Now There's a Helium Shortage and It Affects More Than Balloons

Ripple effects from the war in Iran and the closure of the Strait of Hormuz continue to widen. There's yet another brewing shortage, this time in helium. While most people associate helium with balloons and funny voices, the element is used in a surprisingly wide variety of industrial settings, including semiconductor production, where its role in advanced lithography has been growing rapidly. But helium mining and exploration in North America has been practically non-existent for a variety of reasons. And while the US used to have a strategic helium reserve, the government started selling that down in the late 1990s. On this episode, we speak with Nicholas Snyder, the founder and CEO of North American Helium, which does helium mining in Canada. We discuss the properties of helium that make it so useful, as well as the difficulties of expanding global production and distribution. Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee, so search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:07Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:51Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:07Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:11Tracy Alloway?

  And I'm Tracy Alloway.

• 2:12Joe Weisenthal?

  Tracy, one of the things that I've been learning over the last few weeks is that a lot more than oil comes through. No, for real. Like, you know, if someone said, okay, there's war breaking out in the Middle East, you just think about oil, right? And then that's probably actually where my mind would typically stop. What's the price of oil? And we all are watching the price of oil, but there are a lot of other things that are sourced from the region that are of critical importance. I'm not joking. Like, I'm just saying, like-

• 2:40Tracy Alloway?

  I'm laughing because we have one of those things floating between us. So, speaking of stuff that comes out of the Gulf region, here's one of those things. Not-

• 2:50Joe Weisenthal?

  Listeners can't see it.

• 2:52Tracy Alloway?

  Not the aluminum itself, although probably aluminum also comes out of the Gulf, but helium.

• 2:57Joe Weisenthal?

  Tracy's holding a helium balloon. She went out and got a prop.

• 3:00Tracy Alloway?

  I didn't. One of our lovely producers did.

• 3:02Joe Weisenthal?

  Dashed it.

• 3:02Tracy Alloway?

  I have to say, I haven't held a balloon for a long time, and it's surprisingly entertaining.

• 3:08Joe Weisenthal?

  So, okay, while you hold on to it, I'll go a little bit further, which is, I feel bad for the people in helium because my understanding is that the helium has some pretty important industrial properties. There's not a lot of substitutes for it. But someone says helium and look, oh, the clowns are gonna be able to make their funny voices, et cetera.

• 3:26Tracy Alloway?

  Look, any chance we have to actually bring one of the commodities that we talk about on the show into the studio, I'm gonna seize. So, here is some helium.

• 3:34Joe Weisenthal?

  Well, look, the fact that the balloon is floating is an indicator of the fact that it must have some interesting properties as an element that perhaps have other applications. I don't know. I mean, it tells you something about it as an element, right?

• 3:46Tracy Alloway?

  Well, it's funny you mention that because initially I was gonna take this balloon and, you know, do the thing where you breathe in the helium-

• 3:52Joe Weisenthal?

  Thank you for not doing that.

• 3:53Tracy Alloway?

  And have the funny voice. Well, I thought for an audio medium, maybe it would work. But then, in the course of researching on helium, I read about, apparently it comes partially from radioactive decay. And so I thought, well, maybe, maybe I don't want to be breathing in the helium. Although I also read that it's non-toxic, so I don't know. We need to talk about what helium actually- Actually is clearly.

• 4:12Joe Weisenthal?

  That's right. And we've been getting requests for a helium episode ever since there was a headline out today, Qatar sim helium production that is not gonna, it's not one of those force measures or something like that. I don't know. Whatever. Or something not coming out. Anyway, there's been a lot of requests for a helium episode. We've never done one. Incidentally, years ago, I used to lift weights with this guy in the East Village who's like sort of an entrepreneur and stuff like that.

• 4:35Tracy Alloway?

  Helium filled weights?

• 4:36Joe Weisenthal?

  He was, no, but he was in helium. Among other things, he was one of these guys that has his like finger hands and everything. And he also had like a helium venture. And he's like, oh, you gotta talk to my friend. One day you guys should do an episode on helium. And then I got connected with our guest who we're about to introduce in a second. And I said, hey, do you know this guy in the East Village? Cause okay, maybe like not everyone in Canada knows each other, but everyone in the helium industry almost certainly knows each other. He's like, oh yeah, of course I know that guy who used to lift weights.

• 5:05Tracy Alloway?

  It does seem to be a small concentrated industry, which is why we're talking about it today.

• 5:09Joe Weisenthal?

  Which is why we're talking about today. Anyway, what is helium? Why is it important? Where do we get it? Why is it impaired right now? Many questions that people want answered. Very excited to say we do have the perfect guest. We're going to be speaking with Nick Snyder, founder and CEO of North American Helium, which mines and sells helium out of Canada. So Nick, thank you so much for coming on Odd Lots.

• 5:30Speaker 03

  Joe, Tracy, thanks for having me.

• 5:31Joe Weisenthal?

  How annoyed are you that like?

• 5:33Tracy Alloway?

  That we brought a balloon?

• 5:34Joe Weisenthal?

  They just go, I have the helium company and like everyone, 99% of the time, people are just gonna think that's like the thing for balloons and therefore can't be that important.

• 5:43Speaker 03

  You know, I've gotten used to it. I've got young kids and they had to exercise at school, asking them what their parents did. And they said that I blow up balloons. So the teachers definitely think I'm a clown. And we got, we all get used to it.

• 5:57Tracy Alloway?

  Okay. Well, why don't we ask, in all seriousness, what are the industrial applications for helium beyond entertaining us in balloon form?

