that the Secretary of the Interior 

has the discretion to set a higher price. BLM is planning to reevaluate its selling price, according to agency officials. As a result, it is uncertain how BLM will 

price its crude helium in the future. 

In conclusion, Mr. Chairman, there have been a number of changes in the market 

for helium since the Congress passed the Helium Privatization Act of 1996. As the 

end point for the actions that were required to be taken under the act come upon 

us in the next 5 years, the Congress may need to address some unresolved issues 

such as how to use the remaining helium in storage, how the helium program will 

operate once the Helium Fund expires in 2015, and how to set the price for the 

helium owned by the federal government. 

Mr. Chairman, this concludes my prepared statement. I would be pleased to answer any questions that you or other Members of the Subcommittee may have at 

this time. 

23 

GAO Contact and Staff Acknowledgments 

For further information about this testimony, please contact Anu K. Mittal at 

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Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this testimony include Jeffery D. Malcolm and 

Barbara Patterson, Assistant Directors; Carol Bray; Meredith Graves; and Caryn 

Kuebler. Also contributing to this testimony were Michele Fejfar, Jonathan Kucskar, 

and Jeremy Sebest. 

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56392.007.eps
24 

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Mr. COSTA. Thank you very much. The five points that you referenced in your summary are areas I want to revisit when we have 

that time. But we have two more witnesses. 

Dr. Robert Richardson, Professor and Vice Provost for Research, 

Emeritus and Senior Science Advisor for the President and Provost 

of Cornell University. And, as I noted in the opening, he was, in 

1996, awarded a Nobel Prize in Physics, and we are very honored 

that he is here. 

In addition, for members of the Subcommittee—using helium in 

his work, you are correct. Obviously, there is a tie here. 

But for members of the Subcommittee, Dr. Charles Groat, who 

is also a professor and Chair in Energy and Mineral Resources for 

the Department of Geological Sciences at the University of Texas 

at Austin, and was the former Director of the U.S. Geological Survey from 1998 to 2005. The two professors have submitted their 

written testimony in tandem. So while they will each be making a 

presentation for five minutes, the written testimony, for your information, is one that they have done together. It has a wonderful 

title: ‘‘Up In The Air: The BLM’s Disappearing Helium Program.’’ 

No puns intended, I suspect. 

25 

1The National Research Council is the operating arm of the National Academy of Sciences, 

the National Academy of Engineering, and the Institute of Medicine of the National Academies, 

chartered by Congress in 1863 to advise the government on matters of science and technology. 

Dr. Robert Richardson, we are very anxious to hear your testimony. Please begin. 

STATEMENT OF ROBERT C. RICHARDSON, Ph.D., VICE PROVOST FOR RESEARCH, EMERITUS AND SENIOR SCIENCE ADVISOR TO THE PRESIDENT AND PROVOST, CORNELL UNIVERSITY 

Dr. RICHARDSON. I have made a career of low-temperature 

research using liquid helium for 50 years. The Chairman of the 

Subcommittee gave an admirable summary of the uses of helium. 

Mr. COSTA. Thank you very much, Doctor. 

Dr. RICHARDSON. And I will confine my remarks to substitution, 

conservation, and recovery of helium because helium is far too precious for frivolous use. 

Mr. COSTA. Thank you. 

Dr. RICHARDSON. For some applications, other gases can replace 

helium. The main reason helium is widely used in some applications is that it is far too cheap. Other applications rely on helium’s 

unique properties, and there are no alternative uses. 

In the first category where the substitutions might exist, these 

include lifting. For uses requiring lifting, you can easily substitute 

hydrogen, if there are safety concerns. For instance, in India, 

hydrogen is substituted for helium for party balloons. And the 

quantity of hydrogen in the party balloons, it is not particularly 

dangerous, and it makes it more exciting for the kids. 

[Laughter.] 

Dr. RICHARDSON. Welding. The chemical inertness is the key for 

the welding. And argon can be substituted for helium, and the 

helium gas is slightly more expensive than argon, but not enough 

more expensive. 

Helium, Europe mostly uses argon, but the United States uses 

helium. And then semi-conductor and optics manufacturing, and 

most of Asia uses our helium to manufacture fiber optics. Argon or 

hydrogen will be substituted. 

The essential product is super-conducting magnets and the basic 

research. I will conclude. 

[The joint prepared statement of Dr. Richardson and Dr. Groat 

follows:] 

Statement of Charles G. ‘‘Chip’’ Groat, Ph.D. and Robert Richardson, Ph.D., 

Co-Chairs, Committee on Understanding the Impact of Selling the Helium 

Reserve, National Research Council of the National Academies 

Good morning, Mr. Chairman and members of the Committee. My name is 

Charles Groat. I am Director of the Energy and Earth Resources Graduate Program 

and Professor in the Jackson School of Geosciences and a Professor in the LBJ 

School of Public Affairs at the University of Texas at Austin. My name is Robert 

Richardson. I am the F.R. Newman Professor of Physics at Cornell University. We 

are co-chairs of the National Research Council’s Committee on Understanding the 

Impact of Selling the Helium Reserve. 1

The study we will be discussing was commissioned by the Department of the Interior’s Bureau of Land Management (BLM) and the principal task of our committee 

was to determine whether the sell-off of the nation’s helium reserve as prescribed 

by law has had an adverse effect on the United States’ scientific, technical, bioVerDate Nov 24 2008 10:21 Oct 19, 2010 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 L:\DOCS\56392.TXT Hresour1 PsN: KATHY
26 

medical, and national security users of helium. Our committee concluded that the 

sell-off has had and will continue to have adverse effects and we developed a series 

of recommendations to address several outstanding issues with respect to the reserve. 

To provide context for those recommendations, we will first give a brief overview 

of our critical helium needs, with a focus on the plight of the small research user 

community, and also discuss those uses where substitutes or conservation and recycling are possible. We will follow this with a discussion on helium supply issues, 

the federal helium reserve itself and the sale of federally owned helium. Our testimony will conclude with a discussion of our major recommendations regarding the 

reserve and its management in the future. 

Uses of Helium 

Ready access to affordable helium is critical to many sectors in academe, industry 

and government and the range of those uses is quite impressive, enabling research 

at the coldest of temperatures, weather monitoring, surveillance in areas of combat, 

and optical fiber production, among many other applications. 

The diversity in uses for helium arises from its unique physical and chemical 

characteristics—specifically, its stable electronic configuration and low atomic mass. 

Among those unique characteristics are the temperatures at which helium undergoes phase transitions (liquefies and freezes). Helium has the lowest melting and 

boiling points of any element: It liquefies at 4.2 Kelvin and 1 atmosphere and solidifies only at extremely high pressures (25 atmospheres) and low temperatures (0.95 

Kelvin). These characteristics have led to many cryogenic applications for helium; 

the largest single category of applications by percentage of helium consumed. These 

range from the efforts of individuals engaged in small-scale cryogenic research to 

large groups using high-energy accelerators and high-field magnets. All rely upon 

helium to conduct their research and because the federal government supports 

many of these researchers, it has a direct stake in their continued success. Cryogenic users also include segments of the medical profession, not only for biological 

research in devices such as superconducting quantum interference devices 

(SQUIDS), but also for diagnosis with tools such as magnetic resonance imaging 

(MRI) devices. 

Helium’s ability to remain liquid at extremely low temperatures also gives rise 

to its usage for purging and pressurizing systems and as such, helium is a critical 

component in our nation’s space exploration and defense efforts. The National Aeronautics and Space Administration (NASA) and the Department of Defense (DOD) 

use significant amounts of helium, as it is the only gas that can be used to purge 

and pressurize the tanks and propulsion systems for rockets fueled by liquid hydrogen and oxygen. 

Other uses rely on helium’s lifting capabilities. As the second lightest element, 

gaseous helium is much lighter than air, causing it to be quite buoyant. When combined with helium’s chemical inertness—especially when compared with the highly 

flammable alternative, hydrogen—its buoyancy makes helium an ideal lifting gas. 

NASA and the Department of Energy (DOE) use helium to support weather-related 

missions and various research and development programs funded by these agencies, 

both at government facilities and at universities. DOD also must have ready access 

to helium to operate the balloon- and dirigible-based surveillance systems needed 

for national security. 

Other applications draw on other characteristics of helium—its relatively high 

thermal conductivity, low viscosity, and high ionization potential—either alone or in 

combination. These applications include welding, providing controlled atmospheres 

for manufacturing operations, and detecting leaks in equipment providing vacuum 

environments to science and industry. Table 1 summarizes the principal applications of helium and the share of use in the United States. 

Small-Scale Researchers. Among the events that triggered this study were 

soaring prices and limited supplies that characterized the refined helium market in 

the fall of both 2006 and 2007. The committee, composed of individuals from a wide 

range of professions—economists, business people, and scientists—noted that smallscale scientists were particularly hard hit by price shocks and interruptions in the 

supply of refined helium during that time. An informal poll conducted by committee 

members of approximately 40 research programs at universities and national laboratories that use helium indicated that shortages of liquid helium interrupted the 

helium supply for almost half of these programs, with some interruptions lasting for 

weeks at a time during the late summer and fall of both 2006 and 2007. For many 

of those scientists, losing access to helium, even temporarily, can have long-term 

negative repercussions for their research. 

