Add Helium to the Supply Chain Crisis List

Guest “Everything you never wanted to know about helium” by David Middleton

Free-For-All In Helium Market Could Send Prices Sky-High
By Tom Kool – Mar 30, 2022

The gas that is critical for everything from supercomputing and space travel to MRIs and medical and scientific research was facing a supply shortage even before Russia launched a war on Ukraine. 

Now, the supply squeeze is on war-footing, and some investors are on the lookout for a North American supplier that can get this gas to the market–fast. 

The gas is helium…

The backbone of much of our existing technology …

And the beating heart of our future technology. 

While a helium land rush was already at full throttle after the Federal government shut down its helium reserve in the third quarter of last year, the supply of this gas is facing another big hit with Russia’s war on Ukraine. 

Earlier this week, Algeria–a key supplier–was forced to shut down its helium operations because of soaring natural gas demand in Europe. 

[…]

America’s Biggest Helium Play?

In our view, Total Helium is parked in the right place at exactly the right time. 

The “right place” is the Hugoton natural gas field in the Kansas-Oklahoma panhandle. 

Hugoton is the largest natural gas field in the United States, and the largest conventional natural gas play in North America, having already produced 75 trillion cubic feet of methane. 

The field has already produced some 300 BCF of helium. 

Now that the Federal Helium Reserve in Amarillo, Texas, has been shut down and all its helium auctioned off, Hugoton has become one of the most important helium supply sources in North America. 

[…]

OilPrice.com

Most natural gas contains at least a trace of helium. However, commercially recoverable concentrations generally require two (2) geological factors:

  1. The natural gas reservoir must overlie fractured granitoid basement rocks.
  2. The caprock must form a particularly impermeable seal.
Helium-bearing natural gas deposits: Deposit model for helium-bearing natural gas fields in the United States. Helium is produced by the decay of uranium and thorium in granitoid basement rocks. The liberated helium is buoyant and moves toward the surface in porosity associated with basement faults. The helium then moves upward through porous sedimentary cover until it is trapped with natural gas under beds of anhydrite or salt. These are the only laterally-persistent rock types that are able to trap and contain the tiny, buoyant helium atoms. This geological situation only occurs at a few locations in the world and is why rich helium accumulations are rare. (Geology.com)
Helium-bearing natural gas deposits: Map showing the natural gas fields that serve as important sources of helium in the United States. The natural gas produced from these fields contains between 0.3% to over 7% helium. The helium is removed from the gas for commercial sale. Image by Geology.com using location data from the United States Geological Survey. [2] (Geology.com)

As early as 2011, it was suggested that helium might eventually become a primary drilling target, rather than just a byproduct of natural gas production.

Total Helium might just be making the right play at the right time. They have built up a large acreage position in and around the Hugoton natural gas field.

Hugoton has produced over 300 trillion cubic feet (Tcf) of natural gas along with 75 billion cubic feet (Bcf) of helium over the past 100 years. While natural gas prices are at their highest level since 2014.

Monthly Henry Hub Natural Gas Spot Price (MHHNGSP). St. Louis Fed

Helium prices are approaching escape velocity…

Natural gas is trading at about $6.60/mcf this afternoon. In 2018, helium was going for $280/mcf. (mcf = thousand cubic feet). That price is currently skyrocketing, because… government mismanagement.

Helium supply crunch looms as US alters storage strategy
posted by Will Phillips
in Supply chain
23 February 2022

A vital helium reserve in the US that supplies the global market will stop selling to the public in September 2022, threatening a supply crunch.

The US government has owned up to 1bn cubic meters of helium gas in a Federal Helium Reserve (FHR) – managed by the Bureau of Land Management (BLM) – since 1925. It is now disposing of its remaining helium and assets by transfer to other federal bodies and public sales.

The end of public sales in September, alongside major incidents at a helium factory in Russia – a key supplier – and tensions with Ukraine, mean prices are expected to skyrocket.

Tom Kool, head of operations at price-tracking website Oilprice, said: “A helium supply crunch may be growing more critical with each passing day… The world is quickly coming to grips with one of the biggest supply squeezes of our times.”

