OXFORD – Helium is vital in today’s technology-based world. It cools, with precision, the superconducting coils of magnetic resonance imaging (MRI) machines, as well as the silicon used to make chips for devices like smart phones or the glass that is drawn into optic fibers. For pressure-fed rockets, Big Physics, or even party balloons, there is no realistic alternative to helium. Until recently, the world’s seemingly abundant supply of helium was extracted solely as a by-product of natural-gas production in just two dozen helium-rich fields. But global helium production shortfalls have driven double-digit inflation of helium prices and fueled rising anxiety in the scientific community. Now, prospectors in the United States – the world’s largest helium exporter – are exploring fields in search of helium exclusively.Helium shortages inevitably spur debate about production and preservation practices. Since the 1996 US Helium Privatization Act (HPA) – which required the government to sell off its helium reserves using a rigid price formula in order to repay the debt accrued from a large helium buy-up in the 1960’s – there have been three such shortfalls.Given that the HPA calls for helium sales to cease once the debt is paid – that is, this October – the scientific, medical, and technology communities have become increasingly concerned about a massive helium shortage and ballooning costs. This, together with the fact that helium underpins much US employment, may have contributed to the US Congress’s recent efforts to keep one-third of the world’s helium supply flowing, but at higher prices.The move is timely, because the mandated disposal of such a large volume of helium from the US Federal Helium Reserve over the last 15 years has displaced many helium producers in the American Midwest and deferred projects elsewhere (see graph). Indeed, by artificially constraining helium prices, the HPA weakened companies’ incentive to invest in separating helium from natural gas. As a result, many thousands of tonnes of helium have simply been vented into the atmosphere at source or when the natural gas has been burned.Ending this lamentable squandering of helium requires a fundamental shift in thinking in the natural-gas industry. As helium is a by-product of its much larger energy counterpart, it is fair to say that helium that is not used will not be preserved.Today, the upstream helium market is structurally weak. Helium-bearing Hugoton, America’s largest natural-gas field, is in decline. And sustaining the US Federal Helium Reserve’s high production capacity, which used to enable it to offset global helium-supply disruptions, is no longer geologically viable. Moreover, the rapid expansion in the US of shale gas, which contains no economically recoverable helium, has squeezed marginal conventional-gas supplies. For example, Oklahoma’s Keyes natural-gas field – which relieved a major helium shortage just as the US government started purchasing the gas from private producers during the space race – now lies dormant. And helium extraction is not economical without natural-gas production.As it stands, natural-gas companies have little incentive to adapt their operations to enable helium extraction. In Algeria, a giant gas field, the helium-rich Hassi R’Mel, is also a gas hub for the Sahara region. Rich and lean streams are blended there. This reduces the helium concentration and makes extraction difficult.Clearly, the problem is not insufficient helium, but the economic, legal, and physical constraints on helium resources. In fact, Arizona alone has enough helium to supply the US for a decade. But the St. John’s Dome natural-gas field is dominated by CO2, which the Ridgeway Arizona Oil Corporation aims to use to enhance oil-recovery projects in the area. Given that the CO2 is not yet being produced and will not be vented, the field’s helium remains inaccessible.Despite these challenges, the industrial gas companies are gaining access to helium in low-grade gas sources. Although some producers – including Exxon Mobil’s Shute Creek plant near La Barge, Wyoming (until 2013, home to the world’s largest helium refinery) – once vented waste CO2 into the atmosphere, they are now installing carbon-capture facilities to reduce or eliminate emissions.Moreover, nitrogen – a gas that can be vented without consequences – always coexists with helium. Coincidentally, the initial discovery of abundant helium in the US in 1903 occurred at a dud gas well in Dexter, Kansas, which contained a gas mixture comprising more than 70% nitrogen and 1.84% helium. As helium prices rise, nitrogen-rich sources are becoming economical.But such small-scale schemes will be inadequate to meet escalating demand for helium in Asia. For that, firms should look to liquefied natural gas (LNG) – the precursor to shale gas – which enables the production of helium from natural gas containing just 0.04% helium.The first helium-producing LNG plant was commissioned in 1994 in Algeria. Qatar has one operating helium refinery, and another recently started up. Together, they should produce 25% of the world’s helium during 2014.Richard H. Clarke is a process and resources consultant in Oxford, England. He is co-editor of The Future of Helium as a Natural Resource.Copyright: Project Syndicate