27 

In general, the federal grant programs that support these researchers simply are 

not designed to cope with significant pricing shifts and other market volatilities experienced here. Grants typically are for a two to three year period and for a set 

amount that does not adjust if a principal expense of research such as helium significantly increases. Further, the relatively short duration of such grants, with no 

guaranty of renewal, effectively precludes these research programs from entering 

into long-term contracts that might at least partially reduce the risk of significant 

prices increases and shortages. 

Domestic vs. foreign consumption. The balance between domestic and foreign 

consumption of helium has shifted significantly in the past 15 years. Until the mid1990s, substantially all helium production took place in the United States. This factor, combined with high shipping costs and limited availabilities, meant that until 

recently, the amount of helium consumed abroad was fairly small. In 1990, for example, 70 percent of worldwide helium consumption was in the United States. 

Since 2000, the demand for helium in the United States has remained fairly constant but has grown significantly elsewhere, reducing the U.S. share of total consumption. See Figure 1. Foreign growth has been assisted by the opening of several 

helium-producing facilities outside the United States that will be discussed later in 

this testimony, as well as by improved capabilities in the short-term storage and 

handling of refined helium. This period also saw a significant increase in industrial 

applications, principally in semiconductor and optical fiber fabrication facilities outside the United States, and the shifting of industrial facilities that use helium from 

the United States to foreign countries. By 2007, United States helium consumption 

had dropped to below 50 percent of worldwide demand. Despite a slight downturn 

in overall demand for helium associated with the global recession in 2008-2009, the 

committee believes, based on recent trends, that foreign demand should continue to 

increase relative to demand in the United States, such that U.S. relative consumption is expected to drop even further by 2012, to slightly more than 40 percent. 

Substitution, Conservation, Recovery. For some applications, other gases can 

replace helium, but other applications rely critically on helium’s unique properties 

and there are no alternatives. Applications in the first category, where substitutes 

for helium might exist, include these: 

• Lifting. For these uses, where low density is the only requirement, hydrogen is 

sometimes substituted if safety concerns can be met. 

• Welding. Here, chemical inertness is the key property. For processes such as 

gas tungsten arc welding—a critical process applicable to reactive metals such 

as stainless steel, titanium, aluminum, and others in high-value, high-reliability 

applications—Europe mostly uses argon, while the United States uses helium. 

• Semiconductor and fiber optics manufacturing. In these applications, high thermal conductivity is the important property. Often, hydrogen may be substituted. 

In the above applications, economics, market conditions, availability, safety, and 

legislation can influence the choice among helium and other gases. 

In contrast, other applications require the unique properties of helium, typically 

relying on the extremely low boiling point of liquid helium to achieve a desired result. These applications include the following: 

• Purging/Pressurizing. Entities such as NASA and DOD must purge and then 

pressurize liquid hydrogen (LH2) and liquid oxygen (LOx) rocket propulsion systems and fuel tanks that may be at liquid air temperatures or colder. Although 

gaseous hydrogen might have the right physical properties for use in LOx systems, its reactivity with oxygen precludes its use. Nitrogen is not desirable because nitrogen might contaminate the LOx. In LH2 environments, all gases 

other than helium and hydrogen would freeze, clogging fuel lines and systems 

and rendering the rocket engines nonfunctional. 

• Superconductivity. All applications that employ superconducting magnets, including medical magnetic resonance imaging (MRI) machines, high energy accelerators and many high field magnets used in research, rely on the continued 

availability of helium. Current materials and technologies dictate that only 

helium can act as the crucial refrigerant to cool these materials below superconducting thresholds. 

• Basic research. Here, no other substance can be used as a refrigerant to achieve 

temperatures from 4.2 K above absolute zero down to millikelvins. 

Supply of Helium 

Sources. Helium is the second-most-abundant element in the universe, but its 

diffusive properties mean that atmospheric helium leaks into space, rendering it relatively scarce on Earth. At only 5.2 parts per million (ppm) in air, it is not economically feasible to extract helium from the atmosphere using current technology. Rather, the principal source of helium is natural gas fields. Helium nuclei (or alpha parVerDate Nov 24 2008 10:21 Oct 19, 2010 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6621 L:\DOCS\56392.TXT Hresour1 PsN: KATHY
28 

ticles) are produced in the radioactive decay of heavy elements such as uranium and 

thorium, located in Earth’s crust. While most of these helium atoms find their way 

to the surface and escape, a small fraction are trapped by the same impermeable 

rock strata that trap natural gas. Such natural gas usually consists primarily of 

methane and secondarily of ethane, propane, butane, and other hydrocarbons and 

various other contaminants, including H2S, CO2, and He. 

There are three different situations in which helium contained in natural gas may 

be economically recovered: • Helium may be extracted as a secondary product during the primary process 

of producing methane and natural gas liquids (NGLs) such as propane, ethane, 

butane, and benzene. • For natural gas fields that have sufficient concentrations of helium and other 

non-fuel gases such as sulfur and CO2 to economically justify their extraction, 

the gas in those fields may be directly processed for the non-fuel constituents. • Helium may be extracted during the production of liquefied natural gas (LNG), 

which consists primarily of liquefied methane. 

For the first two recovery processes, current technology requires threshold concentrations of 0.3 percent helium before separation of the helium is commercially 

feasible. For the third process, the helium is extracted from the tail gases, the gases 

that remain after the methane has been liquefied. The helium concentration in 

those tail gases is much higher than in the original gas, allowing the economical 

extraction of helium even through the original natural gas might contain as little 

as 0.04 percent helium. 

Figure 2 shows the principal domestic sources of helium. Historically, most helium 

in the United States has been recovered using the first method described above, as 

a byproduct of producing methane and natural gas liquids. Almost all of that helium 

has been produced in the mid-continental region around the Hugoton Field. As is 

described in later testimony, this is where the federal helium reserve system is located. The Hugoton Field is mature and the production of methane, NGL and secondary products such as helium from that field is expected to significantly decline 

over the next several years. In the last few decades, helium has been produced in 

Wyoming using the second method described above, where the natural gas is directly processed for its helium and other non-fuel content. Potential helium reserves 

have also been explored in the Four Corners area. 

Outside of the United States, only small reserves of the first two sources of 

helium have been exploited and for many years, the rest of the world has relied 

upon the United States as their principal source of helium. Recently, the development of large LNG facilities has opened up new, potential sources of helium. The 

principal countries in which those facilities are being developed are Algeria, Qatar, 

and Russia, with smaller facilities coming online in Australia. These areas are expected to become increasingly more important sources of helium as the Hugoton and 

adjoining fields mature. See Figure 3. 

Supply Chain. After being refined, helium is transported to end users through 

a fairly complicated supply chain. In the United States, the helium typically is liquefied and delivered by refiners either to their transfill stations situated throughout 

the United States or to distributors of industrial gases. This transportation is handled using expensive domestic tanker trucks or bulk-liquid shipping containers 

standardized according to the International Organization for Standardization (ISO), 

each of which holds approximately 1.0 to 1.4 million cubic feet (MMcf) of helium. 

While some of the largest helium users contract directly with a refiner for their 

helium purchases and deliveries, most sales to end users are through the retail division of a refiner or a distributor. The refiners and distributors then repackage the 

helium, either in its liquid state into dewars—evacuated, multiwalled containers designed to hold liquid helium—of varying sizes or in its gaseous state into pressurized cylinders, tube-trailers, or other modules as needed by the end users. 

Federal Policy Regarding Helium 

Helium has long been the subject of public policy deliberation and management, 

largely because of its many strategic uses and its unusual source. Shortly after natural gas fields containing helium were discovered at the beginning of the last century, the U.S. government recognized helium’s potential importance to the nation’s 

interests and placed its production and availability from federally owned mineral interests under strict governmental control. In the early years, helium principally was 

used for its lifting capability, as a safe alternative to highly flammable hydrogen. 

By the mid-1920s full-scale production facilities had been built and were being operated by the federal government to support its lighter-than-air aviation programs. 

In the 1960s, helium’s strategic value in cold war efforts was reflected in policies 

that resulted in the creation of the federal helium reserve. Although much of the 

29 

infrastructure predates the cold war, the Federal Helium Reserve as a program 

began and currently consists of • The Bush Dome reservoir, a naturally occurring underground structural dome 

in the Cliffside Field near Amarillo, Texas, where federally owned (and some 

privately owned) crude helium is stored; • An extensive helium pipeline system running through Kansas, Oklahoma, and 

Texas (the Helium Pipeline) that connects crude helium extraction plants with 

each other, with helium refining facilities, and with the Bush Dome reservoir, • Various wells, pumps and related equipment used to pressurize the Bush Dome 

reservoir, to place into and withdraw crude helium from it, and to operate other 

parts of the helium reserve. 

The 1960s efforts also included inducements for private companies to develop 

helium extraction and refining facilities and to sell crude helium to the United 

States. The program was quite successful, resulting in the accumulation of approximately 35 billion cubic feet (Bcf) of helium by the mid 1970s. This amount was 

many times the 600 (750) million cubic feet (MMcf) of helium then being consumed 

domestically (globally) and so further purchases were suspended. The amount of 

helium maintained in the helium reserve remained fairly constant for the next 20 

years. 

The latest manifestation of public policy is expressed in the Helium Privatization 

Act of 1996 (1996 Act), which directs that substantially all of the helium accumulated as a result of those earlier policies be sold off by the year 2015, at prices sufficient to repay the federal government for its outlays associated with the helium program, plus interest. 

