Federal Helium Reserve

Helium stakeholders urge government to push back sale of federal reserve

January 23, 2024
by John R. Fischer, Senior Reporter
The Compressed Gas Association, AdvaMed, and other organizations are urging Congress to delay the General Services Administration’s sale of the Federal Helium Reserve on January 25 out of concern about the potential effects it could have on MR scanning in healthcare and other industries.

Formed from the radioactive decay of uranium and thorium in the earth’s crust, helium is a finite resource that often escapes into space, making it scarce on earth. Remnants trapped in rocks are extracted and used for various purposes, including the cooling of MR magnets for proper scanning function.

Since 1925, the FHR has supplied helium worldwide and is today the largest global supplier based in the U.S., providing 20% of the country’s helium supply. Under the Helium Privatization Act signed in 1996, the U.S. government began exploring opportunities to sell off parts of the FHR to private companies to reduce stockpile expenses, which at the time exceeded $1 billion.

Because of this, the private sector cut back on its own helium production, leading to a supply shortage amid higher demands, which sent prices soaring and further strained budgets of hospitals, the largest end-users in the market.

While originally scheduled to be completely sold off by 2021, the sale has been delayed a number of times, with the most recent pushback made in November to this month, reported peer-review journal, Science. According to CGA, infrastructure, regulatory, and operational issues from the sale would create more disruptions and shortages, raise prices, and adversely affect U.S. geopolitical relations. It says that any challenges must be addressed before a deal is completed.

“This poorly structured and ill-timed sale would make lifesaving MRs less accessible, the chips that connect everything from computers to cars to airplanes less available, and would have an immediate impact on America’s national security,” said CGA president and CEO Rich Gottwald in a statement.

Among chief concerns is regulatory compliance under private ownership. The FHR spans Texas, Oklahoma, and Kansas, meaning any private owner will have to comply with multiple state-specific laws, which could lead to potential delays and uncertainties.

It also relies on the Crude Helium Enrichment Unit (CHEU) for helium extraction and enrichment. Just this week, helium supplier Messer, which runs CHEU operations, delivered one billion standard cubic feet of helium there, a major milestone. Should the CHEU agreement be non-transferable, the new reserve owner may face operational challenges.

In its own statement, AdvaMed said that the sale would force U.S. and international suppliers to seek supplies from the Middle East and Eastern European countries, like Russia, whose natural gas company Gazprom recently began supplying helium from its Amur plant. It also will have six process trains running by 2025, raising its share in the global helium market. Currently, geopolitical tensions are high due to Russia’s invasion of Ukraine and turmoil in the Middle East from the war between Israel and Palestine, meaning that any reliance on foreign suppliers in these areas would be risky and come with its own set of challenges.

“While innovations to use less helium in medtech are underway, MR machines are made to last for years as an investment and aren’t easily replaced. 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,” said Scott Whitaker, president and CEO of AdvaMed.

Other areas that could be impacted include national defense, nuclear energy, space exploration, search and rescue missions, and industrial applications. In healthcare, access to helium-neon lasers for eye surgery could also be limited, as could access to semiconductors, which are used in various sectors, including for medical device building.

The U.S. already faced months of delays in April 2022 when the Bureau of Land Management transferred operations and maintenance for the FHR to a private company. The interruptions were brought on by the need to identify and correct operational issues, meet regulatory requirements, and complete permits, illustrating the risks of privatizing the reserve, according to Gottwald.

“A poorly executed sale will lead to a helium supply chain crisis, impacting American competitiveness, economic growth, and national security,” he said.