An insightful and thought-provoking day of presentations has come to a close at the Global Helium Summit 2.0 in New Jersey, US.
A number of speakers reflected upon the growing concern about the future of the precarious helium supply chain as the curtain closed on the event, with supply source security in focus. The event shone a spotlight onto the current and future dynamics in the global helium supply chain and crucially analysed its current return to equilibrium – and discovered how long the industry could expect to enjoy this balance. As many presentations throughout the day affirmed, it’s anybody’s guess. Linde’s Head of Global Helium and Rare Gases Joe Horn identified, “Helium is a very special industry; whilst the demand might be static, the industry and the challenges we face aren’t static.” The Helium Summit 2.0 essentially explored and helped to ease looming concerns about these challenges.
Market conditions
Robert Jolley, Field Manager for the Bureau of Land Management (BLM), kicked off the presentations, with an insight into the current BLM pipeline and storage system operations, and of course, a look ahead to the organisation’s looming sale date of 2021. Jolley explained, “In terms of production capacity over the next five years, the field pressure has been constantly declining as we have taken the helium out, but in 2021 when we are expected to close we expect it to level off – the field pressure will only be at 200 million cubic feet per year after 2021. Last year, we were down for a total of 102 days – we had a plant shut down but actually left it down for a longer period of time due to the lack of demand. Currently, companies want every last bit of helium that we can produce – and they are taking it all.” We’re selling more than we can produce at maximum capacity,” Jolley revealed. “At 100% capacity we can only produce 4.5 billion cubic feet (bcf) but demand is sitting at around 5.3bn – so there will still be some helium left in the ground at Amarillo.” The Summit’s next speaker, John ‘Buzz’ Campbell of Intelligas, said the BLM’s 102-day outage gave him “shivers.” Campbell and his colleague Maura Garvey gave an overview of the current supply and demand dynamics of the helium market conditions next, in which Campbell revealed, “We are moving from a surplus of helium in years past, to a position of possible scarcity over the next 10 years.” Campbell identified several areas of the supply chain stunting further growth for the industry: the lack of suitable storage, the availability of crude and crucially, demand. “Right now, we have a major surplus of helium and part of that is being stored in ISOs,” he said. “We have ISOs acting as storage because there isn’t enough storage at the plants. If you take the maximum production in the world, we only have about four or five days of storage – it’s a very perishable product.” “Our forecast suggests significant new production from Russia in 2024, but will it happen earlier in 2021 as the Russians suggest? We don’t know. We do not have enough storage now, and we certainly aren’t going to have enough when the BLM goes out of the business.” Garvey honed in on the supply and demand situation in the traditional home of helium production, the US, and commented on the decline of its leading position, “Once, we accounted for around two thirds of global supply but now we are down to about half,” she said. “In 2013, we went from basically 70% capacity utilisation of the liquid by the refiners, down to 32% by 2017. So, the big question is what’s going to happen to the excess refining capacity? It’s anybody’s guess.” “The decline in the Hugoton has been made up from the non-Hugoton resources, somewhat,” she described. “The Hugoton back in 2013 accounted for 70% of the US supply vs non-Hugoton at about 30%. Fast forward to 2025 and non-Hugoton will be account for around 80% whilst the Hugoton will only be about 20%. So our ability to export is going down unless we develop new sources; we have no new significant applications coming along to drive our demand growth and economic conditions are showing flat to low growth, so I don’t really see the situation changing right now.” In a nutshell, the major challenge according to Campbell is demand, “Will we have a new technology in the near future that requires a lot of helium?” he questioned. “We do not see that on the horizon, at least until fusion happens – we will require a lot more helium than we can develop in a short period of time when fusion happens. Our forecast suggests a 5% increase per year worldwide in demand.” Nick Haines of Linde Gas then wrapped up the first session, explaining the rules and legislation behind the complicated process of passing the Helium Stewardship Act of 2013. Essentially, it was created to alleviate the problems of a potential helium shortage, ensuring continued access to Federal crude helium and providing an orderly transition with the aim of causing minimal market disruption to end users. Despite Haines describing the system as “complex” due to the allocation transition, disposal of assets and priority of deliveries, it has done just that, “It laid out a fairly comprehensive path for the BLM to sell its remaining assets,” he said. Supply issues and future developments were inevitably in focus after these insights, as one delegate asked during the Q&A, “The elephant in the room is the finding of more helium. With a lot more projects estimated to come on-stream, won’t this have a tremendous impact on the market?” Linde’s Haines responded and concluded, “The helium project pipeline is very healthy right now so we have the luxury of choosing the best projects that are appropriate for the industry.”