Context of Current Study. The last section of the 1996 Act called for the Secretary of the Interior to commission a study from the National Academies to determine whether disposal of federally owned helium pursuant to the 1996 Act would 

have a substantial adverse effect on critical interests of the country. The report that 

followed (2000 Report) found that because the helium market had been quite stable 

since the 1980s and the price at which federally owned helium must be sold under 

the 1996 Act was significantly higher than the price at which privately owned crude 

helium was then being sold, the sell off of the helium would not have a substantial 

adverse effect on critical users. The report predicted that the price of privately 

owned crude would gradually rise to the price at which federally owned helium was 

being offered, and until it reached that level very little federally owned helium 

would be purchased, given the availability of cheaper sources. 

While the helium market remained fairly stable for several years after issuance 

of the 2000 Report, that report did not accurately predict the market’s response to 

efforts to sell-off federally owned helium. In March 2003, when BLM first offered 

federally owned helium for sale, the entire 1.6 Bcf offered for sale was purchased. 

Rather than gradually rising, the prices for privately owned crude helium rapidly 

rose such that by 2007, those prices were on par with and often exceeded the legislatively prescribed price for federally owned helium. Retail prices for helium commensurably rose, more than doubling between 2003 and 2008. In addition, during the 

summer and fall of 2006 and 2007, the helium market encountered widespread 

shortfalls, with some of the interruptions lasting for weeks at a time. 

The amount of federally owned helium being sold is enormous: it is currently 

equivalent to approximately one-half of U.S. helium needs and almost one-third of 

global demand. One consequence is that the price of federally owned helium, which 

is set not by current market conditions but by the terms of the 1996 Act, dominates, 

if not actually controls, the price for crude helium worldwide. 

Committee Findings, Recommendations. As mentioned at the beginning of 

this testimony, the principal charge of our committee was to determine whether the 

sell-off of the nation’s helium reserve as prescribed by law has had an adverse effect 

on the United States’ scientific, technical, biomedical, and national security users 

of helium. In response to this charge, the committee determined that selling off the 

helium reserve, as required by the 1996 Act, has adversely affected critical users 

of helium and is not in the best interest of U.S. taxpayers or the country. The selldown of federally owned helium, which had originally been purchased to meet the 

nation’s critical needs, is coming at a time when demand for helium by critical and 

noncritical users has been significantly increasing, especially in foreign markets. If 

this path continues to be followed, within the next ten to fifteen years the United 

States will become a net importer of helium whose principal foreign sources of 

helium will be in the Middle East and Russia. 

In addition, the pricing mandated by the 1996 Act has triggered significant increases in the price of crude helium, accompanied by equally significant increases 

in the prices paid by end users. Finally, the helium withdrawal schedule mandated 

by the 1996 Act is not an efficient or responsible reservoir management plan. If the 

30 

reserve continues to be so managed, a national, essentially nonrenewable resource 

of increasing importance to research, industry, and national security will be dissipated. 

The committee recommends several ways to address the outstanding issues. Several of its recommendations respond to the very large impact that selling off the reserve has had and is continuing to have on the helium market in general, including 

a recommendation that procedures be put in place that open the price of federally 

owned helium to the market. 

Another of the committee’s concerns is that the drawdown schedule required by 

the 1996 Act, which dictates that the reserve helium be sold on a straight-line 

basis—the same amount must be sold each year until the reserve is substantially 

gone—is a wasteful way to draw down a reservoir. Because it is much more costly 

and more likely to leave significant amounts of helium unrecoverable than alternative drawdown scenarios, the committee recommends that this portion of the 1996 

Act be revisited. In addition, given recent developments in the demand for and 

sources of helium (the principal new sources of helium will be in the Middle East 

and Russia, and if the sell-down continues, the United States will become a net importer of helium in the next 10 to 15 years), the committee recommends that Congress reconsider whether selling off substantially all federally owned helium is still 

in the nation’s best interest. 

The committee also addresses the needs of small-scale, government-funded researchers who use helium, a group that has been hit particularly hard by sharp 

price rises and shortages that have characterized the helium market in recent 

times. This group was singled out mainly because such research is an important 

public enterprise and the funding mechanisms available to the researchers, typically 

grants on 3-year cycles for set amounts, do not allow them to respond to short-term 

fluctuations. These research programs should have some protection from the instabilities recently characterizing the helium market. Accordingly, the committee recommends that the researchers be allowed to participate in an existing program for 

government users of helium that would give them priority when there is a helium 

shortage. It also recommends that funding agencies help such researchers to acquire 

equipment that would reduce their net helium requirements. Implementing these 

recommendations would not subsidize such users nor would it require significant additional outlays: Indeed, over time, it would lead to the much more efficient use of 

the federal funds with which helium is purchased. 

Because the helium market is rapidly changing and helium is critically important 

to many critical users, the committee includes recommendations that would facilitate long-range planning to meet the nation’s helium needs, including the collection 

and dissemination of needed information and the formation of a standing committee 

to regularly assess whether national needs are being appropriately met. The remaining conclusions and recommendations consist of steps to help properly manage 

the helium reserve and protect this important national resource. The language of 

the committee’s full recommendations is contained in the summary of the report, 

which is attached to this statement. 

Finally, while noting that the question of how critical helium users in the United 

States will be assured a stable supply of helium in the future is beyond the scope 

of its charge, the committee points out that several important issues related to this 

topic remain unanswered. How will the large amounts of federally owned helium 

that remain after the mandated sell-off deadline in 2015 be managed after that 

date? Moreover, from a wider perspective, should a strategic helium reserve be 

maintained? These questions need to be answered in the near future, well before 

most federally owned helium is sold. 

This concludes our testimony to the committee. Thank you for the opportunity to 

testify on this important topic. We would be happy to elaborate on any of our comments during the question and answer period. 

31 


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33 

2 As discussed more fully in the section of Chapter 1 entitled ‘‘Review of the 2000 Report’s 

Conclusions,’’ the 1996 Act called for an Academy study to determine if such disposal would 

have a substantial adverse effect on U.S. interests. That study, The Impact of Selling the Federal Helium Reserve, published by the NRC in 2000 and referred to hereinafter as the 2000 

Report, concluded that the 1996 Act would not substantially affect matters. While several of that 

study’s findings remain valid, it did not correctly predict how the 1996 Act would impact prices 

or how the demand side of the helium market would grow, in part a response to the ready availability of helium arising from the sell-off of the Helium Reserve pursuant to the 1996 Act. These 

factors have significantly impacted the current market for helium. 

Summary from Selling the Nation’s Helium Reserve 

A Report of the National Research Council 

Ready access to affordable helium is critical to many sectors in academe, industry 

and government. Many scientists—from individuals engaged in small-scale cryogenic 

research to large groups using high-energy accelerators and high-field magnets— 

rely upon helium to conduct their research and because the federal government supports many of these researchers, it has a direct stake in their continued success. 

The medical profession also depends on helium, not only for biological research in 

devices such as superconducting quantum interference devices (SQUIDS), but also 

for diagnosis with tools such as magnetic resonance imaging (MRI) devices. Industrial applications for helium range from specialty welding to providing the environments in which semiconductor components and optical fiber are produced. Government agencies that require helium include the National Aeronautics and Space Administration (NASA) and the Department of Defense (DOD), as only helium can be 

used to purge and pressurize the tanks and propulsion systems for NASA and 

DOD’s rockets fueled by liquid hydrogen and oxygen. NASA and the Department of 

Energy (DOE) also use helium to support weather-related missions and various research and development programs funded by these agencies, both at government facilities and at universities. Finally, DOD must have ready access to helium to 

operate the balloon- and dirigible-based surveillance systems needed for national 

security. 

The Federal Helium Reserve, managed by the Bureau of Land Management 

(BLM) of the U.S. Department of the Interior, is the only significant long-term storage facility for crude helium in the world and currently plays a critical role in satisfying not only our nation’s helium needs but also the needs of the world. The federally owned crude helium now on deposit in the Reserve was purchased by the federal government as a strategic resource during the cold war. After the cold war, 

Congress enacted legislation (the Helium Privatization Act of 1996 referred to hereinafter as the 1996 Act) directing that substantially all of the federally owned 

helium in the Reserve be sold at prices sufficient to repay the federal government’s 

outlays for the helium and the infrastructure, plus interest. The present report, 

called for by BLM, examines whether BLM’s selling of this helium in the manner 

prescribed by law is having an adverse effect on U.S. users of helium and, if so, 

what steps should be taken to mitigate the harm. 2

This report assesses the current status of the supply and demand for helium as 

well as the operation of the federal helium program. It concludes that current efforts 

to comply with legislative prescriptions have had and will continue to have negative 

impacts on the needs of both current and future users of helium in the United 

States. The sell-down of federally owned helium, which had originally been purchased to meet the nation’s critical needs, is coming at a time when demand for 

helium by critical and noncritical users has been significantly increasing, especially 

in foreign markets. If this path continues to be followed, within the next ten to fifteen years the United States will become a net importer of helium whose principal 

foreign sources of helium will be in the Middle East and Russia. In addition, the 

pricing mandated by the 1996 Act has triggered significant increases in the price 

of crude helium, accompanied by equally significant increases in the prices paid by 

end users. Finally, the helium withdrawal schedule mandated by the 1996 Act is 

not an efficient or responsible reservoir management plan. If the reserve continues 

to be so managed, a national, essentially nonrenewable resource of increasing importance to research, industry, and national security will be dissipated. 

