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Driller Floats Plan for Helium Well in Harley Dome

Federal officials have given a green light for a project in eastern Utah to drill an exploratory well in the Harley Dome natural gas field to capture helium, which, if the operation proves successful, could result in a helping to build supplies of the scarce gas.

Commercial helium is recovered from many Utah natural gas wells, but Bureau of Land Management (BLM) officials believe the Harley Dome could be the state's primary site for helium, which is used in many scientific research and technical applications, as well as party balloons.

BLM Utah officials signed the Decision of Record and Finding of No Significant Impact in approving Flatirons Resources LLC's plan to sink a well in Grand County, UT. The project is west of the Utah-Colorado border on federal lands in northern Grand County.

Flatirons also applied for an associated right-of-way to transport the produced gas via a surface pipeline to a new processing plant that would be constructed 1.4 miles from the well on private property.

"If sufficient quality and quantity of helium is confirmed, the proponent will construct a four-inch [diameter], 7,183-foot pipeline to a small plant where the helium will be removed from the gas stream and compressed for truck transport," BLM stated.

In related news, IACX Energy of Dallas has applied to Grand County for a conditional use permit and site plan approval also to drill near Harley Dome. The Grand County Planning and Zoning Commission voted in late February to recommend approval of the project. IACX still has obtain approval for the project from the BLM, Utah Division of Oil, Gas and Mining, as well as the Utah Division of Air Quality.

Crude helium is a byproduct of processing natural gas liquids. From that processing, crude helium is purified and liquefied for sale and delivery. A decrease in natural gas prices has led to lower crude helium production overseas. Estimated worldwide helium reserves are projected to last 300 years at today's usage rates.

Helium shortages in the United States have made the gas particularly valuable, according to BLM. The Government Accountability Office (GAO) reported in February that the price for refined helium sold to end-users quadrupled to $160/Mcf in 2012 from $40/Mcf in 2000.

The GAO reported that "urgent issues" were facing BLM's storage and sale of helium reserves (GAO-13-351T).

During the 1960s and early 1970s, Interior purchased about 34 Bcf of crude helium for conservation purposes and to meet federal helium needs, such as for the space program and scientific research. While some of the helium was used to meet federal needs, most of it was retained at the Federal Helium Reserve in Amarillo, TX.

The stockpile, the largest of its kind in the world, supplies about one-third of the world's crude helium. Supplies are received via pipeline and sent in crude form to refineries that ready it for commercial use. However, Congress in 1996 mandated that the reserve remain in operation only until its helium supplies were sold to pay down the $1.3 billion debt incurred by BLM to acquire the helium and the equipment to process it.

Most of the debt was paid in 2012, and with an estimated $200 million in helium sales last year, BLM expects to repay the rest of its debt this year. The operations have to be reauthorized after the debts are paid off.

House Natural Resources Committee Chairman Doc Hastings (R-WA) in February introduced the Responsible Helium Administration and Stewardship Act (HR 527) "to prevent an impending helium shortage" and to sell helium from the Federal Helium Reserve. It would redefine the reserve as the BLM Cliffside Gas Field.

"The current federal helium program is outdated and needs to better reflect the current supply and demands for helium," said Hastings. "Yet Congress must do more than just keep the reserve open and maintain the status quo. The federal government must not flood the markets with helium at rock bottom prices to only a select few companies. Reforms are necessary to inject competition and obtain a more accurate price for helium that gets a fair return for taxpayers."

HR 527 would complete the private sale of the Federal Helium Reserve and establish an auction at least every six months to sell off the remainder of the reserve to private interests. Preference would be given to federal agencies and grant recipients.

"BLM's effort to sell off the excess helium in storage will not be completed by January 1, 2015, as required by the 1996 act," GAO noted. "As of September 30, 2012, there were 11.44 Bcf of conservation helium in storage. After BLM is finished drawing down the reserve, some believe that the United States could become a net importer of helium."

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