“It’s pretty safe to say at least 2019 is going to be a very tight market vulnerable to upset and it could be ugly for a while. It’s not going to get better tomorrow, it’s not going to fix itself right away, but when everything is running right and all the plants are running, there could be times when things feel a little better.” Those were the words spoken by Phil Kornbluth this afternoon as an insightful and thought-provoking day of presentations came to a close at the Helium Summit 2018 in Houston, Texas.Delegates from 24 countries joined the gasworld team at the Marriott Marquis Hotel for the one-day event to discuss and debate what life for the helium industry will look like beyond the US Bureau of Land Management’s (BLM) Helium Pipeline. The event shone a spotlight onto the future privatisation of the Federal Helium Reserve and what new or alternative sources may fill the void in the commercial market, as well as the tightening market of today and the challenges facing participants in the here and now. The near 300-strong audience of key stakeholders in the global helium business emphasised the hot nature of this topic. Gasworld’s CEO and Publisher John Raquet officially commenced proceedings this morning, stating, “Good morning ladies and gentleman, or should I say from Texas, howdy – welcome to our Global Helium Summit. I have to say wow, what an audience and I really mean that. I am so pleased to see so many of you here and the numbers surpass anything that we’d ever really thought of.” “In London, when we held our first Helium Summit, we had about 120 delegates. Then in 2016 we had 155 in New Jersey and today, according to what’s just come in from registration, we have 308 here. That’s terrific.” “Why are we here? Someone asked me, why are we doing a helium summit when we did one in 2016 – why do one this year? Well I think the answer is fairly obvious. To get 300 people here, there’s clearly a great deal of interest in helium at this moment in time.”
“The theme, which you will have seen, is Transitioning to Life Beyond the BLM. The recent BLM auction created a lot of excitement, probably some concerns, and we certainly saw a pick up of delegates following that auction. So, I’d like to say thank you to Sam and his team for boosting our attendance!” ”Obviously, over the last five years we’ve had periods of pain and tightness; we’ve had some situations where the applications growth exploded considerably and then we’ve gone into almost over-supply at some points. Then we had the new Helium Stewardship Act of the US that was giving the go ahead related to the future of the BLM. Then we had a number of start ups, delays and project delays – so a lot of activity over those five years, and continuing.” ”I want to thank you all for coming and hope you enjoy the Summit.”
Market conditions and future supply
“Wow, John, Phil, you guys really know how to attract a big crowd,” said Air Products’ General Manager of Global Helium, Walter (Wally) Nelson, as he took to the stage to give the day’s first presentation. “There’s a tremendous amount of activity in the helium segment as the BLM begins to sunset and I think that largely explains why this auditorium is packed completely full.” “All of you know that the Bureau of Land Management has played a significant role in the helium industry for decades and that role will change over the next few years as the BLM’s operations at the Cliffside Field near Amarillo Texas wind down, and the BLM completes its mission to privatise helium operations at Cliffside. “However, the BLM is not completely getting off the hook and out of the helium business. The BLM will still be responsible for the United States Federal Helium Program with the charter to manage helium extraction from Federal lands and we expect that activity to continue for decades.”
Walter Nelson, Air Products’ General Manager of Global Helium
Nelson provided a high-level overview of the current global helium market. His presentation explored demand trends, applications, helium supply, new projects, evolving technologies, the BLM system and general outlook. He told delegates that in the past year, helium was added to the critical minerals list in both the US and the European Union (EU). “Adding helium to these lists gives the governing agencies more authority over strategies to ensure the secure and reliable supply of this critical element,” he said. “The world is estimated to have over 1.4 trillion cubic feet of helium reserves. At current rates of production, along with conservative growth rates, these reserves could produce helium for decades.” “There is no shortage of helium on the planet; however, this helium will only be produced as a byproduct of natural gas or LNG production as these resources are exploited by energy companies.” Nelson then recapped the announced future helium supplies, including: Renergen (2019), Qatar 3 (2020), Irkutsk (2021) and Amur (2021-2026). “Not shown on this slide,” he continued, “are a couple of projects that are still in the early stages of development. Qatargas is evaluating the construction of three or four new LNG trains and those LNG trains could produce enough helium to justify a new Helium 4 project with a potential start-up date beyond 2024.” “In Algeria, Sonatrach is evaluating the potential for recovering helium from two existing LNG trains where the helium is currently not being recovered. We hope to learn more about these potential projects in the future.” Next, Sam Burton, Field Manager for the US BLM’s Federal Helium Programme, gave an insight into the steps taken by the BLM to close and transfer operations of the Federal Helium Programme to private operations through the sale of all real property and interest of the US Government.
