{"id":29255,"date":"2023-04-04T08:06:31","date_gmt":"2023-04-04T07:06:31","guid":{"rendered":"https:\/\/www.innovationnewsnetwork.com\/?p=29255"},"modified":"2023-05-12T13:52:30","modified_gmt":"2023-05-12T12:52:30","slug":"helium-shortage-4-0-what-caused-it-and-when-will-it-end","status":"publish","type":"post","link":"https:\/\/www.innovationnewsnetwork.com\/helium-shortage-4-0-what-caused-it-and-when-will-it-end\/29255\/","title":{"rendered":"Helium Shortage 4.0: What caused it and when will it end?"},"content":{"rendered":"

Phil Kornbluth, President of Kornbluth Helium Consulting<\/a>, discusses the major events that have led to a global helium shortage and outlines projections for the future of the helium market.<\/h2>\n

Anyone who uses helium in their business will be well aware that the global helium market has been experiencing \u2018Helium Shortage 4.0\u2019 since the beginning of 2022. From January 2022 onwards, most helium users have been dealing with supply allocations from their suppliers and sharply higher prices for the helium that they require. This article will explore the causes of Helium Shortage 4.0, the developments that could bring it to an end, and the potential impact of the war in Ukraine and sanctions on helium market developments.<\/p>\n

Unprecedented helium shortages<\/h3>\n

Helium markets have experienced a series of extended periods of short supply since 2006. In fact, 2022 was the eighth year of supply deficits during the 17-year period between 2006-2022. But 2022 was not supposed to be another year of shortages. The giant state-owned Russian energy company Gazprom was supposed to start up a huge natural gas processing plant to process the gas flowing to China through the 3,000km Power of Siberia pipeline in the Amur Region of Siberia in late 2021. The waste gas from the Amur gas processing plant is rich in helium and is an ideal feed gas for a helium purification and liquefaction plant. Gazprom plans to produce helium from three separate helium plants, each of which will have annual nameplate capacity of about 28.2 million litres (750 million standard cubic feet or SCF). At full capacity, which was not expected to be reached until 2025, the Amur Plant has the potential to produce 84.5 million litres (2.25 BCF) per year of bulk liquid helium, equivalent to roughly one-third of current worldwide capacity. Gazprom had been planning to start up the first helium plant in 2021, with the second plant starting up in 2022 and the third plant starting up in 2024 or 2025. With two plants running in 2022, adding up to 56.3 million litres (1.5 BCF) to world supply, 2022 was expected to be the year when the era of recurring helium shortages finally came to an end. Unfortunately, this has not come to pass. After briefly starting up the first helium plant at Amur in September 2021 and producing helium for a few weeks, the plant was taken down to complete punch list construction items. While the plant was offline, there was a fire in the natural gas processing plants feeding the first helium plant on 8 October 2021 and then, on 5 January 2022, there was a major explosion\/fire in the natural gas processing plants providing helium feed gas. These fires and explosion were major setbacks for helium production from Amur and, combined with the impact of the war in Ukraine and sanctions, have delayed helium production from Amur until at least the second quarter of 2023.<\/p>\n

While helium markets were disappointed by the delayed impact of new Russian supply, there were a handful of other contributing factors to Helium Shortage 4.0. Foremost among them, there was an extended outage of the U.S. Bureau of Land Management\u2019s (BLM) purifier, commonly referred to as the Crude Helium Enrichment Unit (CHEU), that upgrades the purity of crude helium removed from the Cliffside Field storage reservoir before delivering it to four privately owned helium purification\/liquefaction plants connected to the BLM Pipeline & Storage System. The CHEU went down around 10 January 2022 and did not resume operations until 10 June, removing more than 10% of global capacity from the market. Other factors contributing to the severity of Helium Shortage 4.0 included planned maintenance at two of the three helium plants in Qatar during February and March, reduced production from Algeria caused by the need to replace the loss of Russian gas resulting from the war in Ukraine, reduced production from the Darwin, Australia, plant due to depletion of the Bayu-Undan offshore natural gas field and a fire at a natural gas processing plant in Haven, Kansas, that produces crude helium. Suffice to say, a lot of things went wrong with the world\u2019s helium supply in 2022 and we ended up with a severe helium shortage.<\/p>\n

User impacts of Helium Shortage 4.0<\/h3>\n

How did Helium Shortage 4.0 impact helium users?\u00a0 Four of the world\u2019s five major helium suppliers, including Air Liquide, Linde, Matheson and Messer, declared force majeure and implemented supply allocations (i.e. rationing) for their contract customers. Among the helium majors, Air Products and Chemicals was the sole exception. With supply allocations, customers receive a fixed percentage (i.e. usually less than 100%) of their helium requirements based on their share of a prior period\u2019s historical deliveries. Allocation percentages typically vary depending on the criticality of the application for which helium is utilised. For example, a medical application, such as MRI, might not be subject to allocation, or might receive a very high allocation percentage, while a customer who uses helium to fill party balloons might be subject to a low allocation percentage. Allocations can cause a great deal of inconvenience and frustration, and they may result in constraints on the helium users\u2019 business or activity. Besides allocations, the other major impact is on price. The helium business, with only five major global suppliers, is an oligopoly and the major gas companies are adept at managing price. During shortage periods, prices can increase quickly and dramatically. That has been the case during Helium Shortage 4.0, with price increase activity receiving an added boost by the need to pass through significant increases in the cost of helium produced by ExxonMobil and Qatar Petroleum. While there is no publicly available information on the price of helium, helium price levels have increased by 50-100% for most helium users since the start of Helium Shortage 4.0.<\/p>\n

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Allocation percentages typically vary depending on the criticality of the application for which helium is utilised. For example, a medical application, such as MRI, might not be subject to allocation, or might receive a very high allocation percentage. \u00a9 shutterstock\/Piyorot.s<\/figcaption><\/figure>\n

Future projections for the helium market<\/h3>\n

As of March 2023, the key questions on the minds of helium users include:<\/p>\n