washington

Balloon goes up: helium use is on the rise, but US privatization plan could flood the market. Credit: AP/ERIC DRAPER

A plan to privatize a vast reserve of helium that the US government holds in an old natural gas dome under Texas may be impossible to implement, according to the chair of a National Research Council (NRC) panel. The panel is about to investigate the impact of the proposal on scientists and other users of the gas.

In October 1996, President Bill Clinton signed a law mandating the sale of the helium reserve, which holds 30 billion cubic feet of the gas at Amarillo, Texas. The legislation instructs the government to sell it between 2005 and 2015 at a price which, most analysts believe, the market cannot bear. It also requires the government to keep 600 million cubic feet, excluding the possible transfer of the whole reserve to a private company.

“This is going to be an interesting sale, because the whole thing isn't for sale,” said Ray Beebe, the Tucson, Arizona-based consultant who co-chairs the NRC panel, at its first meeting on Monday (6 July). “Is the legislation a series of compromises, to the point where it might not be workable?” he asked.

The study was requested in the legislation as a concession to groups such as the American Physical Society, which believes that the government should keep the reserve for future use. Physicists say they want to protect the reserve because of the extreme difficulty of extracting the gas from anywhere other than a few, non-renewable natural gas fields. “The physics community is aware of all sorts of technologies that could depend on helium,” says Allen Goldman, a panel member and physicist at the University of Minnesota.

The United States produces three-quarters of the 4.5 billion cubic feet of helium that the world will consume this year. Available global reserves are estimated at 200 billion cubic feet. Use is growing rapidly, but the price of helium has been stable in recent years, at around $35 per 1,000 cubic feet.

Apart from concern about consuming a non-renewable resource, critics worry that privatization of the reserve will flood the market, slashing prices and leading commercial suppliers to stop recovering helium from natural gas. But Tim Brennan, an economist at the University of Maryland, advised the panel to let suppliers worry about this: “I don't understand why [falling prices] should be a social policy concern,” he said.

The government's concern, however, is that collapsing prices will prevent it from recovering anything like the $1.5 billion which the law says should be raised by the sale. Last year, the Congressional Research Service warned that the law requires the government to obtain 25 per cent more than the current price of helium, even as it floods the market with 40 per cent over capacity.

The NRC study of the plan is expected to take 18 months. “It's an opportunity to answer a lot of questions,” says Beebe. He adds that the panel is unlikely to reject the privatization plan, but may suggest how it can be improved.