89–010 

Calendar No. 678 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–391 

HELIUM EXTRACTION ACT OF 2017 

NOVEMBER 27, 2018.—Ordered to be printed 

Ms. MURKOWSKI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 3279] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (H.R. 3279) to amend the Mineral Leasing Act to 

provide that extraction of helium from gas produced under a Federal mineral lease shall maintain the lease as if the helium were 

oil and gas, having considered the same, reports favorably thereon 

without amendment and recommends that the bill do pass. 

PURPOSE

The purpose of H.R. 3279 is to amend the Mineral Leasing Act 

(MLA) to promote the production of helium by taking into account 

the value of helium in determining whether a Federal oil or gas 

lease is producing in paying quantities for purposes of determining 

whether the lease can be extended. 

BACKGROUND AND NEED

Helium is a naturally occurring element that is typically extracted from natural gas, and then subsequently refined to higher 

purity grades for applications such as magnetic resonance imaging, 

semiconductor manufacturing, military aviation, laboratory research, and a variety of other uses. 

Under the MLA, the Bureau of Land Management (BLM) administers natural gas leases on Federal lands. By statute, the initial 

term of a lease is 10 years and can be extended as long as gas is 

being ‘‘produced in paying quantities.’’ The MLA also specifies that 

the United States reserves ownership of any helium produced from 

2 

these oil and gas leases. So long as the processing does not ‘‘substantially delay’’ production of the primary gas products, the BLM 

can enter into a separate contract for the recovery of helium from 

the gas stream being produced from a well on Federal land. 

This framework places the regulation and leasing requirements 

on the natural gas production which is typically the economic driver of the operations, while any contract, revenues and royalties 

from any helium produced as a secondary product are separate. 

One consequence of this structure is that no revenues from the sale 

of helium can be factored into whether a well is producing in ‘‘paying quantities’’ and thus qualifies for an extension of its initial 

lease term beyond 10 years. This is not a problem in high quality 

(high British thermal unit (Btu)) natural gas fields where the hydrocarbon value drives the economics, but in some cases lower Btu 

natural gas resources may not be able to meet the ‘‘paying quantities’’ threshold to qualify for a lease extension despite helium concentrations that would add substantial value to the lease. H.R. 

3279 amends the MLA to allow the value of helium produced at 

these wells to be factored into the BLM’s determination of whether 

to extend a gas lease. 

A growing number of entities are interested in pursuing gas 

leases primarily for the helium resources and in reserves that may 

not be viable from a hydrocarbon perspective. This interest is being 

driven in part by increasing global demand and privatization of the 

U.S. helium industry placing upward pressure on helium prices, 

along with low natural gas prices making additional leases 

unviable commercially. The need for additional production of domestic resources to avoid import reliance from Qatar, Algeria, and 

Russia, which are the main international producers, has also been 

cited as a reason for modifying the treatment of helium produced 

on federal lands. 

LEGISLATIVE HISTORY

H.R. 3279 was introduced by Representative Cook in the House 

of Representatives on July 18, 2017. The bill was favorably reported by the Committee on Natural Resources on October 23, 

2017. H.R. 3279 passed the House of Representatives on November 

1, 2017, by voice vote. 

Senator Hatch introduced a companion bill, S. 1572, on July 18, 

2017. The Subcommittee on Public Lands, Forests, and Mining 

held a hearing on the bill on August 22, 2018. 

The Senate Committee on Energy and Natural Resources met in 

an open business session on October 2, 2018, and ordered H.R. 

3279 favorably reported. 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in 

open business session on October 2, 2018, by a majority voice vote 

of a quorum present, recommends that the Senate pass H.R. 3279. 

SECTION-BY-SECTION ANALYSIS

Section. 1. Short title 

Section 1 provides a short title. 

3 

Sec. 2. Maintenance of Federal mineral leases based on extraction 

of helium 

Section 2 amends the MLA to add ‘‘and that extraction of helium 

from gas produced from such lands shall maintain the lease as if 

the extracted helium were oil and gas’’ into the proviso, which 

states that the United States retains the rights to helium extracted 

from gas wells on public lands. 