“This is a very interesting slide,” he said, “This is the most up-to-date information we could provide our customers [with] from our model, as to how much gas the BLM will continue to be able to provide the private industry over the next three years. So you can see what we are projecting we will be able to produce. Of course, this model is assuming the separate compressor is running; this is not running yet. Hopefully we will be able to follow this curve. But this is the expectation over the next three years. Basically we intend to continue to provide crude helium to the industry on this schedule.” Burton discussed future operations and said the Helium Stewardship Act is the “line in the sand” requiring the Federal Government to dispose of the Federal Helium System by 30th September (2021). The BLM intends to transfer responsibility to deliver previously purchased helium to the buyer(s) as a condition of sale.
Nick Haines, Head of Global Helium Source Development at Linde Global Helium, wrapped up the first half of session one with a presentation about Gazprom’s Amur Project. He told delegates this will be the next major helium source globally and is coming about as a result of a world-scale natural gas processing development to supply China. “Amur will have a marked impact on global helium supply once operational and will be based on a new supply chain yet to be established,” he said. “This will be one of the world’s largest sources with future production upside up to 4bcf. The trunk pipeline from Chayanda Fields to Amur GPP is already 90% complete. The pipeline is expected to be completed and enable the delivery of gas by the end of 2019.”
Current and future helium production and projects
After a short coffee break, session one resumed with Air Liquide’s General Manager of Global Helium and Rare Gases, Jerome Christin, discussing the status of Qatar. Christin explained that although the North Field contains only a trace amount of helium, estimated at 0.04%, the vast size of the reservoir means the helium available is expected to be enough to meet world demand for the next 30 years.
He discussed the Qatar blockade in June 2017 when an air, sea and land blockade was imposed by four countries including Saudi Arabia and United Arab Emirates (UAE). It stopped helium production for two weeks, with helium supply resuming late June 2017. The blockade is still ongoing to date. Christin described the new logistics developed to reliably supply Helium from Qatar to Asia, Europe and the US with new maritime routes. To address potential future port disruptions, Air Liquide has developed several contingency routes to ship helium through Salalah port in Oman but also the Mundra Port, India, and through the Colombo Port in Sri Lanka. Christin indicated that the key challenge in helium supply is to meet customer on-time requirements, independently of the reliability of production sources, by ensuring an optimum transport lead-time. He then described how Air Liquide addresses this challenge thanks to their newly built helium underground storage facility 1,300 meters underground, located in Gronau-Epe in Germany. “This initiative allows Air Liquide to store more than one year of its helium sourcing and better answer its customers’ needs for a reliable and predictable helium supply,” he said. Helium production derived from non-hydrocarbon sources is projected to increase over the next several years as more independent oil and gas companies focus on exploring for, and developing, helium as a primary product, explained Rex Canon, IACX Energy’s CEO, who was next to the stage. “Developing these sources has become more attractive as helium prices have increased, and the resulting production is expected to become an important segment of global supply as the production from the BLM system continues to decline.” Canon explained traditionally helium production is a by-product of natural gas production and processing. When developing gas fields where hydrocarbons are not produced and sold, helium content in the gas must typically be at least 0.6% for development of the field to be economic.
