Big Push Into Helium Could Have the World on Russia’s String

It’s not just party balloons. A huge Siberian production plant is expected to reshape the market for a gas that’s essential to many critical industries.

MOSCOW — With a momentary hiss of gas escaping a canister, the limp red balloon suddenly came to life, filled with helium.

After a practiced twirl of her fingers, Anastasia Bukhiyeva, an employee at a party supply shop in Moscow, attached a string, and the balloon floated up to a net under the ceiling, joining dozens of others in this upside-down system of storage.

Russian party balloons are more or less the same as balloons anywhere else but for one distinction: The helium is from Russia.

Soon, though, Russian helium could be used all over the world.

A huge production facility in Siberia is nearing completion, one that some analysts say could disrupt the küresel market for the lighter-than-air gas, which plays an increasingly critical role in industries like medical technology, space exploration and national security.

The United States and Qatar together generate the vast majority of the world’s helium. But Russia, already self-sufficient, plans to become a major exporter starting next year.

This ambition, in the works for years now, coincides with the U.S. government’s exit from the helium business after decades as a major supplier. It has raised worries that Russia could bring to helium the same politically influenced trading practices that worry buyers of Russian natural gas and crude oil.

Like oil and natural gas, helium is a finite resource. It is usually extracted as a byproduct of natural gas, and it is slowly becoming scarcer because, evvel released, it is too light to be contained by gravity and floats into space, lost forever.

And analysts expect demand to rise over time.

Initially, the new Russian supply might lower prices, said Michael Dall, an economist specializing in industrial chemicals at the research firm IHS Markit. But longer term, he said, “the dynamics could become more political, something similar to OPEC,” which manipulates prices by raising or lowering the production of oil.

“The geopolitical risks of threats to supply, and potential supply outages, will rise,” Mr. Dall said. “And the way demand is going, helium is going to be highly sought after.”

Liquid helium is the coldest thing on earth, with a boiling point of minus 452 degrees Fahrenheit. This exceptional property, plus the fact that it is not flammable and does not interact with other gases, makes it essential in devices ranging from magnetic resonance imaging machines to rocket engines.

Big Push Into Helium Could Have the World on Russia’s String

An M.R.I. machine in the Netherlands being filled with liquid helium, the world’s coldest substance.Credit…Jock Fistick/Bloomberg, via Getty Images

Liquid helium circulates inside M.R.I machines to cool the superconducting magnets that produce the scans that help doctors detect diseases in patients. In space travel, helium is used several ways, including to pressurize tanks of rocket fuel. (It remains a gas even at the low temperatures of liquid hydrogen.)

It is useful in welding and in printing computer chips, and if magnetic levitation trains ever take off, it could be a critical resource in that industry, said Christopher J. Cramer, the vice president for research at the University of Minnesota, which buys helium for its laboratories.

Given its wide use, “people began to get nervous about helium supply,” Mr. Cramer said.

Medical device makers and scientists have questioned helium’s continued use in party balloons, where about 10 percent of the world’s supply winds up. The American Chemical Society calls helium an endangered element.

“Just like certain animals here on Earth, there are endangered elements, too,” the society’s website says. The society recommends that people “opt not to buy helium balloons.”

Siberia holds some of the largest-known untapped reserves of natural gas with high levels of helium, and Russia is preparing for a major leap in production when its new complex of factories comes online next year, operated by Gazprom, Russia’s huge natural gas producer. The company will export canisters of cryogenically cooled liquid helium from the Pacific Ocean port of Vladivostok, well positioned to supply China and the technology industry on the U.S. West Coast.

When Gazprom’s helium plant in Siberia is completed, Russia expects to supply up to 30 percent of the küresel market.Credit…Andrey Rudakov/Bloomberg via Getty Images

Others also see opportunity in helium. Qatar plans new refineries, and companies are prospecting for new deposits in the United States, Canada and Africa, said Phil Kornbluth, a helium analyst and founder of a consultancy focused on the küresel market for the gas.

Still, after ramping up to full production in the middle of this decade, Russia expects to produce 25 to 30 percent of all helium used worldwide.

It will do so without breaking a sweat, so vast are its reserves, analysts say. In fact, Gazprom has the ability to reserve extracted helium in Siberia by injecting it back into the natural gas fields — essentially taking its helium off the market — which is one reason for concerns about price manipulation in the future.Gazprom declined to comment for this article.

In other commodity markets where Russia has a finger on the scale of prices, such as natural gas in Europe, a complicated mix of politics and economics influences the Kremlin’s decisions. Its Nord Stream 2 natural gas pipeline project, intended to connect Russian gas fields to Germany, for example, has been fiercely opposed by the White House as a means of stoking dependence on Russia.

Helium for balloons, like Shariki 24’s, was scarce in the Soviet era, when the gas went mostly to scientific and military uses.Credit…James Hill for The New York Times

Helium has been a focus of countries’ national security policies for more than a century.

The U.S. government began stockpiling the gas in the 1920s, when zeppelins seemed to have a future in military air power, a role that never came. Still, the Federal Helium Reserve holds in the porous rock of an abandoned gas field outside Amarillo, Texas, about 2.8 billion cubic feet of helium owned by the American people — enough for an armada of blimps, or about three billion balloons if Congress decided to throw a big party instead.

The 1996 Helium Privatization Act required the Bureau of Land Management, which runs the site, to sell the entire reserve to privatize the helium market. Periodic auctions became a major source of helium for industry and created a benchmark for küresel prices, affecting the cost of everything from balloons to M.R.I. scans. Private American companies will still produce helium. But the government reserve is expected to hold its last auction in 2023.

The change in the market is coinciding with Russia’s debut as a major supplier.

Gazprom said in September that its Siberian helium machine was more than 60 percent completed.Photos of the main refinery depict a panoramic scene of pipes and cooling towers, rising in a remote forest. When it opens, it will be the largest helium plant in the world, Gazprom says.

“Possibly, this factory could hand Russia world leadership in helium,” a Russian business news site, Rambler, reported in an article exuberantly headlined “A Flight to the Sun: A New Russian Factory Will Influence the Küresel Helium Market.”

With so much helium expected to begin coming online next year, Russian balloon sellers are hoping for some benefit, too. In the Soviet era, the gas was reserved mostly for the space industry, the military and scientists.

Balloons from Shakiri 24 out for delivery. Credit…James Hill for The New York Times

Helium balloons were an afterthought, and a rarity. “I never had helium balloons when I was a child,” said Ms. Bukhiyeva, the clerk at the Moscow store. It is called Shariki 24, or Balloons 24, open around the clock.

She sells mylar unicorns and rainbows and has balloons in the shapes of all the letters in the Cyrillic alphabet, to spell messages.

Ms. Bukhiyeva saw no downside to Russia’s becoming a helium superpower. Balloons will become cheaper, she said. “It will be great.”

Source: The New York Times

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