COST AND BUDGETARY CONSIDERATIONS

The following estimate of the costs of this measure has been provided by the Congressional Budget Office: 

H.R. 3279 would allow firms to retain federal oil and gas leases 

that would otherwise expire for the purpose of extracting helium. 

Using information from the Bureau of Land Management (BLM) 

and industry sources, CBO estimates that enacting the legislation 

would increase offsetting receipts, which are treated as reductions 

in direct spending, by $9 million over the 2019–2028 period; therefore, pay-as-you-go procedures apply. The legislation would not affect revenues. 

CBO estimates that enacting H.R. 3279 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

H.R. 3279 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary effect of [Title] is shown in the following table. The costs of 

the legislation fall within budget function 300 (natural resources 

and environment). 

By fiscal year, in millions of dollars— 

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

DECREASES IN DIRECT SPENDING 

Estimated Budget Authority ...................... * ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥4 ¥9 

Estimated Outlays ..................................... * ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥4 ¥9 

* = between ¥$500,000 and zero. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

3279 will be enacted near the start of 2019. 

H.R. 3279 would allow firms to retain federal oil and gas leases 

beyond 10 years to extract helium. Under current law, firms enter 

into agreements with BLM to extract helium from active oil and 

gas leases. Those leases expire after 10 years if they are no longer 

producing commercial quantities of oil or gas, even if commercial 

quantities of helium are still being extracted. In recent years, BLM 

has granted waivers that allow firms to continue extracting helium 

on leases that otherwise would have expired. In 2018, royalties for 

helium produced on federal oil and gas leases totaled $19 million. 

All proceeds from the production of helium are deposited in the 

Treasury. 

CBO expects that, under the act, firms would be more likely to 

acquire oil and gas leases containing noncommercial quantities of 

hydrocarbons but high volumes of helium. Using information from 

industry sources information from firms in the mineral extraction 

industry, we estimate that royalties from helium production on 

4 

those new leases would average about $1 million a year. Because 

CBO expects that the number of firms seeking to develop such 

leases over the next 10 years would be small, we estimate that receipts from bonus bids (payments to the government to lease public 

land) would be negligible. Finally, CBO estimates that enacting 

H.R. 3279 would have no significant effect on production from existing leases because firms extracting helium on leases that may 

expire would probably obtain permission from BLM to continue 

their extraction of helium. In total, CBO estimates that enacting 

H.R. 3279 would increase offsetting receipts by $9 million over the 

2019–2028 period. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3279, THE HELIUM EXTRACTION ACT OF 

2017, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES ON OCTOBER 2, 2018 

By fiscal year, in millions of dollars— 

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

NET DECREASE IN THE DEFICIT 

Statutory Pay-As-You-Go 

Effect ................................. 0 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥4 ¥9 

Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 3279 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2029. 

Mandates: H.R. 3279 contains no intergovernmental or privatesector mandates as defined in UMRA. 

Previous CBO estimate: On October 23, 2017, CBO transmitted 

a cost estimate for H.R. 3279, the Helium Extraction Act of 2017, 

as ordered reported by the House Committee on Natural Resources 

on July 26, 2017. The two versions of H.R. 3279 are similar and 

CBO’s estimates of their budgetary effects are the same. 

Estimate prepared by: Federal costs: Janani Shankaran; Mandates: Zachary Byrum. 

Estimate reviewed by: Kim P. Cawley, Chief, Natural and Physical Resources Cost Estimates Unit; H. Samuel Papenfuss, Deputy 

Assistant Director for Budget Analysis. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

H.R. 3279. The Act is not a regulatory measure in the sense of imposing Government-established standards or significant economic 

responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

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Little, if any, additional paperwork would result from the enactment of H.R. 3279, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

H.R. 3279, as ordered reported, does not contain any congressionally directed spending items, limited tax benefits, or limited tariff 

benefits as defined in rule XLIV of the Standing Rules of the Senate. 