• 6:05Speaker 03

  So the biggest demand source, which you've probably seen in the news a little bit because of the events in Iran, is manufacturing semiconductors. And beyond that, one of the fastest growing end uses is for launching rockets for space exploration. And then there's a number of pretty durable, longstanding uses, including.

• 6:26Speaker 03

  Leak detection for everything from every cell in an electric battery to all sorts of complex machinery, manufacturing fiber optics, titanium, MRIs and NMR for drug discovery. It's pretty well-used across all of technology.

• 6:41Joe Weisenthal?

  All right, so what is it about the element helium that gives it these properties such that it is useful in what you described as a fairly wide range of industrial applications?

• 6:52Speaker 03

  So what makes it so useful is it's got three or four things going for it that are completely unique. One is that it has the lowest boiling point of anything in nature. So liquid helium is about four degrees Kelvin. I don't have my, you know, conversion in front of me. I think that's negative 270-something degrees Celsius. So it's the coldest substance on earth, and that's really important for any sort of superconducting magnets for the most part.

• 7:22Joe Weisenthal?

  Google says that's negative 452 degrees Fahrenheit. So yeah, that's quite cold.

• 7:25Speaker 03

  We're a Canadian company. We use Celsius.

• 7:28Joe Weisenthal?

  Kelvin is our common language. We don't have to fight Fahrenheit versus Celsius here. We're gonna clash pans with Kelvin. Anyway, keep going.

• 7:35Speaker 03

  So just the boiling point alone makes it very unique and important. So if you want to have something very cold, and that's primarily low-temperature physics and superconductors, you need to use liquid helium for that. But the boiling point is also important for launching rockets, because if you're launching rockets, you can't pump the liquid rocket fuel into the engine fast enough because the volume is so large. So you need to pressurize those rockets, and that is primarily done with helium because it is lightweight, but also it's the only substance that is nonreactive that remains a gas at the temperature of

• 8:16Speaker 03

  liquid oxygen or liquid kerosene. So it also, in addition to being a very cold substance as a liquid, it's also, it's a great heat transfer medium. So if you think about the fiberglass insulation in your walls is a good insulator, and the copper pot you cook eggs in is a good heat transfer medium. No one really thinks about that with gases, but helium is very good at transferring heat. So if you were... A deep sea diver that they breathe helium oxygen mixture mixture so that they don't get nitrogen narcosis. When they're in that high helium atmosphere, they have to heat their habitat to about ninety eight degrees or they'll start shivering because nitrogen is a very good insulator

• 9:01Speaker 03

  and helium is a very good conductor of heat. And that becomes important in semiconductor manufacturing because as they're doing the lithography process, they need a carrier gas that is a small molecule and helium is the smallest molecule in nature. That's also something that can transfer heat away to avoid errors and also is nonreactive. So really what makes helium demand so durable in some of these applications is that you're using more than one of the unique attributes of the molecule.

• 9:31Tracy Alloway?

  Wait, just to be clear on semiconductor lithography, the actual etching, how is the helium used in that process? Is it just like in the environment around to keep it cool or like how is it being deployed?

• 9:44Speaker 03

  So I, I, I'm not an expert here. I don't want to get out of my depth, but basically, you know, they have a light source and a mask and then they have to deposit something on there. That is vapor deposition. They need a carrier gas for whatever they're depositing on there and they need that to be, you know, something with a very high heat transfer rate and also a small molecule. They use it in a bunch of other parts of the semiconductor process, but a lot of them like cooling the backside of the wafer. You can recycle. It's the lithography process where they're essentially polluting the helium with other volatile compounds. That's what's causing demand to grow so quickly in semiconductors. And I've seen estimates that the new leading edge chips use ten times more helium per

• 10:27Speaker 03

  chip than older technologies. So the helium demand from that sector is growing at roughly double the volume of silicon from that sector is growing.

• 10:37Tracy Alloway?

  Okay. And I feel very after school special asking this next question while next to a balloon. But where does helium actually come from?

• 10:46Speaker 03

  Helium is only created on Earth by, as you said, radioactive decay of uranium and thorium. Helium itself is not radioactive and divers can breathe it as long as there's oxygen in there as well. What's interesting about helium is that unlike any other critical mineral, once you use it, it leaves the atmosphere. So you can't go get it out of a landfill after the fact. So that means that you can only find helium on Earth underground where it's been trapped. And the generation time scales are roughly in order of magnitude larger than for oil and gas. So an oil and gas deposit might have taken 10 million years to be created. In helium, you're talking about hundreds of millions of years because it's a very slow process.

• 11:30Joe Weisenthal?

  So we're going to get to North American helium and the deposits that you have access to. But there's helium deposits and then helium also merges as a byproduct of natural gas. So talk to us about how helium comes out of the ground. Typically, you know, if we're talking about the Middle East somewhere, Qatar, where there's a lot of gas versus say where you're mining helium. And then we'll get into some of these different processes.

• 11:53Speaker 03

  So that's really primarily a function of exploration.

• 11:58Joe Weisenthal?

  Okay.

• 11:59Speaker 03

  Helium is much more rare than natural gas, but most of the world's helium supply comes as a byproduct of natural gas because there's been a huge amount of exploration drilling for natural gas. So that's where they've found it. And there's one gigantic field in the US mid-continent called the Hugaton that's been on production for 100 years. That's what we use to originally fill the Federal Helium Reserve. The field in Qatar, which they share with Iran, although Iran is not able to extract helium, that has one twentieth of 1% helium in it. So it's a very, very small quantity. But because they're doing so much pretreatment, because there's hydrogen sulfide in the gas and because the scale of their LNG facility is so large,

• 12:44Speaker 03

  that's the largest single source of helium in the world.

