[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
AMERICA'S HELIUM SUPPLY:
OPTIONS FOR PRODUCING
MORE HELIUM
FROM FEDERAL LANDS
=======================================================================
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
Thursday, July 11, 2013
__________
Serial No. 113-31
__________
Printed for the use of the Committee on Natural Resources
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democratic Member
Don Young, AK Peter A. DeFazio, OR
Louie Gohmert, TX Eni F. H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Tom McClintock, CA Jim Costa, CA
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Cynthia M. Lummis, WY CNMI
Dan Benishek, MI Niki Tsongas, MA
Jeff Duncan, SC Pedro R. Pierluisi, PR
Scott R. Tipton, CO Colleen W. Hanabusa, HI
Paul A. Gosar, AZ Tony Cardenas, CA
Raul R. Labrador, ID Steven A. Horsford, NV
Steve Southerland, II, FL Jared Huffman, CA
Bill Flores, TX Raul Ruiz, CA
Jon Runyan, NJ Carol Shea-Porter, NH
Mark E. Amodei, NV Alan S. Lowenthal, CA
Markwayne Mullin, OK Joe Garcia, FL
Chris Stewart, UT Matt Cartwright, PA
Steve Daines, MT
Kevin Cramer, ND
Doug LaMalfa, CA
Jason Smith, MO
Todd Young, Chief of Staff
Lisa Pittman, Chief Legislative Counsel
Jeffrey Duncan, Democratic Staff Director
David Watkins, Democratic Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
DOUG LAMBORN, CO, Chairman
RUSH HOLT, NJ, Ranking Democratic Member
Louie Gohmert, TX Steven A. Horsford, NV
Rob Bishop, UT Matt Cartwright, PA
Rob Wittman, VA Jim Costa, CA
Paul C. Broun, GA Niki Tsongas, MA
John Fleming, LA Jared Huffman, CA
Glenn Thompson, PA Alan S. Lowenthal, CA
Cynthia M. Lummis, WY Peter A. DeFazio, OR
Dan Benishek, MI Tony Cardenas, CA
Jeff Duncan, SC Raul M. Grijalva, AZ
Paul A. Gosar, AZ Colleen W. Hanabusa, HI
Bill Flores, TX Joe Garcia, FL
Mark E. Amodei, NV Vacancy
Chris Stewart, UT Vacancy
Steve Daines, MT Edward J. Markey, MA, ex officio
Kevin Cramer, ND
Doc Hastings, WA, ex officio
------
CONTENTS
----------
Page
Hearing held on Thursday, July 11, 2013.......................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 5
Prepared statement of.................................... 6
Lamborn, Hon. Doug, a Representative in Congress from the
State of Colorado.......................................... 1
Prepared statement of.................................... 2
Lowenthal, Hon. Alan S., a Representative in Congress from
the State of California.................................... 3
Prepared statement of.................................... 4
Statement of Witnesses:
Bhave, Ramesh R., Ph.D., Principal Investigator and Director,
Inorganic Membrane Technology Laboratory, Materials Science
& Technology Division, Oak Ridge National Laboratory....... 19
Prepared statement of.................................... 20
Gutberlet, Scott, Vice President, Technical and Commercial
Services, QEP Resources, Inc............................... 11
Prepared statement of.................................... 13
Sears, Wheeler M. ``Bo,'' Jr., President, Weil Helium, LLC... 15
Prepared statement of.................................... 16
Letter submitted for the record.......................... 19
Spisak, Timothy R., Deputy Assistant Director, Minerals and
Realty Management, Bureau of Land Management, U.S.
Department of the Interior................................. 7
Prepared statement of.................................... 8
Additional materials supplied:
Sears, Scott, President and Founder, IACX Energy, Statement
submitted for the record................................... 32
OVERSIGHT HEARING ON ``AMERICA'S HELIUM SUPPLY: OPTIONS FOR PRODUCING
MORE HELIUM FROM FEDERAL LANDS.''
----------
Thursday, July 11, 2013
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to notice, at 9:51 a.m., in
Room 1334, Longworth House Office Building, Hon. Doug Lamborn
[Chairman of the Subcommittee] presiding.
Present: Representatives Hastings, Flores, Lowenthal, and
Cartwright.
Mr. Lamborn. The Committee will come to order. Thank you
all for being patient. We had a vote over on the Floor just now
we had to take care of, and now we are back in business.
And Representative Lowenthal on the minority side will be
here momentarily. His opening statement will be given by him at
such time that he gets here and the first opportunity after he
arrives. But he will be here shortly.
Also anytime that a Full Committee Chairman or Ranking
Member are present, we give them the courtesy and look forward
to any statements they might make. And so Representative
Hastings shortly will have a statement as well.
The Chairman notes the presence of a quorum, which under
Committee Rule 3(e) is two Members. The Subcommittee on Energy
and Mineral Resources is meeting today to hear testimony on an
oversight hearing on ``America's Helium Supply: Options for
Producing More Helium from Federal Lands.''
Under Committee Rule 4(f), opening statements are limited
to the Chairman and Ranking Member. However, I ask unanimous
consent to include any other Members' opening statements in the
hearing record if submitted to the clerk by close of business
today.
[No response.]
Hearing no objection, so ordered.
I now recognize myself for 5 minutes.
STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Mr. Lamborn. I'd like to thank everyone here today for
attending this hearing. The Subcommittee is meeting to discuss
the existing U.S. demand for helium, the future of domestic
helium production after the closure of the Federal Helium
Reserve, and existing and potential production of helium from
Federal lands. Helium is essential to many industries that are
vital to the United States. It is an essential element in the
defense, welding, medical, semiconductor, and nuclear
industries.
Over the past year, this Subcommittee has focused on
ensuring that U.S. industries have access to a reliable supply
of helium by providing for the continued operation of the
Federal Helium Reserve past its upcoming closure in October.
In May, the House overwhelmingly passed the bipartisan
Responsible Helium Administration and Stewardship Act, which
would complete the privatization of the Federal reserve by
injecting free market reforms into the current program to
ensure taxpayers receive a fair value for this Federal
resource. Also, it would provide for stability in the helium
market and would protect American jobs and innovation.
While the continued operation of the helium reserve in
order to prevent an immediate global helium shortage remains a
priority for this Committee, we must recognize that the closing
of the Federal Helium Reserve is imminent. With the reserve
currently providing nearly half the domestic helium supply and
30 percent of the global supply of helium, the closure of the
reserve would leave a major gap in the domestic and global
helium supply that must be filled by private industry.
Unfortunately, domestically the private helium industry has
been slow to develop as the U.S. reserve has dumped cheap
helium onto the market. This has delayed new significant
sources of domestic helium from coming online.
Meanwhile, countries like Algeria, Qatar, and Russia have
growing helium industries. This could leave Americans
increasingly dependent on foreign sources of helium to provide
a critical element of their business, when they could, instead,
be getting helium produced by U.S. workers right here at home.
Fortunately, recognizing the need and opportunity, natural
gas producers are increasingly beginning to extract helium from
natural gas. Further, helium producers are looking at Federal
lands as a source of crude helium to fill the void that will be
left when the helium in the Federal reserve has been depleted
and the reserve closes.
And recently, the Nation's first exploratory well devoted
solely to the extraction of helium was approved by secretarial
waiver. With the impending closure of the reserve, we must look
toward securing the Nation's future helium supply. The United
States has the potential for abundant crude helium production,
and we must harness that potential to diversify our Nation's
helium supply and to ensure regulatory certainty for companies
seeking to tap into this emerging industry.
Once again, I'd like to thank our witnesses for being here
to testify before our Subcommittee, and I look forward to
hearing your testimony.
I'd now like to recognize Mr. Lowenthal.
[The prepared statement of Mr. Lamborn follows:]
Statement of The Honorable Doug Lamborn, Chairman,
Subcommittee on Energy and Mineral Resources
I'd like to thank everyone for attending today's hearing. The
Subcommittee is meeting to discuss the existing U.S. demand for helium,
the future of domestic helium production after the closure of the
Federal Helium Reserve, and existing and potential production of helium
from federal lands.
Helium is essential to many industries that are vital to the United
States. It is an essential element in the defense, welding, medical,
semiconductor, and nuclear industries.
Over the past year, this Subcommittee has focused on ensuring U.S.
industries have access to a reliable supply of helium by providing for
the continued operation of the Federal Helium Reserve past its upcoming
closure in October. In May, the House overwhelmingly passed the
bipartisan ``Responsible Helium Administration and Stewardship Act''
which would complete the privatization of the Federal Reserve by
injecting free market reforms into the current program to ensure
taxpayers receive a fair value for this federal resource, provide for
stability in the helium market and protect American jobs and
innovation.
While the continued operation of the Helium Reserve in order to
prevent an immediate global helium shortage remains a priority for this
Committee, we must recognize the closing of the Federal Reserve is
imminent. With the Reserve currently providing nearly half of the
domestic helium supply and 30% of the global supply of helium, the
closure of the Reserve will leave a major gap in the domestic and
global helium supply that must be filled by private industry.
Unfortunately, domestically the private helium industry has been
slow to develop as the US Reserve has dumped cheap helium onto the
market. This has delayed new significant sources of domestic helium
from coming online, meanwhile countries like Algeria, Qatar, and Russia
have growing helium industries. This could leave Americans increasingly
dependent on foreign sources of helium to provide a critical element of
their business when they could instead be getting helium produced by US
workers right here at home.
Fortunately, recognizing the need and opportunity, natural gas
producers are increasingly beginning to extract helium from natural
gas. Further, helium producers are looking at federal lands as a source
of crude helium to fill the void that will be left when the helium in
the Federal Reserve has been depleted and the Reserve closes. And
recently, the nation's first exploratory well devoted solely to the
extraction of helium was approved by a Secretarial waiver.
With the impending closure of the Reserve, we must look towards
securing this nation's future helium supply. The United States has the
potential for abundant crude helium production and we must harness that
potential to diversify our nation's helium supply and ensure regulatory
certainty for companies seeking to tap into this emerging industry.
I'd like to thank our witnesses for being here to testify before
our Subcommittee and I look forward to hearing your testimony.
______
STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Dr. Lowenthal. Thank you, Mr. Chair.
As this Committee has thoroughly reviewed, helium is a
unique and non-renewable resource critical to a variety of
high-tech applications. The most pressing issue related to the
helium market is the quickly approaching end of the fiscal
year, which will bring closure to the Federal Helium Reserve
unless Congress and the President authorize the continued
operation of the Federal reserve.
Currently, nearly half of all U.S. helium supplies and a
third of the global helium supplies come from this reserve.
Cutting off this supply would have a disastrous consequence for
hospitals, for manufacturers, and for researchers around the
world.
That's why the House passage of H.R. 527, the Responsible
Helium Administration and Stewardship Act this past April was
so critical. That bipartisan bill authored by Chairman
Hastings, Ranking Member Markey, Energy and Minerals Ranking
Member Holt, and Representative Flores passed the House in
April in an overwhelming bipartisan vote of 394 to 1.
While personally I believe that some of the revenue from
the sale of the publicly owned helium from the Federal Helium
Reserve should be used for the benefit of all Americans through
funding of the stateside Land and Water Conservation Fund, the
need to take expedited action on moving this bill is paramount.
The Senate Energy and Natural Resources Committee has also
reported out legislation to extend the life of the reserve, but
that bill also does spend some of the helium revenue.
And the full Senate still needs to act and do so quickly. I
remain optimistic that Congress can address this issue before
the end of the fiscal year. Undoubtedly, the bipartisan process
and legislative success of H.R. 527 are correlated, and I hope
it is a template we can use going forward to tackle other
pressing issues before this Committee.
With regard to producing more helium from Federal lands,
the auction and market pricing mechanism included in H.R. 527
were designed to create incentives for additional helium
production on both public and private lands. And with output
from Federal Helium Reserve declining rapidly and prices
rising, demand for alternative helium supplies is increasing.
Operations to produce helium on public lands are pending or
ongoing at seven different locations across Wyoming, Utah,
Colorado, Texas, Oklahoma, and Kansas.
At some of these operations, helium is the primary target,
and in others, helium is a byproduct of natural gas production.
We should look to continue sourcing future helium supplies from
our public lands, which means we can depend less on insecure
and irregular helium supplies from Russia, Algeria, and Qatar.