FINDINGS AND RECOMMENDATIONS 

SPECIFIC RECOMMENDATIONS FOR IMMEDIATE IMPROVEMENTS

To address these issues, the committee first lays out three specific recommendations for improving the federal helium program: changing the methods for pricing 

the helium being sold, committing more resources to managing the physical faciliVerDate Nov 24 2008 10:21 Oct 19, 2010 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 L:\DOCS\56392.TXT Hresour1 PsN: KATHY
34 

3 2000 Report, page 9. 

4The law directs that crude helium from the reserve be offered for sale in such amounts as 

may be necessary to dispose of all helium in excess of 600,000,000 cubic feet on a straight-line 

basis between January 1, 2005 and January 1, 2015. Although BLM has offered helium for sale 

in the amounts required by the 1996 Act, not all such helium has been purchased and as a consequence significant amounts of federally owned helium will remain in the Federal Reserve after 

January 1, 2015. This is discussed in more detail in Chapter 5 in the section entitled ‘‘Sell-Down 

of Crude Helium Pursuant to 1996 Act.’’ 

ties at the Federal Helium Reserve, and providing assistance for small-scale scientists by expanding the sales program for government users to include them and 

promoting conservation and reuse by these users. 

Pricing Mechanism 

The 1996 Act set minimum selling prices, adjusted for inflation, for crude helium 

held by the BLM such that the sale of that helium at those prices would generate 

sufficient revenue to repay the federal government for what it originally spent to 

purchase the helium and to build the supporting infrastructure, plus interest. BLM 

has elected to sell its helium at those minimum prices. At the time of the 1996 Act, 

the minimum selling price was almost double the price being paid for privately 

owned crude helium. A market that had been stable for several decades prior to the 

sell-off of federally owned helium, experiencing neither drastic price increases nor 

shortages of supply, 3 began to change after BLM started to sell its crude helium. 

Almost immediately, privately sourced crude helium prices began to rise, and those 

prices continued to steadily increase so that they now meet or exceed BLM’s price, 

and many of the sales contracts for private helium expressly tie future selling prices 

to BLM’s price. Thus this legislatively set price for federally owned helium is now 

setting the price for crude helium, and there is no assurance that this price has any 

relationship to the current market value of that helium. 

To the extent BLM’s price is lower than the price the market would otherwise set 

for crude helium, this pricing mechanism could have several negative consequences: 

(1) it could lead to inaccurate market signals, increased consumption, and accelerated depletion of the Federal Helium Reserve; (2) it could retard efforts to conserve 

and develop alternative sources of crude helium, (3) it could result in transfers of 

taxpayer assets to private purchasers at below-market values—that is, it could 

amount to a taxpayer-financed subsidy for consumption of this scarce publicly 

owned resource; and (4) sales of federally owned crude helium could end up subsidizing exports of helium. 

The managers of the Reserve should shift to a market-based pricing policy to improve the exploitation of this important national asset. The report notes that several 

mechanisms could be used to implement market-based pricing and thereby introduce competition, or the threat of it, to the process. However, one complicating factor is that before federally owned helium can be used, it must be refined, and the 

refining capacity linked to the Reserve is owned by four companies. The committee 

believes that market-based pricing of crude helium from the Reserve will require 

that purchasers other than those four companies have access to refining capacity 

linked to the Reserve. However, additional details on mechanisms to provide access 

to excess refining capacity and to attain the goal of market-based pricing of crude 

helium from the Reserve are beyond the committee’s charge. 

Recommendation. The Bureau of Land Management (BLM) should 

adopt policies that open its crude helium sales to a broader array 

of buyers and make the process for establishing the selling price of 

crude helium from the Federal Helium Reserve more transparent. 

Such policies are likely to require that BLM negotiate with the 

companies owning helium refining facilities connected to the 

helium pipeline the conditions under which unused refining capacity at those facilities will be made available to all buyers of federally owned crude helium, thereby allowing them to process the 

crude helium they purchase into refined helium for commercial 

sale. 

Management of the Reserve 

An additional aspect of the 1996 Act that has significant—and undesirable, in the 

judgment of this committee—implications for the overall management of the Helium 

Reserve is the Act’s requirement that the sale of federally owned crude helium is 

to take place on a straight-line basis. 4 The mandated constant extraction rate conflicts with standard practices for the exploitation of this type of reservoir, which is 

that production rates vary over the economic life of a deposit, typically declining 

over time. Declining production rates and reservoir pressures delay encroachment 

35 

5The in-kind program is discussed in more detail in Chapter 5 in the section entitled ‘‘InKind’’ Program of Crude Helium Distribution.’’ 6 As discussed more fully in the section of chapter 5 entitled ‘‘In-Kind Program of Crude 

Helium Distribution’’ the price is negotiated between the supplier and user and includes BLM’s 

cost of crude helium plus refining and transportation costs and profits for the refiner and distributor. 7 50 U.S.C.A. Section 167d (a); 

of water from nearby aquifers and connected reservoirs, and promote the efficient 

drainage and recovery of the resource gas in place. 

Recommendation. The BLM should develop and implement a longterm plan that incorporates appropriate technology and operating 

practices for delivering crude helium from the Reserve in the most 

cost-effective manner. 

Assistance for Small-Scale Researchers 

Among the events that triggered this study were the soaring prices and limited 

supplies that characterized the refined helium market in the fall of both 2006 and 

2007. The committee, composed of individuals from a wide range of professions— 

economists, business people, and scientists—notes that small-scale scientists were 

particularly hard hit by price shocks and interruptions in the supply of refined 

helium during that time. An informal poll conducted by committee members of approximately 40 research programs at universities and national laboratories that use 

helium indicated that shortages of liquid helium interrupted the helium supply for 

almost half of these programs, with some interruptions lasting for weeks at a time 

during the late summer and fall of both 2006 and 2007. While anecdotal, these poll 

results provide clear indication that this community of users is directly impacted by 

general shortages of helium. For many of those scientists, losing access to helium, 

even temporarily, can have long-term negative repercussions for their research. 

In general, the federal grant programs that support these researchers simply are 

not designed to cope with the pricing shifts and other market volatilities experienced here. The grants typically are for a two to three year period and for a set 

amount that does not adjust if a principal expense of research such as helium significantly increases. Further, the relatively short duration of such grants, with no 

guaranty of renewal, effectively precludes these research programs from entering 

into long-term contracts that might at least partially reduce the risk of significant 

prices increases and shortages. Further, if BLM were to implement the marketbased pricing mechanism recommended in this report, the retail price for helium 

may commensurably increase, which will have an even greater negative impact on 

those helium users. 

These negative impacts could, however, be mitigated at least in part through a 

programmatic and policy change that would allow small users being supported by 

government contracts and grants to participate in a program—commonly referred to 

as the in-kind program 5—operated by BLM for the sale of helium to federal agencies and their contracting agents. Under that program, qualified buyers purchase 

their refined helium indirectly from BLM on a cost-plus basis. 6 Notably, participants in the program have priority access to helium in times of shortages. 7 The 

committee believes that such an expansion of the in-kind program would eliminate 

supply concerns and many of the price fluctuations that have negatively affected 

federally funded researchers during the past few years. Further, such an extension 

would be without significant cost to the programs supporting these researchers and, 

indeed, should lead to a more efficient use of the federal funds being used to purchase helium. 

Recommendation. The crude helium in-kind program and its associated customer priorities should be extended by the Bureau of Land 

Management, in cooperation with the main federal agencies not 

currently participating in the in-kind program—for example, the 

National Science Foundation, the National Institutes of Health, and 

the extramural grant programs of the Department of Energy—to research being funded in whole or in part by government grants. 

In addition to recommending that these users be allowed to participate in the inkind program, the committee believes that the conservation and reuse of helium by 

these users should be promoted by the agencies funding this research. Although 

adopting such a policy may be costly in the short-run, the committee judges that 

it would save money in the long-run and would help to reduce many of the negative 

effects of the price and supply disruptions referred to in the preceding discussion. 

Recommendation. Federal agencies such as the Department of Energy, the National Science Foundation, the National Aeronautics 

and Space Administration and the Department of Defense, which 

36 

support research using helium, should help researchers at U.S. universities and national laboratories acquire systems that recycle 

helium or reduce its consumption, including low-boil-off cryostats, 

modular liquefaction systems, and gaseous recovery systems. 

The committee notes that because total U.S. research applications account for 

only 2 to 4 percent of all usage of refined helium in the United States, the negative 

effects of supply and price disruptions for the U.S. research community not currently participating in the in-kind program could be addressed at relatively low cost. 

Moreover, in the judgment of this committee, the benefits for the nation that would 

accrue from minimizing these disruptions would be substantial. 

GENERAL RECOMMENDATIONS FOR MEETING U.S. HELIUM NEEDS

In addition to the specific recommendations just discussed, the committee sets out 

more general recommendations for how to best meet the nation’s current and future 

helium needs. These include recommendations for (1) collecting and making available the information needed to more effectively manage the Federal Helium Reserve 

and to formulate future helium policy, and (2) initiating strategies to develop a more 

comprehensive long-term program for meeting the nation’s helium needs. 

