Up, Up in the Air: Helium
Helium is critical, but we just sold the National Helium Reserve to a foreign company, and now 33% of the world's helium is trapped in Hormuz. The history of helium has had its ups and downs.
One of the things that’s trapped by the closed Hormuz Strait is helium. Helium is what you pump into balloons to make them float in the air. You can tie helium balloons up outside your house to announce a graduation or a birthday. You can “swallow” the air from a helium balloon to make your voice all high and squeaky. So what’s the big deal if one-third of the world’s helium comes through the Strait?
After reading that helium is one of the victims of the Hormuz closure I heard two things that sounded completely at odds. I heard that helium was a vital critical material, losing one-third of the world’s supply was dire. But I also heard that the US government used to have a National Helium Reserve but the Reserve was just sold to a German company so we no longer have one. Wait! What? If helium is critical why did we just sell the National Helium Reserve? The whole thing sounds crazy!
First things first. Where does helium come from? Helium is a byproduct of natural gas. When natural gas is processed, it is cooled to separate out various components. Helium has the lowest boiling point of any element, so it remains a gas while every other component is frozen into a liquid. Helium is literally the only thing you have left when you remove everything else. Not all natural gas contains much helium, some natural gas deposits have more helium than others. So helium is not something you drill for, it’s something you may, or may not, get when you drill for something else.
1920s
The story of helium goes back to the early 1900’s. The U.S. Army used hydrogen-filled balloons for observation purposes during the Civil War, and both the U.S. Army and U.S. Navy continued to experiment with hydrogen-filled balloons and dirigibles up until the U.S. joined the conflict in Europe in 1917. A U.S. Army hydrogen airship crashed and exploded at Hampton Roads Virginia in February 1922, and then in October 1922 another U.S. Army hydrogen airship crashed and exploded in San Antonio. Within days of the second loss the U.S. Army and Navy announced plans to switch to helium as the lifting gas for their lighter-than-air craft.
Congress passed The Helium Act of 1925. That authorized the condemnation, lease, or purchase of lands bearing the potential to produce helium gas. It also banned the export of helium, for which the US was the only important source, thus forcing foreign airships to use hydrogen lift gas.
The U.S. Bureau of Mines led the effort to extract helium from natural gas, and the U.S. Army and U.S. Navy each contributed $50,000 toward research and the construction of three experimental helium extraction plants. By 1929 the government had acquired rights to 70,000 acres, and the National Helium Reserve was created. It sat over the Bush Dome reservoir in Texas, a unique geological underground formation perfectly suited to trap and store helium gas without leaks.
U.S. Helium Production Plant #1 in Ft Worth Texas was the first facility in the world to extract helium from natural gas in commercially viable quantities. By World War I, the natural gas deposits containing the largest percentages of helium were located in Texas, Oklahoma, and Kansas, all in the United States. Just prior to the U.S. entering World War I, scientist Clifford Seibel held the world’s entire supply of pure helium gas in a glass bottle.
1930s
After World War I, during peacetime, the military had relatively low demand for helium, and they lost dirigibles in 1933 and 1935, which didn’t make it more attractive. Small amounts of helium were used by the U.S. Weather Bureau, the medical profession, and private dirigible operators, so total US helium usage was very low. The explosion of the German dirigible Hindenburg on May 6, 1937 illustrated the danger of using hydrogen as the lifting gas for dirigibles and renewed interest in allowing the commercial sale of helium produced by the U.S. government. In 1937 congress passed The Helium Act of 1937, which allowed the U.S. Bureau of Mines to sell helium to private companies and foreign nations. We had lots of helium, and didn’t use much. We might as well sell some of it.
1940s
The US entered World War II, which caused a dramatic increase in helium production. By that time helium was used for military airships, welding various metals, and in the medical field.
In 1943, the U.S. government built the Exell Helium plant, and created a small town around it, Exell Texas. The plant was run by the federal government. When the government started developing the atomic bomb, helium from Exell played important roles in uranium leak detection, cooling, and for studying radiation, opening up many new uses for helium.
1950s-1980s
After WWII, the U.S. government shut down other extraction facilities but kept Exell open as its crown jewel. The plant was heavily modernized to meet lots of new needs for helium. Liquid helium from Exell was used to pressurize fuel tanks in Intercontinental Ballistic Missiles (ICBMs) and NASA’s Apollo space program.
The Exell Helium plant was the single largest source of refined helium in the world for 25 years. By the 1960s, the Exell region produced roughly 95% of the world’s recoverable helium.The national infrastructure included a pipeline that linked the plant to the National Helium Reserve.
1990s
By the 1990s, nearly 98% of the helium refined at Exell was going directly to federal government agencies. For some reason, the government had been keeping a ledger of its investment in the helium program, and by this time the ledger showed that the entire federal helium program had amassed over $1.3 billion in debt, mostly from compounding interest over so many years.
Congress decided it was time to get repaid, and passed The Helium Privatization Act of 1996, which mandated that the government sell off its helium stockpile until it fully recouped the debt taxpayers incurred building the reserve during the Cold War. The logic, besides paying off the debt, was that helium was now used by private users, and private industry could take over, helium didn’t need to be a government-run industry any more. In brief, the Cold War is over, we don’t need it any more, things we don’t need should be privatized, and we should sell it by 2015.