But the permitting process or helium production must
balance this new production with the protection of the other
important uses of our public lands: conservation, recreation,
hunting, and fishing. There is a review process already in
place at the Interior Department to allow for the development
of helium from public lands in a way that addressed those
considerations.
As more companies begin to look at producing this resource
from our public lands, we should rightly examine the process
through which the Interior Department permits this production.
But I hope that the intent of this hearing is not to pave the
way for partisan legislation designed to short-circuit that
permitting process or in some other way elevate helium
production over all other land uses.
I yield back my time. Thank you, Mr. Chairman.
[The prepared statement of Dr. Lowenthal follows:]
Statement of The Honorable Alan S. Lowenthal, a Representative
in Congress from the State of California
As this Committee has thoroughly reviewed, helium is a unique and
non-renewable resource critical to a variety of high-tech applications.
The most pressing issue related to the helium market is the quickly
approaching end of the fiscal year, which will bring the closure of the
Federal Helium Reserve unless Congress and the President authorize the
continued operation of the Federal Reserve. Currently, nearly half of
all U.S. helium supplies and a third of global helium supplies come
from the Reserve. Cutting off this supply would have disastrous
consequences for hospitals, manufacturers, and researchers around the
world.
That's why the House passage of H.R. 527, ``The Responsible Helium
Administration and Stewardship Act'' this past April was so critical.
That bi-partisan bill, authored by Chairman Hastings, Ranking Member
Markey, Energy and Minerals Ranking Member Holt and Representative
Flores passed the House in April in an overwhelming, bipartisan vote of
394 to 1.
The Senate Energy and Natural Resources Committee has also reported
out legislation to extend the life of the Reserve but the full Senate
still needs to act. And do so quickly. I remain optimistic that
Congress can address this issue before the end of the fiscal year.
Undoubtedly, the bi-partisan process and legislative success of H.R.
527 are correlated, and I hope it is a template we can use going
forward to tackle other pressing issues in this committee.
With regard to producing more helium from federal lands, the
auction and market pricing mechanisms included H.R. 527 were designed
to incentive additional helium production, on both public and private
lands. And with output from Federal Helium Reserve declining rapidly
and prices rising, demand for alternative helium supplies is
increasing.
Operations to produce helium on public lands are pending or ongoing
at seven different locations across Wyoming, Utah, Colorado, Texas,
Oklahoma, and Kansas. At some of these operations, helium is the
primary target and at others helium is a by-product of natural gas
production. We should look to continue sourcing future helium supplies
from our public lands, which means we can depend less on insecure and
irregular helium supplies from Russia, Algeria, and Qatar.
But the permitting process for helium production must balance this
new production with the protection of the other important uses of our
public lands--conservation, recreation, hunting, fishing. There is a
review process already in place at the Interior Department to allow for
the development of helium from public lands in a way that addressed
those considerations. As more companies begin to look at producing this
resource from our public lands, we should rightly examine the process
through which the Interior Department permits this production. But I
hope that the intent of this hearing is not to pave the way for
partisan legislation designed to short-circuit that permitting process
or in some way elevate helium production over all other land uses.
I yield back the balance of my time.
______
Mr. Lamborn. You're welcome.
I would like to recognize the Chairman of the Full
Committee, Representative Hastings of Washington, for 5
minutes.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Hastings. Thank you very much, Mr. Chairman, for
holding this hearing today. By now I think we all understand
how important helium is to our 21st century economy as was
noted by both the Chairman and the Ranking Member. Medical
equipment, computer chips, fiber optic cables, and other
devices for defense purposes all require helium, and it is
vital that we take steps to ensure that a stable supply of
helium is available in the future.
As noted, in April, the House did pass legislation to
prevent an impending helium shortage that would occur if the
Federal Helium Reserve abruptly closes, which it is scheduled
to do later this year. This closure would immediately cut off
half of our helium supply and 30 percent of the world's helium
supply, and of course at the same time, that would threaten
American jobs and innovation.
So I'm hopeful we'll be able to get legislation signed into
law that will prevent this immediate supply disruption, which
of course would harm our economy.
But today we are examining the next steps, and rightfully
so, that must be taken to continue to ensure a stable supply of
helium. The reserve will eventually close, and we need to be
prepared for that day. The Federal Government has been selling
helium below market value, which up to now has undercut the
private development of alternative sources. That must change,
and we must start looking toward the future. Just like we are
trying to lower our dependence on foreign oil and rare earth
minerals, we also need to ensure that we are not becoming
dependent on foreign sources of helium, and the only way to
prevent that from happening is by increasing helium production
resources right here at home.
So the Committee looks forward to hearing from the
witnesses today about what the prospects are of helium
production, specifically on Federal lands, and how we can make
that production a reality in the future.
And Mr. Chairman, once again, thank you for your courtesy,
and thank you for holding this hearing.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources
Thank you Chairman Lamborn for holding this hearing today.
By now, I think we all understand how important helium is to our
21st century economy. Medical equipment, computer chips, fiber optic
cables and other devices for defense purposes all require helium. It's
vital that we take steps to ensure a stable supply for the future.
In April, the House passed legislation to prevent an impending
helium shortage that would occur if the Federal Helium Reserve abruptly
closes, as scheduled, later this year. This closure would immediately
cut off half of our domestic helium supply and 30 percent of the
world's helium supply while threatening American jobs and innovation.
I'm hopeful we'll be able to get legislation signed into law that will
prevent this immediate supply disruption, which would severely harm our
economy.
Today we're examining the next steps that must be taken to continue
to ensure a stable supply of helium. The Reserve will eventually close
and we need to be prepared for that day. The federal government has
been selling helium below market value, which up until now has undercut
the private development of alternative sources. That must change and we
must start looking towards the future.
Just like we are trying to lower our dependence on foreign oil and
rare earth minerals, we need to also ensure that we are not becoming
dependent on foreign sources of helium. The only way to prevent that
from happening is by increasing production of helium resources here at
home.
I look forward to hearing from our witnesses today about the
potential for helium production on federal lands and how to make it a
reality in order to protect American jobs and our economy.
______
Mr. Lamborn. Well, you are certainly welcome.
We will now hear from our witnesses. I'd like to
acknowledge they have already come to the table: Mr. Tim
Spisak, Deputy Assistant Director of Minerals and Realty
Management for the Bureau of Land Management, U.S. Department
of the Interior; Mr. Scott Gutberlet, Vice President of
Technical and Commercial Services for QEP Resources, Inc.; Mr.
Bo Sears, President of Weil Helium, LLC--if I pronounced that
correctly----
Mr. Sears. Weil.
Mr. Lamborn. Weil. Thank you for the correction.
And Mr. Ramesh Bhave, Director of the Inorganic Membrane
Technology Laboratory Physical Chemistry of Materials Group,
Oak Ridge National Laboratory.
Like all our witnesses, your written testimony will appear
in full in the hearing record, so I ask that you keep your oral
statements to 5 minutes as outlined in our letter to you and in
Committee Rule 4(a).
Our microphones are not automatic, so you have to turn on
the button when you begin speaking. The green light comes on at
the beginning. You have 5 minutes. The yellow light comes on
with 1 minute left, and the red light comes on, and you need to
conclude after 5 minutes are up.
Mr. Spisak, you may begin. Thank you.
STATEMENT OF TIMOTHY R. SPISAK, DEPUTY ASSISTANT DIRECTOR,
MINERALS AND REALTY MANAGEMENT, BUREAU OF LAND MANAGEMENT, U.S.
DEPARTMENT OF THE INTERIOR
Mr. Spisak. Mr. Chairman and members of the Subcommittee,
thank you for the opportunity to testify on domestic helium
production.
As indicated by a National Academies of Sciences report
published in early 2010, the market for helium has proven more
volatile than expected over the last 15 years. The Department
of the Interior appreciates the continued interest of Congress
in exploring the issue of helium production beyond the scope of
the Federal Helium Reserve. We support efforts to increase the
production of helium from new sources to meet future U.S.
demand.
Helium is a critical and non-renewable natural resource.
The most common and economical way of capturing helium is by
recovering it during natural gas processing. The BLM plays a
key role in the management and stewardship of the only
significant long-term storage facility of crude helium in the
world known as the Federal Helium Reserve, which is located
near Amarillo, Texas.
In 1929, the U.S. Bureau of Mines built the Amarillo helium
plant and Cliffside gas field facilities produce helium-bearing
natural gas from a naturally occurring geologic field known as
the Bush Dome Reservoir.
In 1960, Congress granted the Bureau of Mines the authority
to borrow funds from the U.S. Treasury to purchase and store
helium with the expectation that proceeds from future sales of
helium would allow the Bureau of Mines to repay the borrowing.
However, compound interest and the Federal demand rarely met
the expectations underlying the repayment terms of the
Treasury's loan.
In 1996, Congress passed the Helium Privatization Act,
which required the BLM to, quote, ``offer for sale the vast
majority of the stock pile of crude helium.''
Today the BLM operates the Federal Helium Program with the
primary goals of paying off the helium debt, which we
anticipate doing by the beginning of the next fiscal year and
providing the resource to meet public and private needs.
While sales of the crude helium to private refiners make
the most significant contributions toward paying off the helium
debt, the BLM also manages the In-Kind Program, which supplies
helium to Federal agencies and grant holders for operations and
research through private authorized Federal helium suppliers.
Since production of crude helium from the reserve is
currently in decline, other domestic supplies of helium will be
needed to meet future U.S. demand without having to import
helium. The BLM has processes in place to analyze and approve
applications for helium production on Federal lands, both in
combination with natural gas production processing and for
drilling proposals focused exclusively on helium production.
Because the helium on Federal lands is reserved to the
United States, natural gas lessees can enter into additional
contracts with the BLM to provide for the processing and sale
of the helium. Similar contracts can also be used to enable the
recovery of helium as a primary gas in combination with our oil
and gas regulations. This process is used when the gas
composition in a reservoir consists of a relatively higher
helium concentration in a low BTU gas stream.
During Fiscal Year 2012, the Department of the Interior
collected over $10.4 million in revenue from the sale of about
1.4 billion cubic feet of helium produced from Federal lands.
While the long-term potential for such production remains
unclear, the BLM has noticed a recent increase in expressions
of interest. The BLM looks forward to working with the
interested parties on helium production contracts that will
help meet the helium needs for the country.
Thank you for the opportunity to testify today. The BLM
welcomes the further discussion about the Federal Helium
Program, and I would be happy to answer any questions that the
Subcommittee may have.
[The prepared statement of Mr. Spisak follows:]
Statement of Timothy R. Spisak, Deputy Assistant Director, Minerals and
Realty Management, Bureau of Land Management, U.S. Department of the
Interior
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to testify on domestic helium production. As indicated by a
National Academy of Sciences (NAS) report published in early 2010, the
market for helium has proven more volatile than expected when the
Helium Privatization Act of 1996 became law. The report also concluded
that the requirement that the Bureau of Land Management (BLM) offer for
sale nearly all of the Federal Helium Reserve by 2015 could pose a
threat to the availability of this resource for future U.S. research,
scientific, technical, biomedical, and national security users of
helium. The Department of the Interior appreciates the continued
interest of the Congress in exploring the issue of helium production
beyond the scope of the Reserve and supports efforts to increase the
production of helium from new sources to meet future U.S. demand.
Background
Helium is a critical, non-renewable natural resource that plays an
important role in research, medical imaging, space exploration,
military reconnaissance, fiber optics manufacturing, welding and
commercial diving. According to the NAS, helium's best known property,
being lighter than air, means ``that every unit of helium that is
produced and used today will eventually escape the Earth's atmosphere
and become one less unit available for use tomorrow.''
The most common and economical way of capturing helium is by
stripping it from natural gas during gas production. Geologic
conditions in Texas, Oklahoma, and Kansas make the natural gas in these
areas some of the most helium-rich in the United States, ranging from
0.5 to 1.5 percent of the gas extracted during production. The BLM
plays a key role in the careful management and stewardship of the only
significant long-term storage facility for crude helium in the world,
known as the Federal Helium Reserve (Reserve), which supplies
approximately 42 percent of domestic demand and approximately 35
percent of global demand for crude helium.
