Helium Markets Tighten Up Due To Unplanned Outages

At a time when helium supply would be ample if the major sources were operating normally and helium markets are anticipating a significant influx of new supply from Gazprom’s Amur Project by the end of the year, a series of unplanned outages has temporarily disrupted supply and caused renewed concern about shortages.

Three recent events have removed supply from the market during the months of June and July. The Skikda, Algeria plant shut down in mid-June and is expected to be out of operation through at least the month of July, due to problems with the LNG plant which provides feedgas for the helium plant. This outage removes 300-400 million cubic feet (MMCF) of annual capacity from world supply. At around the same time, the Keyes Helium plant, which is one of the four helium liquefaction plants connected to the BLM (US Bureau of Land Management), went down due to a broken turbine. This removes 100 MMCF+ from the market and the time required for repair could be several months. More significantly, the Bureau of Land Management (BLM) shut down its Crude Helium Enrichment Unit with minimal notice on 1st July, to address safety issues. The BLM continued to allow withdrawals of crude helium from its crude helium pipeline until the pipeline pressure declined to 600 PSIG on 19th July. After this date, crude helium withdrawals will not be allowed until the plant restarts and pipeline pressure recovers.
While the BLM’s outage was originally scheduled to last through the end of July, cases of Covid-19 at the BLM’s facility delayed its work plan and are expected to extend the shutdown through to at least mid-August. With normal deliverability of crude helium into the BLM pipeline of 2.3 MMCF per day, this removes up to 800 MMCF of potential capacity from world supply – not counting the loss of helium produced from current natural gas processing. While there was some slack in the market prior to these outages, there was not enough to absorb the loss of more than 1 BCF of annualised supply. As a result, the helium market will be experiencing a supply deficit until the BLM resumes operation.

Reminder

With the BLM system down, there is very little flex capacity available. Tumbleweed Midstream’s Ladder Creek Plant has excess liquefaction capacity and has the ability to increase tolling activity and helium production; Air Liquide’s storage facility in Gronau-Epe, Germany can also provide some flex capacity. Although spot market activity and prices have perked up due to the current tight supply, Kornbluth Helium Consulting does not expect recent events to have a significant impact on contract prices, as long as the tight market conditions are relatively short-term. These latest incidents do provide a reminder, however, that even though the demand shock caused by Covid-19 ended Helium Shortage 3.0 early in 2020, the helium supply chain continues to be fragile, with limited ability to respond to significant plant outages.
Hopefully, the current plant outages will be resolved and the balance between supply and demand will be restored within the next couple of months.

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China opens first large-scale helium plant as it tries to reduce reliance on US imports

China is a step closer to reducing its dependency on the imported helium it uses to make hi-tech products, according to scientists working at a new facility in the northwest of the country.

They say they are extracting helium from the waste product of natural gas at the plant, and it could be the key to mass production in China.

Helium is a noble gas, meaning it is stable and unlikely to react with other elements, even in an extreme environment. It is lightweight, colourless, and a rare resource.

Nearly all helium used in China ” whether to pump fuel for its huge Long March-5 rocket, to protect metal during welding, to produce laser light, or to create the super-clean environment needed to make computer chips ” comes from elsewhere, mostly the United States or US-owned facilities in other countries.

The new factory, which started operating on Tuesday last week, could be about to change that.

Located inside a natural gas processing plant in Yanchi county, Ningxia, it is the first facility in China that can produce helium at a commercial scale, according to a statement from the Chinese Academy of Sciences, which designed and built it.

Scientists working on the project expect the annual output to reach 20 tonnes, in the form of liquid helium. That is not much compared to the massive amount China uses every year ” more than 4,300 tonnes ” but the cost of the plant was low, at 30 million to 50 million yuan (US$4.3 million to US$7.1 million). It means hundreds of similar facilities could potentially be built in China, putting self-reliance in reach.

But to do that, the project will need official backing.

“The investment is not the problem ” the problem is whether the government wants to do it,” said a project scientist, who requested anonymity because he was not authorised to speak to the media.

The US has more than a third of the world’s helium reserves, and has been the biggest producer of the gas since 1925. Most helium is extracted as a by-product in natural gas production, and the US has some of the world’s largest helium-rich natural gas fields. China also has natural gas, but it only contains trace amounts of helium, meaning direct extraction is too expensive for mass production.

