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Hello and welcome to another episode of the Odd Lats podcast. I'm Joe Wisenthal and.
I'm Tracy Alloway.
Tracy, one of the things that have been learning over the last few weeks is that a lot more than oil comes through No for real, Like you know, some onegether'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 important I'm not joking like I'm just saying.
Like 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 listeners can't see it.
Not the aluminum itself, although probably aluminum also comes out of the Gulf, but helium.
Tracy's holding a helium balloon. She went out and got a prop.
I didn't one of our lovely producers did. I have to say, I haven't held a balloon for a long time, and it's surprisingly entertaining.
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 like, oh, the clowns are going to be able to make their funny voices, et cetera.
Any chance we have to actually bring one of the commodities that we talk about on the show into the studio, I'm gonna seeze. So fear is some helium.
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 elementary.
Well, it's funny you mentioned that, because initially I was gonna take this balloon and you know, do the thing breathe than the helium 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 is. Clearly, that's right.
And we've been getting requests for a Helium episode ever since there was a headline out today Cutter some Helium production that is not gonna sit 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 Helium filled with no but he was in Helium
among all those things. He's 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 got to talk to my friend one day. You guys should do an episode on Helium. And then I got connected with our guests who are about to introduce a second and I said, hey, do you know this guy in the East Village Because okay, maybe like not everyone in Canada knows each other, but everyone in the helium industry.
I must certainly knows each other. He's like, oh, yeah, of course I know that guy who used to live away to it.
It does seem to be a small there's a traded industry, which is why we're talking about it today, 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 at 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 minds and sells helium out of Canada. So Nick, thank you so much for coming on odd lots.
Joe Tracy thanks for having me.
How annoyed argues that like that we brought up balloon, they just like, oh, I have the helium company, and like everyone, ninety nine percent of the time, people are just gonna think that's like the thing for balloons, and therefore it can't be that important.
You know, I've gotten used to it. I've got young kids and they had to exercise 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 all get used to it.
Okay, well, why don't we ask in all seriousness what are the industrial applications for helium beyond entertaining us in balloon form?
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, long standing uses including leak detection for everything from every cell and 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, all right.
So what is it about the element helium that gives it these properties such that it is useful? Well, you described as a fairly wide range of industrial applications.
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 uh, you know, conversion in front of me. I think that's negative two hundred and seventy something degrees celsius. So it's the coldest substance on Earth, and that's really important for any sort of superconducting magnets to the most.
Google says that's negative four hundred and fifty two degrees fahrenheit. So yeah, that's quite cold.
We're Canadian companyelium.
Kelvin is our common language. We don't have to fight fahrenheit versus celsia's here. We're gonna class pans with kelvin anyway, keep going.
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 light weight. But also it's the only substance that is non reactive that remains a gas at the temperature of liquid oxygen or liquid kerosene. So it also, in addition to being a very cold substance, is 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 the helium oxygen mix 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 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 non reactive. 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.
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.
So 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 to carry your 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 ship than older technologies, So the helium demand from that sector is growing. It roughly double the volume of silicon from that sector is growing.
Okay, and I feel very after school special asking this next question while next to a balloon. But where does helium actually come from?
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 magnetudes larger than for oil and gas. So an oil and gas deposit might have taken ten million years to be created. In helium, you're talking about hundreds of millions of years because it's a very slow process.
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 e merges as a byproduct of natural gas. So talk to us about how helium comes out of the grown Typically, you know, we're talking about the Middle East, somewhere Tatar there's a lot of gas versus say, where you're mining healing, and then we'll get into some of these different processes.
So that's really primarily a function of exploration. Okay, 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 Hugoton that's been on production for one hundred years. That's what we use to originally fill the Federal Helium Reserve.
The field and cutter which they share with Iran. Although Iran is not able to extract helium that has one twentieth of one percent helium in it, so it's a very very small quantity. But because they're doing so much pre treatment, because there's hydrogen sulfide in the gas, and because the scale of their LNG facility is so large. That's the largest single source of helium in the world.
This is really helpful because I just sort of, you know, when we do these things like where's that fane come from, it's like all these byproducts. 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, I're going to find helium.
Yeah, yea.
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.
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 it's falling off. There's one field in Siberia. There's the field in the Middle East, the field that's been depleting for 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.
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. Is probably more deeply buried, less place for it to escape. But the existence of mountains implies tectonic activity, and that's how you get leaked. Super interesting. Do they have it in Kazakhson? I know they have a lot of uranium. There is there helium in kazakhs On.
I think there's a little bit of helium content in one of the stranded gas fields there. Certainly there's no production there, Okay, And again you know the the LNG operation and cutter 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 energy complexes there, generally one third of one percent is sort of considered an economic cutoff for the helium downtown.
Is it true? We used to have a strategic a national helium reserve. I can't believe we don't have a strategic pork reserve, but there was a federal helium reserve 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 vented 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.
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 do we sell it to? What happened?
So it was primarily the helium that was the Hugoton field, which is this very large field across Texas and Oklahoma and parts of Kansas.
That's close to Amarillo, isn't it.