The Federal Helium Program
Because of helium's potential to lift military reconnaissance
devices high above battlefields, the Federal government's interest in
the resource dates back to World War I. Recognizing this key military
use for helium, the Mineral Leasing Act of 1920 reserved to the Federal
government all helium produced on Federal lands--a reservation that
remains in effect today. After World War I, recognition of the
potential for helium recovery in the Texas Panhandle, Western Oklahoma,
and Kansas area (collectively, the ``Hugoton'' field) led to the
development of the Federal helium program focused in that area. In
1929, the Bureau of Mines built the Amarillo Helium Plant and Cliffside
Gasfield Facility near Amarillo, Texas, to produce helium-bearing
natural gas from a naturally occurring geologic field known as the Bush
Dome Reservoir.
After World War II, Federal use of helium shifted toward
applications related to space exploration, and in 1960 Congress passed
the Helium Act Amendments of 1960. This Act changed the program's
mandate from exclusive government production of helium to conservation
of the resource. This was to be accomplished by executing contracts
with private natural gas producers to purchase extracted crude helium
for the Federal government to store in the Bush Dome Reservoir. The Act
granted the Bureau of Mines, the BLM's predecessor agency in managing
this program, the authority to borrow funds from the U.S. Treasury to
purchase the helium, with the expectation that the proceeds from future
sales of helium would allow the Bureau of Mines to repay the debt. This
borrowing authority, established by Congress in lieu of a direct
appropriation, required the Bureau of Mines to repay the loan by 1985.
Subsequent legislation extended the deadline to 1995.
Federal demands for helium rarely, if ever, met the expectations
underlying the terms of the U.S. Treasury's loan to the Bureau of
Mines. When the 1995 deadline to pay off the debt arrived, the $252
million the Bureau had spent on privately-produced helium had increased
to $1.3 billion (principal and interest), and the Bureau of Mines
appeared to have little prospect of repaying the debt. In his 1995
State of the Union address, President Bill Clinton stated that it was
his Administration's goal to privatize the Federal helium program.
Congress subsequently passed the Helium Privatization Act of 1996
(HPA), which required the BLM (which assumed jurisdiction over the
program after the termination of the Bureau of Mines) to make available
for sale the vast majority of the stockpile of crude helium. The
mandate directed the BLM to begin selling helium no later than 2005, in
order to avoid market disruption. The BLM was to make a consistent
amount of helium available every year at a price based on the amount of
remaining helium debt and the amount of helium in storage. When
Congress passed the HPA, there was approximately 30.5 billion standard
cubic feet (scf) of helium in storage in the Bush Dome Reservoir. The
HPA mandated the BLM to make available for sale all of the helium in
excess of a 600 million scf permanent reserve.
Additionally, the HPA required the BLM to cease all helium
production, refining, and marketing activities to effectively privatize
the refined helium market in the United States. Finally, the Act
provided for the NAS to review the impacts of the 1996 Act. The NAS
published its first study in 2000, and released a follow-up report in
2010.
The BLM's Helium Operations
The BLM currently operates the Federal helium program with the
primary goals of supplying helium to meet the Nation's needs of Federal
helium users and paying off the ``helium debt.'' To this end, the BLM
has paid approximately $1.33 billion to the U.S. Treasury since 1995.
This constitutes substantial progress toward eliminating the helium
debt, which the HPA froze at approximately $1.37 billion. During FY
2012, the helium debt was reduced by an additional $180 million from
Reserve sales, resulting in an outstanding balance of approximately $44
million at the end of the fiscal year.
According to the HPA, once the helium debt is retired, the Helium
Production Fund (used to fund the BLM's helium program operational
expenses) would be dissolved and all future receipts would be deposited
directly into the general fund of the U.S. Treasury. The BLM has
generated enough revenue during this fiscal year through currently
authorized helium sales to pay off the debt at the beginning of FY
2014.
The BLM's current helium program, with a workforce of 51 full-time
equivalents (FTE), operates not only the original storage and pipeline
system, but also a crude helium enrichment unit, owned by private
industry refiners, that facilitates transmission of helium to private
helium operations on the BLM's helium pipeline. Among its
responsibilities, the BLM administers the sale of crude helium to
private refiners. These sales make the most significant contributions
toward paying off the helium debt. In addition, the agency conducts
domestic helium resource evaluation and reserve tracking to determine
the extent of available helium resources. The BLM is also responsible
for administering helium extracted from Federal resources, including
management of fees and royalty contracts. These operations are not
limited to the Hugoton gas field, but also occur in fields in Colorado,
Wyoming, Utah, and any other state where producers extract helium from
the Federal mineral estate.
Another major part of the BLM's helium program is the ``In-Kind''
program, which supplies helium to Federal agencies (e.g., the
Department of Energy and the National Aeronautics and Space
Administration) for operations and/or research. Before the Helium
Privatization Act, Congress required Federal agencies to purchase their
refined helium supplies from the Bureau of Mines. Under the current In-
Kind program, Federal agencies purchase all of their refined helium
from private suppliers who, in turn, are required to purchase a
commensurate amount of crude helium from the Reserve. In FY 2012,
Federal agencies purchased $10.3 million of helium through the In-Kind
program.
The National Academy of Sciences Reports
In 2000, the NAS published its first analysis of the impacts of the
HPA. Its general finding was that the Act would not have an impact on
helium users. Additionally, the NAS report concluded that because the
price-setting mechanism was based on the amount of the helium debt, and
not the market for helium, the government's significantly higher price
would mean the helium refining industry would buy crude helium from the
BLM only as a last resort for fulfilling private contracts. However,
private helium refiners would still be required to purchase crude
helium from the BLM under the In-Kind program.
Over the course of the last decade, however, it has become apparent
that assumptions underlying the 2000 NAS Report did not hold. First,
the NAS's assumption that ``[t]he price of helium [would] probably
remain stable through at least 2010'' has proven faulty. The market for
helium has seen significant fluctuations on both the demand side--which
dropped significantly in 2008 after peaking the prior year--and on the
supply side, which experienced a significant decline in private
supplies between 2006 and 2008. In the face of this volatility, prices
for helium rose steadily over the course of the decade. By 2008, the
market price for helium began to hover near the BLM's price, leading to
greater withdrawals from the Reserve than the 2000 NAS Report
anticipated.
Another market impact that the 2000 NAS Report did not address was
international supply and demand for helium. According to the U.S.
Department of Commerce, domestic consumption of helium decreased 2.7
percent per year from 2000-2007, while exports to the Pacific Rim grew
6.8 percent annually, exceeding the 5.1 percent growth rate in Europe.
The international market also experienced supply issues because of
refining capacity problems at plants in Qatar and Algeria, which would
normally help supply both Europe and Asia.
In early 2010, the NAS released a follow-up report on the BLM's
management of the Reserve. The report, entitled ``Selling the Nation's
Helium Reserve,'' focused on ``whether the interests of the United
States have been well served by the [HPA] and, in particular, whether
selling off the Reserve has had any adverse effect on U.S. scientific,
technical, biomedical, and national security users of helium.''
The 2010 NAS report, which identified some shortcomings of the 2000
report, takes a markedly different tone than the 2000 report. This
change in approach reflects the volatility of the helium market over
the last decade. The NAS report analyzes the relationship between
supply and demand for helium on a domestic and international basis, as
well as the BLM's management of the Reserve under the HPA. The report
concludes that the HPA mandated sell-off is negatively impacting the
needs of both current and future users of helium in the United States.
This conclusion is the driving force behind a series of recommendations
in the report directed at the BLM and the Congress.
Helium Production on Federal Lands
Since production of crude helium from the Reserve is currently in
decline, other domestic supplies of helium will be needed to meet
future U.S. demand without having to import helium.
The BLM has processes in place to analyze and approve applications
for helium production on Federal lands--both in combination with
natural gas production processes and for drilling proposals focused
exclusively on helium production. As stated above, helium commonly
exists as a minor component of most natural gas plays. When natural gas
is produced, it is typically transported by pipeline to a processing
plant where it is separated into marketable components, which could
include helium if it is a viable option. Because the helium on Federal
lands is reserved to the United States, natural gas lessees can enter
into additional contracts with the BLM to provide for the processing
and sale of the helium. This type of arrangement occurs near Kemmerer,
Wyoming, where helium produced from Federal lands partially supplies an
ExxonMobil helium refinery.
Similar contracts can also be used to enable the recovery of helium
as a primary gas in combination with Applications for Permit to Drill
(APDs). This method is feasible where the gas composition in a
reservoir consists of relatively higher helium concentration in a low
Btu gas stream. For example, the BLM recently approved an APD for a
1,100-foot exploratory well in the Harley Dome gas field in eastern
Utah and an associated right-of-way to transport the produced gas via a
surface pipeline to a new gas processing plant. If sufficient quality
and quantity of helium is confirmed, the proponent will construct a
four-inch, 7,183-foot pipeline to a small plant where the helium will
be removed from the gas stream and compressed for truck transport. The
well will be located five miles west of the Utah-Colorado border on
Federal lands in northern Grand County and the helium extraction plant
will be located 1.4 miles from the well on private property.
During FY 2012, the Department of the Interior collected over $10.4
million in revenues from the sale of helium produced from Federal
lands. While the long-term potential for such production remains
unclear, the BLM has noticed a recent increase in expressions of
interest for helium production on Federal lands. The BLM looks forward
to working with interested parties on helium production contracts that
will help meet the helium needs of the country.
Conclusion
Thank you for the opportunity to testify today. The BLM welcomes
further discussion about the Federal helium program. Many Federal
agencies depend on helium for scientific research, aerospace projects,
and defense purposes. Since its formal discovery almost 120 years ago,
helium has proven to be an increasingly important natural resource. The
expansion of helium-related technology and declining domestic reserves
means the importance of helium as a strategic resource is likely to
increase. The BLM continues to serve the country by effectively
managing the Reserve, and working with natural gas producers to
efficiently extract helium from natural gas. I would be happy to answer
any questions the Subcommittee may have.
______
Mr. Lamborn. All right. Thank you.
Mr. Gutberlet.
STATEMENT OF SCOTT GUTBERLET, VICE PRESIDENT OF TECHNICAL AND
COMMERCIAL SERVICES, QEP RESOURCES, INC.
Mr. Gutberlet. Thank you, Chairman Lamborn, Ranking Member
Lowenthal, members of the Committee, my name is Scott
Gutberlet.
I'm the Vice President of Commercial and Technical Services
for QEP Resources located in Denver, Colorado. I'm also a
degreed petroleum engineer with 25 years of experience in the
industry, and I currently manage various commercial matters for
QEP, including projects that may have helium potential.
QEP Resources is the largest publicly owned exploration and
production company headquartered in Colorado, and we have 90-
plus years of experience in the energy business. My complete
testimony has been filed with the Committee, and I appreciate
the opportunity to discuss our Nation's helium supply situation
from our perspective as a major oil and gas operator on Federal
lands.
More and more, public policy debates relating to the health
of our economy are focused on monetary and fiscal issues, so
it's great to be participating in an open and honest
conversation that deals with real people building real and
operating real facilities, producing an incredibly valuable and
unique commodity here in the United States that is so essential
to so many aspects of our high-tech economy as well as our
national security.
QEP has safely and responsibly produced oil and gas on
Federal lands for our entire 90-plus years history. We are a
major lease holder of Federal lands in the Rockies, which means
we understand what it takes to successfully operate on public
lands. We are also fully cognizant of the responsibilities and
trust that is inherent to operating on these lands.
QEP is also a significant player on the midstream business,
which involves building and operating natural gas processing
plants. We have many years of experience with these capital-
intensive and complex facilities. The operation of natural gas
processing plants is required for helium production because of
the unique processing techniques necessary to recover helium
from a produced gas stream.
As you know, helium is always a byproduct of natural gas
production and never found as a primary volume component of a
gas stream. Oil and gas production occurs in 32 of our 50
States. Unfortunately, commercial quantities of helium are only
found in a small fraction of the fields around the country.
However, we are fortunate to have the right geologic conditions
in several parts of the country which allow for helium
concentrations much higher than the rest of the world.
This is the reason why, for so many decades, the U.S. was
the principal supplier of low-cost and reliable helium to
governments and industries around the world. Some believe that
helium projects in the Middle East and Russia will make up for
declining U.S. production. We believe it's risky to rely on
foreign governments for such a strategically important
commodity. Simply put, we need to do more to ensure the
domestic supply of this vital resource.
The western U.S. has substantial undeveloped helium
resources in Wyoming, eastern Utah, and the Four Corners area
of Utah, Colorado, New Mexico, and Arizona. These areas include
large amounts of Federal mineral and Federal surface estate,
which in most cases is managed by the Bureau of Land
Management.
