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Congress turns its attention to... America’s helium crisis

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Sure, Congress has plenty of crises to deal with: a weak economy, an expiring highway bill, the end-of-the-year “taxmageddon.” But now there’s another one floating into view.

RAFAEL MARCHANTE

REUTERS

Up, up and ... away?

The United States is running out of helium.

Yes, helium. Thanks, in part, to a 1996 law that has forced the government to sell off its helium reserves at bargain-bin prices, the country’s stockpile of the relatively rare and nonrenewable gas could soon dwindle.

Party supply stores are already feeling the pinch, as recent helium shortfalls have driven up the price of helium-filled balloons. But it’s not birthday parties we should worry about. A severe helium shortage, experts say, would cause problems for large swaths of the economy, from medical scanners to welding to the manufacturing of optical fibers and LCD screens.

Congress is slowly grasping the extent of the problem. At a sleepy Senate hearing Thursday morning, the Energy and Natural Resources Committee listened to an array of experts chat about the gas. The hearing was tied to a bill, sponsored by Sens. Jeff Bingaman (D-N.M.) and John Barrasso (R-Wyo.), that would change how the government sells helium from its Federal Helium Reserve (yes, this exists) in order to prevent shortages.

“Chances are you’ve heard little or nothing from your constituents about helium over the past 15 years,” said Walter Nelson, director of helium sourcing at Air Products and Chemicals. “That’s a good thing!” But if the problem doesn’t get fixed soon, Nelson warned, there will be serious “grumbling” across the land.

So how did we get to this point? Back in the 1920s, when blimps and other airships seemed like a useful military technology, the United States set up a national helium program. In the 1960s, it opened the Federal Helium Reserve, an 11,000-acre site in the Hugoton-Panhandle Gas Field that spans Texas, Oklahoma and Kansas. The porous brown rock is one of the only geological formations on Earth that can hold huge quantities of helium. And the natural gas from the field itself was particularly rich in helium — a relative rarity in the world.

By 1996, however, the Helium Reserve looked like a waste. Blimps no longer seemed quite so vital to the nation’s defense and, more important, the reserve was $1.4 billion in debt after paying drillers to extract helium from natural gas. The Republican-led Congress, looking to save money, passed the Helium Privatization Act, ordering a sell-off by the end of 2014.

‘Fire sale’ prices

There was just one small hitch. According to a 2010 report by the National Research Council, the formula that Congress used to set the price for the helium was flawed. Bingaman has dubbed it a “fire sale.” The federally owned helium now sells for about half of what it would on the open market (see chart on the right).

And, since the Federal Helium Reserve provides about one-third of the world’s helium each year, this has upended the entire market. There’s little incentive to conserve, recycle or find new sources of helium. Instead, we’ve been frittering it away. And once helium escapes into the air, it can’t be recovered. That’s partly why, since 2011, the world has been running into shortages, as demand has outstripped supply.

Worse, under existing law, the Federal Helium Reserve could run out of money to operate as early as mid-2013. When that happens, it will still have a large chunk of the world’s helium supply locked in the reservoir — but no one will be able to access it.

“If Congress does not act,” Bingaman said, “the helium program will disappear altogether in less than three years, leaving our hospitals, national labs, domestic manufacturers and helium producers without an adequate supply.”

Witnesses at the hearing painted apocalyptic scenes. Take, for instance, MRI scanners. About 40 million MRI exams are conducted each year to help doctors diagnose everything from strokes and cancer to torn ligaments. Health-care experts have debated whether MRI scans are overused, but everyone agrees these machines are valuable.

Yet a helium shortage could ruin them. Tom Rauch, a health-care supply-chain manager for General Electric, explained that the powerful magnet in an MRI machine must be constantly cooled by liquid helium. Without timely refills, the magnets run the risk of permanent damage.

“Replacing an MRI often involves a crane, street closures and knocking down ceilings and walls of a care facility,” Rauch said.

Maintaining supplies

Bingaman and Barrasso’s bill would revamp the Federal Helium Reserve program so that it doesn’t shut its doors by the end of 2014. Instead, helium would be sold off more judiciously to preserve a steady supply until other domestic or international sources could be developed. Under the new law, the reserve would start selling helium at market rates to encourage private producers to extract more helium (or recycle the stuff).

Russia, Algeria and Qatar have all recently built processing facilities for helium. Canada, China and Poland are also thought to have potential reserves, according to the U.S. Geological Survey. Other facilities could well pop up if the prices rise; the key question is whether it will be an orderly transition or a chaotic scramble worldwide.

But the prospect of chaos doesn’t seem to be terrifying anyone yet. For most of the Senate hearing, just two senators — Bingaman and Barrasso — hung around, and after asking the witnesses a few desultory questions, they disbanded about an hour later.

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