Divers are a notoriously argumentative and prickly bunch that would be hard-pressed to agree on the colour of orange juice. Put three divers in a room and ask them about gas planning or sidemounting off a boat, for example, and you’re bound to get three different answers. Maybe even five, on a bad day. Ah, but there is a topic on which all divers can agree: the global helium shortage plaguing divers from the Americas to the Antipodes. It doesn’t matter where you are in the world: a visit to your friendly fill station either results in your going home empty-handed, or bleeding profusely after extracting the requisite kidney to pay for it all. The two key questions, therefore are: what the hell is happening, and when are things going to get better?
Signs of the Times (full credit to The Viz)
We divers like to think we’re the most important people in the world. In actual fact, other consumers are far more essential: namely, the aerospace, electronics (e.g., semiconductor and fiber-optics), healthcare, and the manufacturing sectors. They need helium to make their work possible. To complicate things, nothing substitutes for helium in cryogenic applications if temperatures below −429 degrees Fahrenheit are required. Granted, argon can be substituted for helium in welding, and hydrogen can be substituted for helium in some lighter-than-air applications in which the flammable nature of hydrogen is not objectionable, but for the most part, there are no alternatives. By contrast, we recreational divers don’t need to dive below 100 feet. We have options. We can choose dive profiles that don’t require helium, and avoid dive sites that render it essential to dive safely. We might not like it, but we can do it.
None of this mattered until fairly recently, of course, because the global pandemic killed off a lot helium demand. Apart from the healthcare sector, helium use petered off across the board: the global shutdown hit the manufacturing, aerospace and electronics sectors hard. Now that global economies are reopening, consumers are once again placing orders for helium, only to find themselves staring down the barrel of a supply shortage – and very high prices. Major helium suppliers like Air Liquide, Linde, Matheson, and Messer are rationing their supplies to US customers – buyers are apparently getting just 40-60% of their contracted volumes. But it’s the noncontractual users who buy helium through purchase orders that are having the hardest time acquiring it: spot prices have reportedly doubled in the last several months - assuming they can access supply at all. That’s most likely the position in which your local friendly fill stations finds itself. Diver demand is negligible compared to other buyers.
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Unfortunately, this uptick in helium demand has coincided with a series of global supply crunches. The inevitable result of this perfect storm: limited and comparatively expensive helium supplies for everyone. That’s partly because the vast majority of helium production is associated with fossil fuel output, a sector that continues to struggle with limited manpower and surging raw materials costs to meet demand. The United States, which produces some 40% of the world’s helium, is moreover contending with infrastructure shutdowns, thereby exacerbating an already dire situation. The US Bureau of Land Management’s (BLM) Crude Helium Enrichment Unit (CHEU) has been shut down for months. The CHEU upgrades the purity of crude helium removed from the Federal Helium Reserve before sending it down to BLM Pipeline for delivery to four privately owned helium refining facilities that depend on the BLM System for feed gas. The CHEU has been down since mid-January 2022, forcing the BLM to limit crude helium withdrawals from their pipeline, reducing the supply of feed gas to the helium refining facilities and reducing global supply by more than 10%.
Although several other countries are notable helium producers, they too have struggled to keep output flowing. For example, production from the Arabian Gulf state of Qatar dropped in the first quarter of 2022 due to plant maintenance. More pressingly, the ongoing conflict in the Ukraine creates uncertainty about Russia’s ability to maintain helium production from new and future projects. After briefly producing helium for a few weeks in September 2021 at its new Amur facility in Russia’s Far East, the plant went offline to complete construction punch-list items. The reopening has been delayed by fires at the plant’s feedgas facilities: one in October 2021 and another in January 2022. Amur was expected to resume service in the third quarter of 2022, but Russia’s focus on its conflict with Ukraine will probably affect this schedule. There is also the issue of Western countries’ economic sanctions on Russia; even if the plant resumed operation immediately, Western buyers could find their hands tied due to the sanctions imposed on Russian commerce by their host countries.
There is hope that offline US helium flows will be restored in the coming months and that new capacity commissioned in the slightly longer term, thereby easing the currently supply crunch.
Most critically, the CHEU is expected back online during the summer of 2022, thanks to the Bureau of Land Management’s recent decision to outsource the operation of the CHEU. This move alone will increase the world’s helium supply by greater than 10% compared to recent levels.
Another positive development is the recent cancellation of ExxonMobil’s planned maintenance outage at their Shute Creek, Wyoming plant which is the largest US source and accounts for greater than 20% of global supply. The Shute Creek plant had been scheduled for a significant outage in August that would have temporarily negated much of the benefit of the BLM’s return to normal operation.
Finally, there have been moves to build new US helium recovery facilities. A deal was struck in April 2022 to sell volumes from a facility be built at an existing natural gas export facility on the Gulf of Mexico. The plant will enter service in 2024. There is also cause for optimism abroad, with new capacity in Algeria expected to come online.
While these are all promising developments, the real transition to more plentiful supply is still expected to be delayed until Russia’s Amur project restarts and ramps up production. Again, the estimates of when that might happen remain very uncertain due to the impact of the war in Ukraine, but it is considered highly improbable that Amur will restart before 2023.
As consumers, it’s natural to focus on the resolution of supply constraints, but the current supply crunch and attendant high prices might be eased in another, albeit less positive fashion: on the demand side. Countries around the world are experiencing significant inflation, with rising costs of living and stagnant wages for middle and working class citizens. These conditions are conducive to a recession, which could happen later in 2022 or sometime in 2023. Reduced demand for helium due to lower economic output could help restore the balance between supply and demand, but at great personal costs to individual workers and families already struggling to make ends meet.
Right now, the situation for divers is grim. We’ve received word from some clients in the US that helium is simply unavailable at their local fill station, and that as far as priorities for supply go, fill stations are very low on the list compared to other sectors like manufacturing and electronics. The world won’t care if an individual diver has to forgo a mixed gas dive, but it will assuredly care if laptop and cell phone production is halted by a lack of helium, or if MRI machines are offline for cancer and neurological screenings.
Here in our part of Mexico, we’re not facing such supply constraints, but our local fill station confirms that helium is much costlier than before. That obviously sucks if you like making 100+ foot dives on the Mesoamerican reef, but fortunately, you have to look really hard for caves in the Riveria Maya that dip below 100 feet. You could dive here your whole life and never encounter a cave deeper than 50 feet, and a bunch have average depths that are a lot lower than that. The moral of the story is: escape the helium crunch. Come to Mexico. With very few exceptions, you don’t need helium here. Save the money you would have spent on helium on a taco-filled dive trip. We’re waiting for you.