The alarm raised by many consumers on what will happen to
helium markets once the National Helium Reserve is depleted and
the Nation is scrambling to identify next sources of dependable
and reasonably priced, long-term supply, we appreciate and
agree with their concerns.
This Committee's bill, H.R. 527, dealing with the National
Helium Reserve outside of Amarillo is an excellent step forward
and was much needed for all concerned. The National Helium
Reserve currently supplies approximately 50 percent of the U.S.
demand and 30 percent of the world demand, but it's a declining
reserve that has a finite remaining life. Congress can and
should do more to provide regulatory certainty for natural gas
producers that want to invest and bring new helium resources
online.
Like all drilling operations, helium-related projects on
Federal lands are subject to the National Environmental Policy
Act, or NEPA, a law which requires comprehensive environmental
reviews, public comment, and outside participation, which can
be long and quite costly. Such NEPA requirements routinely lead
to delays which, depending on the project, can be many years,
even in areas that have had significant ongoing oil and gas
activity for many decades.
Companies need to be confident that Federal agencies will
issue the appropriate permits in a timely manner. We would
encourage you to look at legislative language, which would
provide clear guidelines to Federal agencies, as well as the
companies that are looking to produce helium, without weakening
NEPA.
Congress can draw up a number of existing precedents under
current law to ensure timely permitting of helium projects
without limiting or foregoing the necessary environmental
reviews. Such legislative signals would demonstrate that
helium-related projects are recognized as a priority for
development on public lands. As I stated at the beginning of my
comments, we recognize the responsibilities and trust inherent
to operating on Federal lands. We are only suggesting you
provide for the dedication and prioritization of resources to
assure helium-related projects on Federal lands can be brought
online in a reasonable time frame.
We encourage you to act before the helium supply demand
situation reaches a critical stage and take this opportunity to
promote long-term helium supplies from domestic sources via
sensible and practical regulatory oversight.
Thanks again for the opportunity to speak, and I look
forward to any questions you may have.
[The prepared statement of Mr. Gutberlet follows:]
Statement of Scott Gutberlet, Vice President,
Commercial and Technical Services, on behalf of QEP Resources, Inc.
Chairman Lamborn, Representative Holt and Members of the Committee,
thank you for the opportunity to provide testimony for today's hearing
regarding helium supply and production from federal lands. My name is
Scott Gutberlet and I am the Vice President of Commercial and Technical
Services for QEP Resources, Inc (``QEP''). As a way of background, I
have a Bachelor of Science degree in Petroleum Engineering from the
Colorado School of Mines and 25 years of experience in the U.S.
exploration and production industry in reservoir engineering, midstream
business development, strategic planning, and asset management. I
currently manage various commercial matters for QEP including projects
that have the potential to produce helium. With a company value in
excess of $8 billion, QEP is the largest publicly owned independent
natural gas and crude oil exploration and production company
headquartered in Denver, Colorado. We have been producing oil and gas
in the Rockies since the 1920's and our assets include large acreage
positions on federal lands across multiple states. QEP also has
significant experience operating natural gas processing plants which is
a crucial skill-set in any helium production project due to the unique
processing techniques necessary to extract what are generally low
concentrations of helium from the production stream and make commercial
quantities available for sale.
Helium is a vital product for America's high tech manufacturers
including its use in MRI machines, semiconductor manufacturing, and
advanced nuclear reactor designs. In addition, it is essential to the
construction industry in certain arc welding operations. And as you
know, it is also a resource of strategic importance for the space
program and the defense industry.
The exploration and production industry appreciates the amount of
time and dedicated work your committee is taking to understand helium
production and supply and we also applaud this committee's previous
work on H.R. 527, ``Responsible Helium Administration and Stewardship
Act'' dealing with the National Helium Reserve outside of Amarillo, TX.
The language in the bill which was adopted by the House to promote
price transparency is a positive sign for companies that are looking to
increase our nation's helium supply. Creating federal policies that
cause helium to be sold at its true market value is an important step
for companies like QEP who are looking to potentially enter the helium
market. However, Congress can do even more to promote the development
of future supplies of helium.
Three years after the discovery of natural gas in the Baxter Basin
of southwest Wyoming that was the beginning of QEP Resources and its
predecessor company, the federal government in 1925 had the vision and
incredible foresight to establish the National Helium Reserve in
response to national security needs and the recognition that since
helium was a byproduct of natural gas production, special efforts
needed to be made to facilitate the production and extraction of this
unique, non-renewable element. For decades, the U.S. was the primary
helium producer to industries and nations around the world. We are
fortunate to have the right geologic conditions in many parts of the
country which make possible helium concentrations much higher than most
of the rest of the world. While technological progress has devised more
and more uses for helium, the original conclusion by the federal
government that helium is a strategic national resource remains
unchanged.
Rather than relying on imported helium from unstable and high-
priced international sources, we should look to continue to develop our
helium resources here in the U.S. The U.S. has significant remaining
helium potential, much of which is on the federal mineral estate. As
referenced by several witnesses during the U.S. Senate Energy and
Natural Resources Committee May 7th hearing, the western U.S. has
substantial undeveloped helium resources in Wyoming, Utah, and the Four
Corners area. These areas include large amounts of federal mineral and
federal surface estate which in most cases is managed by the Bureau of
Land Management.
Helium end-users are very concerned about a sufficient supply of
helium, not only in the short-term but also in the long-term. We
appreciate and agree with their concern. A constant alarm raised by
many end-users is what will happen to helium markets once the National
Helium Reserve is depleted and the nation is scrambling to identify the
next sources of reliable and reasonably priced long-term supply. The
National Helium Reserve currently supplies approximately 50% of the
U.S. helium demand and approximately 30% of the world's demand but it
is a declining reserve that has a finite remaining life.
Due to the technically complex and remote nature of these projects
combined with long lead times involved with engineering and
construction, minimizing risks for project success is essential.
Congress can and should do more to provide regulatory certainty for
natural gas producers that want to invest and bring new helium
resources online. Operating on federal lands creates unique issues for
everyone, but especially for those targeting helium extraction and
production. Like all drilling operations, helium related projects are
subject to the National Environmental Policy Act (NEPA) when it comes
to approval for exploration and production activities on federal lands.
NEPA invites public comment and outside participation that creates
additional reviews which can often be very lengthy and costly. Such
NEPA requirements routinely lead to delays which, depending on the
complexity of the project, can be at least several years, even in areas
that have had significant ongoing oil and gas development activity for
decades.
A company needs to be confident that federal agencies will issue
the appropriate permits in a timely manner which requires the agencies
to have the staffing resources to do so. We encourage you to include
language in future legislation which would provide clear guidelines to
federal agencies, as well as the companies that are looking to produce
helium. Such signals should advocate that helium related projects be
recognized as a priority when it comes to development on public lands.
Congress can draw upon a number of existing precedents under current
law to ensure timely permitting of helium projects without limiting or
forgoing the necessary environmental reviews. We are not suggesting you
do anything to weaken NEPA reviews. Rather, we are simply suggesting
you provide for the dedication and prioritization of resources to
assure helium related projects can be brought online in an expedited
fashion.
While some in the end-user community have a primary focus on the
National Helium Reserve, we believe Congress needs to do more to focus
on getting more helium out of the ground from within the U.S. While
there is hope Qatar and Russia's helium resources will make up for the
declining U.S. production, we believe it is short-sighted and very
risky to rely on foreign governments to provide such an element of
strategic and economic importance. We believe Congress needs to act now
to send signals to the private sector and the relevant federal agencies
to encourage additional helium supply be developed.
We would also persuade you to look for opportunities to help
promote production and conservation of helium wherever possible. Helium
production from federal lands has the added benefit of requiring the
operator of helium producing wells to pay a fee to the federal
government to extract and sell helium. Helium production and the
resulting federal government revenues can grow together with the right
price signals and a smart regulatory structure in place, especially for
projects located on federal lands.
Thank you for the opportunity to provide testimony to this
committee. We encourage you to act proactively before the helium
supply-demand situation reaches a critical stage and take this
opportunity to promote long-term helium supplies from domestic sources
via sensible and practical regulatory oversight. I welcome further
questions and discussion about helium production and the federal
government's role in helping meet our nation's future helium needs.
______
Mr. Lamborn. Thank you.
Mr. Sears.
STATEMENT OF WHEELER M. ``BO'' SEARS, JR.,
PRESIDENT, WEIL HELIUM, LLC
Mr. Sears. Chairman Lamborn, Ranking Member Lowenthal, and
members of the Subcommittee, I would like to thank you for the
opportunity to testify today about securing America's future
helium supply and provide some ideas how this can become
reality.
My name is Bo Sears, and I am president of Weil Helium,
LLC, based in Richmond, Virginia. Weil's primary objective is
to explore for and produce helium resources in the United
States and Canada. We successfully drilled a well exclusively
for helium last year in northern Montana on private lands where
development plans are currently underway. We have also begun
testing on another significant project in Southern
Saskatchewan, Canada.
These projects, like all of the other helium projects in
our portfolio, have been targeted only for their helium content
as there are no appreciable amounts of hydrocarbons in these
gas streams. Weil is pursuing projects where helium is the
primary target as opposed to a secondary or tertiary target
like those found from traditional helium sources.
We appreciate the hard work the Subcommittee has undertaken
in its attempt to prolong the life of Cliffside Field. We are
excited to address where our next domestic sources of helium
will come from and believe this hearing is an important step to
ensure that the United States does not become a helium importer
for the first time in its history.
Weil Helium has various helium projects on Federal lands,
and we understand that one of the objectives of this hearing is
to discuss how to streamline existing helium regulations in a
manner that promotes new domestic helium supplies. The process
of drilling for helium is virtually the same as traditional oil
and gas exploration projects. Like oil and gas, helium is
discovered with a drill bit.
The key difference, however, lies solely with helium's
treatment under a standard Federal and gas lease. The United
States Minerals Leasing Act of 1920 states that any helium
found on Federal land belongs to the Federal Government. As a
result of un-amended portions of the 1920 Act, the helium
aspect of this Act needs some modernizing. If changes are not
made, the process for dealing with helium wells on Federal
lands becomes unreasonably long. A recent example from our
experience may give the panel some insight.
We nominated Federal acreage in Utah for a standard Federal
oil and gas lease in February of 2011 and waited almost 2 years
for it to appear on the docket for a competitive bid. Once
acquired, we immediately requested from the BLM a consent to
extract helium as a primary gas. I'm happy to say that we
received authorization in June of this year, which was much
faster than anticipated, but we are far from finished.
It is now necessary to obtain an interdisciplinary review
required by the National Environmental Protection Act, or NEPA.
In addition, approval of a helium processing agreement with the
BLM is required.
Assuming we obtain the NEPA approval, a permit to drill, we
anticipate that the earliest we will be able to commence our
field development work will be mid-2014. Thus from start to
finish on this Federal Helium Project, the time required will
have been over 3\1/2\ years. If Congress truly understands the
critical nature of our helium supply situation here in the
U.S., then helium projects need to be put into a higher gear
procedurally.
Another important factor that will inspire new supplies of
helium from groups like us is the helium auction language that
was presented by this body, and we applaud the hard work and
dedication this Committee and its staff members have done to
pass H.R. 527. A market-derived price for domestic helium is
fundamentally critical for companies to invest in helium
projects.
Weil is ready to underwrite some risk dollars to bring in
new helium, but market prices are an important component of
this exercise. Without market pricing very soon, we are fearful
that the price of BLM helium will remain at submarket levels,
and a headwind will remain for the helium prospectors. It is
extremely difficult for investors to adequately weigh the
merits of an investment in helium exploration unless there is
some upside potential for helium prices.
There are estimates that say Cliffside Field will be
depleted in 5 to 10 years. What happens after that? If we allow
Cliffside Field to simply deplete without even an effort to re-
stimulate helium production, this inaction will hurt this
country strategically, and we will be left to import this
indispensable commodity from countries such as Algeria, Qatar,
and Russia for the long term.
We believe that imported helium will result in a new supply
and demand dynamics. These foreign providers of helium will not
be relying on the 1996 Act for ideas about how they price their
helium. Higher imports mean higher prices and loss of control
of product. In short, we need your help for an aggressive
streamlining of processes to encourage risk capital into the
helium discovery world.