Collection of Information 

One of the difficulties encountered by this committee and the previous NRC committee that issued the 2000 Report was the lack of timely and sufficient information 

to evaluate the supply and demand sides of the helium market, especially non-U.S. 

supply and demand, and the operation of the Federal Helium Reserve. Such information is needed by those who formulate and carry out U.S. policies on helium in 

order to make good decisions. 

Recommendation. The Bureau of Land Management (BLM) should 

acquire, store, and make available to any interested party the data 

to fill gaps in (1) the modern seismic and geophysical log data for 

characterization of the Bush Dome reservoir, (2) information on the 

helium content of gas reservoirs throughout the world, including 

raw data, methodology, and economic assessment that would allow 

the classification of reserves contained in specific fields, and (3) 

trends in world demand. BLM or other agencies with the necessary 

expertise, such as the U.S. Geological Survey, should develop a forecast over the long term (10-15 years) of all U.S. demand for helium 

for scientific research and for space and military purposes. 

Recommendation. Unless expressly prohibited from doing so, Bureau of Land Management should publish its database on the 

helium concentrations in the more than 21,500 gas samples that 

have been measured throughout the world and provide its interpretations of gas sample analyses, especially those reflecting likely 

prospective fields for helium. 

Long-Range Planning 

Helium is critically important to many U.S. scientific, industrial, and national defense sectors. Further, the helium market is rapidly changing, as evidenced by the 

unforeseen developments on both the supply side and demand side of that market 

since the 2000 Report was released. Finally, because the Reserve is so large, steps 

undertaken in connection with it can have unintended consequences, the most pertinent being the effect of the pricing mechanism adopted by BLM pursuant to the 

1996 Act on worldwide prices for helium. These considerations merit the development of a more permanent and sustained plan for managing this valuable resource. 

In addition, the Federal Helium Reserve is a finite resource and so at some point 

in the future will be depleted. However, the helium needs of users in the in-kind 

program will continue. The BLM and the White House Office of Science and Technology Policy (OSTP) should develop a strategy to address these important future 

needs. 

Recommendation. The Bureau of Land Management should promptly investigate the feasibility of extending the Helium Pipeline to 

other fields with deposits of commercially available helium as a 

way of prolonging the productive life of the Helium Reserve and 

the refining facilities connected to it. 

Recommendation. The Bureau of Land Management (BLM) should 

form a standing committee with representation from all sectors of 

the helium market, including scientific and technological users, to 

regularly assess whether national needs are being appropriately 

37 

met, to assist BLM in improving its operation of the Federal Helium 

Reserve, and to respond to other recommendations in this report. 

Recommendation. The Bureau of Land Management, in consultation with the Office of Science and Technology Policy and relevant 

congressional committees, should commission a study to determine 

the best method of delivering helium to the in-kind program, especially after the functional depletion of the Bush Dome reservoir, 

recognizing that this will not happen until well after 2015. 

Recommendation. The congressional committee or committees responsible for the federal helium program should reevaluate the 

policies behind the portions of the 1996 Act that call for the sale of 

substantially all federally-owned helium on a straight-line basis. It 

or they should then decide whether the national interest would be 

better served by adopting a different sell-down schedule and retaining a portion of the remaining helium as a strategic reserve, making this reserve available to critical users in times of sustained 

shortages or pursuant to other predetermined priority needs. 

CONCLUSION

The committee notes that securing a stable and accessible helium supply in the 

future requires addressing several important issues that are beyond the scope of 

this study. For example, the legislative framework for the operation of the federal 

helium program is silent on the management of the Federal Helium Reserve after 

January 1, 2015, the mandated date for disposal of substantially all federally owned 

crude helium. What is to be done with the remaining federally owned crude helium? 

How will BLM operations beyond 2015 be financed? Should the Reserve, either as 

a federal or a private entity, as appropriate, continue to exist after the BLM debt 

to the U.S. Treasury has been retired? While the committee supports maintaining 

a strategic reserve, addressing these issues requires the involvement of Congress 

and the broader federal science policy establishment because they go well beyond 

the reserve management responsibilities of BLM. 

Mr. COSTA. Thank you very much, Professor. We will look forward to having an opportunity to ask you some additional questions when we get to that part of the hearing. 

Our last witness, but certainly not least, as I indicated, both Professor Groat and Professor Richardson have submitted their written testimony together. Dr. Charles Groat is Professor and Chair 

in the Energy and Mineral Resources for the Department of Geological Sciences at the University of Texas at Austin. As I noted, 

Dr. Groat was also the former Director of the U.S. Geological Survey from 1998 to 2005. 

Could you please present your testimony, Dr. Groat? 

STATEMENT OF CHARLES G. GROAT, Ph.D., CHAIR IN ENERGY 

AND MINERAL RESOURCES, DEPARTMENT OF GEOLOGICAL 

SCIENCES 

Dr. GROAT. Thank you, Mr. Chairman. I appreciate the opportunity to summarize the results of the National Research Council 

study on the impacts of selling off the national helium reserve. 

As the Chairman and Dr. Richardson discussed the use of 

helium, I will make a couple of comments about the supply situation. 

In 2009, approximately 170 million cubic meters of helium were 

extracted from natural gas or withdrawn from the helium reserves. 

Approximately 78 percent of that production comes from the United 

States, 10 percent from Algeria, and most of the remainder from 

Russia, Poland, and Qatar. 

38 

The U.S. supplies all domestic demand, and approximately 80 

percent of world demand. Part of the supply comes from the sale 

of helium from the Federal Reserve. The Helium Privatization Act 

of 1996 called for sales of 2.1 billion cubic feet, as noted earlier, per 

year in order to sell off the reserve by 2015. 

In 2009, the Amarillo Field Office of BLM sold 940 million cubic 

feet. The Federal Reserve contains about 18 billion cubic feet, as 

of 2009. Given the actual rate of sales, there will be more than the 

mandated amount, 600 million cubic feet, as noted by other 

witnesses, of helium left in the reserve in 2015, which raises the 

question from the committee, what happens after 2015. 

The principal change charged to our committee was to determine 

whether the sell-off of the Nation’s helium reserve, as prescribed by 

law, has had an adverse effect on the United States’ scientific, 

technical, biomedical, and national security users of helium. 

In response to this charge, the committee determined that selling 

off the helium reserve in the manner prescribed by the 1996 Act 

has adversely affected critical users of helium, and is not in the 

best interest of U.S. taxpayers or the country. 

The sell-down of Federally-owned helium is coming at a time 

when demand for helium by critical and non-critical users has been 

significantly increasing, especially in foreign markets. If this path 

continues to be followed, within the next 10 to 15 years the United 

States will become a net importer of helium, whose principal 

foreign sources will be the Middle East and Russia. 

In addition, the pricing mandated by the 1996 Act has triggered 

significant increases in the price of crude helium. The helium withdrawal schedule mandated by the 1996 Act is not an efficient or 

responsible reservoir management plan. 

Another of the committee’s concerns is that the draw-down 

schedule required by the 1996 Act, which dictates that the reserve 

of helium be sold on a straight-line basis, the same amount must 

be sold each year until the reserve is substantially gone, is a wasteful way to draw down a reservoir, because it is more costly and 

more likely to leave significant amounts of helium unrecoverable 

than alternative draw-down scenarios. 

The committee, therefore, recommends that a portion of the 1996 

Act be revisited, that particular portion. 

Furthermore, the committee recommends that the Congress reconsider whether selling off substantially all the Federally-owned 

helium is still in the nation’s best interest. 

The committee also addressed the needs of small-scale, government-funded researchers, a group that has been particularly hardhit by the sharp price rises and the shortages that have characterized the helium market in recent times. These research programs 

should have some protection from the instabilities recently characterizing the helium market. 

Accordingly, the committee recommends that the researchers be 

allowed to participate in an existing In-Kind Program for government users of helium that would give them priority when there is 

a helium shortage, and insulation from the accompanying dramatic 

retail price increases. 

Because the helium market is changing rapidly, and helium is 

critically important to many users, the committee report includes 

39 

recommendations that would facilitate long-range planning to meet 

the nation’s helium requirements. Including the collection and dissemination of needed information, and the formation of a standing 

committee to regularly assess whether the national needs are being 

appropriately met. 

Finally, while noting that the question of how critical helium 

users in the United States will be assured a stable supply of 

helium in the future was beyond the scope of its charge, the committee points out that several important issues related to this topic 

remain unanswered. 

How will the large amount of Federally-owned helium that remained after the mandated sell-off in 2015 be managed after that 

date? Moreover, from a wider perspective, should the strategic 

helium reserve be maintained? 

These questions need to be answered in the near future, well before more Federally-owned helium is sold and will require action by 

the Congress. 

This concludes my spoken remarks. 

[The joint prepared statement of Dr. Groat and Dr. 

Richardson can be found on page 24.] 

Mr. COSTA. Thank you very much. A number of questions that 

I had have been answered as it relates to the 1996 proposal at that 

time by a sense of Congress to, in essence, eliminate the reserve 

by 2015. 

Professor Groat, you clearly, I think, have given us a sense that 

we need to revisit that 1996 policy by the Congress at that time. 