“If there is another non-hydrocarbon gas present that can be produced and sold as a commercial product, such as carbon dioxide, gas fields with helium contents lower than 0.6% can be developed for the production and sale of helium as a secondary product.” “Helium production from non-hydrocarbon sources is production where helium produced and sold is either the only revenue stream or one of the key revenue streams and hydrocarbons produced, if any, are not produced in commercial quanitites.” But why are non-hydrocarbon sources becoming more important? Canon gave a number of reasons including, “Higher helium prices at the wholesale level are driving more upstream development of helium resouces; decline of existing helium supply souces, particularly the BLM system, are causing industrial gas companies and distributors to seek new sources of supply; low natural gas prices are leading some independent oil and gas companies to consider developing helium as a primary product or as a co-product with natural gas resources.” He gave an overview of current production from non-hydrocarbon sources, “There are five fields in production in 2018 producing lift-grade, gaseous Grade 5.0, or liquid helium from non-hydrocarbon sources, all produced in the US and Canada. Various operators are developing new projects in the Four Corner/Rockies area, Kansas, Montana, Saskatchewan, Alberta and Tanzania.” Concluding, he said as the BLM supplies continue to decline, non-hydrocarbon soruces of helium can be a meaningful alternative to the traditional sources from LNG flash gas and NRU off-gas. Nick Snyder, Founder, Chairman and CEO of North American Helium, explained the numerous geologic, logistical and regulatory advantages in south west Saskatchewan, Canada, that will allow companies like North American Helium to bring significant new helium production online in a short span of time. Snyder told delegates these advantages include a lack of hydrocarbons and CO2 in the gas, a large, local workforce of skilled operators and numerous rigs operating in the area, outstanding helium regulations in a pro-development jurisdiction, large reservoirs of deep high-pressure helium-bearing gas and abundant roads and electricity to accelerate development.
Following lunch sponsored by DataOnline and dedicated networking time around the exhibition, delegates reassembled for the final session of the summit which delved into helium marketing, markets and applications. Phil Kornbluth, Founder and President of Kornbluth Helium Consulting, began the session by exploring the impact of the pending merger between Praxair and Linde on the Global Helium Business, including the expected regulatory remedies and the strengthening of two competitors who will now have a global footprint. Kornbluth said the merger had moved at a “glacial pace” but closing is expected to take place this month and there is a deadline in Europe of 24th October.
Steve Eckhardt, Vice-President of Global Helium at Matheson Tri-Gas, gave an overview of the Chinese Market, explaining it has experienced significant growth over the past 10 years and is now a major market for helium. Eckhardt’s presentation elaborated on this growth, the dynamics of the market, major players and where it may be headed in the future. The growing electronics business was cited as one of the factors behind this increased Chinese demand, including in fibre optics applications.
Helium use in the electronics industry was then highlighted next by Michael A. Corbett, Managing Partner and Co-Founder of Linx Consulting. He reviewed where and how much helium is used in the semiconductor manufacturing process, looked at where the growth is geographically and asked delegates, do semiconductor manufacturing trends require more or less helium? “Sustainable strong growth outlook is anticipated for several years despite some seasonal cycles. The 300mm and 200mm and older wafer fab is expected to remain at high levels of capacity utilisation over the next several years. Productivity will be a major driver.” “Helium demand volume in the semiconductor segment has strong correlation with deposition/etch steps and 3D structures and new materials will continue to drive semiconductor technology advancement at advanced nodes. Helium demand intensity will increase as semiconductor process complexity goes up.”