We are most appreciative of this body's version of the
helium legislation that allows for the market forces to impact
markets sooner rather than later, but the market's work to
provide the investment dollars needed to pursue future
projects, and they will do just that.
Thank you for the opportunity to testify today, and I look
forward to any questions you might have.
[The prepared statement of Mr. Wheeler M. ``Bo'' Sears
follows:]
Statement of Wheeler M. ``Bo'' Sears, Jr., President,
Weil Helium, LLC
Chairman Lamborn, Ranking Member Holt, and Members of the
Subcommittee, I want to thank you for the opportunity to testify today
about securing America's Future Helium Supply and provide some ideas
how this can become reality. My name is Bo Sears and I am President of
Weil Helium, LLC (a subsidiary of Weil Group Resources, LLC) based in
Richmond, Virginia. Weil's primary objective is to explore for, and
produce helium resources in the United States and Canada.
We successfully drilled a well exclusively for helium last year in
northern Montana where development plans are currently underway. We
have also begun testing on another significant project in southern
Saskatchewan, Canada. These projects, like all of the other helium
projects in our portfolio, have been targeted only for their helium
content as there are no appreciable amounts of hydrocarbons (i.e. no
oil and/or natural gas \1\) in these gas streams. Weil is pursuing
projects where helium is the primary target as opposed to a secondary
or tertiary target like those found from traditional helium sources.
---------------------------------------------------------------------------
\1\ Natural gas is commonly defined as methane (CH4) although
natural gas could infer any natural element or compound that is a gas
in its natural state.
---------------------------------------------------------------------------
We appreciate the hard work the Subcommittee has undertaken in its
attempt to prolong the life of Cliffside Field. We are excited to
address where our next domestic resources of helium will come from and
believe this Hearing is an important step to ensure that the United
States does not become a helium importer for the first time in its
history.
Weil Helium has various helium projects on Federal Lands and we
understand that one of the objectives of this Hearing is to discuss how
to streamline existing helium regulations in a manner that promotes new
domestic helium supplies. The process of drilling for helium is
virtually the same as traditional oil and gas exploration projects.
Like oil and gas, helium is discovered with a drill bit. By most
accounts, helium exploration is a ``conventional'' extraction endeavor
and I know of no helium well that has ever been frac'ed. The key
difference, however, lies solely with helium's treatment under a
standard Federal Oil and Gas lease.
The United States Minerals Leasing Act of 1920 states that any
helium found on Federal Land belongs to the Federal Government. The
reason for this stipulation was due to the fact that the United States
had successfully proven, just before the end of World War I, that they
could economically extract helium from natural gas from the Petrolia
Field in North Texas for processing in Fort Worth, Texas. This was a
feat deemed impossible just five years prior due to the low
concentrations of helium in the gas and the lack of processing know-
how. The United States continued the helium program with haste despite
the armistice and the United States' first semi-dirigible, the Navy's
C-7, took its maiden flight on December 5, 1920. At the time of the
passage of the Minerals Leasing Act of 1920, helium's only known use
was for its lighter-than-air properties. It wasn't until 1925 when
another use for helium was discovered. It was found that helium could
replace nitrogen for deep sea dives thus preventing Caisson's disease,
or ``the bends.''
As a result of unamended aspects of the 1920 Act, the helium aspect
of this Act needs some modernizing. If changes are not made, the
process for drilling helium wells on Federal lands becomes unreasonably
long. A recent example from our experience may give the panel some
insight. We nominated Federal acreage for a standard Federal Oil and
Gas lease in February of 2011 and waited almost two years (November
2012) for it to appear on the docket for competitive bid. While our
primary focus was the inherent helium resource (and helium is
explicitly excluded from Federal oil & gas leases), we lost the auction
to an oil and gas speculator who believed this area contained an
unconventional hydrocarbon resource. Fortunately, we reached agreement
with the winning bidder for Weil to pursue only the helium zones in
this project area because we were instructed by the BLM that helium
rights would only be granted to holders of the oil & gas rights. We
immediately requested from the BLM a consent to extract helium as a
primary gas. I'm happy to say that we received authorization in June of
this year which was much faster than anticipated. The BLM has done a
considerable job navigating these tricky waters and we would like to
thank Tim Spisak and all of his colleagues at the BLM, the Amarillo,
Texas Field Office, the State Office in Salt Lake City, and the Price,
Utah Field Office for being so proactive in helping us with this step.
But we are far from finished. It is now necessary to obtain an inter-
disciplinary review required by the National Environmental Protection
Act (``NEPA''). In addition, approval of a Helium Processing Agreement
with the BLM is required. Assuming we obtain the NEPA approval and
approval of permit to drill, we anticipate that the earliest we will be
able to commence our field development work will be mid 2014. Thus,
from start to finish on this Federal Helium project, the time required
will have been over three and a half years.
The uncertain timeframes for pursuing helium on Federal lands is
one reason why Weil has focused on private lands here in the United
States and Crown lands in Canada. Our Montana helium project, which is
located on private lands, took a total of 3 months from the time we
crafted an agreement with the existing operator to the time we drilled
our helium test well. On our Canadian project, the process took a total
of 4 months. I will assert here that in order to bring new domestic
supplies online from Federal Lands, the Federal time frame from start
to finish needs to be reduced significantly. If the Congress truly
understands the critical nature of our helium supply situation here in
the U.S., then helium projects need to be put into a higher gear
procedurally.
Another important factor that will inspire new supplies of helium
from groups like us is the helium auction language that was presented
by this body and we applaud the hard work and dedication this committee
and its staff members have done to pass H.R. 527.
A market derived price for domestic helium is fundamentally
critical for companies to invest in helium projects. Weil is ready to
underwrite some risk dollars to bring in new helium, but `market
prices' are an important component of this exercise. Without market
pricing very soon, we are fearful that the price of BLM helium will
remain at submarket levels and a headwind will remain for the helium
prospectors. It is extremely difficult for investors to adequately
weigh the merits of an investment in helium exploration and production
unless there is some upside potential for helium prices. As it
currently stands, the 1996 Helium Privatization Act (which is still in
effect) has anchored helium prices at submarket levels for some years
now and new volumes have been slow to materialize.
Also as a result of the `96 Act, the refiners on the pipeline
continue to enjoy a pricing structure, which is formulaic and
arbitrary. More importantly, and according to the National Academy of
Sciences, the price of BLM helium is below supply and demand driven
market prices. The major industrial gas companies are, admittedly, not
in the helium drilling business, so declining sources of domestic
helium should come as no surprise knowing that their BLM quota will
satisfy them until new foreign sources start rolling in. We believe the
helium paradigm has shifted and we have no choice but to begin
exploratory efforts to ensure our future domestic supply.
There are estimates that say the Cliffside Field will be depleted
in 5 to 10 years. What happens after that? Looking back, wasn't our
Congress proactively wise when it established the Federal Helium
Reserve in 1960. Remember, 1960 was a time before MRI machines, fiber
optic cables, superconductive colliders, etc. If we allow the Cliffside
Field to simply deplete without even an effort to re-stimulate helium
production, this inaction will hurt this country strategically and we
will be left to import this indispensable commodity from countries such
as Algeria, Qatar, and Russia for the long-term. We believe that
imported helium will result in new supply and demand dynamics. These
foreign providers of helium will not be relying on the 1996 Act for
ideas about how they price their helium. Higher imports will mean
higher prices and loss of control of product. In short, we need your
help for an aggressive streamlining of processes to encourage risk
capital into the helium discovery world. We are most appreciative of
this body's version of the helium legislation that allows for the
market forces to impact markets sooner rather than later. Let the
markets work to provide the investment dollars needed to pursue future
projects and they will do just that.
Thank you for the opportunity to testify today and I look forward
to any questions you might have.
______
[A letter attached to Mr. Sears statement follows:]
[GRAPHIC] [TIFF OMITTED] T1896.003
.eps ------
Mr. Lamborn. Thank you, Mr. Sears.
Mr. Bhave, you are recognized for 5 minutes.
STATEMENT OF RAMESH R. BHAVE, PH.D., DIRECTOR, INORGANIC
MEMBRANE TECHNOLOGY LABORATORY PHYSICAL CHEMISTRY OF MATERIALS
GROUP, OAK RIDGE NATIONAL LABORATORY
Dr. Bhave. Chairman Lamborn, Chairman Hastings, Ranking
Member Lowenthal, and members of the Subcommittee. Thank you
for the invitation and the honor to appear before you today.
My name is Ramesh Bhave, and I am the Director of the
Inorganic Membrane Technology Lab at the Oak Ridge National
Laboratory in Oak Ridge, Tennessee.
I am pleased to be here to discuss ORNL's gas separation
research and membrane technology development and its
collaborative work with small business to incorporate this
technology into a system that can efficiently and cost
effectively separate helium from other gas streams.
Virtually all helium produced in the U.S. today is from
fuel-rich natural gas deposits that contains sufficient helium
to enable economic recovery. However, U.S. production of helium
is in rapid decline as these currently viable, rich reserves
are being depleted. This, coupled with rising global demand,
has resulted in a shortage causing prices to rise. The price of
helium has increased four-fold from 1998 to 2013.
Helios Energy, a small business located in western New
York, estimated that a substantial amount of helium exceeding
that in the rich fields used today is present in lower-grade
fields where the amount of energy required to extract helium is
cost-prohibitive with the existing technology.
In order to solve this problem, Helios set out to develop
an advanced technology to cost effectively recover helium from
these vast, but low-grade, sources. In 2010, Helios received a
DOE small business technology transfer award to fund their
efforts. ORNL's recognized leadership in gas separation and
selective enrichment technologies goes back more than 60 years
and is rooted in the Manhattan Project.
The primary role of ORNL in this project is to develop and
perfect advanced gas separation membranes that are used as part
of the hybrid system. ORNL molecular sieve membranes enable the
separation of helium based on the fact that the helium molecule
is significantly smaller than all other molecules such as
nitrogen and methane present in the marginal helium sources.
Phase one of the project was successfully completed in
early 2011 and achieved all of its technical objectives. Phase
two of the project has built on the progress made in phase one
and has advanced the technology to pilot scale. The project is
on track to meet all of its technical and economical targets
and objectives. Helios and ORNL are now very well positioned to
continue the development of the hybrid system and membrane
technologies for helium recovery and recycle to ensure a
stable, reliable, competitively priced supply of helium for
several high-technology and research applications.
Helios has had some preliminary discussions with a global
leader in helium in production that has expressed interest in
this system and hosting the field demonstration plant. The
timeline for commercialization will depend on the availability
of Federal and private industry funding. We would not be here
today if we had not invested in research and development. Based
on conversations with DOE, it is not clear if phase three
funding is available, but we continue to explore possible
options. We believe implementation of such new options for
producing more helium is critical to address the shortage.
Thank you, and I'll be happy to answer any questions.
[The prepared statement of Dr. Bhave follows:]
Statement of Ramesh R. Bhave, Ph.D. Principal Investigator and
Director, Inorganic Membrane Technology Laboratory Materials Science &
Technology Division, Oak Ridge National Laboratory, Oak Ridge, TN
Chairman Lamborn, Ranking Member Holt, and members of the
subcommittee: Thank you for the invitation and the honor to appear
before you today. My name is Ramesh Bhave, and I am the Director of the
Inorganic Membrane Technology Lab at Oak Ridge National Laboratory
(ORNL) in Oak Ridge, TN. I am pleased to be here today to discuss
ORNL's gas separations research and membrane technology development and
its collaborative work with a small business to incorporate this
technology into a system that can efficiently and cost-effectively
separate helium from other gas streams.
The Helium Supply Problem
Helium (He) is a scarce, high value, inert gas with unique
properties that is used in several high technology applications such as
MRI machines, super-conductors, semi-conductor fabrication, fiber optic
manufacturing and others. For the last century, the U.S. has dominated
global helium supply with 2010 production estimated at 125 million
cubic meters. Virtually all helium produced in the U.S. today is from a
few ``rich'' natural gas deposits that contain sufficient helium to
enable economic recovery. However U.S. production of helium is in rapid
decline as these currently viable rich reserves are being depleted
(Figure 1). This coupled with rising global demand has resulted in a
shortage causing prices to rise (Figure 2). As is shown in Figure 2,
the price of helium increased four-fold from 1998 to 2013.
