14 February 2013 19:03 [Source: ICIS news]
WASHINGTON (ICIS)--A US House committee on Thursday began considering a bill to extend the federal role in domestic helium production and sales, hoping to avert what could be a sharp decline in supplies and equally abrupt price hikes later this year.
The bill would extend the federal government’s role in providing and selling helium, a function that otherwise would end abruptly in October this year. The bill also would establish a new operating system over the next 10 years to enable a more gradual federal exit from the helium business.
The US government-operated system, the Federal Helium Reserve (FHR) in Texas, provides 30% of the world’s supply of helium and fills more than 50% of US domestic demand.
That system feeds raw helium recovered from natural gas production to six refineries operated by four major industrial gases firms along the FHR pipeline that spans parts of three states – Texas, Oklahoma and Kansas.
While the federal role in managing and selling helium dates to the World War I era – when helium was needed for military blimps – the FHR is by law scheduled to shut down later this year.
Citing large debts run up by the Department of the Interior (DOI) in managing the FHR, Congress in 1996 directed that the federal government should close down the reserve and get out of the helium business.
A major criticism of the FHR operation was that the department was selling helium at prices far below true market value and consequently short-changing taxpayers. The low federal price for helium, it was argued, also discouraged private sector firms from seeking out new helium-rich natural gas fields.
But as the FHR shut-down date neared, helium refiners and consumer industries warned that if the federal reserve were allowed to close in October this year without alternative, private-sector arrangements having been made, half of the domestic supply would be withdrawn from the market.
That in turn could trigger a wide-scale US industrial, medical and research crisis, according to committee chairman Doc Hastings (Republican-Washington).
“Unless Congress takes swift action,” Hastings said at the hearing, “America will float off a helium cliff – which will adversely affect American jobs and our economy.”
Along with others testifying at the hearing, Hastings agreed that the federal government ought to get out of what should be an entirely private sector commodity business, but he argued that an abrupt exit could be catastrophic.
“So this bill is necessary to protect our economy from severe disruptions because helium is too essential to suddenly shut off the valve at the Reserve,” he said.
“This bill recognizes that reality and builds into place critical reforms to sell off the helium in a more responsible manner,” Hastings said.
“This will prevent a potentially economically crippling shortage,” he said, adding: “It will ensure a better deal for taxpayers, and it will provide additional time for new development of alternative domestic helium resources so our country and economy are prepared when the reserve does close.”
Helium is broadly used across US manufacturing industries, and it is critical to medical sector operations, especially diagnostics such as magnetic resonance imaging (MRI) systems.
The lighter-than-air gas also plays a crucial role in welding – which is ubiquitous in almost every manufacturing and process industry, including chemicals and refining – and in such varied products as LCD video screens, computer chips, medical lasers, rocket fuels and nuclear reactors, among many others.
In congressional testimony last year, helium was identified as critical to basic research, having played a central role in about one-third of the 31 Nobel Prizes awarded for physics since 1980.
Final action on HR-527 is not expected until after further hearings, but Hastings has said he wants the measure to clear Congress as soon as possible this year. The bill has bipartisan backing.
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