The price of helium has increased more than 250 percent over the past five years, due in part to war, mismanagement and some bad luck and timing.
To put the price in some perspective, helium is 2.5-times more expensive than hydrogen and 100-times more expensive than natural gas.
But even in the best of times, acquiring the gas is a volatile proposition for investors because it’s not only expensive to find and painstaking to refine – it is also non-renewable.
We’re not making any more helium. And we need more of it.
Helium is used in scientific research, medical technology, high-tech manufacturing, space exploration, national defense, and to cool nuclear power plants. And because it’s a very light gas – lighter than air – it rises as soon as it forms, which is why the balloons at kid’s birthday parties fly away.
(As a side note, globally, 85 percent of helium is used for applications other than balloon inflation, meaning a whopping 15 percent of worldwide helium is.)
“Helium is not like oil and gas in the United States where it is easy to find a pipeline or truck to sell your product to. Even with the high prices it is often difficult to monetize due to the low concentrations most helium fields have.”
That’s Jeff Aldrich, a senior geoscientist at Sproule, and while he’s generally excited about the prospects of increased helium exploration, especially in the United States and Canada, he knows it will take not only explorationists who know what they’re doing but capital providers looking to invest.
Geology of Helium
Helium is usually found in low concentrations mixed with either methane, nitrogen or carbon dioxide gas, meaning it is essentially a byproduct.
“It is formed by radiogenic decay of uranium and thorium over very long periods of time, and since it is inert and one of the smallest molecules, it is very hard to trap,” said Aldrich.
Helium geologists – yes, there are such people – look for a “helium system” much as they do in petroleum systems, meaning they need a source, trap and seal.
Additionally, there needs to be a long maturation time for the helium generation and a migration pathway to the reservoir and the average. The average helium concentration in a helium field is less than 1 percent by volume, thus there are lots of other gases that have to be accounted for. Sometimes those gases have value, such as methane or other hydrocarbons, and sometimes the gases can be an extra cost to manage.
“You need to work with good reservoir engineers who understand helium properties,” said Aldrich.
While it is one of the most abundant elements in the universe (most of the stars are made of helium) it is relatively rare on Earth, and what little there is here likes to play hide-and-seek.
“Once you put it into the atmosphere, it will escape into space,” said Aldrich. “It does not recycle!”
Geography of the Helium Market
The helium market, at least lately, has been prone to price shocks; hence, an additional obstacle for investors. In 2017, for instance, the Saudi blockade of Qatar suddenly removed 30 percent of the world’s helium supply from the market.
The “gas that would not burn” was discovered in 1903 in Dexter, Kansas. As the decades progressed, the United States had 40 percent of the world supply, thanks to a large reserve found across Texas, Oklahoma and Kansas. It was called, appropriately enough, the Federal Helium Reserve. By 1995, a billion cubic meters of the gas had been collected, but the reserve was more than a billion dollars in debt, so Congress begin phasing out the reserve in 1996 and started selling off inventory to the private sector. It did so, according to the Bureau of Land Management, “To remove itself from the helium business, and allow the private sector to further develop this industry to meet the supply needs of the United States, creating a sustainable economic model and jobs for Americans.”
That proved to be a mistake, Aldrich said, because it was based on projections that the world had too much helium.
“The U.S. government has not fully understood what is needed for future energy needs with respect to critical minerals and helium, in terms of environmental permitting, and incentivizing industry to invest in these projects,” he explained.
There have been four helium shortages since 2006, but they all have roots in that decision by the U.S. Congress to privatize the National Helium Reserve back in 1996.
Since then, helium’s problems have gotten even worse.
The Russians have a plant at Amur that would have produced up to three times the world’s annual helium consumption, but it is currently shut down. Even when it reopens, sanctions imposed since Russia invaded Ukraine will prevent Gazprom, Russia’s top energy producer, from selling helium outside of Russia and China.
Obstacles and Opportunity
Helium is second element on the periodic table – hydrogen (H) is the first – and is the first noble gas, which along with neon (Ne), argon (Ar), krypton (Kr), xenon (Xe) and the radioactive radon (Rn) make up a class of chemical elements that are all odorless, colorless, monatomic gases with very low chemical reactivity.
At present, helium production is only taking place in 14 refineries around the world: seven in the United States, two in Qatar, two in Algeria and one each in Poland, Russia and Australia.
Aldrich believes – all the obstacles notwithstanding – that this is a good time to explore both helium fields and commercial opportunities.
“This should not be seen as a partisan issue, however too often it becomes a NIMBY issue that needs a strong, clear-sighted governmental policy to lead the way to clearing the path. Without that, industry will often turn overseas,” he said.
To that end, the Rocky Mountain Association of Geologists will be hosting the North American Helium Conference in Denver in March, to explore helium exploration and commercialization, including discussions of the current state of the helium market, geophysical techniques, new technologies to find and refine it, and government regulations.
“There is no good oversight body like the International Energy Agency or the Weather Prediction Center that puts out projections for global energy that looks at helium,” he noted.
Exacerbating the obstacles already in place, helium contracts, he said, are not disclosed on the open market.
“This has created a very opaque world of helium pricing and reserves and almost every helium contract comes with a non-disclosure clause that no one wants to break or they won’t be able to go back to the buyer or seller again,” Aldrich explained.
What happens in the coming decades for helium is deadly serious.
“When helium was relatively cheap, the helium balloon was great to have at a party and a fun gag to breathe in and speak funny. At 10 to 20 times the price it is no longer such a laughing matter, and industrial users, like hospitals, are starting to be very worried,” he said.
Still, he believes there’s out there for “the excitement and optimism for what can be done.”