* Demand for helium rising, pushing up prices
* US reserve, a third of global supply, may shut next month
* Other countries' supply not enough to cover shortfall
By Nina Chestney
LONDON, Sept 19 A 90-year-old helium reservoir
in Texas could shut down next month causing disruptions and
raising costs for makers of high-tech products from MRI scanners
to semiconductors and threaten medical treatments and research.
More than 100 organisations, universities and companies,
including Siemens, Philips, Samsung
, and General Electric, wrote to the U.S.
Congress last week urging it to keep the reservoir open or risk
a disruption to the U.S. economy, putting millions of jobs at
Helium, best known as a party gas for filling balloons and
making the voice squeaky, is also needed for aerospace and
defence industries as well as smart phones, flat-screen TVs,
medical equipment and deep-sea diving tanks.
The gas, which is the second most abundant element in the
universe, is difficult to capture and store, making the U.S.
reservoir a vital source.
The U.S. Federal Helium Reserve has been providing around a
third of global crude helium and 40 percent of U.S. supply. But
this will be turned off after October 7 unless Congress acts to
extend its life.
The reserve near Amarillo in Texas was opened in 1925 as a
supply of helium for airships and it then provided helium in the
Cold War and the Space Race.
By 1995 the reserve was $1.4 billion in debt as a result of
earlier purchases of helium from private producers. The debt is
due to finish being repaid to the U.S. Treasury by the end of
this month and under current law, funding to the federal program
will then stop, terminating operations.
Congress would have to amend the law or pass new legislation
to keep the reserve going.
Helium refiners have already been raising prices in
anticipation of its closure.
GE Healthcare, which uses helium to make MRI scanners, told
Reuters the spot price of liquid helium has jumped to $25-30 per
litre from $8 last year.
"There is no question the situation is challenging. We are
having to look at different sources of helium, not just the U.S.
supply, and have invested $17 million in a plant to capture
waste helium," said Richard Hausmann, president and chief
executive of GE Healthcare's global Magnetic Resonance business.
The firm uses around 5.5 million litres of helium a year in
its production facility in South Carolina and another 6 million
litres a year servicing MR systems at U.S. sites.
Using other gases instead can result in poorer quality goods
or require costly and unproven re-fitting of processing or
"If supplies were disrupted for a significant period it
could even impact the overall economy," Rodney Morgan, vice
president of procurement at computer memory manufacturer Micron
Technology, told a hearing of the U.S. House Committee on
Natural Resources earlier this year.
ON A CLIFF EDGE
Helium remains liquid at extremely low temperatures, making
it ideal for cooling superconducting magnets used in electronics
manufacturing and in magnetic resonance imaging (MRI) machines
which help to diagnose diseases.
The cost of helium already makes up to 30-40 percent of
research budgets so further price rises could be crippling.
Some university research projects in Britain were put on
hold and brain-scanning equipment was shut down last year due to
a helium shortage.
Helium is a by-product of natural gas production but once it
is released into the atmosphere it cannot be captured. Demand
for helium has risen, driven particularly by Asia's booming
Annual global production of helium was nearly 175 million
cubic metres (mcm) in 2012, according to the U.S. Geological
Survey, but demand is forecast to rise to over 300 mcm by 2030.
"Even if the reserve didn't go offline, things aren't good
at the moment. There is definitely around a 3 percent shortage.
Everything produced is being snapped up," said Richard Clarke,
resources consultant and former helium specialist at the Culham
Centre for Fusion Energy in Oxford.
The U.S. reserve is important because other countries'
supplies, such as Qatar, Russia and Algeria, are still too
erratic or not large enough to cover the U.S. shortfall.
Qatar could potentially supply around 20-25 percent of world
helium when its two large liquefaction plants reach full
capacity. Air Liquide started up a 38 million cubic
metre per year plant last month but it is not yet operating at
Algeria already supplies 10 to 15 percent of global helium
but could potentially provide more if it recovered helium from
natural gas export pipelines to southern Europe.
Russia currently accounts for around 3.6 percent of global
helium production, according to Ernst & Young, but it needs to
build a lot of gas infrastructure in Siberia to enable its
output to equal that of the United States by 2022-2025.
"October 7 is D-day for helium," said Clarke. "It may be
that U.S. President Obama has to pass a continuing resolution to
keep operations going."
(Editing by Jane Merriman)