What has changed so dramatically in terms of the demand and 

the usage of helium that puts us on a different track? And I guess 

the other question, I guess, is, it seems like logically you are indicating that if we eliminate the reserve, we will go, in a short period 

of time, from being the net provider of helium throughout the 

world, to a net importer. 

And I am wondering, is there not a third scenario in which, in 

fact, as a result of the elimination of the reserve, that it might increase domestic production for helium, and how that would take 

place absent the reserve. 

There are two parts to that question, the demand and then 

the—— 

Dr. GROAT. Right. I think the stimulus for the price erratic, the 

changes in pricing were, the events had started in 2003, when you 

actually began selling the helium reserve off, and went on the market with helium. They sold 1.6 billion cubic feet. And as one of the 

testimonies pointed out earlier, the price for government helium at 

that time was high, and private-sector helium was low. 

It didn’t take very long for private-sector helium to move up 

above the government helium, so there was a large price increase. 

At the same time, there were demand increases globally and in the 

United States. There were some planned and unplanned maintenance issues, both at the—— 

Mr. COSTA. But if I am a consumer of helium, either for scientific 

purposes or because I manufacture MRI machines, why would I 

buy helium from the private sector, when it came significantly 

higher than the reserve? 

40 

Dr. GROAT. Well, the government was only selling its helium to 

refiners. So they—— 

Mr. COSTA. I see. 

Dr. GROAT. It had to be refined first. You couldn’t buy it directly 

from the government any more. 

Mr. COSTA. OK. So then the refiners were making a good profit. 

Dr. GROAT. They were doing better, yes. In fact, and that combined with the straight-line sell-off set a Federal price that remain 

now very low. And the refined price, retail price went up very high. 

Couple that with world demand increasing, particularly in Asia. 

So we had the beginnings of a critical supply-and-demand situation that really affected the small researchers probably most significantly because they have fixed budgets. They can’t go back for 

more money to buy more helium. And so they really felt the pinch, 

and were probably the most vocal about that. 

Your question about supply is an interesting one. Are there ways 

to increase the supply. If you look at the total resource base of 

helium in the United States, it is huge. But the base that is commercially exploitable is not. And so it is a legitimate question to 

wonder whether, if the price continues to go up, which would force 

some of the substitutions Dr. Richardson talked about, some of the 

conservation that could take place; if that price were to go up, 

would that encourage others to process other helium resources for 

the helium? 

In other words, there are helium and natural gas in the Four 

Corners area. 

Mr. COSTA. Right. Did you look at that? 

Dr. GROAT. We did not. 

Mr. COSTA. You did not. 

Dr. GROAT. We did not. In fact, Mr. Chairman, one of the things 

we pointed out that we were very emphatic about was that the 

availability of information about potential sources of helium, about 

demand for helium, about supply economic issues, is sparse. We 

had a great difficulty in getting original data, and that is one of 

the reasons we put such an emphasis on trying to gather that information in formulating long-range plans. 

Mr. COSTA. Do both you and Dr. Richardson believe we ought to 

maintain a reserve? 

Dr. RICHARDSON. Yes. 

Dr. GROAT. I think the committee and Dr. Richardson and I both 

felt—the committee wasn’t asked that question, but individuals on 

the committee, including both of us, feel the reserve has a legitimate and important role in the future. 

Mr. COSTA. Dr. Richardson, how do you, you talked about how 

there are other uses. You went from party balloons to welding to 

other kinds of things that should not be used helium, that hydrogen and some of the other gases can be substitutes for. 

But how do you, I mean, isn’t that ultimately a function of price? 

Or is it just availability? 

Dr. RICHARDSON. I think the price. And I think that helium probably has a factor of 20, too cheap. 

Mr. COSTA. Too cheap, OK. I want to get back to that in a moment. But I do want to ask our lead witness if, in fact, it has been 

an issue that she has had with the Department, with the Secretary 

41 

or with others within the Administration, to revisit the current 

plan that has been moving forward as she outlined, as you outlined, Ms. Marcilynn, to basically pay off by 2015 and continue to 

implement this. Or is there a reconsideration taking place now 

within your agency and by the Department? In light of the changes 

that many of the witnesses have indicated in recent years. 

Ms. BURKE. Yes. Mr. Chairman, the report has certainly generated quite a bit of discussion within the Bureau, and we are well 

aware of the supply-and-demand issues that have changed over 

time, making our helium less expensive relative to other sources. 

But the Helium Privatization Act is very specific in its direction 

to the Bureau. So—— 

Mr. COSTA. No, I understand that. But is there any—I am just 

trying to get a sense. Is there any discussion taking place to reconsider that? 

Ms. BURKE. Yes. 

Mr. COSTA. OK. My time has expired. I will now defer to the gentleman from New Jersey. We have, I am told, votes in about 15 

minutes. So what I will intend to do is give every Member here an 

opportunity to have five minutes for their questions. And if there 

is further time, we will maybe consider some others. 

But when votes are called, it is the Chair’s intention to shortly 

thereafter close the hearing. 

Mr. Holt. 

Mr. HOLT. Thank you, Mr. Chairman. And I thank you and the 

staff for assembling a good group of witnesses on what is a topic 

that is more important than generally recognized. And so, thank 

you. 

As someone who actually wrote on this subject three decades ago, 

about why it was important for the government, why it was in the 

public interest to maintain helium reservoirs; and as someone who 

was not in Congress when the revisions were made in the midnineties, but who read with alarm what Congress had done; I am 

delighted that the Chairman is revisiting this now. 

First of all, Dr. Richardson, did I understand you correctly to say 

that you think the, in your own opinion, that the price for helium 

is off by a factor of 20? Is that—all right? 

Dr. RICHARDSON. Party balloons are three dollars, and I think 

that it would be appropriate for them to sell at $60. 

Mr. HOLT. Thank you. 

Dr. RICHARDSON. Because, I mean, it is not a major use, but it 

is symptomatic of the problem. 

Mr. HOLT. Well, that raises lots of other questions. But I 

thought, I thought that in recent years—and I suppose this would 

be a question for Ms. Burke—that private, the private commercial 

price for helium is more or less pegged to the Federal price now. 

That there was not much discrepancy between. Am I misguided in 

this? Or maybe someone else can answer that. OK. 

Mr. SPISAK. Yes. Generally, the Bureau price is, serves as a 

benchmark price. And a lot of contracts are tied to that. But they 

will add on a refining charge. And so it is always going to be above. 

With some of these shortages that occurred over the last several 

years due to some of the supply issues, you have the market drivVerDate Nov 24 2008 10:21 Oct 19, 2010 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 L:\DOCS\56392.TXT Hresour1 PsN: KATHY
42 

ing the price up quite a bit higher. And it doesn’t always come back 

once it goes up. 

Mr. HOLT. A question, maybe starting with Dr. Richardson and 

Dr. Groat, but for anyone who wants to chime in. Recognizing that 

predictions are difficult, especially about the future, can anybody 

explain why the predictions about the—historically, the predictions 

about the use of helium have been pretty far off? And will that help 

us, the lesson, can we draw lessons from that to help us understand what future need might be? 

Dr. GROAT. Mr. Holt, I think part of the problem has been a benefit. It has been technology. There have been developments in technology. MRIs, for example, fiber optics, those sorts of things that 

put demands on helium that weren’t anticipated in some of the earlier projections. And then the growth of the Asian economy that 

does a lot of this work has increased the volume of demand internationally. 

So I think the supply, the demand situation has probably been 

the least accurately projected. And one of our chief concerns was 

that with a standing committee, we might have a chance to keep 

a better handle on those kinds of changes than we have been able 

to do in the past. 

Mr. HOLT. Do we need to mandate or ask for better data about 

supplies? Does that require new studies, or just reporting of data? 

Dr. GROAT. Speaking from the committee’s opinion, I think we 

felt strongly that obtaining more data was important, and that the 

responsibility for doing that would need to be fixed with an agency 

or with an organization so it was clear what the responsibilities 

are. 

The helium is, through the USGS Mineral Service, actually funded, or supported through BLM, does do routine statistical gathering 

of information. So there is some information. But the specificity is 

difficult to obtain that is needed. And also, some of the market 

changes are very difficult to monitor. And we would really benefit, 

I think, from better efforts there, and clear responsibility assignments, which aren’t there now. 

Mr. HOLT. Thank you. I am intrigued by your—well, my time is 

up. 

Mr. COSTA. Go ahead. 

Mr. HOLT. I am intrigued by the suggestion of the NRC panel, 

that helium be supplied in kind or on a subsidized basis to small 

researchers. It seems to me that would not be terribly expensive. 

But I guess the question is, from a Congressional point of view, 

how would that be accomplished? This committee, obviously, would 

have no jurisdiction over that, I think. Do you have any advice for 

us on that? 

Dr. GROAT. I can speak, reflect some of the committee discussions, and perhaps the others would care to speak in. 

Much of the research that uses helium by the small research 

community is Federally funded: NSF, DOE. So they are technically 

Federal users of helium, but they have no mechanism for accessing 

it, since the money comes through a Federal agency. 

So it would be contingent upon the agency doing the funding to 

have a program for getting at the In-Kind Program. So I am not 

so sure it is a question of it is illegal or immoral for that to happen. 

43 

It is a question of mechanisms or processes that would be workable 

to do it. 

And we think access to the In-Kind Program would be a great 

insulator for the research community, and solve many of its problems. But how you do it is the difficult part. 

