The United States Government price for "Crude" Helium is $75.75 per thousand cubic feet (for open market sales only) effective October 2011.  This value was adjusted July 22, 2011.  Prior to the past two increases, the price of helium was not based on any fundamental market-based activity. Rather, it was simply the reserves left in the Cliffside Field (near Amarillo) divided by the accumulated government debt created by the Helium Act of 1960 (and adjusted by the Consumer Price Index). As mandated by Congress in 1996 (Helium Privatization Act of 1996), the U.S. Government must sell off substantially all of its reserves by 2015 to cover this debt (debt was frozen in 1996 as a result of this Act).  The balance of the Helium Debt in Fiscal Year 2009 was $579 million.

The new price of $75.75 was established as a result of the 2010 Government study, Selling the Nation's Helium Reserve, which recommended that a market price be placed on Government helium stored at Cliffside in order to "enable more rapid retirement of BLM facilities debt to the U.S. Treasury". Government helium was sold at a severe discount to fair market value prior to this increase.  Although this new price of $75.75 established by the BLM is a step in the right direction, it still does not reflect true market value.  This new price reflects only a 1% increase from the previous $75 implying that the price reflects the Consumer Price Index adjustment only.  No market driven mechanism was used to adjust this new price increase.

In 2009, the estimated price range for private industry's Grade-A gaseous helium was between $125 to $145 per Mcf.  In 2010, this price range increased to roughly $140 to $160 per Mcf, with some producers posting surcharges to this price.  This reflects an average price increase of 11% in one year.  With increasing demand and diminished supply, these prices will continue to escalate into the near future.

In Fiscal Year 2010, Cliffside open market sales of helium were 2,133 million cubic feet with sales receipts of $135,975,000.  In-kind** sales were 172 million cubic feet with sales receipts of $10,902,185.  This sales value represents helium sold at the stipulated (previous), formulaic price.  If this helium had been sold at fair market value, a larger portion of the U.S. Government Helium Debt could have been retired.    The total helium in storage as of the end of September 2010 was 24.2 billion cubic feet (does not include Cliffside Field native gas).  Estimated 2010 domestic consumption of helium was 1.90 billion cubic feet.

In 2010, the National Research Council addressed this issue (among other important issues) in their recent publication, Selling the Nation’s Helium Reserve (publication is free with registration). The committee highlighted the need to establish a market-based price and concluded the following:

The pricing mechanism used by BLM reflects the costs of crude helium (as determined by the 1996 Act), not the value of the helium. The best data available to the committee indicate that since approximately 2007, the BLM price for crude helium is now the average price at which privately-owned crude helium was sold between private parties and in effect, BLM, rather than market forces, is setting the price for crude helium. While recognizing the idiosyncratic nature of the helium market, in the committee’s best judgment if this situation persists, it can have several negative consequences —

• Lead to inaccurate market signals, bringing about increased consumption and thereby acceleration in the depletion of the Federal Helium Reserve.
• Retard efforts to develop alternative sources of helium.
• Result in a net transfer of taxpayer assets to private companies.
• Result in sales of federally-owned crude helium that subsidize exports of helium.

The committee recommended that “the Bureau of Land Management (BLM) should adopt policies that open its crude helium sales to a broader array of buyers and make the process for establishing the selling price of crude helium from the Federal Reserve more transparent.”

For more information on the BLM's role in worldwide helium distribution, please read The US Government's Role in Providing Helium to Worldwide Markets, by Leslie Theiss (Manager of the Helium Operations Office for the Bureau of Land Management in the Amarilo Field Office).

** "As part of the resetting of the helium program's objectives, the 1996 act established a revised approach for meeting federal needs for helium.  In 1998, BLM began engaging in in-kind sales to federal agencies.  The in-kind regulations established procedures for BLM to sell crude helium to authorized helium supply companies and required federal agency buyers to purchase helium from these approved suppliers."  Source:  Helium Program: Key Developments Since the Early 1990s and Future Considerations, U.S. Government Accountability Office (GAO-10-700T) May 13, 2010, p.10