• 12:47Joe Weisenthal?

  This is really helpful because I just sort of, you know, when we do these things, like where does that thing come from? It's like all these byproducts. And so I assumed that helium was yet just like another byproduct thing that shows up anytime you're looking for natural gas. But it sounds like, no, the reason it's there is just because there's been a lot of exploration in that area and they found helium, but that it's not inevitable that anywhere you have natural gas, they're going to find helium.

• 13:09Tracy Alloway?

  Yeah. So actually, on that note, so if I go exploring for nat gas and I happen to find a helium deposit, like what happens to that helium if I decide that I want to monetize it? Like, how do I actually extract it out of the ground? How do I store it? Do I set up a helium facility right next to where the deposit actually is? Or do I move it somewhere else? What's the next step in the process?

• 13:34Speaker 03

  The way that the gas separation process works is, for the most part, you're actually separating everything except for the helium, because helium is a small, non-reactive molecule. You can't just take that out. So, for the most part, helium always shows up with nitrogen, so you'd already have a high nitrogen content in the gas. And then you're going to remove the nitrogen and the methane and be left with the helium, which you can then purify. And there's really only a couple of fields in the world. There's one field in Algeria that's been on production for a long time and is falling off. There's one field in Siberia. There's the field in the Middle East, the field that's been depleting for

• 14:17Speaker 03

  a long time in the US mid-continent. But it is really quite rare. And if you think about what are the ingredients you need for this? You need to have an area with uranium and thorium. And we sort of know where that is, because the US and the Russians during the Cold War looked all over the world for uranium. And you need to have an area where you've got a sedimentary basin, where you're going to have traditional oil reservoir rocks. You're sort of looking for a sandstone. And in general, you're looking for an area where there aren't any mountains, because it's a small molecule that wants to escape to the surface. So if you are in a tectonic area, that's going to be a big problem for you.

• 14:55Joe Weisenthal?

  That's interesting. So the existence of mountains implies, I hadn't thought about that at all. I would say, oh, mountains, that's great. It's probably more deeply buried, less place for it to escape. But the existence of mountains implies tectonic activity, and that's how you get leaks. Super interesting. Do they have it in Kazakhstan? I know they have a lot of uranium there. Is there helium in Kazakhstan?

• 15:16Speaker 03

  I think there's a little bit of helium content in one of the stranded gas fields there. Certainly, there's no production there.

• 15:23Joe Weisenthal?

  Okay.

• 15:23Speaker 03

  And again, you know, the LNG operation in Qatar is somewhat unique with a very small helium content. If you were to go drill for helium in North America and you're not going to have one of the world's largest LNG complexes there, generally, one-third of 1% is sort of considered an economic cutoff for the helium content.

• 16:01Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief podcast. Every week, experts from Barclays Markets and Research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee, so search Barclays Brief wherever you get your podcasts.

• 16:27Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 17:09Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including... Including in job ads that candidates quote must be willing to work extended hours and weekends as needed. One major perk for all that hard work employees access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 17:50Tracy Alloway?

  Is it true we used to have a strategic helium, a national helium reserve? I can't believe we don't have a strategic pork reserve, but there was a federal helium reserve.

• 18:00Speaker 03

  Once upon a time when our government was very foresighted, we did build a helium reserve during the Cold War, which was a brilliant idea, both because helium is an important thing to have, but also because that gas would have been invented otherwise. And you know, a good example of this is in Algeria, they have one field with helium content that mixes in with everything else. If they're making LNG from the gas stream in Algeria, then they can recover the helium. But if they're putting it into the pipeline to Europe, which unfortunately is where the majority of it's going right now because gas prices are very high in Europe, it can't be recovered. And that helium, when you turn on your stove is just going to escape into the atmosphere.

• 18:43Joe Weisenthal?

  Oh, that's really interesting. So even if you don't have a market or an easy way to sell it at the time, what the strategic reserve did was allow us to capture something that would have been otherwise lost permanently had we not had this thing. So tell us the story because I'm evidently we don't have it anymore. What was in it? Where was it? And where did it go? Who'd we sell it to? What happened?

• 19:05Speaker 03

  So it was primarily the helium that was the Hugaton Field, which is this very large field across Texas and Oklahoma and parts of Kansas that

• 19:16Tracy Alloway?

  It's close to Amarillo, isn't it?

• 19:17Speaker 03

  So the field is very large. The gas production from that, we started recovering helium. We were always the Saudi Arabia of helium, if you will. You know, side note there is that the Hindenburg was designed for helium and the US Senate blocked export of helium for military reasons to Germany. And that's why they filled it up with hydrogen instead. Huh. So, this has been going on for a while and, you know, we talk about it being a small molecule and difficult to trap underground. A good example of that is when it was first found in Kansas. Originally helium was discovered by looking at the sun during an eclipse. And someone was able to see from the spectral lines that, uh, there's another element out here. Hmm.

• 20:02Speaker 03

  And then they found an inert gas well in Kansas and they were able to, uh, you know, distill the helium basically by putting the gas through a bunch of really narrow glass tubes. And the helium will go through the glass because it's such a small molecule. And that's how they were able to distill it. Um, so anyways, we built the world's only helium reserve during the Cold War. And this is something that the science community was very excited about because they recognize that this is really important for a bunch of science and physics. But more importantly, if you think about the long term, we're living in interesting times in many ways, but an interesting time if you think very long term in terms of

• 20:47Speaker 03

  the last hundred years have seen drilling for natural gas all over the place. And particularly for conventional deposits, it's important to understand you can't find helium in economic quantities in unconventional resources like shale. Oh. So, prior to our company, the last new discovery of helium that was commercialized in North America was fifty years ago. The oil and gas companies aren't looking for these conventional fields anymore. But, you know, the American Physical Society got very upset when we talked about selling off the helium reserve and they said basically, this is a molecule that's only getting more important. We're finding more and more uses for it. And if you think about today, what are some future uses?

