The global helium business has seldom been far from the headlines in the last half-decade. The industry endured a long and severe supply shortage from 2011-2013 (Helium Shortage 2.0) and though it has been through periods of recovery and equilibrium in the years since, the business is still often on the edge of imbalance. The market experienced a high-profile reminder of this just last year. While short-lived at just a three-week shutdown, a feared shortage due to the abrupt Qatar embargo situation in summer 2017 sent shockwaves through the market and highlighted a glaring lack of a Plan B in the helium supply chain. Qatar supply accounts for about 32% of worldwide demand; when spare capacity is considered, this is at least 25% of worldwide helium capacity. The Saudi Arabian-led embargo of Qatar created a major logistical challenge in getting product out of Qatar to world markets, and forced a temporary shutdown of the two plants in Ras Laffan Industrial City (Qatar I & II). Now, for the second time in 12 months, the industry is staring at the prospect of another global helium shortage. A central factor in this is that the US Bureau of Land Management’s (BLM) continuing allocation of crude helium feedgas to the helium refining facilities linked to the BLM Pipeline has significantly reduced US production. The BLM has been allocating supply at varying levels since the Qatar embargo last year. Helium markets have been in short supply since around February and most participants in the helium business believe the market will remain very tight for the next couple of years, if not longer. “This is probably the number one issue on most people’s minds right now,” said esteemed consultant Phil Kornbluth in an exclusive interview with gasworld just days before the Helium Summit 2018 in Houston, Texas. Kornbluth – President of Kornbluth Helium Consulting and a veteran of the helium sector with more than 30 years of experience working for some of the biggest players in the business – will chair Session 1 tomorrow dedicated to Market Conditions & Future Supply. He will also kick off Session 2 with a discussion of the pending Praxair-Linde merger and how this could create a whole new player in the global helium business. Much of the publicity surrounding Praxair’s pending merger with Linde has focused on the geographic overlap between their respective atmospheric gas businesses, especially in the US. Another segment where there is very significant overlap, however, is the helium business – where Praxair and Linde are two of the four largest global competitors (the others being Air Products and Air Liquide). It is felt in some quarters that the regulatory authorities will require major divestitures of helium assets to preserve the competitive intensity of the helium business. As Kornbluth will explain, when the dust settles it is likely that there will be a major new competitor in the global helium business.
What’s your take on the helium business today?
That’s a very broad question, but I will try to address a few of the more important points. Following on from the tightening helium market, there is a lot of activity related to developing new sources and an unprecedented number of small companies are exploring for helium in the southwestern United States, Saskatchewan & Alberta, Canada and Tanzania. There is also a great deal of recent interest in the BLM’s final crude helium auction and Conservation Sale and the unexpectedly high auction prices. These is concern about how the auction result and Conservation Sale might impact worldwide helium costs and prices. Unfortunately, the manner in which the BLM handled this created some ambiguity and the potential to disrupt helium markets. There is also a great deal of interest in how the merger between Praxair and Linde is going to affect the business. We will have two new companies – Taiyo Nippon Sanso Corporation and Messer – with global footprints via the acquisition of assets that will be divested to secure regulatory approval for the merger. Looking further out, there is concern about how the privatization of the BLM’s helium assets will impact the business after 2021 and anticipation of supply from Gazprom’s Amur Project entering the market in 2021. There is a lot going on in the Helium Business right now and this is a period of transition and change as the BLM System is entering its sunset period. There are more than 250 delegates attending the Helium Summit compared to 155 at the previous summit in New Jersey. Are you surprised by this excellent turnout? A little surprised perhaps, but I expected a strong turnout. Interest in the Helium Business always spikes during periods of supply shortage and, for that reason, there is a great deal of interest right now. Houston is an ideal location for the Helium Summit, as two of the Tier One helium marketers have offices there and many of the natural gas producers/processors who produce crude or liquid helium are based in Houston. Finally, Houston is a relatively convenient location for many of the start-up companies who are trying to develop helium production. Many of these companies did not even exist when the first helium summit was held in London four years ago and now they will represent a significant percentage of the attendees.
What do you hope attendees will take from the Helium Summit?
Of course, I expect the presenters to do a very good job in covering topics that will be interesting and relevant for most of the conference attendees. So there will be an educational aspect to the Helium Summit. The attendees will be more knowledgeable about the Helium Business after the summit than they were when they arrived in Houston. To me, however, the biggest benefit from attending the Helium Summit will come from interacting with the other attendees. Nearly every company that has a significant presence in the Global Helium Business will be represented at the Helium Summit. Where else will you have an opportunity to network with a veritable “Who’s Who” for an entire Global Business? I know that many of the delegates are already busy lining up meetings with other attendees for the days leading up to and following the Summit.
What life beyond the BLM do you see for the helium business?
The Helium Business is fun because it is a global business and it is always changing. It has kept my attention for the last 35 years. The decline of the BLM System and coming privatization of the BLM’s helium assets are just another of those changes that the business has had to deal with over the years. I am very confident that market forces, combined with the ability of market participants to adapt to a changing environment, will enable the Helium Business to sustain itself for as long as other industries rely on helium in their businesses. I am a big believer in market forces to rebalance supply and demand during periods like the present where there is an imbalance. Nonetheless, the loss of flexible supply that the BLM System has historically provided will most likely result in a more fragile helium supply chain in the future. In fact, we are already feeling that as a key contributing factor to the current shortage.
Any final thoughts?
Gasworld always does a great job in organizing these sorts of conferences and I’m sure that Houston will be no exception. I am looking forward to meeting a lot of new people and I am anticipating a very successful conference.
https://www.gasworld.com/interview-with-phil-kornbluth/2015489.article