A Possible Technology Solution
Helios-NRG, a small business located in Western New York, estimated
that a substantial amount of helium, exceeding that in the ``rich''
fields used today, is present in lower-grade fields where the amount of
energy required to extract helium is cost-prohibitive with current
technology. In order to solve this problem, Helios-NRG set out to
develop an advanced technology to cost-effectively recover helium from
these vast but ``low grade'' sources.
In 2010, Helios-NRG received a DOE Small Business Technology
Transfer (STTR) award to fund their efforts. They believed that a
hybrid system that integrated membrane and non-membrane technologies
would permit high purity helium production from marginal, low purity
sources--at costs comparable to the conventional technology used today
to recover helium from helium-rich fields. Led by Dr. Ravi Prasad, the
Helios team brings more than 30 years of technical and business
experience in gas separations including helium recovery applications.
They found essential support at ORNL with its expertise in membrane
separations, forming a team uniquely qualified to develop options for
addressing the shortage of helium.
ORNL's Historical Research on Membrane Technologies
ORNL's recognized leadership in gas separation and selective
enrichment technologies goes back more than 60 years and is rooted in
the Manhattan project. In the past 30 years, ORNL has focused on
research and development utilizing advanced membrane technologies to
address challenges in many energy-intensive separation processes of
national and commercial importance. Utilizing ORNL's state-of-the-art
membrane fabrication, characterization and test facilities, ORNL's
research team has made important contributions in several areas such as
hydrogen recovery and separations, and post-combustion carbon dioxide
capture and sequestration technologies. The team is also developing and
improving advanced processes for lithium and rare earth metal
extraction and is a leading member of the Department of Energy's (DOE)
Critical Materials Institute.
ORNL Role in the Helios-NRG STTR Project
The primary role of ORNL in the Helios-NRG project is to develop
and perfect the advanced gas separation membranes that are used as part
of the hybrid system. More specifically, ORNL will provide research and
development support for the development, demonstration, and deployment
of molecular sieve membranes in the hybrid system being developed by
Helios-NRG. ORNL molecular sieve membrane technology has wide
applications to other important gas separations including hydrogen,
carbon dioxide and noble gas separations, which are relevant to the
clean-energy, petrochemical, and high-tech industries. Molecular sieve
membranes enable the separation of helium based on the fact that the
helium molecule is significantly smaller than molecules of all the
other gases such as nitrogen and methane often present in the marginal
helium sources. ORNL also has membrane fabrication expertise and
facilities for larger scale prototype development and can support field
demonstrations with private industry sponsors and partners.
Goals, Objectives, and Funding of the Helios-NRG STTR Project
The Helios-NRG--ORNL collaboration started in September 2010 with
the award of the Phase 1 DOE STTR grant and continued to support
research focused on helium recovery with a Phase 2 DOE STTR award in
August 2011. Phase 1 and 2 goals, objectives and funding are summarized
as follows.
Phase 1
The objective of Phase 1 was to demonstrate the feasibility of the
concept at bench scale. Preferred membrane materials and fabrication
techniques were identified and significant progress made towards
commercial targets. Economic analysis was carried out and showed
potential to produce helium from marginal sources using the new hybrid
system at substantial cost advantage over the current commercial helium
prices.
Phase 1 of the project was successfully completed in early 2011 and
achieved all its technical objectives. The total Phase 1 DOE-STTR grant
to Helios-NRG was approximately $100,000, out of which ORNL funding was
approximately $43,000.
Phase 2
Phase 2 of the project builds on the progress made in Phase 1 and
is intended to advance the technology to pilot scale. This will include
further improvement in the membrane properties, scale-up of membrane
fabrication, design/fabrication/testing of a scaled-up hybrid system
and validation of process economics. It will lay the foundation for
advancing the technology to demonstration stage.
Phase 2 funding was awarded in August 2011 and this phase of the
work will be completed by the end of 2013. The total DOE-STTR funding
to Helios-NRG is approximately $750,000 out of which ORNL funding was
approximately $300,000.
Research Progress and Results
The project has made excellent progress and is on track to achieve
all of its objectives. As I conclude, here are other highlights:
Early in the project, advanced hybrid process cycles
for helium recovery incorporating membranes and other
separation processes were developed and used to establish
quantitative targets for membrane development.
Many membrane materials and fabrication techniques
were tested and preferred combinations identified. Excellent
progress has been made towards meeting or exceeding the
ambitious performance targets. Substantial progress has been
made in evaluating different types of helium recovery
opportunities including a ``standalone'' case, intended for
green-field applications.
Economic analysis was carried out using the actual
properties measured in the pilot unit showing potential to
produce 99.99+% helium from marginal sources using the new
hybrid system, with substantial economic advantage over the
current commercial helium price.
Helios-NRG completed the design and fabrication of a
small test unit in August 2012. Testing of a single molecular
sieve membrane tube module was completed in the first quarter
of 2013. ORNL and Helios are exploring other, different
membrane technologies that may further improve overall system
performance. This work is ongoing in the second quarter of
2013. Pilot tests confirmed significantly better performance
than project targets for both types of membranes.
ORNL completed the design and assembly of a larger
test module containing 8 membrane tubes which was shipped to
Helios-NRG in June 2013. This is currently under evaluation at
Helios-NRG facilities in New York.
Prospects and Timeline for Possible Commercialization
Helios-NRG and ORNL are well-positioned to continue the development
of the hybrid system and membrane technologies for helium recovery to
ensure a stable, reliable, competitively-priced supply of helium for
several high technology and research applications. To further enable
commercialization, Phase 3 of this effort will focus on validation of
the membrane technologies and the hybrid system in a field
demonstration plant using actual raw gas bearing helium. Helios-NRG has
had preliminary discussions with a global leader in helium production
that has expressed interest in this system and hosting the field
demonstration plant. The timeline for commercialization will depend on
the availability of federal and private industry funding. It is
estimated that based on the results to date, the field demonstration of
the hybrid helium recovery system can be completed in 48 months, with
the possibility for commercial deployment by 2020.
[GRAPHIC] [TIFF OMITTED] T1896.001
[GRAPHIC] [TIFF OMITTED] T1896.002
__
Mr. Lamborn. Thank you, Mr. Bhave, and thank you for your
statement. We will now begin the questioning. Members are going
to be limited to 5 minutes, but we may have additional rounds
of questions. I'll start by recognizing myself for 5 minutes.
Let's talk with Mr. Spisak. Do you think that the current
laws for helium extraction on Federal lands are up to date and
conducive for modern-day helium production operations?
Mr. Spisak. Well, generally, the current laws and
regulations are set up more for these large-scale, natural gas-
based development where you have a significant resource
available that could support the infrastructure needed to
develop the helium. As smaller prospects are identified and as
we're talking here from the panel some of the newer
technologies that are able to develop lower-grade helium, the
regs are not quite set up that way.
We generally, by maintaining ownership from Federal mineral
estate, it's set up to be able to aggregate at the point where
the helium is being processed and being extracted. And some of
the difficulties we have had in the past, and one of the
requirements that we require of these smaller projects, is to
ensure that there is a unification of the natural gas rights,
and so we have the helium contracts.
So that is the kind of work-arounds we've developed to
allow these smaller prospects to go. So I think we can make do
with the current rules and regulations. Certainly any type of
modernization would help facilitate that going forward.
Mr. Lamborn. OK. Thank you.
Mr. Gutberlet, can you explain the difference in the
processes and the cost between natural gas production and
helium production in less than 3 minutes?
Mr. Gutberlet. In standard oil and gas operations, in many
cases you actually don't need any natural gas processing
facilities to allow you to sell your products. However, in
those helium-related projects, you're always going to have
other components of the natural gas that need to be removed
from the stream before you can have commercially available
helium supplies.
CO2, nitrogen, H2S, methane and so
forth, all of those can be very costly to separate from the
helium stream, and as you go further and further downstream
with the various components, pressures and temperatures get
greater and greater or lower and lower in terms of temperature-
wise, so it just becomes that much more complex and, of course,
costly to remove those other components before you have a
helium product that is available for the market.
Mr. Lamborn. Can you give us an idea in terms of a
percentage cost change to these different points you talked
about vis-a-vis just natural gas processing?
Mr. Gutberlet. Oh, depending on the components,
H2S and CO2 are incredibly costly to
remove. You could have upwards of 30 to 50 percent increase in
your capital costs just depending on the amount of those
individual products. Nitrogen rejection units are another very,
very costly technology that you have to employ. So depending on
the particular components of the gas, it's easily upwards of 50
percent.
Mr. Lamborn. And how much of a variable cost difference is
there? You talked about fixed capital costs, but how about
variable cost?
Mr. Gutberlet. Well, variable cost, the systems that are
employed to remove H2S and CO2 have a
significant variable cost component: electricity, power, and
the solutions themselves that are employed to remove these
products. So you can have a very significant variable cost
component operating your expense component to these facilities,
and that is why, as we have discussed here, historically you
have gone after the high concentrations of helium. Now, I
guess, we are chasing the lower concentrations just because of
all these cost issues that you have referred to.
Mr. Lamborn. OK.
Mr. Sears, in your testimony, you said that you nominated
Federal acreage for a standard oil and gas lease in February of
2011, and you waited nearly 2 years for that acreage to be put
up for auction. So I've got four questions in that line. The
first one is: Were you given any reason why the wait was so
long?
Mr. Sears. Not given any reason whatsoever.
Mr. Lamborn. And do you feel that anything could be done to
expedite the process that land is made available for helium
exploration and production?
Mr. Sears. I would imagine it all boils down to field
visits, field work, and that type of activity.
Mr. Lamborn. OK, and I'm running out of time, so I'm going
to come back to you in the second round of questions, and we'll
come back to this one. So with that, I'm going to recognize Mr.
Lowenthal for 5 minutes.
Dr. Lowenthal. Thank you, Chairman.
Mr. Spisak, are there currently any pending applications to
produce helium from public lands where helium is the primary
target, that is where it is not being captured as a byproduct
of natural gas production?
Mr. Spisak. We currently have two agreements. We've got
three active agreements where there's natural gas production
and they're producing. There are currently two other agreements
where the waiver has been granted to allow them to produce
helium only, and we have a couple more that are in negotiations
right now, and there are all within the last 2 years that these
have come up.
Dr. Lowenthal. And so there are no pending applications?
Mr. Spisak. We have one pending right now we expect to have
out this month.
Dr. Lowenthal. And were those projects conducted fairly
quickly? Were they quickly processed?
Mr. Spisak. The first one that came forward a couple years
ago took a little bit of time because it was the first one, and
we've tried to figure out what a waiver from a secretary meant.
And once we got that worked out, the next couple have been
fairly----
Dr. Lowenthal. So once you worked that out, you've been
able to move the process through fairly smoothly?
Mr. Spisak. And that's just the part for approving the
waiver to allow a helium sales contract to be sold, but it's
contingent on the applicant having the natural gas rights tied
up or----
Dr. Lowenthal. So where you are now, is it correct to say
that the BLM is not being overwhelmed with applications to
produce helium from Federal lands?
Mr. Spisak. We have other things overwhelming us, yes.
Dr. Lowenthal. So that is not one of the overwhelming
things?
Mr. Spisak. No.
Dr. Lowenthal. Is the Department's intention, as you
mentioned, I just want to follow up on what you said before, to
respond to the Chairman's question that the Department's
intention is to examine the process for approving projects on
public lands where helium is the primary target, that have
already been permitted to develop lessons learned and come up
with more robust policies if it's needed? So where are you in
that process as your intention?
Mr. Spisak. I think it's fair to say we're in the middle of
that process. We have the couple projects that have come
forward that we're working through and kind of coming up with a
framework that would allow us to develop a more formal policy
that will help guide future projects as they come forward.
Dr. Lowenthal. Thank you. And, Mr. Spisak, you mentioned in
your view some of the regulations may need to be updated to
allow for the development of helium where it's the primary
target. Does the Department have the authority under the
Minerals Leasing Act to update these regulations
administratively?
Mr. Spisak. Where we have the trouble or where the problem
area comes in is the oil and gas lease is maintained through
natural gas production, and the primary term is 10 years, and
if the helium recovery would go beyond that 10 years and
there's not any significant natural gas production, how do you
keep the lease going? And that's an area that we could use some
work. Whether there's clear authority there to change
regulations to allow that, I think that's something we need to
investigate a little----
Dr. Lowenthal. So you may be able to do it
administratively. So will you get back to this Committee in
terms of whether that is possible?
Mr. Spisak. Sure.
