What Does the Shale Gas Boom Have to do With Helium Prices?
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In a recent article, Bloomberg paints shale gas as a cause for an upward spiral in the cost of helium. But like many stories on shale gas, this one falls victim to hyperbole. There’s no such thing as a free gas, if you will, so let’s deflate the helium hyperbole.
Helium, which is used in applications as varied as microchip manufacture and Zeppelins, is captured as a byproduct of natural gas extraction. Helium composes up to 2-3% of natural gas, and can be extracted during processing.
The problem that the Bloomberg article highlights is that shale gas contains virtually no helium, since helium in porous shale deposits has long since escaped to greener pastures. Bloomberg suggests that, because shale gas now makes up such a considerable percentage of all natural gas produced in the U.S. (actually only 35% at the moment ), there’s less byproduct helium produced, and thus, a shortage.
Sounds tidy enough, but it seems that the proximate cause of the spike is the imminent closure of the Federal Helium Reserve, which currently supplies a third of the world’s helium at well below market prices. There’s plenty of helium left, but a 1996 law would have the reserve close once the proceeds from helium sales pay the debt from establishing it in the first place. Congress could fix this, but in the meantime, the helium market has responded with higher prices.
The shift from conventional to unconventional natural gas production in the U.S. may have an impact on helium prices in time, but not just yet. Scratch the surface on pretty much any shale gas story and you find a complex web of politics, market forces and history at play.