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Linn Energy, LLC Message Board

  • rlp2451 rlp2451 Feb 5, 2013 10:40 PM Flag

    Helium Production in Wyoming

    01/09/2013 - Analysts expect the Riley Ridge facility near Big Piney, to be operated by Denbury Resources Inc. out of Plano, Texas, to supply about 10 percent of the world's helium when it is operational, according to the Christian Science Monitor.

    Denbury, however, declined to provide figures.

    "Unfortunately we don't provide production guidance," said Ernesto Alegria, Denbury's public relations contact.

    He did say in an email that the helium production is expected to go live by the middle of this year and that they already have a contract in place with Air Products — a multinational corporation that recorded upwards of $9.6 billion in sales in 2012 — to buy all the helium it can produce on the property. Beyond that, he had little to add to the discussion.

    "We unfortunately are not able to speak about helium supply and demand and the effects on Denbury," he wrote.

    When Denbury's facility comes online, it will be one of only two producing helium in the state. Right now, Exxon Mobil Corp.'s LaBarge-Shute Creek facility is the only one contributing to the global helium supply. And its numbers have held relatively steady, according to Wyoming Oil and Gas Conservation Commission statistics. The plant generally continues to produce about 120 million cubic feet of helium per month, though production in the third and fourth quarter of 2012 faltered to below 100 million cubic feet some months.

    "Helium isn't one of the commodities that we track real closely," said Bob King, interim director of the Wyoming Oil and Gas Conservation Commission. However, King said the commission does recognize the importance of the element.

    "I think the world demand for helium is increasing because of the need for electronics with respect to computers," he said. "The supply is not able to keep up with demand; it's not a matter of supply [dropping.]"

    What are the BLM’s prices for crude helium? What will the helium prices be next year?

    The FY 2013 price is $84.00 per Mcf.

    The cost of helium sold for federal purposes will continue to be the minimum allowed by the HPA. For FY 2013 the pricing has been adjusted to $67.75 per Mcf up from $65.50 per Mcf in FY 2012.

    The estimated price range for private industry’s Grade-A gaseous helium was about $5.77 per
    cubic meter ($160 per thousand cubic feet), with some producers posting surcharges to this price.

    Here's a question to the board:

    What company buys all the helium from the Jayhawk plant?

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    • LEHIGH VALLEY, Pa., Jan. 30, 2013 /PRNewswire via COMTEX/ -- "The current shortage in the helium market is unprecedented. Investments by the energy sector are necessary to develop and employ helium recovery with natural gas processing where there is helium present," he said. "Not all natural gas fields are alike. Part of the decline in helium production is due to companies focusing their natural gas drilling efforts on natural gas that is rich in liquids rather than 'dry gas' which typically has more helium," is the message Walter Nelson, director of Helium sourcing at Air Products delivered today at the European Industrial Gas Association (EIGA) Symposium in Brussels, Belgium.

      "Like fossil fuels, helium is a finite resource. While the known supplies are sufficient to meet demand for more than 100 years, and with advances in exploration and drilling, chances are that we may find even more, this finite resource must be managed."

      Air Products is one of the largest helium refiners in the United States and a leading supplier globally. There has been much discussion recently about the tightness in the market and the availability of helium. Nelson's presentation discussed all aspects of the helium business: where helium comes from; its uses and market demand; availability and distribution; supply shortage; and conservation and recycling efforts. Most importantly, Nelson presented the key actions necessary to maintain and increase helium supply for today and tomorrow.

      The importance of an available helium supply to society is easily demonstrated by its many uses. The largest end-user market segments for helium are the health industry with magnetic resonance imaging (MRI) and MRI manufacturing, and the semi-conductor industry. Scientific research, and traditional uses such as cutting and welding, balloons and lifting applications, diving gas mixtures and analytical and leak detection, are several other end-uses for the noble gas.

      Addressing tightness in the helium market, Nelson said that we are seeing a shortage of helium supply resulting from limits in natural gas and liquefied natural gas (LNG) production as well as some existing production plant disruptions around the globe. There are no naturally-occurring underground reservoirs of pure helium. Helium is a byproduct of natural gas production.

      One additional key factor of looming impact to helium supply is legislation currently being considered by the United States (U.S.) Congress related to the U.S. Bureau of Land Management (BLM) helium reservoir, which currently supplies 30% of the global helium demand. "U.S. legislators undoubtedly need to pass legislation soon to extend the BLM operations and preserve the availability of this important source of supply. Unless, this legislation passes and BLM has renewed authority to continue to operate the federal reservoir, all of the helium that remains in the reserve would be inaccessible. The impact on the U.S. and the world in terms of helium availability would be chaotic. Renewed or new legislation granting the BLM the authority it needs to continue to supply helium would bridge the time period necessary for new announced natural gas and helium production plants to come onstream," Nelson said.

      The new sources of helium to come onstream Nelson was referring to include: a new natural gas facility to supply a new Wyoming helium plant, in which Air Products has an ownership interest; an LNG and helium project in Qatar; and additional LNG and helium production expected in Algeria. All these projects are targeted to be onstream in 2013. "Only after these three new helium sources are operational and existing plants are again running at normal rates will the global helium supply begin to fully stabilize. This is why the U.S. legislation to continue BLM supply is so critical to so many industries," Nelson said.

    • First Hydrogen, now Helium...are you planning to go through the entire periodic table in order?
      Next up, Lithium batteries, I suppose?
      After that it gets tricky - what is your story on Beryllium? Boron?

      P.S. My high school mnemonics for remembering the periodic table:
      He held little bells behind cows nibbling oats for nourishment.
      Nasty magpies always sit perched squatting clutching a kellogs carton.
      Screaming till victorious Christians manage to feed countless numbers of crazy zombies.
      Silly rhymes but I can still remember the first 30 elements in order 40 years after being taught this.

    • "What should be expected in future helium price increases?
      In FY2012, the Office of Inspector General audited BLM’s pricing methodology and agreed with the 2010 NAS study that the BLM price should not be based on cost but on market value. Proposed legislation in the Senate and the House of Representatives also agree that the BLM price should be based on market value. Based on these recommendations, BLM is currently working with the Office of Minerals and Evaluation to develop a new market value methodology. This new price methodology is expected to be release for the FY2014 price unless new legislation mandates a different pricing strategy."

      The helium market is a government construct with a very limited number of plants processing raw helium into the various grades. As the government set price to trailing cost of production the private economy under invested to maintain adequate supply once the government stock pile is depleted.

      So the Jayhawk plant offers another possible avenue of new business with refining helium.

      So once again rather than offer anything productive RLP prattles and dissembles. Not only an unproductive pointless life but in reality due to amoral ethics a social parasite disrupting Free Speech rational discussion between fellow Americans.

      The only question now is the RRBS interval. Blows it completely on basic concepts then hides out for a little while. Then claim it did not make a mistake so as to return to the primary function of disruptive social parasite.

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