EXECUTIVE COMMUNICATIONS

The testimony provided by the Department of the Interior at the 

August 22, 2018, hearing on S. 1572, the companion measure for 

H.R. 3279, follows: 

STATEMENT OF CHRISTOPHER MCALEAR, ASSISTANT DIREC- TOR, NATIONAL CONSERVATION LANDS & COMMUNITY

PARTNERSHIPS, BUREAU OF LAND MANAGEMENT, U.S. 

DEPARTMENT OF THE INTERIOR

Thank you for the opportunity to testify on the Federal 

helium program managed by the Bureau of Land Management (BLM), and on S. 1572, Helium Extraction Act of 

2017. S. 1572 would amend the Mineral Leasing Act of 

1920 (MLA) to provide a mechanism for industry to 

produce helium from Federal lands. The Department of the 

Interior (Department) appreciates the opportunity to review S. 1572 and supports this legislation. 

We also appreciate the sponsors’ interest in the BLM’s 

helium program and would welcome the opportunity to 

work with the sponsor to improve management of this valuable commodity and to ensure that Federal agencies retain assured access for future national security, biomedical, and other technical purposes. 

The BLM plays a key role in the careful management 

and stewardship of the only significant long-term storage 

facility for crude helium in the world, known as the Federal Helium Reserve (Reserve). Helium is a critical, nonrenewable natural resource that is important in military 

reconnaissance, medical imaging, space exploration, fiber 

optics manufacturing, welding, and commercial diving. Helium is a by-product of oil and natural gas production and 

is usually captured by stripping it from the natural gas. 

Geologic conditions in Texas, Oklahoma, and Kansas make 

the natural gas in these areas some of the most heliumrich in the United States, often ranging from 0.5 to 1.5 

percent of the gas extracted during production. 

Because of helium’s potential to lift military reconnaissance devices high above battlefields, the Federal government’s interest in the resource dates back to World War I. 

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. After World War I, recognition of 

the potential for helium recovery in the Texas Panhandle, 

Western Oklahoma, and Kansas led to the development of 

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the Federal helium program focused in that area. In 1929, 

the Bureau of Mines commissioned the Amarillo Helium 

Plant and Cliffside Gas Field Facility near Amarillo, 

Texas, to produce helium-bearing natural gas from a naturally occurring geologic field known as the Bush Dome 

Reservoir. 

After World War II, Federal use of helium shifted toward space exploration. The 1960 Helium Act Amendments 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 crude helium to the Federal government for storage in the Bush Dome Reservoir. In 1996, the Helium Privatization Act (HPA) required the BLM (successor to Bureau of Mines) to make available for sale the vast majority 

of the stockpile of crude helium from the Reserve, in a 

manner to avoid market disruption. The BLM fully implemented this direction. In 1996, the Bush Dome Reservoir 

stored approximately 30.5 billion cubic feet (Bcf) of helium; 

by April 2017, about 4.4 Bcf of Federally owned helium 

and about 3.2 Bcf of privately owned helium remained in 

the Reserve. 

The BLM’s current helium program 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 

also conducts domestic and, to a lesser extent, international helium resource evaluation and reserve tracking 

to determine the extent of available helium resources. 

The BLM is responsible for selling helium from the Reserve to private entities at market-based prices determined 

by industry surveys and auctions. Federal users (e.g., the 

Departments of Energy and Defense, NASA, and the National Institutes of Health, among others), which primarily 

use helium for research and operations, may access Federal helium at a discounted rate through the current helium ‘‘In-Kind’’ program managed by the BLM. The InKind price is calculated as a discount from sales and auction prices. Federal agencies and their contractors generally purchase all of their refined helium from private 

suppliers who, in turn, purchase an equivalent amount of 

crude helium from the Reserve. In 2016, Federal agencies 

purchased about 122 million cubic feet (MMcf) of helium 

through the In-Kind program. 

After funding operations, the BLM returned $115 million to the U.S. Treasury in 2016. The Federal Helium 

Program operates using a revolving fund not subject to annual appropriations. All revenue generated from the helium program is deposited in the fund. This includes revenue derived from auctions and sales of helium from the 

Federal Helium Reserve, oil and gas residue sales from the 

crude helium enrichment process, storage and transportation fees, and royalty and fees sales from helium produced on Federal lands. 

