Helium Program: Key Developments Since the Early 1990s and Future Considerations
Published: 2010-05-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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 helium program is currently managed by the Department of the Interior's Bureau of Land Management (BLM). During the 1960s and early 1970s, Interior purchased about 34 billion cubic feet of crude helium for conservation purposes and to meet federal helium needs, such as for the space program and scientific research. Crude helium is a gas of 50 to 85 percent helium. While some of the helium was used to meet federal needs, most of it was retained in storage. The funds used to purchase the helium became a debt owed by the program. GAO reported on the management of the helium program in the 1990s (GAO/RCED-92-44 and GAO/RCED-93-1). Since GAO's reviews of the program in the 1990s, key changes have affected the federal helium program and a recent report by the National Academy of Sciences concluded that it is time to reassess the program. This testimony discusses (1) GAO's findings and recommendations in the early 1990s, (2) key changes that have occurred since the early 1990s, and (3) some of the issues facing the helium program in the near future. To address these issues, GAO reviewed prior reports, applicable laws and regulations, National Academy of Sciences' reports, and BLM data. GAO is not making any new recommendations.
section_title: What GAO Found
paragraphs: In 1991 and 1992, GAO reported on various aspects of the federal helium program including the helium debt, pricing, purity, and alternatives for meeting federal helium needs, and made recommendations to the Congress. For example, in 1992 GAO recommended that the Congress cancel the helium program's debt. As of September 1991, the debt had grown to about $1.3 billion, over $1 billion of which was interest that had accrued on the original debt principle of about $290 million. The debt was also a factor in setting the price of federal helium because the Helium Act Amendments of 1960 stipulated that the price of federal helium cover all program costs, including interest on the debt. In addition, in 1991, GAO recommended that Interior take action to preserve the purity of the helium in storage. GAO found that the unrestricted extraction of helium from the reserve was causing the purity of the crude helium to degrade faster than would otherwise occur, which in turn had increased the program's operating costs. In 1992, GAO also recommended that the Congress reassess the conservation objectives of the helium program and consider other alternatives to meet federal helium needs. Since GAO's 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 helium program and addressed or altered GAO's prior concerns. Specifically, the 1996 act froze the program's debt and as a result over half the debt has been paid off and the remainder should be paid off by 2015. The 1996 act also required a specific method for pricing helium. This along with other changes in the supply and demand for helium, has resulted in BLM's price to be at or below the market price. Lastly, in resetting the program's objectives, the act directed Interior to stop refining helium and it established a modified in-kind approach for meeting federal helium needs. Agencies must purchase helium from refiners who then purchase an equivalent amount of crude helium from BLM. The Cliffside Helium Enrichment Unit has addressed concerns about helium purity by enriching the crude helium through extracting excess natural gas. Changes in the helium market have generated concerns about the future availability of helium for federal and other needs. The 1996 act did not provide a specific direction for the federal helium program past 2015. Some of the uncertainties facing the program include: (1) How should the helium owned by the federal government be used? BLM's effort to sell off the helium in storage is going slowly and will not be completed by 2015; and some believe that the United States could become a net importer of helium within the next 10 to 15 years. (2) How will the helium program be funded after 2015? If the helium program's debt is paid off by 2015, the revolving Helium Fund that is used to pay for the program's day-to-day operations will be terminated. (3) At what price should BLM sell its helium? In the past, the debt has been a factor in the price and the price has been above the market price. After 2015 the debt will be paid off and the current price is at or below market.

section_title: Letter
paragraphs: 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, Interior purchased about 34 billion  cubic feet of helium from private crude helium producers. In the 1990s,  we reported to, and testified before this Subcommittee on Interior’s  management of the helium program. 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 concluded that it is time once again to reassess the  program. 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; 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.
subsections: section_title: Background
paragraphs: Helium is an inert element that occurs naturally in gaseous form and has a  variety of uses (see table 1). 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.
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, as  amended, assigned responsibility for producing helium for federal users to  the Department of the Interior’s Bureau of Mines. 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. 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.
section_title: GAO Reported on Helium Debt, Pricing, Purity, and Alternatives for Meeting Federal Helium Needs in the Early 1990s
paragraphs: 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.
subsections: section_title: In 1992, GAO Recommended that Congress Cancel the Debt in the Helium Fund
paragraphs: In October 1992, we reported that the Helium Fund debt had grown to  about $1.3 billion, as of September 30, 1991. 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.
section_title: In 1992, GAO Found That the Federal Price for Helium Affected the Private Helium Industry and Identified Alternatives to Foster the Private Helium Industry
paragraphs: 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. 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 but prohibiting the  federal helium program from selling helium to nonfederal customers.
section_title: In 1991, GAO Made a Recommendation on the Purity of the Helium in Storage
paragraphs: 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. We noted that because of this  accelerated degradation, the Bureau of Mines was incurring additional  costs to extract and refine federal helium. 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.
section_title: In 1992, GAO Recommended That Congress Reassess the Objectives of the Helium Program
paragraphs: 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. 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.
section_title: Two Key Developments Have Affected the Issues That GAO Reported on in the Early 1990s
paragraphs: 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 helium debt and pricing, and  it reset the program’s objectives. The Cliffside Helium Enrichment Unit  addressed the issue of helium purity in storage.
subsections: section_title: The Helium Privatization Act of 1996 Affected the Helium Debt, Pricing, and the Program’s Objectives
paragraphs: After our reports in the early 1990s, the Congress passed the Helium  Privatization Act of 1996, which significantly changed the objectives and  functions of Interior’s helium program. 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)).
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).
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. 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  cubic feet  (see fig. 3).  (see fig. 3).
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.
section_title: The Cliffside Helium Enrichment Unit Addressed the Helium Purity Issue
paragraphs: 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 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.
section_title: The Helium Program’s Direction after 2015 Is Uncertain
paragraphs: 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.
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.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact Anu K. Mittal  at (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of  Congressional 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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