• 21:31Speaker 03

  They're using this for quantum computing to keep things very cold. They're using it for nuclear fusion, for the superconducting magnets. They're now using it in, I think, X-energy just filed for an IPO. Those are helium cooled fission reactors that they're building, SMRs. Hmm. Because. Like if you think about Fukushima, that was a water cooled reactor and the water got hot and then the water turned into steam and it got so hot that the steam separated into hydrogen and oxygen and then things blew up. But because helium is such a good heat transfer medium, you can use helium as the primary loop there in these reactors and it makes it passively safe. So the physics community was very up in arms when we decided to sell this off because they said, you know, what happens 50 years from now when we need this

• 22:16Speaker 03

  for space exploration and quantum computing and everything else? And there's no one drilling for conventional gas anymore. So, you know, that's sort of the issue there. And, you know, we can get into why we sold it off. It won't be a terribly

• 22:30Joe Weisenthal?

  Well, who bought it? Where'd it go? Because I can't imagine like, oh, we bought the strategic helium reserve. Let's just go make a bunch of balloons. Like, I assume that didn't happen. So who bought it and what'd they do with it?

• 22:39Speaker 03

  So we actually stockpiled two things during the Cold War, helium and tin. Tin is also used for semiconductors. We sold them both off prior to right now when we started building semiconductor fabs in the US. So that's sort of a, you know, not a great choice necessarily. With regard to the helium reserve, when they originally started, they took the helium out of the gas stream and to your point, Tracy, they put it into an old natural gas field in Amarillo. So that's why the helium reserve was there and they filled that up. But the government never appropriated funds to pay for the helium. So the Bureau of Land Management or their predecessor basically owed the government

• 23:22Speaker 03

  $300 million for this because no funds were appropriated. And that $300 million was accruing interest to the point where, I think in 1996, Newt Gingrich got into power and it was time to start talking about privatizing things. And Christopher Cox went to the House floor and basically said, you know, do you know the government, this dumb government has $1.4 billion of party balloon debt? And a bill was quickly passed and, you know, signed by Clinton and we decided to sell the whole thing off. The original plan, I believe, was to sell it off. In equal parts over 30 years for exactly 1.4 billion with no regard to the market, just to pay off the government's so-called party balloon debt.

• 24:07Speaker 03

  And the physics community was up in arms about this, but you know, they don't have that many senators.

• 24:11Tracy Alloway?

  That's amazing, and I feel like we could do a whole episode just on the helium reserve. But, serious question, I guess, or maybe a related question. How difficult is helium to store? Because we're used to, you know, maybe you go into the, the party balloon shop in the party balloon district of downtown New York, and you see canisters of helium gas lying there. But on the other hand, I imagine you're talking about the world's smallest molecule, as you said, it must escape quite easily.

• 24:43Speaker 03

  So i- i- if you decide to get into the party balloon business and you're going to take over where Party City left off, you know, by the way, the only time people usually, friends on the street bringing up helium with me is every time there's a helium shortage, and we're now looking at probably the fifth in the last 20 years, Party City goes bankrupt. And that's the end of the industry. But if you wanted to get into that industry and you wanted to get canisters of helium, and I hope, being an honest person, you would get canisters of pure helium, because I've heard a lot about people, you know, going 50/50 and your balloons don't stay in the air as long as you remember them when you were a kid.

• 25:21Tracy Alloway?

  Scandal.

• 25:21Speaker 03

  The helium will be leaking around the threads of the valve, a little bit each day. And the world trade of helium is actually done in the form of a liquid, where a liquid helium ISO container can be put on a ship. It can hold roughly five times more than a, what used to be called a tube trailer, of, you know, sort of a two-foot in diameter, 40-foot-long tube. And you'll see these on the highway where there's about 10 of them stacked on the back of a tractor trailer. That, that's a steel tube trailer now because of the hydrogen industry. There is carbon fiber overwrapped trailers that can hold about a third as much as a liquid helium container.

• 26:04Speaker 03

  So it changes the transportation differential a little bit, and that's what we use. But it's shipped around the world as a liquid, and as a liquid, it is perishable. So. That's part of the reason that whenever, you know, the sort of timeline here is I have nothing interesting to say about geopolitics, but the Qataris have said they are going to wait until hostilities have ceased and then they will restart LNG production. And I read that'll take three or four weeks or something. The helium industry is going to take longer than that to recover from this because there's only about 3,000 of these liquid helium containers in the world. They're highly, highly specialized because you're talking about taking a huge

• 26:47Speaker 03

  amount by weight of liquid helium, which is at four degrees Kelvin, and putting it in a container where it's essentially a very fancy thermos, but this has to be hardy enough that you can put it on a truck and put it on a ship, but it's warming up the whole time. And the very best containers can hold the helium for about 45 days before the pressure gets too high and they'll essentially vent themselves.

• 27:11Joe Weisenthal?

  Hmm.

• 27:12Speaker 03

  So it makes it very perishable and it makes the containers very important where I would assume that the Qatari LNG facilities have built a lot of liquid helium containers that are now stuck somewhere.

• 27:22Joe Weisenthal?

  Yeah.

• 27:23Speaker 03

  And those are slowly warming up. And on the other hand, to deal with a crisis like this, the big industrial gas companies are now going to have to scramble to move containers to other sources to try and get helium out of storage where they've built some private storage since the, you know, Federal Reserve is now essentially gone. And that's going to cause a lot of problems because it's just a very limited supply of these.