Mr. HOLT. Thank you. 

Mr. COSTA. You are welcome. The gentleman from Maryland is 

next, Mr. Sarbanes. 

Mr. SARBANES. Thank you, Mr. Chairman. I am neither a physicist nor an economist, so I am kind of hanging on by my fingernails 

here for this conversation. 

But Dr. Groat, could you just take me through again why you believe that if we don’t, if we don’t sort of adjust the current trend, 

we are going to end up being importers of helium from other 

places? Just take me through that one more time. 

Dr. GROAT. A couple of factors. One is that there aren’t new deposits being put on line in the United States right now. I shouldn’t 

say—that is not absolutely true because there are small ones. But 

the major supply that we tap now is very mature. And so it is subject to decline with time. 

So if we don’t look at any economic incentives to develop new 

supplies and our existing ones decline, and we end up selling off 

the Federal reserve, the domestic supply base of helium is going to 

drop off dramatically over the next 10 to 15 years. We will still 

have a demand. 

Now, the U.S. demand has flattened out, but the global demand, 

when added to, the international added to ours has gone up dramatically. And so if we are not supplying it, and if the dependency 

for helium for our own needs and the global needs are based on foreign sources, and those are based on LNG facilities in Algeria and 

Qatar and Russia; and if there is a glut of natural gas on the market and we may not see all—it is almost a perfect storm of factors 

that could lead to critical supply shortages for the U.S. community, 

and a global situation where their supply needs aren’t met, as well. 

So it is a number of factors working together that could cause a 

supply disruption in a fairly short period of time. 

Mr. SARBANES. So it is not that our reserves will be disappearing; 

it is that our management of the economics of this will be such that 

we won’t, we won’t have the kind of access to the reserves and the 

production capacity and so forth that will allow us to deliver that 

out of our own resource, as opposed to getting it someplace else? 

Is that correct? 

Dr. GROAT. There is some of both. Our own reserves in the U.S. 

are being depleted. 

Mr. SARBANES. They are. 

Dr. GROAT. If there were economic incentives to develop additional ones, then it would help solve that problem. 

But the amount of helium out there in natural gas that is being 

processed for LNG, which takes a much lower concentration, and 

if it were all processed, and if it were turned into helium, then we 

would not have a numerical supply situation. It comes down, as 

you mentioned, to economics, and the willingness of the private sector to invest in providing that helium. 

44 

Mr. SARBANES. I think I was being misled by the fact that by 

2015, we are still going to have a certain amount of helium in the 

reserve. Which makes one thing that we are OK in terms of supply. 

But what you are saying is that eventually that is just a matter 

of time, if we don’t address this broader issue. 

Dr. GROAT. Yes, correct. The law says there will be 600 million 

cubic feet left. And then the sell-off rate is telling us that it won’t 

all be gone that was intended to be gone by 2015, so we will have 

a significant amount of helium left in the reserve. But no responsibility for what happens after that, as BLM has pointed out. So that 

is the part that is hanging over us right now. 

Mr. SARBANES. Thank you. 

Mr. COSTA. I just want to, I have a couple other questions. I don’t 

know if Mr. Holt does, but they really take on the questions that 

my colleagues just asked. 

I mean, it is being depleted, in fact, because that was the public 

policy that was enumerated in 1996, right? That the Federal government should not be in the business of holding a helium strategic 

reserve. 

I mean, we had, I mean, we had a strategic petroleum reserve 

that used to be in California as a part of our Navy strategic defense 

planning. It was felt that the use of helium really dated back 80 

years to a policy that was no longer strategic in nature. 

And so in 1996, good, bad, or indifferent—I mean, that is why 

we are reexamining it—the plan was to phase this out by 2015. 

That is what we are doing, right? 

And what you are suggesting in the report is that in reflection 

of what has taken place between now and 1996, and what you see 

us going forward with, that you are saying it is in the United 

States’ best interest in terms of our longer-term public policy that 

we maintain a reserve. 

Dr. GROAT. Go ahead. 

Dr. RICHARDSON. Yes. 

Mr. COSTA. Dr. Richardson. And not only for strategic purposes 

and research, but also for commercial use? 

Dr. RICHARDSON. Urgent commercial use, yes. You know, the 

next generation of nuclear power reactors will require helium. 

Mr. COSTA. And that is a very important potential energy source, 

I believe. 

Dr. RICHARDSON. Yes. 

Mr. COSTA. To further the line of questioning that Congressman 

Sarbanes was asking, I mean, I guess the alternative is, if we 

eliminate this—again, you are going to have to help us a little bit, 

because I suffer from the same level of expertise as my colleague 

from Maryland on this subject matter. 

Helium is produced when we are producing natural gas, right? 

Generally speaking, from natural gas fields? And I guess the theory 

might have been, in 1996, is that if we no longer have this helium 

reserve, that when—and of course, especially in California, but 

elsewhere, natural gas I refer to sometimes as the energy du jour 

because of its clean-burning attributes related to natural gas. And 

so it is an energy source with, when we have air quality issues in 

California, that is sought after. And there is much more demand 

and increased production taking place of natural gas. 

45 

Would that not indicate that as a part of that, that additional 

helium will be produced at the same time? Or am I missing something here? 

Dr. GROAT. I think the fact that most of the helium that we have 

in the United States is situated in very limited geographic areas 

means that much of the natural gas isn’t coincident with those 

areas. So we can increase our natural gas significantly, production 

significantly, without necessarily tapping natural gas that contains 

a lot of helium. So that is the basic problem. 

But in theory, in general, if we increase natural gas production, 

and if it includes areas like the Four Corners area, then we would 

be tapping natural gas that has some helium. And if the price were 

high enough to encourage commercial development of that, we 

might actually see some incremental increases in the helium resource base. 

Mr. COSTA. How would the Helium Program be funded, Ms. 

Mittal, after 2015, once the program’s debt is paid off? 

Ms. MITTAL. That is a question that we think Congress is going 

to have to address. Because once the Helium Fund is terminated, 

there is no mechanism for funding the program. 

Right now what happens is, as BLM sells the helium in storage, 

the funds are put in the Helium Fund, and then BLM has access 

to those funds to operate the program. But the fund is tied to the 

debt. So once the debt is paid off, the Helium Fund gets terminated, and then there is no mechanism to operate the program. 

So either Congress is going to have to, if one wants to continue 

a Helium Program, Congress will either have to appropriate funds 

for the program, or create some new mechanism by which the fund 

can continue, or some other appropriate vehicle is there for BLM 

to manage the operations of the program. 

Mr. COSTA. So that, in part, is the discussions I guess that is taking place within the Department, and what this Subcommittee 

ought to be focused on as it relates to whether or not we want to 

continue the current policy or make changes. I mean, those are at 

the heart of the question, I guess. 

Ms. BURKE. Yes, Mr. Chairman. 

Mr. COSTA. At what price should the BLM sell its helium? In the 

past the debt has been a factor in price, and price has been above 

market price. After the 2015 debt will be paid off at current prices 

at or below market. And of course, Dr. Richardson has already 

opined as to his thoughts about the inexpensiveness of what the 

current price of helium is today. Yes. No, Dr. Mittal I think was, 

that was in part what you—— 

Ms. MITTAL. It was one of the issues that I identified that needs 

to be addressed. 

You are absolutely right. Once the debt is paid off, it ceases to 

be a factor in the formula that BLM has been using to price 

helium. And so we have to consider what the policy, public policy 

objective of the program is. 

If we want the program to be one of conservation or allowing the 

industry to take over more of the production of helium, then you 

might consider a market, a higher-than-market price for the price 

of the crude in storage. 

46 

If you want to make sure that the Federal government is getting 

its too-fair value for the helium in storage, then you might consider 

a market price. 

If the whole objective of the program is to eliminate the reserve 

completely, then you might go with a price that is below market 

price. So again, it hinges back to what are the public-policy goals 

for the Helium Program going forward. 

Mr. COSTA. Well, that is why we are reexamining this, and that 

is why your testimony is important. I mean, the policy again, as 

I understood it, as was noted by Congressman Holt, none of us 

were here when it was established. But as I, and maybe someone 

can correct me if I am wrong, but it was basically to get the government out of the business of a strategic helium reserve. 

And what Professor Richardson and Professor Groat are telling 

us is you don’t think that the private sector can handle whatever 

the needs are, whether it be for research or for medical science, or 

for the next production of nuclear reactors, absent a government 

strategic reserve? I mean, I guess that is the bottom, that is the 

threshold question that we need to wrestle with here. Dr. Groat, 

and then Dr. Richardson. 

Dr. GROAT. I think—— 

Mr. COSTA. I mean, if we just eliminate, you know, under the 

theory that I guess established this program in 1996 is, is that 

whatever those needs are—and I think we have all substantiated 

that the needs are important, they are critical, and they are going 

to be a part of our long-term requirements for this country in the 

21st century. So that, I think, is established. 

The question is, I guess, is there a role for the government to 

continue on this? Or can the private sector handle this? Or will we 

just become dependent upon foreign sources, as I think someone indicated? 

Dr. GROAT. I think you hit the heart of the question. And that 

is, why do we have reserves in the first place. And we had many 

reserves, strategic minerals and so forth, that helium was one of 

them. And then we went through a period in the nineties when we 

decided, as a matter of policy, to get out of the reserve business; 

that private sector and supply and demand will take care of the situation. It is no longer necessary or in the best interest of the 

United States to maintain these kind of reserves. Helium was part 

of that, the privatization. 

