Demand for helium from high-tech industries is out-stripping supply. Why the sudden supply crunch?[1] Suppliers have had to ration while not refusing to provide helium for priority medical equipment, large research installations and NASA. But the supply was and will be withheld from general purposes and low priority applications.
As high-tech industries develop, worldwide demand is growing fast. Consumption increased by between 5 and 10% annually in the 1990s then slowed to around 3% annually this century. According to the U.S. Geological Survey, present helium consumption is estimated to be circa 75 tons per day or 170 million cubic metres per year. On current estimates, global consumption may only be sustained for a few more decades.
Handled and marketed by the industrial gases sector, helium was in the past simply obtained as a by-product of the separation of atmospheric gases, but as a result of the growing demand, nowadays it is mostly supplied as a by-product from the petroleum industry. Commercial production of liquefied or compressed helium for the World market is concentrated in seven countries: the USA (the world’s first producer), Poland, Qatar, Algeria, Russia, China and Australia. In the USA, the helium reserve was privatized in 1996 and is now in the process of being sold off, whereas helium production appears to have already peaked.
During 2006, most helium suppliers announced price increases of 10% to 15%. These adjustments were justified by record-high energy and transportation costs, continuing increases in crude helium costs, rising utility and labour costs. But essentially, increased helium costs were the result of a growing reliance on crude helium supplied by the US Bureau of Land Management, whose stockpile is playing an increasing role in the helium supply, as crude helium production from lower cost private sources declines, due to depletion of some of the richer natural gas fields. It is anticipated that helium costs will continue to rise along with increasing production costs as USA helium reserves continue to decline.
Two large helium projects at Algeria and Qatar (both countries holding large natural gas reserves) came on-stream in late 2005. These had been expected to increase supply by some 20%, but have run into technical trouble, and the international market was not eased. The Algeria expansion project, designed to increase production capacity by 16.6 million cubic meters per year came on-stream at about one-half of its nominal capacity. The Qatar project, a new helium extraction facility with a production capacity of 8.3 million cubic meters, also had operational problems and output has been less than expected.
The world market is highly concentrated as mergers and acquisition have taken place rather recently. Very few large industrial gases corporations, which trace their ancestry to more than a century ago, lead the helium World market. Air Liquide, founded in 1902, has a labour force of nearly 36 thousand and operates in about 70 countries, with sales amounting to € 10.4 billion in 2005. It is a world leader in industrial and medical gases and related equipment and services. The Group offers solutions based on constantly enhanced technologies, over an ever increasing range of applications.
BOC Group plc and Linde AG are now members of The Linde Group, having merged in 2006, after approval first by the European Commission, in June, followed by the US Federal Trade Commission, in September. The Linde Group is another world leader in industrial gases with a 53 thousand strong labour force, operating in some 70 countries, with a sales volume of about US$ 16 billion in 2005.
Another important World player is the Tokyo based Taiyo Nippon Sanso Corporation (TNSC), that resulted from the merger of Taiyo Toyo with Nippon Sanso in 2004. As an ancillary part of Linde's 2006 acquisition of BOC Group, TNSC bought certain helium assets from Linde AG and BOC Group plc, including long-term helium supply contracts in the USA, Poland and Russia, two trans-fill locations in the US, and operations in Europe. This transaction was officially approved by both the US Federal Trade Commission and the European Commission, in September 2006. In the USA, the acquired helium business will be managed by TNSC's subsidiary, Matheson Tri-Gas, Inc. under the name Matheson Tri-Gas Global Helium.
There are no known sources of refined helium not already committed in long term contracts. A hypothetical new entrant in this market would need to locate a new source of crude helium and build a refinery. Constructing a helium refinery large enough to be viable in the world market would cost between $25 to $100 million dollars. In addition, tens of millions of dollars would be needed to acquire the necessary infrastructure for distribution, trans-fill facilities, cryogenic and high-pressure tube trailers and liquid dewars, capable of transporting helium from the refinery to customers.
Peak helium is a challenge to geologists as it is to economists who assess market trends and the viability of investments. It might turn into a nightmare to technologists who require those properties that helium alone holds.
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