A Comedy of Errors: How the US Government Bungled Helium Production Over and Over

What do balloons, MRI machines, and the Large Hadron Collider have in common? Helium!

These items and a multitude of others require the second-most common element in the universe to function. Although it is generally abundant throughout the cosmos, helium is relatively hard to find on Earth, as its low mass allows it to easily escape the atmosphere.

Helium can be found in a few separate deposits under ground as well as in trace amounts in the atmosphere (5 parts per million) and in underground natural gas deposits (up to 7% of total NG volume). It is also a common byproduct of radioactive decay, as alpha particles.

Since the 1920s, the United States government has held a monopoly on helium production. Helium is crucial for national defense applications such as rocket engine testing and air-to-air missile guidance systems. Thus, the government, through the Bureau of Land Management, began to produce and store it in large quantities at the National Helium Reserve in Texas, at one point amassing over one billion cubic feet of helium.

CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=646716
CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=646716

In the 1990s, the National Helium Reserve fell into debt to the tune of $1.4 billion due to poor management and increasing costs of helium extraction. Concerned about bloated government, the 1996 Congress passed the Helium Privatization Act, which initiated the shutdown of the National Helium Reserve. The Reserve was required to sell its entire stockpile at below-market rates, finally shutting down operations entirely in 2015. The intention of the Act was to jumpstart the privatization of the helium industry, but things did not play out as hoped.

The National Helium Reserve flooded the market with helium, which drove worldwide helium prices to record lows. Low prices made helium recycling economically disadvantageous, which increased consumption. Most strikingly, private industry failed to step in because low prices made helium extraction and sales unprofitable.

As the National Helium Reserve continued to sell off its reserves and slouch toward its mandated end, an heir apparent in the private sector failed to appear, and scientists began to worry. A panel convened by the US National Resource Council, a branch of the US National Academy of Sciences, recommended that the US Government increase the cost of helium and slow the depletion of the National Helium Reserve. They warned that if the US failed to take action, the closing of the reserve in 2015 could trigger a global helium crisis, and that consequences of such would be dire due to the ubiquity of the need for helium in scientific and and technological research.

Exell Helium Plant, circa 1980. By Federal Helium Program (Bureau of Land Management) [Public domain], via Wikimedia Commons
Exell Helium Plant, circa 1980. By Federal Helium Program (Bureau of Land Management) [Public domain], via Wikimedia Commons
The US Government took action in 2013 by extending the lifespan of the National Helium Reserve and selling existing helium reserves at market prices. But with private industry failing to identify and extract new helium reserves, helium prices soared and US reserves continued to dwindle. Scientists worried that the United States’ poor management of a finite natural resource would devastate the helium market for years to come.

Luckily, due to a recent discovery, this does not seem to be the case. In June 2016, a team of researchers from Durham and Oxford Universities discovered a massive helium gas field in the Tanzanian East African Rift Valley. The field is estimated to contain 54 billion cubic feet of helium, enough to meet global demand for several years.

Although the discovery of this reserve has inspired hope that more like it exist in the world, that hope should not translate into careless use and management of existing helium reserves. Our current understanding tells us that helium is extremely rare on Earth, so we must consume and regulate helium reserves with that fact in mind, at least until the development of new technology to make alternative helium production economical. Scientists have recommended banning the use of helium in party balloons (yes, seriously) and implementing helium recycling technology to prevent the escape of helium from MRI machines and other such devices.

HeCd Laser via photopin (license)
HeCd Laser via photopin (license)

The latest discovery of helium deposits presents a fantastic opportunity for Tanzania to finance its development rather than falling into the resource curse. An exemplary model of proper resource management can be found in the Norwegian Oil Fund. Norway, upon discovery of its oil reserves, instituted the collection of economic rent based on the revenue generated from oil extraction, plus oil exploration licensing fees. The resulting revenue was then kept in a trust fund and used to invest both within Norway and internationally. As of June 2015, the fund has accrued $873 billion. Given its size and ownership in companies worldwide, the fund has now become an significant player in international affairs. As such, it pursues economic and social justice through its decisions concerning its holdings, even going so far as to exclude ownership in companies that violate its ethical standards.

If Tanzania is able to collect economic rent from the exploration and extraction of its helium reserves, it could likely enjoy similar success as Norway while providing the world with a critical resource.
Our history with helium is a lesson in the consequences when governments fail to properly manage a finite natural resource. As Tanzania begins to manage its vast reserves of helium, we can only hope that they will heed the lessons of successful natural resource management.

Cover image: By Alchemist-hp www.pse-mendelejew.deOwn work, CC BY-SA 2.0 de, https://commons.wikimedia.org/w/index.php?curid=7601144

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2 thoughts on “A Comedy of Errors: How the US Government Bungled Helium Production Over and Over

  1. The monopoly of the United States government over the export of helium was directly responsible for the 1937 Hindenburg disaster. Germany could not buy helium and had to use hydrogen instead in its zeppelins. Hydrogen offers more buoyancy than helium and thus works better in airships – until it ignites! We all know the results.

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