7 

Continuing Congressional interest in privatizing the helium market ultimately resulted in enactment of the Helium Stewardship Act (HSA) of 2013. The HSA established 

September 30, 2021, as the sunset date for the Federal helium program. For the years preceding the sunset date, the 

HSA created a set of phased authorities for the BLM’s 

management of the Reserve, establishing a ‘‘glide path’’ by 

which auctions and sales from the Reserve would draw 

down the amount of helium until there remained only 3 

Bcf of helium, which would be reserved solely for Federal 

users. 

The BLM is implementing the HSA’s statutory directives 

to sell helium from the Reserve to a level of 3 Bcf of recoverable helium (not including privately stored helium) by 

2021. This will be accomplished with annual sales and 

auctions of decreasing volumes through 2021. The BLM expects to reach the 3 Bcf milestone after this sale. Anyone 

meeting the statutory definition of a ‘‘qualified bidder’’ 

may participate in the helium auctions. A qualified bidder 

is a person seeking to purchase helium for the person’s 

own use, refining, or resale to users. 

The BLM offered helium volumes in three distinct sales 

in FY 2017 for delivery in FY 2018: • The ‘‘FY 2018 Delivery Phase B Auction,’’ con- ducted in July 2017, of 500 MMcf in 30 lots, for $59.7 

million. The helium that was auctioned represented 

over 55 percent of the total volume that the BLM will 

make available from the Reserve in FY 2018. This met 

the 55 percent requirement mandated in the HSA. • The ‘‘FY 2018 Delivery Phase B Non-Allocated Sale,’’ conducted in August 2017, of 40 MMcf for $4.76 

million. • The ‘‘FY 2018 Delivery Phase B Allocated Sale,’’ conducted in August 2017, of 360 MMcf for $42.8 million. 

The total volume of helium sold, excluding In-Kind helium, was 900 MMcf, and the total revenue generated from 

helium sales in FY 2017 was $107.2 million. The BLM intends to hold the next sale and auction on August 31, 

2018, for delivery in FY 2019. At this sale, 210 MMcf will 

be offered at auction, an additional 9 MMcf will be offered 

at the ‘‘Phase B Non-Allocated Sale,’’ and 81 MMcf will be 

offered at the ‘‘Phase B Allocated Sale’’ for a total of 300 

MMcf. 

Helium commonly exists as a minor component of most 

natural gas plays. Natural gas typically is transported by 

pipeline to a processing plant where it is separated into 

marketable components, which could include helium if it is 

present in sufficient amounts. Because the helium from 

leases on Federal lands is reserved to the United States 

(i.e., there is no authority under the MLA to lease helium), 

natural gas lessees now can enter into contracts with the 

BLM to provide for the processing and sale of the helium. 

This type of arrangement occurs, for example, near 

Kemmerer, Wyoming, where helium produced from FedVerDate Sep 11 2014 02:26 Nov 30, 2018 Jkt 089010 PO 00000 Frm 00007 Fmt 6659 Sfmt 6969 E:\HR\OC\SR391.XXX SR391
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eral lands partially supplies an ExxonMobil helium refinery. 

Similar contracts can enable the recovery of helium as 

a primary gas in combination with a BLM oil and gas 

lease, and is feasible where the gas composition in a reservoir consists of relatively higher helium concentration in 

a low Btu gas stream. For example, the BLM approved an 

Application for Permit to Drill (APD) for a 1,100-foot exploratory well in the Harley Dome gas field in eastern 

Utah and an associated right-of-way to transport the produced gas via a surface pipeline to a new gas processing 

plant. With sufficient quality and quantity of helium, the 

proponent constructed a four-inch, 7,183-foot pipeline to a 

small plant where the helium is removed from the gas 

stream and compressed for truck transport. The well is located five miles west of the Utah-Colorado border on Federal lands in northern Grand County and the helium extraction plant is located 1.4 miles from the well on private 

property. 

S. 1572 would amend the MLA to define helium as a 

natural gas for purposes of lease extension. This would 

have the practical effect of allowing helium production 

when there are no economic quantities of oil and gas being 

produced from the leases (which would trigger expiration 

of the leases under the current MLA). 