• 27:45Joe Weisenthal?

  I just want to say, and I really mean this with no offense, but anytime that we have a guest who sort of is talking a lot about science and technology, I do a little bit of live fact checking. I like look up all these things. And it's like, yep, we really did have something called the Helium Privatization Act in 2016, just about 1.3 billion dollars. And party balloon debt. It really is perceived to be important in quantum computing. It really is perceived to be important in small modular reactors. So all, I just, you know, for the listeners out there, because I can't, you know, I don't know anything about any of this stuff. This all seems to check out. Helium seems to be pretty important. Now, here's something I've learned. I have learned over the years, which is that anytime we are talking about niche commodities,

• 28:29Joe Weisenthal?

  it's often like harder to find anything resembling spot prices at all, including a lot of the rare earths and stuff. Sometimes you'll see these tickers, but they're like ancient or not up to date or whatever, or whatever that maybe there was a futures market at one point, but it like got discontinued in 2018 or something. There's actually literally nothing on the terminal about helium pricing. And I tell us about why that is and how, what is, how transparent is the helium market? And what is the cost of a ton of helium or whatever? What is the denomination of helium in terms of how much is sold in a chunk? Tell us about that market.

• 29:06Speaker 03

  Yeah, so it's a pretty unique market. I mean, there used to be more markets like this, but companies like Bloomberg and many others have helped to make things a lot more efficient. In general, the price to the end user, it's considered to be about a six billion cubic foot per year market and worth about $6 billion a year. So that implies about $1,000 per MCF to the end user. And, you know, that's, MCF is 1,000 cubic feet. That's the standard denomination that they use in natural gas. You know, so that implies that it's a dollar for one cubic foot. And since you insisted on bringing a helium balloon into the studio, I would fact check you and say, what did you pay for that?

• 29:49Tracy Alloway?

  Oh, well, I actually don't know.

• 29:51Joe Weisenthal?

  But definitely more than a dollar.

• 29:52Tracy Alloway?

  Yeah.

• 29:53Joe Weisenthal?

  And definitely that's not a cubic foot.

• 29:54Tracy Alloway?

  I'm going to ask our producer and then he can tell us in a few minutes.

• 29:58Joe Weisenthal?

  But keep going while we wait for a response for our producer. What do you tell us about the, the current market environment and how 2026 looks versus 2025 versus 2016, et cetera?

• 30:08Speaker 03

  So the market had been trending down since the last shortage, which ended in around 2022, when the Russians brought production online. And that was a bit of a surprise to the industry because a German firm, Lindy, had been involved with building the Russian facility. They're a more gas project, which processes natural gas liquids and other things out of a big gas stream. And it also recovers the helium from the Chayanda and Kovikda fields. And the general consensus because of the Ukraine war is that the Russians wouldn't be able to get that plant to run without the help of the Germans. And, you know, they started up the first train and had a very large fire and they started up the second train.

• 30:52Speaker 03

  And had a very large explosion. So everyone has sort of written that off, but they were, you know, able to get that production up and running. And start bringing it into the market. There are sanctions on bringing liquid helium containers to. Sanctions might not be the right word, but I believe there's a state department restriction on taking liquid helium containers from the US to Russia. Because it's dual use, it can have a military application. Yep. Um, there's also sanctions on taking Russian helium at all the places like Europe. So the Russians went into production and basically flooded the Chinese market and it sort of spread out from there a little bit.

• 31:30Speaker 03

  It's somewhat limited, the impact they were able to have because of the lack of liquid helium containers, the lack of end markets for them, but. Prices have been trending down. I will say, you know, in answer to your question, why isn't it obvious what the helium price is? There's a confidentiality clause in every helium contract. So we sell on long-term contracts primarily to the big industrial gas companies, but those are all confidential and, um. Certainly from a commodity trader point of view, having an opaque market probably is, uh, you know, a pretty good thing. Yeah. Maybe that originated with the fact that the government was selling the helium for, uh, exactly 1.4 billion and, uh, no one wanted to, you know, have a futures market there, but also.

• 32:14Speaker 03

  As you guys know, you know, futures markets sort of need to be deliverable. And there's no longer any sort of global hub. You could have potentially when the Federal Reserve was a public facility where you could inject gas back into it. You could have built a futures market around that, but no one did.

• 32:31Tracy Alloway?

  It kind of reminds me of plane delivery contracts where, you know, the announcement comes out and it's always at a list price. So, you know, like, an airline buys $100 million worth of Boeing planes. But the contracts are so custom and opaque and individualized that like no one really ever knows how much they sold for.

• 32:52Joe Weisenthal?

  The price of an airplane, that's super interesting.

• 32:53Tracy Alloway?

  Our producer Dash, by the way, got back to us and he says the balloon cost $9, which is more than I would have expected, but what do I know about balloons?

• 33:02Joe Weisenthal?

  But we're at a helium crisis.

• 33:22Speaker 01

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• 34:45Tracy Alloway?

  First of all, from your vantage point in the market, what supply disruptions are you seeing right now? And then secondly, how long does it actually take those disruptions to work their way into the market and start to hit prices, given that we just talked about how most of the stuff is selling on a very long-term forward basis?

• 35:05Speaker 03

  Yeah, well, the second part of your question is particularly germane, but the Qatari facilities in total were producing north of 30% of world helium supply. And given that there's no federal helium reserve anymore, and given that this is a perishable commodity, essentially, because it starts warming up, once you fill a liquid helium container, that's a huge problem. The longer this goes on, it becomes more and more of a problem. But to your point on timing, there's a leading helium consultant who we've worked with for a long time, who I think put it very well, where he described the situation last week as it's like a tsunami, where the water has already gone out, but we're all still on the beach and the wave hasn't hit yet.

