Global demand for helium is likely to nearly double by 2035, largely driven by robust growth by the semiconductor sector market research, firm IDTechEx has reported. The company estimates that global demand could exceed 322 million cubic meters by 2035, possibly outpacing supply growth.
According to the report, global helium production averaged about 160 million cubic feet between 2019 to 2023. As the second lightest element after hydrogen, having the lowest melting point of any element at -261.1°C (-429°F) and being highly chemically inert, helium has no substitute where ultra-low temperatures are required including in superconductors.
Helium is indispensable in many key applications including space exploration, rocketry, high-level scientific applications, in the medical industry for MRI scanners, fiber optics, electronics, telecommunications, superconductivity, underwater breathing, welding, cryogenic shielding, leak detection, and in lifting balloons.
IDTechEx has projected that demand for the gas is likely to rise five-fold in the semiconductor industry over the next decade, with the global semiconductor market expected to grow by 13.1% in 2024.
Currently, only a handful of countries including the United States, France, Russia and Qatar produce helium in commercial volumes. In 2023, U.S. sales of grade-a helium and gaseous helium were an estimated 2.8 billion cubic feet valued at about $1.1 billion. Allentown, Pennsylvania-based Air Products and Chemicals Inc. (NYSE:APD), France's Linde and Air Liquide (OTCPK:AIQUF) and privately-held Zephyr Solutions based in Avon, Ohio, are some of the biggest helium-producing companies in the world.
Dwindling Supplies
Only a small percentage of the helium generated through natural means is readily accessible, and even a smaller proportion is economically feasible to collect.
The helium that we find on our planet is a product of radioactive decay from minerals made of uranium and thorium. Unfortunately, the vast majority leaks off into space, and whatever little that is trapped comes nowhere close to meeting our global demand of 32,000 tons of helium per year (about 6.2 billion cubic feet measured at 70°F and under earth's normal atmosphere). The vast majority of our helium reserves come from millions of years of gradual accumulation, especially in shale formations.
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After being formed deep in the bowels of the earth, helium tends to rise and collect in the same deposits as natural gas. In fact, a large proportion of our helium supply comes from natural gas companies that collect the gas as an ancillary benefit. Unfortunately, current technological limits mean that helium is only economically recoverable at concentrations greater than 0.3%. Consequently, the vast majority of the helium in gas reserves is simply vented away.
Another weak link has developed in the U.S. helium supply chain: The U.S. federal government will no longer be selling helium to traders and manufacturers.
Back in 1925 when helium-based airships seemed like they would become vital to national defense, the U.S. government created the Federal Helium Reserve (FHR) out of a giant, abandoned salt mine located 12 miles northwest of Amarillo, Texas. Over several decades, FHR collected as much helium as it could and essentially became the world's strategic helium reserve supplying ~40% of the world's needs.
Unfortunately, the FHR eventually ran into debt trouble to the tune of billions of dollars thanks to its practice of selling helium at well below market prices. In 1996, the U.S. government passed laws mandating FHR to sell off its reserves and close in 2021 in an effort to recoup its debts.
The Bureau of Land Management (BLM) outlined the process and timeline by which the FHR will dispose of its remaining helium and helium assets. BLM, which now manages the reserve, managed to sell off most of the stored helium to all users, with the remaining 3 billion cubic feet (84 million cubic meters) by 2018 restricted for sale to only federal users, including universities that use helium for federally sponsored research. BLM held its last Crude Helium Auction in Amarillo, Texas, in 2019 with the price rising 135%, from $119/Mcf in 2018 to $280/Mcf in 2019.
In June 2024, Germany's Messer, the largest privately held industrial gas company in the world, closed on its purchase of the Federal Helium System from BLM, claiming some 425 miles of pipelines spanning Texas, Kansas and Oklahoma, plus about 1 billion cubic feet of helium. Unfortunately, regulatory and logistical issues with the facility now threaten a temporary shutdown as it passes from public to private ownership, with hospitals particularly worried they could run out of helium for cooling their MRIs. American patients undergo an estimated 40 million MRI scans each year to help diagnose diverse health conditions including cancer, brain and spinal cord injuries, strokes and heart conditions. The superconductive magnet-powered imaging machines give doctors clear, high-resolution images of areas inside the body that are not accessible with X-rays and CT scans.
"Timely, critical patient care would suffer if helium supplies constricted further. AdvaMed urges the White House to delay the sale and privatization of the Federal Helium Reserve until outstanding issues identified by the Compressed Gas Association are resolved," Scott Whitaker, AdvaMed's CEO, wrote in an email to NBC News.
Helium was already in short supply before the sale of FHR: according to Phil Kornbluth, President of Kornbluth Helium Consulting, three out of five U.S. helium suppliers are currently rationing the element to prioritize critical uses like MRI machines ahead of less-essential helium applications.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More