Yet today the question is not so much could the private sector 

produce helium. I think the policy question is, and this is a personal opinion, is whether or not the government has a role in ensuring certain users are insulated because they are so critical from 

price and supply shocks, because it is in the best interest of the 

United States. Our small research community, small-user research 

community on the committee felt very strongly that their role was 

critical to the well-being of the United States in doing research. 

And if they are denied a supply, then it is not good for the United 

States. So they would argue that the reserve is important, and access to it, for them, is important. 

And I am sure the MRI folks and the nuclear reactors of the future will feel that they are an important part of the United States’ 

future. So again, back to the policy question, is the government’s 

47 

role to provide this insulation through a reserve program worthy 

of reconsideration again. Perhaps not only for helium, but there 

may be some other critical things that are in the same family. 

Mr. COSTA. Any other questions by my colleagues? Yes, Congressman Holt. 

Mr. HOLT. Thank you, Mr. Chairman. And thank you again for 

that line of questioning, because I think you get at the heart of the 

question before us. 

A couple of kind of random questions. In your paper, Dr. Groat 

and Dr. Richardson, and briefly in your testimony, you talk about 

efficiencies in the use of helium. How much is to be gained? What 

savings are there in efficiencies? 

You talk about low-boil-off cryostats. But if you are filling dirigibles, you know, maybe the amount that is lost from cryostats 

isn’t, or the amount that might be saved might not be so important. 

So can you give me an idea of how important it might be? We 

just passed a week ago here in the House something called Home 

Star to encourage efficient use of energy. Maybe we need a Lab 

Star or a Dirigible Star program—— 

Dr. RICHARDSON. Yes. 

Mr. HOLT.—or a Welstar to encourage efficient use of helium. 

How significant is this? 

Dr. RICHARDSON. You know, the NASA and the Department of 

Defense use liquid helium for purging rockets. And it would be expensive, but it would be worthwhile to recapture that helium. Because it is 25 percent of the uses, for instance. 

Mr. HOLT. So could it be, for example, a condition of sale that 

the user have some approved recapture technology? 

Dr. RICHARDSON. Well, if it is expensive enough to begin with, 

then the user would be naturally encouraged to recover the helium. 

Dr. GROAT. That is an interesting point about some condition of 

sale. The committee did discuss how can you encourage conservation and more efficient use. And again, back to the small research 

user, they don’t have the resources available to put in these recycling conservation things. And if there were some process by—— 

Mr. HOLT. But they are using only a few percent—— 

Dr. GROAT. They are not using very much, no. They are perhaps 

the most acutely affected, but they are not—percentage-wise, you 

are correct, they are not. 

But the large commercial users already do. MRI industry and 

people like that are more cautious about recycling. But there are 

large segments, as Dr. Richardson pointed out, that don’t or can’t. 

And that is one step the committee felt was, could be encouraged. 

Mr. HOLT. A question, actually maybe for an economist or someone else, but let me ask it of you. Why not depend on Qatar? Why 

do you think that a domestic supply is needed? 

I mean, there are certainly many things that we are dependent 

on, not the latest of which is petroleum, where we have, you know, 

backed in or walked in or gladly embraced dependence on international suppliers. 

Dr. GROAT. I think, Mr. Holt, initially the thoughts of Qatar, Algeria, and Russia being our suppliers made people nervous. But beyond that, you are correct; we still get a lot of critical minerals and 

48 

resources from countries that aren’t terribly stable or friendly. So 

that is not a new thing. 

My personal concern is not so much those countries, but it is dependence on the international LNG production as the source for 

that helium. If the world glut in natural gas persists, then there 

are going to be some LNG facilities that don’t make it economically. 

And if the ones that produce helium are among those, we could see 

a decrease in an intended large source of supply. 

So it is less strategic and more economic, at least that is my 

personal concern. 

Mr. HOLT. Are there other comments on that? 

[No response.] 

Mr. HOLT. Thank you, Mr. Chairman. 

Mr. COSTA. Thank you for your focus and interest. And now, 

when I see you on the Floor, I can ask you how you wrote your 

thesis on helium several decades ago. 

Mr. HOLT. Sorry, it wasn’t my thesis, but I had written on the 

subject decades ago. 

Mr. COSTA. Well, we appreciate all the witnesses’ testimony this 

morning. It was helpful. And we will look, as the Administration 

is looking, at this policy that has been in place, whether or not we 

need to have some mid-course corrections, as the National Academies have indicated, it seems to me. And I think it is an important issue, clearly not only strategically for the United States, but 

commercially as we go forward. So your testimony will be well 

used. 

The Subcommittee on Energy and Mineral Resources hearing is 

now adjourned. 

[Whereupon, at 11:22 a.m., the Subcommittee was adjourned.] 

[Additional material submitted for the record follows:] 

[A letter and attachment submitted for the record by Mark 

Haynes, President, Concordia Power, on Behalf of the NGNP 

Alliance, follows:] 

May 13, 2010 

The Honorable Jim Costa 

Chairman 

Subcommittee on Energy And Mineral Resources 

Committee on Natural Resources 

1324 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Costa: 

Thank you for conducting your oversight hearing on ‘‘Up in the Air: The BLM’s 

Disappearing Helium Program’’ today. Among other things, this hearing helps highlight the great importance of helium to our economy and the need for its careful 

management. 

On behalf of the Next Generation Nuclear Plant Industrial Alliance, I am writing 

to bring to your attention the importance of helium to what may ultimately prove 

to be one of the most important future energy options: high temperature gas cooled 

reactors or HTGRs. HTGRs are quite different from the water cooled reactors that 

constitute the vast majority of the world’s existing nuclear fleet. By utilizing helium 

as a coolant, along with other important design and materials differences, HTGRs 

exhibit unparalleled safety characteristics and are able to operate in high temperature regimes that make it possible for them to ultimately supplant fossil fuel use 

and substantially reduce greenhouse gas production in many industrial and transportation uses. The attached one page summary discusses these uses. 

49 

In the overall picture of current world helium production(193,000 cubic meters in 

2008), HTGR use is not large. A deployment of 1,000 HTGR modules would use 

about 5.0% of the world’s current production on an ongoing basis. It is important 

to assure, however, that future helium supplies and production are managed to enable a long-term supply for the HTGR nuclear energy technology. 

Thank you again for your attention to this very important resource. 

Sincerely, 

Mark Haynes 

President 

Concordia Power 

On Behalf of the NGNP Alliance 

cc: The Honorable Douglas L. ‘‘Doug’’ Lamborn. Ranking Member 

Attachment 

Next Generation Nuclear Plant (NGNP) 

and High Temperature Gas Cooled Reactor Technology: 

Environmental and Economic Benefits 

The approximately 20% of U.S. energy consumption associated with industrial 

uses (primarily in the form of process heat), is almost completely derived from fossil 

fuels and cannot be replaced by renewable sources such as wind and solar. The 

ONLY option for a substantial greenhouse gas free substitute for this energy and 

its associated emissions, is High Temperature Gas-cooled Reactors (HTGRs). 

GREENHOUSE GAS REDUCTIONS AND INCREASED ENERGY SECURITY 

HTGRs can provide reliable, economic process heat and cogenerated electricity 

needed for the petrochemical, petroleum and fertilizer industries as well as for 

heavy oil recovery and upgrade applications that otherwise rely on burning natural 

gas. In these applications, a nominal 600MWt HTGR modular unit can avoid ∼0.8 

million metric tons of carbon dioxide annually—essential to achieving the long term 

U.S. environmental goals. Further, the natural gas is then available as a feedstock—important stewardship of resources. 

For the end uses discussed above, a conservative estimate shows that a U.S. market for at least 200 HTGR modules could exist in the next four decades. A 200-module deployment would eliminate 160 million metric tons/year of CO2 and reduce U.S. 

natural gas consumption by ∼32% of current consumption in the industrial and commercial sectors or ∼13% of total natural gas consumption in 2008 Importantly, the 

potential CO2 and natural gas offset via an export market for HTGRs is even more 

significant 

Beyond these applications, HTGRs can be integrated with coal conversion processes (e.g., gasification and coal-to-liquids) that can produce transportation fuels and 

hydrocarbon feedstock for the petrochemical industry. The use of HTGRs in this 

manner would result in essentially no carbon footprint for production of transportation fuels and hydrocarbon feedstocks using indigenous coal. Fifteen 100,000 barrel per day coal-to-liquids plants integrated with 480 HTGR modules could reduce 

U.S. oil imports by 26% of current U.S. petroleum imports 

ECONOMIC BENEFITS 

Achieving the HTGR energy supply capability described above (and assuming no 

export sales) would result in significant economic activity and job creation. HTGRs 

are designed to be constructed in plants of 4 to 8 modules. Each 4-module plant 

would create approximately 12,400 jobs during construction and approximately 1200 

permanent jobs at the site during plant operation. Looked at another way and depending on the ultimate number of reactors built domestically, the $2 - $3 billion 

estimated federal investment in the NGNP Project to achieve HTGR commercialization would leverage over $2 trillion in economic activity. These figures do not assume any exports which have the potential to substantially increase these totals. 

Æ