While most people were watching whether the Land and Water Conservation Fund would be reauthorized in the John D. Dingell, Jr. Conservation Management, and Recreation Act (Dingell Act), a few of us were hoping the long-sought “helium fix” would at last make it across the finish line. When the President signed the Dingell Act on March 12, 2019, Section 1109, “Maintenance of Federal Mineral Leases Based on Extraction of Helium,” was included. What is the helium “fix” and why should we care about helium anyway?
Most people are familiar with helium from buying party balloons. But that is a minor (1%) part of its use. Helium plays a much more important role in space and aerospace applications, fiber optics, airbags, high-speed internet and medicine. MRI imaging depends on the ability of helium to hold a temperature of -269 degrees. In May 2018, pursuant to Executive Order 13817, the Trump administration identified helium as one of 35 minerals deemed critical to U.S. national security and the economy. 83 Fed. Reg. 2395 (May 18, 2018). And, this year, the media is highlighting a helium shortage that is closing 45 Party City stores and sending helium prices sky-high.
The helium story is one of those little-known, odd quirks of public land law. The federal government got involved with helium in WWI as it looked for a gas to use in blimps and initially restricted use of helium to the federal government. The Mineral Leasing Act of 1920 (30 USC § 161) specifically excludes helium from a federal oil and gas lease. In 1925, the Helium Act (50 USC § 167) was enacted and asserted strong federal control over the development of helium. In 1929, the National Helium Reserve (a federal helium storage, purification and distribution facility) was opened in Amarillo, TX and is today managed by the BLM. Until 1960, the federal government was the only US producer of helium. Beginning in 1996, Congress has been moving—slowly—to privatize helium management and the Amarillo facility is now scheduled to be closed in 2021 pursuant to the Helium Stewardship Act of 2013. In the meantime, BLM has more demand for helium than it has available, so it is prioritizing allocation of helium to a select group of federal helium suppliers, leaving other end users without their contracted amount. Congress is concerned.
Most helium is produced in the U.S., Qatar and Algeria and is typically stripped out of natural gas at gas processing plants. BLM’s helium regulations reflect that more typical process. 43 CFR Part 16. But public land states including Wyoming, Montana, Utah and Colorado also contain helium-rich deposits that are worth developing for helium alone. Unfortunately, due to helium’s tangled history of federal management, accessing federal helium is not easy.
According to BLM, to develop helium on public lands you need three things: an agreement (authorization) from the Secretary (as of 2013 delegated to the BLM Director); a sales contract with the Amarillo Field Office; and an oil and gas lease. The requirement for an oil and gas lease was BLM’s policy choice to prevent conflict with oil and gas development and provide a regulatory structure to manage the development of helium, without promulgating helium-specific rules. Unfortunately, the requirement to obtain an oil and gas lease also erected a significant hurdle to helium development. The only way to hold an oil and gas lease past the 10 year initial term is to produce oil or gas in “paying quantities.” Helium is typically found in nitrogen-rich and methane-poor reserves, making it next to impossible for a helium producer to hold the BLM-required oil and gas lease.
Enter the “helium fix.” After a sustained five-year effort by several companies at both BLM (for a policy change) and the Hill (for a legislative fix), Congress, in the Dingell Act, added a provision amending the Mineral Leasing Act to provide that the “extraction of helium from gas produced from such lands shall maintain the lease as if the extracted helium were oil and gas.” On March 28, 2019, then Acting Secretary Bernhardt by Secretarial Order 3374 established a task force for the Dingell Act to prioritize any necessary Interior implementation actions—including any necessary policy or regulatory changes to implement the new helium provision. The demand for helium will only continue to grow in the world’s high-tech economy, and this much-needed fix is one step to increase domestic helium supplies.