Production and projects
The second session honed in on some of the current and future helium production and projects, with future supply sources and Helium One’s game-changing discovery in Tanzania in the spotlight. Phil Kornbluth of Kornbluth Helium Consulting was first to take to the stage in the summit’s second session, discussing the future sources of helium and explaining the drivers behind his self-coined term, “The Helium Rush – a frenzy of activity that has developed for supply right now.” He said, “In my experience and career, there have never been more companies trying to start up helium production projects than there are now. They are all shapes and sizes – some will be successful and some won’t but there is a lot of activity and it’s keeping things interesting.” So what’s causing the Helium Rush? According to Kornbluth, it’s a combination of the industry’s reaction to the “long and severe” 2011-2013 shortage, the elevated prices of helium and the gradual decline of the BLM system as it winds down to close in 2021. “While supplies are ample now, the refiners are well aware that they will be losing their BLM capacity over the next few years; so long-term, they need to replace it,” he stated. But reflecting upon future developments and touching on alternative helium production sources, Kornbluth then suggested, “Non by-product sources, where helium is the only commercial product, will play an increasing role and can provide flexibility for the global supply chain. That’s a real positive attribute of those sources, although right now they account for a relatively tiny fraction of global supply – less than 200 million cubic feet per year – but the impact of this should increase over time.” In a reassuring statement, he affirmed, “When people talk about the world running out of helium – it’s not. It’s total fiction. There is a tremendous amount that isn’t being exploited yet because of economics and there will still be shortages – the BLM system is in decline and must be replaced, but the world is not running out of helium any time soon.” Next it was onto the much-anticipated presentation of Helium One’s Thomas Abraham-James, as he discussed the discovery of the decade and the future helium potential in Tanzania, Africa, who opened by saying, “We’re a new company so this is a wonderful forum to meet the who’s who in the helium industry – and we have a very exciting story to tell.” Abraham-James revealed the origins behind Helium One’s flagship Rukwa project began after the company’s co-founder Josh Bluet happened across helium percentage concentrations of the project’s area in a local Tanzanian newspaper, which were quoted as being between 2-18%. The duo then obtained necessary exploration permits and the standalone Rukwa project was born. “We are currently on schedule with our work programme,” he revealed. “The airborne gravity survey is just about to occur in the third quarter of this year, drilling will commence in the second quarter of 2017, so we can rank and prioritise our targets and hit the best ones first. We are in a very good position; our intention is to be able to calculate reserves and then make a final investment decision, with the ultimate aim of producing around one billion cubic feet per annum of liquid helium on site and looking at options for exporting our product.” Two alternative helium supply sources in the chain were highlighted next, with Air Products’ Dr. Vince White and IACX’s Brian Witt talking about helium extraction from carbon dioxide and primary product helium production from non-hydrocarbon sources, respectively. Both presentations revealed the novel techniques were relatively young in practise compared to traditional production methods, with Air Products’ Doe Canyon project being the first of its kind. White suggested that, “With the price of helium going up, what wasn’t attractive suddenly becomes attractive,” whilst Witt affirmed that, “Other primary products production projects are expected to grow over the next five years.”
Technology shifts and application drivers
Following a delicious lunch sponsored by DataOnline and dedicated networking time around the exhibition, delegates reassembled for the final session of the summit which delved into technological shifts for helium applications and fundamentally, to discover what’s driving growth for these technologies. Andrew Wade of Siemens began the third session of the day by telling the ‘MRI Story,’ explaining the past, present and future drivers within the sector, with the underlying development centring on technological advances significantly decreasing the amount of helium consumed during the MRI process. “MRI is consuming about 15% of the world’s helium output. The earlier machines consumed around 3,500 litres of helium per year, so it’s crucial that that has changed,” said Wade. He described technology progressions and the efficiency with which MRI now consumes helium, but he warned, “3,000 litres in a lifetime is still too much. Siemens Healthineers has been leading a lot of efficiency measures, such as upgrading recovery systems and looking at logistical processes, as we think there is value and a responsibility that we have to keep helium as an added value and not just let it go into the atmosphere.” Jim Hermetet of AGP then explored the balloon gas distribution dynamics across the US, with Brain Bauer of Hybrid Enterprises taking to the stage next to explain the role helium plays behind airship technologies. Richard Adams of DataOnline concluded the presentations with an insight into tracking and monitoring technologies used for helium assets. So with helium supply security and market balance on everyone’s mind, Kornbluth offered these concluding thoughts, “Helium demand, as we have heard, is sluggish right now and we have headwinds from the major application for helium as the demand from MRI will be slowly declining. As far as supply, right now supplies are ample and we are out of the real severe over supply; so if plants run properly we will bring the market back into balance.” “We have a fairly fragile global helium supply chain now due to the fact that we have lost a lot of the flexibility form the BLM system; it’s an important change in the business,” he continued. “Companies are scrambling to replace BLM capacity before it leaves the market, so despite an environment where there is ample supply, there is brisk activity looking for new sources with more companies than ever before scouting for new sources of supply.” Going forward, Kornbluth suggested, “The new technologies, such as extracting helium from carbon dioxide and non-hydrocarbon sources, are opening things up and the Gazprom project is going to be a game-changer; whilst there are other projects on the horizon, they are not as far along, advanced and assured as Gazprom. However, a lot depends on supply and severe shortages and over-supply could happen in the early 2020s – but a lot depends on timings and Gazprom’s contribution will be a big factor in the market.”