• 35:49Speaker 03

  And the last cargoes that left Qatar are probably just now getting delivered to customers. So the real problems are coming in the next month.

• 35:59Joe Weisenthal?

  This is how everyone, by the way, in energies are thinking about this moment right now, because by and large, markets are up for oil, gas, et cetera, but maybe not hyper catastrophic levels. And everyone's like, this better open up soon because the water has come out and we're going to have real problems the longer we have these disruptions. It's interesting, too, like this idea that, you know, here's something I wondered about, and it again relates to the, some of the conversations we've had about rare earths in the past. The nominal size of this market, even right now, does not sound very large, a $6 billion global market. This is the same thing, we talked to Javier Blas here at Bloomberg about rare earths. The total dollar amounts for this stuff are not that high.

• 36:44Joe Weisenthal?

  And it always makes me wonder, does that impair exploration and production appetites? That it's like, look, yeah, we could go looking for New fields, we could drill here, et cetera. But there's just even in the best of times, it's not going to be a great market. And so we have like other things on our mind to do. And I'm curious like whether small nominal markets make it harder to mobilize capital.

• 37:08Speaker 03

  100% and you know, I don't know what the price of uranium is today, but that's a similarly sized market. And you know, what you see in these industries when prices, um, you know, go up or there's a shortage is essentially, people start, uh, doing exploration at the desk where they're saying, who almost found this in the past? Because it's too expensive to go do it from first principles. If you think about the size of the oil and gas market, it's what hundreds of times larger than helium. So, you know, the only people who could afford to explore at scale in North America were the oil and gas drillers. So we've found a niche where we're able to do that because it's a lot cheaper than in some other places.

• 37:53Speaker 03

  But that is really what separates us as a company in terms of we've been focused on grassroots exploration, saying the best stuff hasn't been found yet. And, uh, you know, in those other industries, I, I think that's a problem going forward for a number of, of critical minerals and niche commodities where you can say, well, hypothetically, there's rare earths in North Carolina. But how much do you want to spend looking for them? Cause it can cost hundreds of millions of dollars to go drill holes in the ground.

• 38:23Tracy Alloway?

  You know, you said earlier that there had been five previous helium shortages, um, I guess in, in recent times. What happened during those? Like, how much substitution did you see of alternative gases? I guess I don't know what those would be neon maybe. And then how much rerouting did you see from like one geographic area to another? Like, I, I guess what I'm asking is how flexible is the industry that relies on helium?

• 38:52Speaker 03

  So answering that in reverse, you know, the industrial gas companies that really distribute the helium and move it around the world and break it into smaller quantities to serve the end user. They do a phenomenal job with this, but it's a very, very difficult problem. So when there's a shortage, there's absolutely a problem, particularly because of the specialized logistics. And there's not, you know, a bunch of extra helium containers lying around and things like that. In terms of, what was your question about the previous helium shortages?

• 39:23Tracy Alloway?

  Yeah, basically, how much substitution did you see? Like, are there other gases like neon that you can use instead of helium? And that, basically, just how easy is it for people to adapt to an actual helium shortage?

• 39:36Speaker 03

  So the first shortage was in 2007. And back then, we had a lot more options in terms of, in Europe, they've never really had a lot of helium the way we have in the US. So for that reason, they don't really have party balloons over there, which is the most visible thing for the average person. But they also have always used a lot more argon in welding. Helium is used in inert gas welding because it is inert, because it has high heat transfer. They've always used more argon. We've always used more helium in the US. And there was a lot of substitution of saying, okay, we still need helium if you're welding stainless steel, titanium, aluminum, if you're doing thicker welds.

• 40:18Speaker 03

  But in some of the lower spec welding applications, we were able to substitute argon. And you've also seen recycling where, you know, if you're doing semiconductor lithography, you can't really recycle because you're putting other things in the gas. But if you're purely doing it for a cooling loop, you can start to recycle. And my understanding is that the MRI manufacturers prior to 2007, they would build an MRI, fill it up with liquid helium, make sure it works at the factory, and then just vent it into the atmosphere and ship the unit, and it would be refilled when it got there. So there's certainly been demand destruction from that. The other side of that coin is that there's very little opportunity for additional recycling or additional substitution at this point.

• 41:02Speaker 03

  And, you know, I sort of tell people. If you're still using helium after four global shortages, you have to use helium.

• 41:09Joe Weisenthal?

  There are helium balloons in Europe. I fact-checked that. They do exist. They're perhaps not as widespread. I actually found a, uh, this is a very European, this is the most European-looking document I've ever seen, which is this really serious, like, think-tank report on the intentional release of balloons and confetti in the Baltic Sea area. Scoping study, a collection of existing information, regulation, and best practices published by the Baltic Marine Environment Protection Commission. It's a 50-page paper on the release of balloons. Anyway, sorry. But I take your point that, but I also found a Reddit post, someone asking where they can get helium balloons. So maybe they're not, maybe they're not as prevalent.

• 41:52Speaker 03

  If the EU has regulations on it, I'm willing to believe they've got it.

• 41:56Joe Weisenthal?

  No, there's, there's something going on there. You know, the thing, the big takeaway I have from this conversation is just going back to thinking about that 30-year release schedule from the helium reserve. And especially if you're not doing it at something resembling a market price. That must have just obliterated any, like, private sector activity. Because if there's going to be this fixed supply coming onto the market, and it's not even price-sensitive in any way, why would you ever, like, build out private production at that point?

