Could gas shortage pop WD's helium drive plans?

Plans to ramp up helium production in the works

By , Computerworld |  Storage, hard drives, Western Digital

Walter Nelson, director of helium sourcing for Air Products and Chemicals, told the U.S. Senate Energy and Natural Resources Committee in May that with current production rates of about two billion cubit feet per year, the Federal Reservoir could continue to create helium for another "five to six more years." Computer modeling, he told the committee, shows reservoir production will decline to approximately 1 billion cubic feet per year after 2014.

The Federal Helium Reserve was established in 1925 as a strategic supply of gas for dirigibles. During World War I, America was only able to build a few air ships because of it lacked a non-flammable gas. Later, in the 1950s, those reserves were used as a coolant by NASA during the race to be first to put a man into space.

Today, Helium is used by the U.S. military for drones, and by private industry for manufacturing semiconductors, LED lights, LCD screens and for cooling magnetic resonance imaging (MRI) magnets. Helium is even used to cool the superconducting magnets in Europe's Large Hadron Collider.

But perhaps the greatest market competitor for worldwide supplies are party balloons, Garvey said. That industry's future currently looks bleak.

In an attempt to get the federal government out of the helium business, the Helium Privatization Act of 1996 mandated that all reserves be sold off by 2015. Over the past 15 years, it was hoped new gas fields would come on line. That, however, has yet to happen. The massive sell-off of helium by the U.S. government artificially depressed worldwide prices for years, but as the drawdown neared, prices again spiked.

In April, helium prices charged by the federal government were reported to have reached an all-time high of $75.75 per thousand cubic feet. Next year, the price is expected to climb to $84 per thousand cubic feet -- that represents a doubling over the past decade. In 2002, one thousand cubic feet of helium sold for $42, said Hummel. In contrast, last year in the private sector, helium sold for $160 per thousand cubic feet.

This year, the U.S. Senate began considering a bill to reestablish the supplies in the Bush Dome in the Texas panhandle. The Helium Stewardship Act of 201, was intended to slowed the sell off and changed the pricing model from public to private rates. The bill, however, has not moved forward and will be reconsidered in the next legislative session.

Even if the bill were not to pass, substantial worldwide helium reserves exist around the globe that could sustain the helium industry for hundreds of years, according to Maura Garvey, director of market research at J.R. Campbell & Associates.


Originally published on Computerworld |  Click here to read the original story.
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