Dr. Lowenthal. Mr. Bhave, you mentioned in your testimony
that you anticipate that the membrane technology that you've
been working on will be deployed commercially in the next 10
years. How might this technology affect the U.S. helium market?
Dr. Bhave. Very substantially. In fact, the lot of economic
analysis that we have done, the production cost of helium, FOB,
using this technology will be substantially lower than the
current market prices, so we believe that this will enable more
usage of helium as we know that there is increasing demand for
helium, so this would actually help solve some of that
shortage.
Dr. Lowenthal. So you're about to deploy--and you really
have developed this new technology, and yet the research and
development cuts that we've recently seen in the Republicans'
energy spending plan mean that projects like this will go
unfunded in coming years. Is that a problem?
Dr. Bhave. Yes. That could be a problem, and as I was
saying that we are having conversations with DOE and others to
see what sort of funding may be available. It doesn't appear
there is a clear mechanism, but yes, I mean we are concerned
about that, and certainly we are exploring possible options.
Dr. Lowenthal. Thank you, and I yield back my time, Mr.
Chair.
Mr. Lamborn. OK. Thank you.
Mr. Spisak, one area where we could see more development of
helium is in the natural gas fields in the west where we have
had historic drilling for natural gas, but limited development
of helium. One example is in the San Juan Basin where much of
the natural gas development has been in the Cretaceous layer,
which has nearly no helium.
However, according to USGS, the deeper Triassic layer holds
between 8 to 10 percent helium. My question is: What would be
the process of a company to change the target zones to develop
the deeper helium under current law, and does Congress need to
change the authority to BLM to accommodate that?
Mr. Spisak. Typically, when we lease a mineral state, it is
done in a uniform manner, so whether there is a different zone,
it wouldn't impact the ability to develop. Somewhere like the
San Juan Basin, though, there are a lot of times where those
different zones are broken up for various and sundry reasons.
But if there is a potential helium development zone, it
would be something that the company would identify through gas
sampling. And if the volumes are such that it would make it
cost-effective to put in the equipment, the infrastructure to
recover it, then at that point we would engage with the company
and sign a helium sales contract.
We could do that now, and we have done that sort of thing,
so there's really no change required. It's just a matter of
working with the company and consolidating the area of interest
under the helium contract and going forward.
Mr. Lamborn. So BLM doesn't need any additional statutory
authority?
Mr. Spisak. Not in those types of circumstances, no.
Mr. Lamborn. And I didn't know that you did leasing
sometimes or permitting in layers or in zones.
Mr. Spisak. Well, we don't typically do it that way. It may
be that it's how the lands came back to the government or maybe
somebody else would have subdivided different layers.
Mr. Lamborn. OK. Thank you.
Mr. Spisak. It's not our preferred state because it does
complicate things.
Mr. Lamborn. OK. Thank you.
Mr. Gutberlet, in your testimony, you discussed the NEPA
requirements that lead to delays in helium projects. Do you
have any thoughts on what Congress could do to provide
regulatory certainty for helium producers and/or to improve the
NEPA process?
Mr. Gutberlet. As I understand it, under existing NEPA law,
Congress has provided discretion to Federal agencies to
prioritize certain types of projects, and given the strategic
implications of helium as we've discussed here today, I think
all we're suggesting is that helium-related projects can also
fall under the same type of NEPA prioritization given to other
projects and other industries.
Mr. Lamborn. OK. Thank you.
Mr. Sears, do you feel the current process of obtaining a
special waiver or consent from the Secretary to make helium the
primary gas extracted from Federal land is the most efficient
and up-to-date way to manage this resource? And if not, how
could we improve upon that?
Mr. Sears. Yes, I believe that helium should be separately
granted to folks with projects where helium is a primary
constituent. For instance, virtually all our projects have no
appreciable amounts of hydrocarbons whatsoever. It is primarily
nitrogen and helium. So in that case, a project like that would
not fall under a standard oil and gas lease because there is no
oil and gas, so we believe that helium, perhaps, could be fast-
tracked in that regard.
Mr. Lamborn. Mr. Gutberlet, do you have any thoughts on
that same question?
Mr. Gutberlet. Could you repeat the question, sir?
Mr. Lamborn. Is the current process of obtaining a special
waiver or consent from the Secretary to make helium the primary
gas extracted from Federal land the most efficient and up-to-
date way to manage that resource? And if not, can that be
improved?
Mr. Gutberlet. I'm afraid we don't have any experience in
projects where helium is the primary revenue component, so I'm
afraid I'm not an expert on----
Mr. Lamborn. OK. Thank you.
And last, Mr. Bhave, in your testimony, you mentioned that
there are rich helium fields that are used today and lower-
grade fields. Can you explain the difference between those two
types?
Dr. Bhave. Sure. When we say rich fields, we talk about
helium concentrations 5 percent or greater. When we talk about
the lean fields or low-grade, we're talking about extracting
helium that is of the .1 to .3 percent. So there is a big
difference. However, the quantities that you can extract from
these low-grade are vast, so they actually exceed that of our
existing rich reserves, and therefore, we were very excited to
work on this new technology that has the potential to start
extracting from low-grade to supplement our depleting supply of
helium.
Mr. Lamborn. OK. Thank you very much for that
clarification. We will now have a second round--oh, excuse me.
We have Representative Cartwright.
Mr. Cartwright. Thank you, Mr. Chairman.
Mr. Lamborn. And then we'll do a second round.
Mr. Cartwright. Thank you, Mr. Chairman, Mr. Ranking
Member, and thank you to all the witnesses for coming today. I
appreciate your presence and your insights.
I want to direct my first question to Mr. Spisak. Mr.
Spisak, I want to talk about geology for a little bit. Can you
describe the geology in areas where helium may be recoverable
as the primary target or the primary gas? Are these areas where
natural gas production has already occurred? Are there areas
where natural gas production has already occurred, but the
helium resource has not been depleted?
Mr. Spisak. Generally, there's helium in all natural gas.
It might be in the parts per billion range, but the general
rule of thumb in the past has been if there's about \3/10\ of a
percent of helium contained in the source gas, then it's
economically viable. With new technologies, that threshold may
be pushed down, but if there's natural gas production, it's
taken the helium up with it. It's produced at the same time, so
there's no real way to separate it unless there's enough of a
quantity in there to make it economically viable.
Mr. Cartwright. OK. Thank you for that.
And Mr. Bhave, I was listening to your testimony, and one
of the things you mentioned, and it's also in your written
submission, is that there is an estimate that there's a
substantial amount of helium present in lower-grade fields
where the amount of energy required to extract helium is cost-
prohibitive with current technology. You said that in today's
testimony. You've also provided for us, Dr. Bhave, a couple of
tables with your submission. Figure 2 shows us the rise in
helium prices on the market over the last 14 years, 15 years,
and just looking at it, it's quite dramatic. Since 1998, it's
gone from under $4 per hundred cubic feet to over $16 per
hundred cubic feet. Am I reading that correctly?
Dr. Bhave. Yes. That is correct.
Mr. Cartwright. Really it looks like much of the rise has
occurred in the last 10 years. In fact, looking at your chart,
it looks like in the last 10 years, helium has more than
quadrupled in price; is that true?
Dr. Bhave. Yes, that's true.
Mr. Cartwright. So I want to tie those two concepts
together, the dramatic rise in helium price to the statement
that the energy required to extract helium is cost-prohibitive
with current technology in lower-grade fields. At some point,
the price of helium justifies an added expense of that
separation; does it not?
Dr. Bhave. Yes, but I think when we say these rich
reserves, they are still using helium at higher concentrations
than these low-grade sources.
Mr. Cartwright. Right.
Dr. Bhave. But that's the difference. So the existing
technology of cryogenic distillation as well as absorption is
able to handle those streams, but when you are looking at very
low-grade streams that contain very little methane or other
hydrocarbons and largely nitrogen, that's where the issues are
in terms of using the existing technology to refine it to 99.99
percent pure helium.
Mr. Cartwright. Thank you for that, which makes development
of new technology all the more important, and you've made that
point. Dr. Bhave, would you have been able to develop your
membrane technology without research and development support
from the Department of Energy?
Dr. Bhave. No, we would not have. We are very fortunate
that the Department has chosen this project since 2010, and I
think it was essential, because the private industry would not
fund this research at this time.
Mr. Cartwright. Now Dr. Bhave, last night, the House
Republicans passed an extremely damaging energy appropriations
bill that would cut the Department of Energy's budget next year
by $3 billion below last year's already depressed levels and $4
billion below the level requested by the President. Investments
in applied R&D would be cut by more than half under this bill.
Will massively cutting R&D investments like this undermine
America's ability to innovate in technologies such as yours?
Dr. Bhave. Yes. I believe so, and we are very concerned
about it, and so we are looking at options to find sources for
funding to continue this effort.
Mr. Cartwright. Well, thank you, Dr. Bhave, and I yield
back.
Mr. Lamborn. OK. Thank you. And to take advantage of the
great expertise that we have assembled before us, let's do a
second round of questions, but at the same time, we're about to
call votes. So to make sure that we wrap up before we have to
leave for votes and so you don't have to wait for us to come
back and we're done with this hearing, we'll just have a 2-
minute round. We'll go in the same order that we did earlier.
So Representative Flores will go first.
Mr. Flores. Well, thank you, Chairman Lamborn. I'd like to
remind Mr. Cartwright that the Department of Energy spending
levels that we set last time are the same as 2007, and the
world wasn't coming to an end in 2007.
Mr. Sears, I'd like to continue the line of questioning we
had with you regarding the 2-year delay it took for you to get
a lease. And my next question on that subject was: Would it be
more beneficial for the helium industry if we made helium a
leasable mineral similar to oil and gas?
Mr. Sears. Absolutely.
Mr. Flores. OK. Mr. Spisak, do you have any comments on
that?
Mr. Spisak. I think it really has to go hand in hand with
the technology issue, because we tried to lease out helium
prospectively back in the early 1990s, and the helium lessee,
the person that won that wasn't able to get an agreement with
the natural gas lessee, which they had to be able to work
together to be able to produce together, and we wasted
basically 10 years trying to work some accommodation, that we
didn't really have a needle to kind of push them along, and so
there are challenges with that approach.
Mr. Flores. Continuing on this helium leasing and helium
permit processing question for a minute, a couple of facts we
know, that helium is essential to U.S. industry and, number
two, we're going to close the reserve in the near future. So,
in light of that, does BLM give any sort of priority processing
for NEPA reviews or APD applications for helium exploration?
Mr. Spisak. Nothing has been identified as far as priority
processing. It's basically the oil and gas leasing process that
is----
Mr. Flores. Right. But one of the things that sort of
bothers me is that we have a fast-track process for wind and
solar, and it seems to me like we ought to have a similar
process for helium since it's such a critical element. Would
you agree with that?
Mr. Spisak. That could be something that could be
considered, but I can take that back.
Mr. Flores. Thank you. I yield back.
Mr. Lamborn. Thank you.
Mr. Lowenthal.
Dr. Lowenthal. Thank you, Mr. Chair.
Mr. Spisak, can you talk about the time frame for approving
these projects where helium is the primary target. This is
relatively new, I think, as you pointed out, that the industry
is pursuing. My concerns are: Is the Department more efficient
at learning what needs to be evaluated in processing these
applications? Where are we?
Mr. Spisak. The process that we've been talking mainly
about is the helium waiver and then the contracts associated
with that. I think it is now fairly streamlined, but that's
just half of it. The other half is that a condition of the
waiver is they work with the oil and gas lessee and work
through that process. If they have that already worked out when
they come to us, then it can move forward very quickly. If not,
as the example here that Mr. Sears mentioned, it could derail
the whole process.
Dr. Lowenthal. The permitting times will then continue to
decrease as you point out, as the industry and the Department
become more familiar with this process?
Mr. Spisak. On the helium side, but the natural gas lessee
side is within----
Dr. Lowenthal. Talking about the helium side.
Mr. Spisak. Yes.
Dr. Lowenthal. I just want to say that I'm troubled that
we're hearing, I think, from the Majority that imposing
artificial timelines on the Department to approve these
applications and eviscerating the NEPA process, as they've
tried to do with the oil, gas, and mining industries, will
continue. So I just want to say I'm very concerned that we'll
see a process that is working now, as it goes forward, will
protect other interests and that we will eviscerate that
process.
Thank you, and I yield back my time.