The BLM supports S. 1572 as it not only opens up public 

lands to helium development but also supports the administration’s priorities to secure reliable supplies of critical 

minerals, including helium. 

To prepare for the sunset of the Federal helium program, the HSA directed the Department, with other agencies, to prepare a Report to Congress on a plan to provide 

for an orderly transition to a privatized helium system by 

2021. The HSA required that the Report offer a Federal 

Agency Helium Acquisition Strategy, including a description of a 20-year Federal strategy for securing access to helium that minimizes any potential supply disruptions for 

Federal users. This Report was transmitted to the Congress on April 1, 2016. As discussed in the 2016 Report, 

the BLM is on track for this transition. 

When the transition to a privatized system occurs, Federal users will no longer be able to meet their helium requirements through the Federal Helium Reserve and the 

In-Kind program, and will need to find new sources of helium. Federal defense and research access to helium would 

rely on the private helium market, and market prices. This 

will likely result in increased costs to meet Federal helium 

requirements for defense and homeland security uses, and 

in planned aerospace programs. The Report to Congress 

recommends that a new Royalty In-Kind program be created which would provide Federal agencies with an assured source of helium into the future. Under a new Royalty In-Kind program, rather than the royalties that BLM 

currently receives, the BLM would track the equivalent helium volumes at each refining plant. The refiner would 

9 

subsequently make that amount available to Federal agencies. Federal agencies could then enter into contracts with 

refiners to obtain helium. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by H.R. 3279, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

MINERAL LEASING ACT 

Public Law 66–146, as amended through Public Law 115–232 

AN ACT To promote the mining of coal, phosphate, oil, oil shale, gas, and sodium 

on the public domain 

Be it enacted by the Senate and House of Representatives of the 

United States of America in Congress assembled, That deposits of 

coal, phosphate, sodium, potassium, oil, oil shale, gilsonite (including all vein-type solid hydrocarbons), or gas, and lands containing 

such deposits owned by the United States, including those in national forests, but excluding lands acquired under the Act known 

as the Appalachian Forest Act, approved March 1, 1911 (36 Stat. 

961), and those in incorporated cities, towns, and villages and in 

national parks and monuments, those acquired under other Acts 

subsequent to February 25, 1920, and lands within the naval petroleum and oil-shale reserves, except as hereinafter provided, shall 

be subject to disposition in the form and manner provided by this 

Act to citizens of the United States, or to associations of such citizens, or to any corporation organized under the laws of the United 

States, or of any State or Territory thereof, or in the case of coal, 

oil, oil shale, or gas, to municipalities. Citizens of another country, 

the laws, customs, or regulations of which deny similar or like 

privileges to citizens or corporations of this country, shall not by 

stock ownership, stock holding, or stock control, own any interest 

in any lease acquired under the provisions of this Act. 

The term ‘‘oil’’ shall embrace all nongaseous hydrocarbon substances other than those substances leasable as coal, oil shale, or 

gilsonite (including all vein-type solid hydrocarbons). 

The term ‘‘combined hydrocarbon lease’’ shall refer to a lease 

issued in a special tar sand area pursuant to section 17 after the 

date of enactment of the Combined Hydrocarbon Leasing Act of 

1981. 

The term ‘‘special tar sand area’’ means (1) an area designated 

by the Secretary of the Interior’s orders of November 20, 1980 (45 

FR 76800–76801) and January 21, 1981 (46 FR 6077–6078) as containing substantial deposits of tar sand. 

The United States reserves the ownership of and the right to extract helium from all gas produced from lands leased or otherwise 

granted under the provisions of this Act, under such rules and regulations as shall be prescribed by the Secretary of the Interior: Provided further, That in the extraction of helium from gas produced 

from such lands it shall be so extracted as to cause no substantial 

delay in the delivery of gas produced from the well to the purVerDate Sep 11 2014 02:26 Nov 30, 2018 Jkt 089010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR391.XXX SR391
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chaser thereof and that extraction of helium from gas produced 

from such lands shall maintain the lease as if the extracted helium 

were oil and gas. 

* * * * * * * 

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