• 42:28Speaker 03

  100%. That's been a big issue. And, you know, when I first started looking at this issue in 2011, because my dad was involved in, you know, trying to advocate for fusion-fission hybrid reactors. And he chaired a Brookings MIT conference on this, and he was very disappointed. He said, "The smartest guy there told him he was wasting his time because we were going to run out of helium before they could get the technology working." And, you know, he called me and I said, "I thought that was for party balloons. Now I'm cursed to be on the other side of that conversation for the rest of my life." But the American Physical Society at the time, you know, put out a statement saying...

• 43:07Speaker 03

  Not only should you not sell this, helium is the one thing we should be building a bigger stockpile of for the future. And, you know, I sort of compared the situation to what happened in your, with uranium. Um, in the megatons to megawatts program after the fall of the Soviet Union. We took a bunch of their former Soviet nuclear weapons, we turned them into power plant fuel, uh, just because of proliferation reasons and sold that into the market. And similar thing, you know, you dump a bunch of supply into the market for a long time. And then there's no incentive for exploration and uranium prices went up, you know, 500% in the early 2000s. So that's certainly been a factor in terms of, you know, why haven't people been doing this the whole time?

• 43:49Tracy Alloway?

  Well, okay, on that note, you're the founder and CEO of North American Helium, and we know that helium prices are going up, even though we don't have a very good benchmark. But, you know, broadly, we know that, uh, it's going to get more expensive. What do you do with that price signal? Do you invest more? Do you expand, given the limitations around, you know, exploring for LNG and things like that? What do you do?

• 44:14Speaker 03

  We're on the unique end of the spectrum in the industry because we're not running a $10 billion LNG project or something like that because we're producing, we're only drilling for helium from non-hydrocarbon sources. So we're essentially looking for, we're drilling into older rocks that predate plant life on Earth, so there's not a lot of organic material there. Um, so you're drilling for fields of helium and nitrogen. And these exist and, you know, where we are primarily operating in southwest Saskatchewan in Canada, they had found a field like this in the 1960s. They wrote helium legislation, which made them very unique. But because of the combination of the forced sales from the federal stockpile, keeping

• 44:56Speaker 03

  helium prices low and nitrogen being worthless because it's already 80% of the atmosphere, no one ever came back and looked at this. But we're certainly, I, I would say we were already going pretty fast, uh, certainly in an environment like this. You know, our mission is to support science and industry. So all of a sudden, this is a big problem. We're going to do everything we can to increase our rate of exploration, bringing new plants onto production and, you know, really trying to support some of the most vital, uh, uses of helium. And then we've had in previous shortages, one of the problems is it's not a question of For the end user, it's not a question of whether or not you get the helium or not. The consequences of not getting helium across the value chain are pretty significant.

• 45:41Speaker 03

  If you're Party City, you go bankrupt. If you're a chip manufacturer, you have to shut down chip manufacturing and that's, you know, the dollar amount there is just tremendous. Uh, if you're running MRI or their cousin NMR, which is used for drug discovery and things like that. If that magnet heats up, it will destroy the magnet. So you're talking about your machine getting destroyed essentially. Um, so we're very focused on supporting those vital end uses. And if people can't do as much welding for a little while, you know, it is what it is. But in general, the price is very volatile because helium is a very small percentage of the cost of goods sold for all of the end uses.

• 46:25Tracy Alloway?

  Sorry, just to press on this point, I'm going to assume that you're going to make more money in the coming months as a result of helium supply getting squeezed in Qatar. What are the like major choke points at your company that you would be trying to use that money to resolve? Is it actually finding new fields or is it investing in more storage capacity, um, transportation investment? Like, what are you going to do with the money?

• 46:53Speaker 03

  It's a little bit of all of the above. Our, our focus has always been on the, the lack of reliability in the supply chain, which comes from two things. One is the extreme concentration where you've got one Exxon CO2 project in Wyoming. It's a quarter of world supply. You've got one LNG facility that's a third of world supply. You've now got production in Russia, which has its own issues. So the geopolitics and the concentration are a problem. So we've been working for the last 13 years to build a new helium hub to create, you know, helium supply from non hydrocarbon sources in Western Canada and.

• 47:33Speaker 03

  For that reason, we've run a bunch of stuff in parallel. So we'll be bringing a new facility online that'll increase our production by forty percent later this year. We're also drilling for, you know, doing exploration for the next field. We're also looking at doing much more grassroots exploration for just continuing to understand the area because we have nine million acres of long-term helium rights. So it takes three hours to drive across it. This is, uh, you know, we've identified a thousand structures from seismic data that we have not drilled yet. So it's really all of those things. One of the biggest things that we've been looking at is building a helium liquefier in Canada.

• 48:13Speaker 03

  Because right now, we have nine facilities that are producing helium and we truck all of that in carbon fiber overwrap, uh, tube trailers down to existing liquefiers in the US mid-continent. And there's a lot of extra capacity down there because production's been falling in the US for the last thirty-five years. But building a helium liquefier in Canada along the Trans-Canada Highway, which runs through the middle of our properties, really lowers the cost. It also lowers the emissions, which is something people, you know, cared a lot more about four years ago, but we still think is important, and opens up this area as more of a global hub. And also, if you think about the high-end customers, they're very concerned with purity.

• 48:57Speaker 03

  The average customer is taking liquid helium at grade P, which is sort of the industry standard, you can think of it as more or less five nines purity, ninety-nine point nine nine nine percent pure. The leading-edge chip manufacturers are now looking for six nines purity. And right now, that primarily either comes from Exxon's facility or it comes from Curratt. So all of a sudden, you've got a big issue there. And if you want to think about, you know, I know you guys love all the weird logistical stuff. That's right. There's only so many liquid helium containers in the world. Yeah. And if you want six nines purity, you don't ever want to fill that with five nines because you might get a molecule of hydrogen in there. So those containers are sort of kept separate. And the fiber optic manufacturers have their own containers.