When he signed it, President Clinton said,
“Once, our defense and aviation industries had a strong need for helium and the Nation lacked a market to supply it. A Government program was appropriate. But today, over 90 percent of U.S. helium needs are met by private producers and suppliers. A Government-operated program is no longer needed. The private sector can meet, and now will be able to compete to supply, the needs of all users. The bill brings us closer to our goal of creating a Government that works better and costs less.”
The law was described by critics as a fiasco due to the formula-based sale price being significantly lower than the market price for helium. So the government started flooding the market with helium, distorting world prices. And, as dictated by the law of unintended consequences, instead of encouraging private industry, the government sales caused much of the private helium industry to shut down, since they couldn’t compete with fire sale prices.
In 1996, the biggest producers of helium were:
United States, 96%
Russia, 4%
Algeria, 4%
Poland, 1%
2010s
By mid-2013, the Bureau of Land Management (BLM) was on track to pay back the $1.3 billion debt.
In addition to the problems caused by distorted prices, another unintended consequence of the 1996 law had become clear: the moment the debt hit zero, the BLM’s funding and authority to sell any helium would instantly expire. At the time, the reserve supplied 40% of domestic and 30% of global helium demand. If the reserve abruptly froze its operations in 2013, it would have triggered a catastrophic global shortage, paralyzing semiconductor fabs and hospital MRI networks overnight.
By 2010 helium was critical to a wide range of industrial, scientific and medical markets, including medical devices such as MRIs, industrial welding, high tech manufacturing of microchips and fiber optic cables, manufacturing of magnets for wind turbines, space exploration at NASA, and many other important scientific research activities that are conducted at laboratories around the country.
The Senate held hearings in 2012 to discuss the future of the helium reserve. By this time, new sources of helium were being developed in the Middle East and Russia, and if US helium reserves were exhausted, the US would become a net importer of helium.
To prevent that economic shock, Congress stepped in with The Helium Stewardship Act of 2013. The law extended the life of the reserve but strictly laid out a multi-phase, legally binding exit strategy. The law dictated that the entire physical system—including the 423-mile pipeline, the processing equipment, and the remaining native gas rights—must be declared surplus federal property and sold off to the private sector.
The underlying philosophy behind the 2013 Act was that the federal government should not be operating a commercial business. When the reserve was created in the 1920s, helium was a highly restricted military asset used for navy blimps. By 2013, it was a global industrial commodity. Congress believed that privatizing the infrastructure would allow the free market to more efficiently manage, price, and develop the domestic helium supply chain.
In 2013, the leading producers of helium were:
United States, 69%
Qatar, 15%
Algeria, 12%
Russia, 2%
Poland, 1%
Australia, 1%
2020s
In 2022, the Ukraine war made it clear that helium reserves in Russia could pose a problem. The American Hospital Association wrote an open letter to the Bureau of Land Management expressing concern about the upcoming sale of the Helium Reserve that outlined some of the possible impact of an interruption in helium on medical operations,
“We are deeply concerned that the transfer of ownership of the Federal Helium Reserve at this time may exacerbate the challenge of the already constrained market…In hospitals and health systems, we principally use helium to operate our magnetic resonance imaging (MRI) machines and to assist patients suffering from breathing disorders, such as asthma. MRIs are essential for accurate diagnoses of many urgent or emergent health problems, including brain tumors, traumatic brain injury, stroke, multiple sclerosis, dementia and other diseases. For our patients, their lives may depend on our ability to rapidly image their brains or other organs and begin treatment within minutes. Diagnoses cannot safely be put off until more helium is available, and any resulting delays in treatment may lead to increased patient suffering and possibly even death. We request your help to ensure that there is a plan in place to secure the continuous production of helium to meet critical health care needs before the sale is finalized.”
The National Helium Reserve was supposed to be auctioned off in 2021. In 2022 there was a failed auction that produced no sale. The property was finally auctioned off in 2024 to Messer Americas, a German company that has operations in China. Messer had been operating the National Helium Reserve assets for years before that. It took nearly 30 years from the first law dictating that the government get out of the helium business in 1996 until the final sale in 2024.
In 2025, the leaders in helium production were:
United States, 43%
Qatar, 33%
Russia, 10%
Algeria, 6%
Canada, 3%
China, 2%
Poland, 2%
You can see the increasing dependence on both Qatar and Russia, and that the United States share of helium has significantly declined. The breakdown of US helium production by company currently is:
Exxon Mobile, 45%
Messer, 20%
Air Products, 20%
Various smaller players, 15%
That leads us to the current crisis, the Iran War, which has put the 33% share of helium produced by Qatar in jeopardy, while the Russian war with Ukraine continues to affect the 10% produced in Russia.
Ironically, just two years after the 30-year-long sale of the original National Helium Reserve was finally completed, we are now starting to talk about whether we should create a new helium reserve! Congress’s House Oversight Committee launched a formal inquiry, and there are several public and private proposals to create a new helium reserve in some way shape or form.
The history of helium, you can’t make this stuff up!
Photo by Siora Photography on Unsplash