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Senate Hearing on Helium Reserve Highlights Important Program for Researchers

Richard M. Jones
Number 97 - May 23, 2013  |  Search FYI  |   FYI Archives  |   Subscribe to FYI

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Bills to revise current legislation governing the nation’s helium reserve managed by the Bureau of Land Management are moving through Congress.  The House passed a helium bill in late April.  The Senate Committee on Energy and Natural Resources held a hearing on its version of this legislation earlier this month. 

Concerns have been voiced repeatedly on Capitol Hill about the impacts of helium pricing and supply on researchers.  One of the witnesses at the Senate’s May 7 hearing was Moses Chan, a Professor of Physics at Penn State University.  Chan was a member of a National Research Council committee that in 2010 issued the report, “Selling the Nation’s Helium Reserve.” 

As is customary at congressional hearings, committee members submit questions to witnesses asking for elaboration about issues that were not fully discussed.  The committee’s Ranking Member, Lisa Murkowski (R-AK) submitted a question to Chan regarding a Bureau of Land Management program that is not fully utilized by low-temperature researchers that is intended to  mitigate supply interruptions and pricing problems.  This program is available to all federal research facilities and holders of federal research grants using helium.  Chan’s reply highlights the program’s important benefits relating to pricing and supply for researchers receiving federal support, although the program is not fully functioning as intended.  The American Physical Society, a Member Society of the American Institute of Physics, is working with others on steps to correct these problems.

Senator Murkowski asked:

“Delivery of Full Volume:

“I am told that some federal users may be getting a smaller volume of helium than they had anticipated receiving. This would be consistent with the global shortage we’ve faced and delivery reductions to private users, but I wanted to raise the issue and gather additional information from you if I could.

“Are federal users receiving less helium than they signed up for, and do you think this is consistent with the contracts and other measures in place related to those transactions?”

Chan replied:

“I am happy to answer your question. In the summer of 2012, scientists in universities and National labs experienced wide spread, late, and sometimes canceled shipments of liquid helium.  The shipments were often rationed; they did not get the full amount they ordered.

“Some but not all of the 29 Universities that experienced difficulty were registered with the Bureau of Land Management (BLM) for the In-Kind program. It is my understanding that all the National Labs are enrolled in the In-Kind program. Because Federal users and grantees are entitled to priority supply under that program, reducing allocations to In-Kind program users implies a breach of the contracts signed by the vendors with BLM.

“I would also like to bring to your attention to a related issue. Since late last year, many, if not all the universities that buy liquid helium have registered for the In-Kind program. However, there is evidence that many of the In-Kind users are not being helped by the ‘cost plus’ concept. In fact, many of the In-Kind university users have been informed of a dramatic price increase of nearly 100% - from ~$7.50 a liter to ~$15.00 a liter between 2012 and 2013. The raw helium price (equivalent to less than $2.00 a liquid liter) sold to the vendors by BLM over the same time period increased by no more than 5%. We do not understand how such price increase can be consistent with the In-Kind program.”

Information on registering for the BLM’s In-Kind Program is available on their website . BLM states “If you are a federal agency or a contractor who is federally funded and have a major helium requirement, you are eligible for in-kind helium and are encouraged to register on this site.”

Chan included a copy of the NRC study’s Summary and Findings and Recommendations in his written testimony.  The section on Assistance for Small-Scale Researchers is below:

“Among the events that triggered this study were the soaring prices and limited supplies that characterized the refined helium market in the fall of both 2006 and 2007. The committee, composed of individuals from a wide range of professions - economists, business people, and scientists - notes that small-scale scientists were particularly hard hit by price shocks and interruptions in the supply of refined helium during that time. An informal poll conducted by committee members of approximately 40 research programs at universities and national laboratories that use helium indicated that shortages of liquid helium interrupted the helium supply for almost half of these programs, with some interruptions lasting for weeks at a time during the late summer and fall of both 2006 and 2007. While anecdotal, these poll results provide clear indication that this community of users is directly impacted by general shortages of helium. For many of those scientists, losing access to helium, even temporarily, can have long-term negative repercussions for their research.

“In general, the federal grant programs that support these researchers simply are not designed to cope with the pricing shifts and other market volatilities experienced here. The grants typically are for a two to three year period and for a set amount that does not adjust if a principal expense of research such as helium significantly increases. Further, the relatively short duration of such grants, with no guaranty of renewal, effectively precludes these research programs from entering into long-term contracts that might at least partially reduce the risk of significant prices increases and shortages. Further, if BLM were to implement the market-based pricing mechanism recommended in this report, the retail price for helium may commensurably increase, which will have an even greater negative impact on those helium users.

“These negative impacts could, however, be mitigated at least in part through a programmatic and policy change that would allow small users being supported by government contracts and grants to participate in a program - commonly referred to as the in-kind program - operated by BLM for the sale of helium to federal agencies and their contracting agents. Under that program, qualified buyers purchase their refined helium indirectly from BLM on a cost-plus basis. Notably, participants in the program have priority access to helium in times of shortages. The committee believes that such an expansion of the in-kind program would eliminate supply concerns and many of the price fluctuations that have negatively affected federally funded researchers during the past few years. Further, such an extension would be without significant cost to the programs supporting these researchers and, indeed, should lead to a more efficient use of the federal funds being used to purchase helium.

Recommendation. The crude helium in-kind program and its associated customer priorities should be extended by the Bureau of Land Management, in cooperation with the main federal agencies not currently participating in the in-kind program - for example, the National Science Foundation, the National Institutes of Health, and the extramural grant programs of the Department of Energy - to research being funded in whole or in part by government grants.”

Richard M. Jones
Government Relations Division
American Institute of Physics
rjones@aip.org
301-209-3095