• 49:40Speaker 03

  So now you've got an issue where the special containers for the semiconductor firms are trapped somewhere. They've got to go somewhere else. You've got to say, well, we need more of this from the Exxon facility and maybe that's going to cause a problem somewhere else. Uh, but building our own liquefier gives us the opportunity to, you know, meet any purity and be able to sort of... Kind of go farm to table with the whole supply chain.

• 50:05Joe Weisenthal?

  Farm to table helium. Nicholas Snyder, thank you so much for coming on Odd Lots. I learned a lot about helium in that conversation. That was fantastic.

• 50:13Speaker 03

  Joe Tracy, thanks so much. It was a pleasure.

• 50:28Joe Weisenthal?

  Tracy, I really wanted to do a live episode one day in Saskatchewan with Nicholas and Murad Al Khatib, the lentil king of Saskatchewan. We could have the helium king of Saskatchewan and the lentil king of Saskatchewan. I think that'd be a great live event for us.

• 50:41Tracy Alloway?

  I want to go scout, scout the plains for helium deposits.

• 50:45Joe Weisenthal?

  Yeah, me too.

• 50:46Tracy Alloway?

  And lentils, I guess. No, that was a fascinating episode.

• 50:49Joe Weisenthal?

  Totally.

• 50:49Tracy Alloway?

  I mean, all of these niche commodities are fascinating. I will say one thing that keeps getting repeated on all of these shows, and you touched on it already, is this idea that we haven't actually seen the physical impact just yet, and it's coming down the line. And you can imagine there are a lot of consumers of specific products out there who, for now, are able to say, you know, we're doing all right. But in maybe a month, maybe three months, maybe four months, if things keep going as they are. And even frankly, if the war were to stop tomorrow, you would probably have some sort of impact.

• 51:25Joe Weisenthal?

  Yeah. You know what it reminds me of? May 2025. It's like, the shortages are coming to the shelves because of the tariffs.

• 51:33Tracy Alloway?

  Yeah.

• 51:33Joe Weisenthal?

  And they didn't. And then it's like.

• 51:35Tracy Alloway?

  Well, but that was partially because Trump started reversing everything.

• 51:38Joe Weisenthal?

  I know, he did, he did, he did. But I do think we're in like this weird moment where it's like, nothing ever happens, but maybe it will. But yeah, but everyone who we talked to in commodities essentially is like, we're in the phase where the water has come out. And the longer it takes for production to restart and the street to reopen, the greater the damage is going to be. You know what I think is like really interesting about this conversation in particular? And there are actually, from a sort of economic standpoint, like several very interesting threads in there. So first of all, there's the part about how like, if you're selling helium at the same clip every. Every year over 30 years, you destroy any sort of semblance of a market

• 52:15Tracy Alloway?

  Yeah.

• 52:15Joe Weisenthal?

  for private production. That's interesting. Another interesting thing is that, OK, like helium itself is sort of scarce and out all over the place. And then the scarcity of the containers to, he kept coming back to the containers. There aren't that many containers in the world because if helium can go through glass, that means it's so small, not a lot can trap it. Even the containers that exist can only hold it for so long. And then the fact that the helium that's needed for the most advanced science, as he mentioned at the end, they want the 6/9s purity, not the 5/9s purity. And so they have their own separate set of containers that like, it's almost impossible to imagine like at this point, like a sort of like truly coordinated, like commodity helium, just because kind of like natural gas,

• 53:00Joe Weisenthal?

  so much of the story seems to be in the shipping and holding of it rather than the commodity per se.

• 53:06Tracy Alloway?

  No, it strikes me as very similar. And like helium is even more nat gas than nat gas, right?

• 53:12Joe Weisenthal?

  Yeah, right.

• 53:12Tracy Alloway?

  In the sense that we don't even have any pricing to look at, basically, which is just shocking to me as someone who's been staring at a Bloomberg terminal for many, many years. It feels really weird when you can't get a price of something.

• 53:24Joe Weisenthal?

  So there is, so like typically speaking, if you enter in any ticker in the terminal, something will come up. And there is actually a something.

• 53:35Tracy Alloway?

  There's a helium fund.

• 53:37Joe Weisenthal?

  No, there's a helium index, but whatever it was, it was put together by the Bureau of Land Management. And they ended it in 2018, like they stopped whatever, like whatever this index is in 2018. So there is not a lot of, there is not a lot of data on helium. And I've found that to be the case with a lot of the Nisha. Yeah, discontinued. It's for historical purposes only, according to the DES page.

• 54:02Tracy Alloway?

  Well, the other weird thing about it is it doesn't actually look that volatile at all.

• 54:07Joe Weisenthal?

  No, so I don't even believe the chart.

• 54:09Tracy Alloway?

  Yeah, exactly. OK, well, if anyone wants to create some sort of pricing index for helium, let us know.

• 54:15Joe Weisenthal?

  Yeah, we'd love to check it out.

• 54:16Tracy Alloway?

  Shall we leave it there?

• 54:17Joe Weisenthal?

  Let's leave it there.

• 54:18Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow. Follow me at Tracy Alloway.

• 54:23Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at TheStalwart. Follow our producers, Carmen Rodriguez at CarmenArmed, Dashiel Bennett at Dashbot, and Kale Brooks at KaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 54:43Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about helium and balloons, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 55:34Speaker 04

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