Michael A. Corbett, Linx Consulting Managing Partner
Corbett said helium demand volume in the next five years is expected to grow at about 7 to 8% of CAGR. Combining with continued ASP increase due to tight supply, the Total Available Market ($ basis) for the semiconductor helium segment could grow at double digit of CAGR. “The tight helium supply situation is an ongoing concern of fab management. Therefore in-fab process optimisation efforts to conserve helium consumption are expected to continue. External collaboration with gas suppliers on helium recovery may not occur as it still can’t be econonically justified. New capacity in China may take longer to come online than anticipated.” Ken Kelley, CEO of Kelley/GTM, outlined helium transport in the new millennium, concluding compressed helium can still be a viable option based on volume and distance. However, he said, the new Type 4 proves to be the best option for transporting crude to liquefiers. “The market is now ready to accept Type 4 with its proven track record in the CNG space. New type 4 trailers prove to be the best option for transporting high purity crude helium to liquefiers.” Finally, Todd Newman, Gardner Cryogenics’ General Manager, discussed the evolution of the LHE ISO container used to transport liquid helium, under the title ‘State-of-the-Art Liquid Helium ISO Containers’.
Before handing over to Phil Kornbluth, John Raquet said, “I would like to thank you all for this tremendous turnout. I hope you have found the day of interest and you have learnt a lot. I personally have learnt a number of things. We’ve had people attend from Australia, China, Japan and from just down the road. I’d like to sign off by saying thank you for your attendance, I hope you enjoyed it.” With helium supply security and market balance on everyone’s mind, Kornbluth offered these concluding thoughts, “We talked a little about the tight market or the shortage market depending on your view. It’s a pretty big deal, it’s affecting a lot of people, some folks are allocating, and it will affect commercial arrangements in the industry as well.” “Something we didn’t talk a lot about, but it’s been talked about quite a bit, is the recent BLM auction and conservation sale. It’s a big deal and a lot of folks didn’t understand. I just want to say because it’s a little bit of a sensitive topic, it couldn’t be discussed in detail here today. My comment is that the way things were handled has confused the market and destabilised it a bit and I think we’re in a period now that will probably last a little while, probably a few months where folks are sorting things out. Commercial arrangements will settle out and we’ll have a new commercial regime, but there is some confusion in the market at the present time.” ”A big thing I wanted to recap, one of the big reasons there’s so many people in this room, there is an unprecedented level of activity to develop new sources. By my estimate, I would say there’s close to 100 people out of the 308 that are here today either because they are involved with a new helium exploration venture or they’re an investor in helium exploration ventures. There’s a lot of folks in here who wouldn’t have been here for sure when we had the London conference, many of you wouldn’t have been there for the New Jersey conference and that’s a huge reason why there’s 308 people here today. It’s kind of a new group of folks who are interested in helium.”
”My next point, the markets probably going to be tight until at least Qatar 3 starts up. I think it’s pretty safe to say that at least 2019 is going to be a very tight market and it’ll be vulnerable to upset if somebody takes a maintence shutdown or something like that. It could be ugly for a while. When everything is running right and all the plants are running, if some of the new smaller sources come to fruition there could be times when things feel a little better. But it’s not going to get better like tomorrow, it’s actually going to get probably a little worse tomorrow, it’s not going to fix itself right away.” ”Privitisation of the BLM’s assets, it’s a major question mark. It’s not going to affect anything tomorrow, but there’s a lot of uncertainty how that’s going to work out, who the buyer(s) might be, or I think somebody suggested that there still could be new legislation that changes something. I heard a couple of hints that as of now the crude helium is included, but we’ll see. There’s a little uncertainty around that and of course, the GSA is working on the process so that’s going to be very interesting. If we do this again in two years that’ll be a really hot topic at that point in time.” ”Of course Praxair’s merger with Linde, that’s going to shuffle the competitive landscape. There’s going to be new competitors or bigger competitors, one big competitor goes away, it’s a lot of change. Messer coming back into the US market is an interesting change. TNSC getting into Europe at the end-user level, that’s an interesting change.” “Those to me are the big topics that are on peoples minds right now. Other than that I’m going to echo John and say we’re really impressed by the turnout. There’s a good chance if we do this again in two years this will be a two-day event rather than a one-day event. John, thank you for inviting me.”