However, a research team with the academy’s Technical Institute of Physics and Chemistry in Beijing found there was a considerable amount of helium in the waste product of Chinese natural gas plants. When methane becomes a liquid at low temperature, the helium stays in the air and becomes concentrated, forming a waste substance known as boil-off gas. While helium makes up only about 1 per cent of that boil-off gas, it is enough to extract at a relatively low cost.

Another scientist involved in the project would not disclose the production cost, but said it was “competitive” compared to the cost of importing it.

Separating the helium from the boil-off gas required an extremely low temperature, and the cooling pump needed was only made in a few countries, the scientists said. But after years of research and development, China can now make “every component at home”, according to the academy’s statement.

The price of helium more than doubled last year, according to industry data. The global helium market is influenced by many factors, but the protracted trade war between the US and China has brought new concerns. For example, a possible scenario where Beijing cuts off the supply of rare earths to the US, which it depends on for hi-tech products, and America retaliates by blocking China’s helium supply.

But the researchers believed China would still depend on the US for helium in the years to come. While Qatar and Australia have ramped up production in recent years, their facilities are mostly owned or controlled by US interests. Russia also produces helium, but its supply cannot meet China’s increasing demand.

Building more facilities in China will take time.

“I think we’ll need at least 10 years to reach self-reliance,” one of the scientists said.

Several more facilities were being built or at the planning stage, but they were mainly to be used as a backup supply for the defence industry, the researchers said.

However, some experts say that instead of aiming to produce enough helium to meet its needs, China should increase imports while the resource is still available on the international market, and build up a large strategic stockpile.

https://finance.yahoo.com/news/china-opens-first-large-scale-093000149.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLm5sLw&guce_referrer_sig=AQAAAHt1e1iYgdQG4UGZSz22dEbRrPkquT5jDBarqsDD4IK36UwSCcFihP0TFGinVUEawLxDa-1Dfb6Ty7HLgXUKpw9X1GGDFDiG5SvzLIoPMDjsXQxtcXmUh9bOElQL2AchqVeQebW3gllqmegIOCztcJoo7F6yb9tMY2IouaPk2PjF&_guc_consent_skip=1597272831

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21-07-2020

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juni 2020

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Global Oil & Gas picks-up helium exploration pace at NT permit amid tight market

Global Oil & Gas (ASX: GLV) claims helium exploration across its Northern Territory exploration licence is “gaining momentum”, as the global helium market remains in undersupply.

In this morning’s announcement, Global Oil & Gas stated its 2020 exploration work program is “progressing well”, with Global Oil & Gas now completing the design of its planned geochemical survey.

Global Oil & Gas hopes the survey will detect an active helium system across its EP127 permit.

To get the survey underway, Global Oil & Gas has begun permitting consultations with the NT Central Land Council and the NT Government to ensure COVID-19 guidelines are followed.

Helium exploration program
Global Oil & Gas’ exploration program is designed to prove the charge of helium and better define targets in addition to firming up already identified prospects and leads.

The company said it has analysed existing data sets, integrated interpretations as well as applying new thinking in its search for helium across the tenement block.

Exploration will involve regional surface and remote sensing mapping validated by field work; interpretation of integration of latest gravity, magnetics and seismic data; undertaking a geochemical survey to establish hydrocarbon and helium charge across EP127.

Results from these activities will be integrated and underpin planning for the 2021 work program.

Helium market
As a high-value speciality gas with unique qualities, helium has been classified a strategic element.

The market is in undersupply and the gas commands prices 100 times higher than natural gas.

Helium is critical to a lot of technologies including the manufacture of MRIs, semi-conductors, fibre optic cables, and hard discs, as well as being used in cooling, space exploration, rocketry, lifting and high-level science.

To-date, most of the world’s helium is extracted as a by-product of natural hydrocarbon gas production.

About 3% of the world’s helium is produced in Australia, with the nation consuming about the same amount.

All of Australia’s helium is processed at the BOC plant in Darwin to an A Grade liquid helium – equating to 99.995% helium.

This helium is sourced from the offshore Undan-Baya gas field. The helium accounts for 0.1-.03% of the raw gas that is fed to the LNG plant.

Global Oil & Gas pointed out the gas field was in decline, providing an opportunity for the company to fill the gap.

The company would look at transporting any helium produced from its permit to the BOC plant for further purification and export overseas.

Global Oil & Gas picks-up helium exploration pace at NT permit amid tight market

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