Helium gas prices have risen dramatically since 2019, when the US government sold at a rate of $280 per million cubic feet (Mcf). Now that figure has more than doubled, selling for up to $600/Mcf.

The US produces 40% of the world’s helium supply, with the majority coming from the FHR. The FHR has reserved all helium found on federal land since 1925, and purchased crude helium extracted by natural gas producers for storage at its facility in Amarillo, Texas. This purchasing policy accumulated 1bn cubic meters of helium by 1995 and led to the reserve being $1.4bn in debt.

The FHR is currently the only helium storage facility in the world and has sold crude helium to private companies since 1996, often at below-market prices, in order to clear the debt.

The FHR was established to provide gas for airships and in the 1950s supplied the government with coolant for the Cold War and Space Race. 

[…]

CIPS.org

For nearly 100 years, the US government controlled the production, storage and sales of helium, essentially driving the program out of business. The FHR accumulated 1 billion cubic meters (~35Bcf) of helium and $1.4 billion in debt. Fortunately, the USGS estimates that there’s a lot of recoverable helium left in the ground…

USGS Estimates 306 Billion Cubic Feet of Recoverable Helium in the United States

Agency releases first-ever assessment of recoverable helium

By Communications and Publishing September 28, 2021

The natural gas reservoirs of the United States contain an estimated 306 billion cubic feet of recoverable helium, according to a new report from the U.S. Geological Survey. This is the first-ever estimate of recoverable helium resources from the USGS.

“This helium assessment is a perfect application of our long-standing research on geologic reservoirs ranging from natural gas resources to carbon dioxide storage potential,” said Sarah Ryker, USGS associate director for energy and mineral resources. “This publicly available assessment will provide an unbiased estimate of the remaining volume of helium that private markets can rely on.”

Helium is a lighter-than-air gas that is primarily used in medical imaging such as MRIs, semiconductor manufacturing, laser welding, aerospace, defense and energy programs. Almost all commercial helium supplies come from the production of natural gas. As the natural gas is pumped to the surface, it brings other gases such as helium along with it. The helium can then be captured and stored separately from the natural gas.

Helium is considered a nonrenewable resource because it is produced with other non-renewable gases and it is also light enough to escape Earth’s gravity into space.

The United States is the leading supplier of helium for the world, producing 2.15 billion cubic feet of helium (61 million cubic meters) in 2020, or about 44% of the total global production. This assessment represents about 150 years of supply at 2020 U.S. production levels. However, because most production of helium is as a byproduct of natural gas production, it is unlikely that all 306 billion cubic feet of helium would be produced.

A significant portion of the Nation’s helium production has historically come through the Federal Helium Program, managed by the Bureau of Land Management.

The USGS tracks helium production, both in the United States and globally, in its annual Mineral Commodity Summaries. These estimates have included both production from private wells and releases from the Federal Helium System.

This assessment of helium resources was undertaken by the USGS under the direction of the Helium Stewardship Act of 2013. It was informed by assessments of geologic carbon dioxide storage potential and studies of other energy-related gases.

The assessment report is entitled “National Assessment of Helium Resources Within Known Natural Gas Reservoirs” and can be accessed here. USGS commodity information on helium can be found here. To find out more about USGS energy assessments and other energy research, please visit the USGS Energy Resources Program website, sign up for our Newsletter, and follow us on Twitter. More information about USGS commodity data for helium and more than 90 other mineral commodities can be found here. All other USGS mineral resource information can be found here.

USGS

306 Bcf would represent about 150 years’ worth of current annual production. Unsurprisingly, the assessment (Brennan et al., 2021) found that 99% of the recoverable helium was in the Rocky Mountains and Mid-Continent regions, where the natural gas reservoirs generally overlie fractured granitoid rocks and are overlain with particularly impermeable sealing formations.

Here’s a schematic cross-section of the Panhandle Field in the Hugoton complex and the Anadarko Basin:

Figure 1-3. South-north cross-section, Anadarko Basin (after Johnson, 1989; Dutton and Garnett, 1989; Pippin, 1970). (Sorenson, 2003)

The primary reservoirs are Early Permian dolomitic carbonates, with Middle Permian evaporites (mainly anhydrite) providing the seal. The hydrocarbons are sourced from Devonian, Mississippian and Pennsylvanian shales (Ball et al., 1991). The helium is sourced from the underlying fractured Cambrian-Precambrian igneous basement rocks.

