A study of global helium resources

• Main Author: Cai, Zhiming
• Published: University of Cambridge 2010
• Subjects: 333
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.597213

Helium investment is fundamentally driven by the expectations of future helium demand of both oil & gas companies and the major industrial gas companies. When they conduct helium business, the relationship between the two groups of companies is governed by long-term contracts with take-or-pay clauses. System dynamics has been applied as a main research methodology, complemented by critical review, time series data analysis, interviews and private communications with helium industry experts and data collection. A system dynamics model of helium resources and the market has been created on the basis of the fundamental principles of economic theory, to examine the likely dynamic behaviour of the future helium market (i.e. the path of prices and resources extraction rate). The following issues have been thoroughly investigated: the nature of helium resources, supply chain and production technologies; helium market structure and production policies of competing firms; and the dynamics of the interaction among demand, supply, Government policy and technology. Monte Carlo simulation was conducted to examine the main uncertainties in connection with the dynamics of the future helium market: future supply from natural gas and the length of time that supply will be available; costs of obtaining helium from lean sources, including the atmosphere; future demand and how sensitive the demand will be to unprecedented prices. Key findings: (1) helium depletion is not imminent, and there is at least 30-50 years to allow users to develop new technologies to avoid or lessen their dependency on helium molecules; panic about helium depletion is unwarranted; (2) the periodical occurrences of helium shortages is fundamentally dependent on the investment policies of producers and their expectations of future helium demand, the lead time of investment, and realisation of demand; any helium supply shortage is not necessarily an indication of the imminence of helium depletion; (3) helium production as a by-product of the cryogenic separation of oxygen and nitrogen from air could be a potential solution for particular types of helium user when the cost of extraction from natural gas resources rises to a point at which backstop resources (e.g. helium from the atmosphere) comes into play; (4) increase in inventory in trans-fill facilities could be another way to smooth out the irregularities of supply and demand balance, especially after the BLM reserve, which has served as a crude helium inventory, is depleted; (5) potential big users of helium, such as fusion technology, need to take sustained action to reduce the potential demand for helium.