Mr. Lamborn. OK. Thank you. I will recognize myself for 2
minutes.
Mr. Spisak, earlier you said BLM wasn't overwhelmed by
requests to extract helium. However, with the impending closure
of the reserve, do you expect to see an increased interest in
helium development both from natural gas and as a primary gas?
Mr. Spisak. I think as it becomes clear that there is
interest and the market starts driving that, it's very possible
that we'll get more people coming to us to develop low-BTU
helium.
Mr. Lamborn. OK. So what you said earlier is only as of
today and could change in the short term?
Mr. Spisak. It's very possible. Sure.
Mr. Lamborn. OK. Thank you. And also, Mr. Spisak, if I'm
correct, the secretarial waivers are just a small part of the
overall process. Can you tell us what NEPA-related documents
are required and what is the timeline of the NEPA process?
Mr. Spisak. The NEPA, and I'm not a NEPA expert by any
stretch, but the NEPA process is not any different for the oil
and gas or the helium side. It's a Federal action that our
field offices have to go through and identify impacts and such,
and since the helium development is very similar to an oil and
gas development, all the same types of impacts are possible and
would need to be analyzed.
Mr. Lamborn. And what length of time does all that take?
Mr. Spisak. They vary from months to years depending on
whether you have to do an EA or an EIS.
Mr. Lamborn. OK. So it easily could be in the years?
Mr. Spisak. It would be dependent on how up-to-date the RMP
is and other documents, or other analyses, that may have
occurred in that area. If it's an area where there hasn't been
any development before, it might be longer because new NEPA
would have to be----
Mr. Lamborn. If there's already been oil and gas
development in the past, does that make it go faster?
Mr. Spisak. I would expect they'd be able to tier off of
that type of analysis for the helium impacts. I would not
expect there to be a lot of helium impacts associated with
development, but you're still drilling wells, you're still
potentially putting in operational pipelines, those types of
impacts. And depending where they are, the surface expressions
and whether there is threatened and endangered species, all
that sort of thing wouldn't be any different whether it's
helium or oil and gas.
Mr. Lamborn. Mr. Gutberlet or Mr. Sears, do you have a
final comment on the NEPA process, especially if there is
existing hydrocarbon activities?
Mr. Gutberlet. We have varied experience in our operations
in the Rockies. We have some projects that go in a reasonable
time frame, which would be a few years for the NEPA experience.
We've had other projects that are actually still ongoing that
are now over 7 years waiting for the EIS and EA and NEPA
process to work its way through in areas where we've been
producing since the 1930s. So we've seen varied experience, and
it's more than likely just factors of staffing, of
prioritization, of the complexities of the projects and
multiple things.
Mr. Lamborn. Mr. Sears, then we'll wrap up.
Mr. Sears. We don't have any NEPA experience just yet.
Mr. Lamborn. OK.
Mr. Sears. We've been focusing primarily on private lands
primarily because of this.
Mr. Lamborn. I'll just conclude, but thank you. I'll just
say this process, if not a broken process, needs to be
streamlined somehow, especially if we do have a closure in
October and we're scrambling to discover and exploit new
resources. And we're going to be in a world of hurt partly
because of the litigation and the regulation that NEPA causes.
OK. Thank you all for being here. I want to ask unanimous
consent to enter into the record a statement by Scott Sears,
President and Founder of IACX Energy.
[No response.]
Hearing no objection, so ordered.
[The prepared statement of Mr. Scott Sears follows:]
Statement submitted for the record by Scott Sears,
President and Founder, IACX Energy
Mr. Chairman and Members of the Committee, IACX Energy (``IACX'')
sincerely appreciates the invitation to provide a written statement
today for this important hearing before the Subcommittee on Energy and
Mineral Resources--and we apologize that our schedules made our
presence at the hearing impossible.
By way of background, IACX is a midstream natural gas and gas
treating company headquartered in Dallas, Texas. IACX presently
operates 20 gas treating facilities (18 nitrogen rejection and two
helium extraction) in six states, and the company owns or controls
natural gas pipelines in Kansas, Oklahoma and Texas. IACX hold eight
patents involving the separation of gases. Our company is growing to
meet demand for our unique technologies and assets, especially as it
relates to the separation of nitrogen and/or helium from natural gas at
or near the wellhead. It is the latter topic that has relevance for
today's proceedings. IACX recently installed its second gaseous helium
unit in Kansas and we are currently executing on numerous other
projects across the Western and Mid-Continent regions of the U.S. There
are many challenges before us as it relates to promoting new American
supplies of helium, but we're encouraged by the progress of the
industry, and we are heartened by this subcommittee's continued
interest in this important issue.
The topic of finding, processing and selling refined helium from
American sources is one in which IACX is particularly interested. We
believe that there are changes that can be made to the existing federal
mineral leasing regulations that will reform some of the 1920-era
provisions that impede modern day helium extraction. IACX believes that
reasonable updates to existing laws will encourage the discovery of new
domestic helium sources and the investment in extraction and processing
facilities. Many of the existing helium laws that stifle exploratory
efforts today have been on the books since 1920, back when federally
derived helium was reserved exclusively for the U.S. military's
strategic dirigible (blimp) program. The times, military needs, uses
for helium and market conditions have changed--but regulations for
producing helium have not.
America has more helium than it realizes
There are still high-helium gas deposits here in the US, many on
Federal lands. But the exploration, mining, discovery and production of
helium gas, as its own distinct or accretive endeavor, has suffered
from a multi-generational era of obliviousness with regard to the
sourcing and uses of helium. In fact, before the admirable work that
this committee has done to educate policymakers and the public, most
Americans had no idea that helium was scarce and is irreplaceable for
many high tech applications. Most independent natural gas producers
don't even recognize the value of the helium that may be contained in
their gas streams. Even if they did, the question of the helium's
extraction and purification presents a considerable barrier of
progress. IACX believes that the recognition of helium as a value
constituent in natural gas will be accelerated if the final version of
recently debated helium legislation resembles the House's H.R. 527, the
``Responsible Helium Administration and Stewardship Act''. Transparency
in pricing of helium itself will create more supplies if there is a
market-driven incentive for explorers to risk the necessary capital to
find new supplies. And the sooner this transparency becomes reality,
the sooner new volumes of domestic helium will find its way into the
market.
Helium is still a mystery for most people, including prospective helium
miners
In recent Congressional hearings on the topic, we heard that helium
is important for so many different and important things--it's not just
about balloons and blimps. There is a genuine concern among a variety
of American industries and laboratories that helium shortages will
persist as the rule and not the exception. Throughout these recent
hearings, the `demand' and `distribution' segments of the helium
industry were impressively and exhaustively examined. I think we can
all agree that there exists today a potential scarcity of supply of
helium but not a scarcity of demand or distribution. We are very
pleased that this forward-thinking Subcommittee has chosen to shift the
focus of discussion to this neglected topic of incentivizing new,
domestic helium supplies.
Some of the challenges facing new, domestic helium sourcing endeavors
From a mining operation perspective, the digging, capture,
production, gathering, and refining of domestic helium from Federal
lands is complicated for various reasons:
1. The exploration and production of helium as a primary gas
constituent on federal lands requires the explicit consent ``of the
Secretary [of the Interior]''. At IACX's Harley Dome, Utah helium
project, the process for receiving this consent alone took more than
two years. These delays did not result from bureaucratic inertia, but
rather because the novelty of helium-only production and sales from
federal lands. This `request for consent' exposed the fact that was no
such precedent for helium driven extraction on federal lands. We are
proud of the fact that IACX helped establish this precedent, but these
processes still need review and change.
As helium values increase through time, we believe this issue
will become especially problematic for producers. In cases
where natural gas prices are low and helium prices high, it's
conceivable that helium will be the constituent of primary
value, and producers would then be, unexpectedly, burdened by
this regulation.
2. Presuming that a ``helium-only'' mining project is successful,
the law is vague with respect to perpetuating the rights of extraction.
For example, because helium is explicitly excluded from the Mineral
Leasing Act of 1920 (as amended), helium production alone cannot `hold'
an oil & gas lease but an oil & gas lease is required to explore and
mine for helium reserves. There is presently nothing that connects the
helium production with the federal oil & gas lease form (where helium
is the primary constituent), yet there's a vague mandate on the Federal
level that, somehow someway, connects the two. This is simply broken.
3. Helium has always been considered a byproduct of natural gas,
and then, not always a byproduct with value: helium reduces natural
gas' BTU content. Industries typically don't spend primary capital
dollars on by-product constituents, such as helium. This is one of the
reasons why helium scarcity accelerates during times of depressed
natural gas prices.
Proposed `fixes' of existing helium laws
IACX believes that some very simple changes to the existing helium
laws will go a long way in clearing the path for new helium supplies.
For one, the Mineral Leasing Act of 1920 (as amended) needs to be
updated. Here are two ideas:
1. Change the wording of the Mineral Leasing Act to include helium
extraction as one of the value constituents, or
2. Remove the exclusion of helium from the Mineral Leasing Act.
In either case, a Helium Processing Agreement will still need to be
consummated between the producer and the Amarillo Field Office of the
BLM. IACX has already done this for its Harley Dome project and is in
the process of doing it in our Woodside Dome project. Helium is an
atypical commodity and it requires special handling, measurement, and
tailored royalty considerations that don't necessarily fit the
traditional `oil & gas' model. If either one of the above ideas were
implemented, we believe the process for helium discovery will be
greatly helped. Moreover, all divisions of the BLM would have a precise
methodology for 21st Century helium exploration endeavors because the
Mineral Leasing Act has been consecrated and amended through time.
Where will the new domestic sources of helium come from?
The principals of IACX have spent several years looking for high
helium deposits. Presently, we're operating two gaseous helium units
that are producing private (non-government) helium and taking it
directly to the market. IACX is also involved in two primary helium
projects on Federal lands: the Harley Dome Field and the Woodside Dome
Field. The Woodside Dome Field was once set aside (by Executive Order)
as ``U.S. Helium Reserve #1'' in 1924 and the Harley Dome Field was
once set aside as ``U.S. Helium Reserve #2'' in 1934. These fields
never produced helium (or anything else), perhaps because the helium
was the primary value constituent--the balance of the gas in these two
fields is largely inert gas containing virtually no hydrocarbons.
IACX's low-pressure helium extraction technologies have also helped
turn these idle helium fields into potentially significant new sources
of supply.
We see considerable opportunities for helium extraction as a
primary gas and as a by-product gas in states such as Montana, Wyoming,
Colorado, Utah, New Mexico, Kansas, Arizona, Oklahoma, Texas, Arkansas,
Michigan, Indiana, Illinois and Kentucky. In most cases, incidences of
helium in natural gas are less than 0.5 percent; therefore, hydrocarbon
gas and liquids need to lead the project's economics. In other areas,
such as Harley Dome, helium percentages can reside in gas deposits
exceeding 7%; however, in these `high helium' anomalies, the host gas
is usually inert nitrogen. At 7% helium, a project can begin to stand
on its own as a helium-only project.
IACX as a primary helium developer and as a facilitator of helium value
for others with helium
IACX Energy is proud of its role in bringing in new volumes of
helium in the very recent past and in the very near future. We believe
that the new ``openness'' proposed in the House's ``Responsible Helium
Administration and Stewardship Act'' will shed light on this largely
misunderstood element. With pending `price transparency' already in the
works, we believe that economic incentives will soon drive new helium
exploration and extraction efforts. A simple review and updating of the
existing, antiquated laws will only help future helium endeavors and
supplies. IACX and its industry partners are forging a path into new
areas of helium exploration and we're excited about the future and
thankful to this Subcommittee.
We are also standing by to help the entire natural gas producing
community by providing a service for the extraction, purification and
marketing of gaseous helium. Many natural gas producers that we speak
to are surprised to find that not only is there helium in their gas,
but that it can also be economically captured and sold. When economic
incentive augments supplies of a critical, strategic commodity such as
helium, everyone along the supply chain wins. A retuning of regulations
related to helium exploration and extraction will help ensure a stable
supply of helium for the United States for many years to come.
______
Mr. Lamborn. I thank the panel for their testimony. Members
of the Committee may have additional questions for the record,
and I ask that you would respond to these in writing. We're
about to go over to vote, so we're going to wrap up now. If
there's no further business, without objection, the Committee
stands adjourned.
[Whereupon, at 10:49 a.m., the Subcommittee was adjourned.]