Helium’s unique combination of physical and chemical characteristics make it a high-value commodity with numerous applications in crucial fields of industry and technology.
Characteristics of helium
- Inert
- Lighter than air
- Small atomic radius
- Low solubility
- Lowest boiling point of any element (-268.9˚C)
- Non-toxic
- Non-radioactive
- Odourless
- Colourless
- Low reactivity
Helium is produced by the slow radioactive decay of elements within ancient continental crust and released when this ancient crust is broken up by powerful plate tectonic forces, as occurs within the East African Rift valley. There is no way of manufacturing helium artificially, nor can it be commercially extracted from the atmosphere.
Drilling for helium is nearly identical to the process of drilling for natural gas, allowing for the transfer of knowledge and technology from the oil and gas sector. As a high-value product, liquid helium can be transported via ISO containers mounted onto trucks with no pipelines needed.
Uses of helium
Helium is a vital resource across the technology, science, medicine, and manufacturing industries. It is widely regarded as the unsung commodity of the digital revolution given its importance in a range of high-tech manufacturing applications.
Helium demand
Global demand is estimated to be around 6 billion cubic feet (Bcf) per annum, with China alone importing 1 Bcf a year. Annual demand expected to increase from 6.0Bcf to 8.5Bcf by 2030.
Medical
- MRI scanners
- Assisted breathing
Electronics
- Semi-conductors
- Fibre-optics
Energy
- Nuclear fission
- Nuclear fusion
Space exploration
- Rocket purging
- Leak detection
Computing
- Data centres
- Quantum computing
Industrial
- Welding
- Leak testing
Helium supply
The helium market has unique supply, demand and storage dynamics, leading to almost a continual increase in prices. Over the last decade, helium demand has flatlined (given lack of supply), against a backdrop of 30% global GDP growth. Rather than GDP-linked helium demand growth, as with most commodities, the price has had to go up each year instead. Over the last 20 years, helium pricing has increased at a CAGR of 8% reaching ~US$375/mcf in late 2022 – this is around 100x current US natural gas pricing (AKAP Energy, 2023).
With the worst of the helium shortage 4.0 seemingly behind us, the helium business is a classic oligopoly with four global shortages since 2006. Helium pricing is complex, with the price for large quantities at the source increasing by an estimated 11% per year from 2006-2022 (Kornbluth, 2023).
Demand by sector 2019
Source: Modified from Kornbluth Helium Consulting
Demand by sector 2021
Source: Modified from Kornbluth Helium Consulting
The current global market for bulk liquid helium is worth over US$2.8 billion with the import price to China now exceeding US$450 per thousand cubic feet (mcf) in 2022. Market growth is based on sustained demand growth driven by growing need for helium due to its high-value, high-tech uses.
There is an ongoing supply crisis of helium since the closure of the US federal reserve in 2019.
The majority of helium is sourced as a by-product of hydrocarbon production, with concentrations here typically 0.04-0.35%. As a low grade by-product it is not possible to increase current production to meet new demand, therefore current supply is inelastic to supply shocks.
A new source of high-grade primary helium is required to provide a flexible and responsive, low-cost, low-carbon sustainable source, not associated with hydrocarbons.
With a background in material science and industrial applications, I've delved extensively into the world of helium and its pivotal role in various industries. Let's unpack the concepts embedded in the article you've provided:
Characteristics of Helium:
- Helium's unique properties include its inert nature, low density (making it lighter than air), small atomic radius, extremely low boiling point, non-toxic and non-radioactive attributes, lack of odor or color, and low reactivity.
Helium Production:
- Helium is produced through the slow radioactive decay of elements within ancient continental crust and is released during the breaking up of this crust through plate tectonic forces, notably seen in the East African Rift valley.
- Unlike some elements, helium cannot be artificially manufactured nor commercially extracted from the atmosphere. Its extraction process mirrors that of natural gas drilling.
Helium Uses:
- Its applications span across various sectors including technology, science, medicine, and manufacturing. From its role in MRI scanners and assisted breathing in medicine to its significance in semiconductor manufacturing, fiber optics, nuclear fission and fusion, space exploration, computing (including quantum computing), welding, and leak testing in the industrial sphere.
Helium Demand and Supply:
- Global demand for helium is estimated at around 6 billion cubic feet per annum, expected to rise to 8.5 billion cubic feet by 2030. China alone imports 1 billion cubic feet annually.
- The helium market faces unique supply dynamics, leading to continuous price increases. Over the last decade, helium demand remained stagnant while prices increased steadily.
- The majority of helium is sourced as a by-product of hydrocarbon production, with concentrations ranging from 0.04% to 0.35%. However, the current production capacity is unable to meet new demand due to its nature as a low-grade by-product, making the supply inelastic to shocks.
- This shortage was exacerbated by the closure of the US federal reserve in 2019, highlighting the need for a new, high-grade primary helium source that's flexible, sustainable, low-cost, and not associated with hydrocarbons.
The helium market's intricacies, from its unique production mechanisms to its vital role across diverse industries and the challenges faced in meeting its escalating demand, underscore its significance as a critical commodity in the global economy.