It’s interesting to note that the Palo Duro Basin, just south of the Amarillo Uplift has very little hydrocarbon production. This appears to be due to a lack of sufficiently thermally mature source rocks (Rose, 1986).

The definitive characteristics of this play are its setting in the central portion of the Palo Duro Basin and
the Pennsylvanian and Permian ages of its reservoirs. The main weakness of this play is apparent lack of source rock.

USGS, 1995

The Granite Wash formation, an excellent reservoir, directly overlays the Precambrian igneous basement in the Palo Duro basement. Whereas, in the Anadarko Basin, there is a very thick organic-rich sequence of sedimentary rocks in between the reservoir rocks and the Precambrian igneous basement… Coincidence? (Rhetorical).

Terrestrial helium is a nonrenewable resource because Earth makes it a lot more slowly than we produce it… What happens if we run out of helium on Earth? Ralph Kramden has the answer:

“Bang zoom… to the Moon!”

14 March 2019
Helium-3: Lunar Gold Fever
Astrophysics | Energy | Nuclear energy | Physics | Space

In 1986, scientists at the Institute of Fusion Technology at the University of Wisconsin estimated that the lunar “soil”, called the regolith, contains one million tons of helium-3 (3He), a material that could be used as fuel to produce energy by nuclear fusion. According to the study, mining it would be a profitable undertaking: the energy produced by the helium-3 would be 250 times greater than that needed to extract this resource from the Moon and transport it to Earth, where the lunar reserves of helium-3 could supply human needs for centuries.

The analysis of the researchers, based on samples collected by the Apollo missions, triggered a fever for this new lunar gold, which would be worth billions of dollars for those who controlled it. However, more than 30 years later, not a single gram has been collected yet, and there are those who say that it will never happen, because —according them— helium-3 has only served to inflate an enormous balloon of unfounded speculation.

The nuclear fusion of light atoms, such as the hydrogen isotopes deuterium (2H) and tritium (3H), has been seen for decades as the energy source of the future, inexhaustible and much less polluting than the fission of heavy atoms such as uranium. However, the technological development needed for it to be a practical and energy-efficient option still keeps researchers busy, and it is not an entirely clean energy: the fusion of deuterium and tritium produces neutrons, particles that cause radioactive contamination and that cannot be contained with electromagnetic fields, since they lack an electrical charge.

Against this, helium-3 (a non-radioactive isotope of the gas used to inflate balloons) offers remarkable advantages: its fusion with deuterium is more efficient than deuterium-tritium and does not release neutrons but protons, which can be easily contained thanks to their positive charge. In addition, it is possible to capture its energy to produce electricity directly, without the need for a water heating process to move turbines, as in current nuclear fission plants.

[…]

BBVA Open Mind

Let’s go! Apollo 17 astronaut Jack Schmitt has already written up the business plan!

References

Ball, M. M.; Henry, Mitchell E.; Frezon, Sherwood E.; Petroleum geology of the Anadarko Basin region, Province (115), Kansas, Oklahoma, and Texas; 1991; OFR; 88-450-W.

Brennan, S.T., Rivera, J.L., Varela, B.A., and Park, A.J., 2021, National assessment of helium resources within known natural gas reservoirs: U.S. Geological Survey Scientific Investigations Report 2021–5085, 5 p., https://ift.tt/BnvHthE.

Rose, P R. Petroleum geology of the Palo Duro Basin, Texas Panhandle. United States: N. p., 1986. Web.

Schmitt H (2006) Return to the Moon: exploration, enterprise, and energy in the human settlement of space. Springer, New York

Sorenson, Raymond. (2003). A dynamic model for the Permian Panhandle and Hugoton fields, Western Anadarko basin. Search and Discovery Article #20015. Adapted for online presentation from poster session presented at the 2003 AAPG Mid-Continent Section Meeting, Tulsa, Oklahoma, October 12-14, 2003.

via Watts Up With That?

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April 12, 2022 at 08:13AM

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