As most CryoGas International readers know, the Bureau of Land Management (BLM) (www.blm.gov) is responsible for managing the United States’ Federal Helium Reserve and for selling crude helium (a gas mixture that’s between 50 and 80 percent helium) to private-sector helium refiners, who market and sell helium to both government and private sector users.
There are currently about 16 billion cubic feet of helium stored at the Reserve, north of Amarillo, Texas. Under the Helium Privatization Act of 1996 (Act), the government was directed to offer and sell helium from the Reserve, starting at a minimum price set by the Act, with annual cost-of-living adjustments. The sales were to be in equal increments resulting in the offering for sale of the remaining helium in the Reserve by 2015. At the time the Act was passed the minimum price set for government crude helium was almost double that of equivalent helium offered by the private sector. While the Act set the terms for how much crude helium would be offered for sale and the minimum price, the market determined how much was actually sold and subsequently produced.
The price of crude helium sold by the BLM ranged from about $44 per thousand cubic feet (Mcf) in 1999 to $64.75 in Fiscal Year 2010, with annual adjustments largely based on the Consumer Price Index (CPI). However, since the BLM began selling helium under the Act, worldwide demand for helium has increased and the price of private sector crude helium — and refined helium — has increased significantly.
Last year, the BLM was likely selling crude helium below the cost of similar helium offered in the private sector, potentially subsidizing the price of helium for the worldwide market. As a point of comparison, the price of Grade A (standard retail) helium has almost tripled in the same time period, going from about $42 per Mcf in 1999 to over $120 in 2009.
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