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. A side note there is that the Hinden Bird 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. So this has been going on for a while, and 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 there's another element out here. And then they found an inert gas well in Kansas and they were able to 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.
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 recognized that this is really important for a bunch of science and physics, but more importantly, 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 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 and economic quantities in unconventional resources like shale. So prior to our company, the last new discovery of helium that was commercialized in North America's fifty years ago, the oil and gas companies aren't
looking for these conventional fields anymore. But 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. 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, 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 fifty years from now when we need this 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 terrible hold on it.
Where did it go? Because I can't imagine, like, have we bought the strategic helium reserve. Let's just go make a bunch of balloons, like I assume that didn't happened. So who bought it and what did they do with it?
So we actually stockpiled two things during the Cold War helium and ten ten 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 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 three hundred million dollars for this because no funds were appropriated, and that three hundred million dollars was accruing interest to the point where I think in nineteen ninety six, 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 one point four billion dollars 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 thirty years for exactly one point four billion, with no regard to the market, just to pay off the government so called
party balloon debt. And the physics community was up in arms about this. But you know, they don't have that many senators.
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 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've said, it must escape quite easily.
So 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 twenty years,
party City goes bankrupt. And that's 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 fifty to fifty in your balloons don't stay in the air as long as you remember them when you were a kid. Candle, 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 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 forty foot long tube, and you'll see these on the highway where there's about ten 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, So it changes the transportation differential
a little bit, and that's what we use. But it 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 Kataris have said they are going to wait until hostilities have ceased and then they will restart LNG production, and I read that it'll take three or four weeks or something.
The helium industry is going to take longer than that to recover from them, because there's only about three thousand of these liquid helium containers in the world. They're highly highly specialized because you're talking about taking a huge 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 thermost 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 forty five days before the pressure gets too high and they'll essentially vent themselves. So it makes it very perishable, and it makes the containers very important. Where I would assume that the Katari LNG facilities had filled a lot of liquid helium containers that are now
stuck somewhere, yeah, 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 story since the 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.
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 guy like look up all these things, and it's like, Yep, we really did have something called the Helium Privatization Act in twenty sixteen, just about one point party billion out 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 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, 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 tech but they're like ancient or not up today or whatever or whatever that maybe there was a futures market at one point but it like got discontinued in twenty eighteen 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.
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, Yeah, help 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 six billion dollars a year. So that implies about one thousand dollars per MCF to the end user. And you know that's mcf is a
thousand 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? Oh?
Well, I actually don't know, but definitely more than a dollar. Yeah, and definitely that's not a cubic foot.
Well, I'm going to ask our producer and then he can tell us in a few minutes.
But keep going while we wait for a response for our producer, what do you tell us about the current market environment and how twenty twenty six looks for twenty twenty five verse twenty sixteen, et cetera.
So the market had been trending down since the last shortage, which ended in around twenty twenty two, 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 also recovers the
helium from their Canda and Kubecta 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 they started up the first train and had a very large fire, and they started up the second train and had a very large explosion. So everyone has sort of written that off. But they were 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 could have a military application. 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. 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, an 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 certainly from a commodity trader point of view, having an opaque market probably is you know, a pretty good things. Yeah, but maybe that originated with the fact that the government was selling the helium for exactly one point four billion and no one wanted to, you know, have a futures
market there. But also, 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.
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 like an airline buys one hundred million dollars worth of Boeing planes, but the contracts are so custom and opaque and individualized that like, no one really ever knows how.
Much they serplane. That's super interesting.
Our producer Dash, by the way, got back to us and he says the balloon costs nine dollars, which is more than I would have expected. So what do I know about balloons? 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.
Yeah, Well, the second part of your question is particularly germane. But you know, the Katari facilities in total, we're producing north of thirty percent 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, and the last cargoes that left Cutter are probably just now getting delivered to customers, so you know, the real problems are coming in the next month.
This is how everyone, by the way, an Energy are thinking about this moment right now, because buy and large markets are up for oil, gas, et cetera. But maybe you know, 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 earth's in the past. The nominal size of this market even right now does not sound very large. A six billion dollar global market. This is the same thing we talked to Haaveer Blase here at Bloomberg about rare earths. The total dollar amounts for this stuff are not that high.
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 this just even in the best of times, is not going to be a great market. And so we have, like other things is on our mind to do. And I'm curious, like whether small nominal markets make it harder to mobilize capital.
And you know, I don't know what the price of uranium is today, but that's a similar sized market. And you know what you see in these industries when prices you know, go up or there's a shortage is essentially people start 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 where 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.
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 you know in those other industries, I think that's a problem going forward for a number 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, because it can cost hundreds of millions
of dollars to go through holes in the ground.
You know, you said earlier that there had been five previous helium shortages. I guess 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, ne on maybe, And then how much rerooting did you see from like one geographic area to another, Like I guess what I'm asking is how flexible is the industry that relies on helium?
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 their extra helium containers lying around and things like that.
In terms of what was your question about the previous helium shortages.
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?
So the first shortage was in two thousand and seven, 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 personet But they also have always used a lot more argone in welding. Helium is used in inert gas welding because it is a dirt, because it has high heat transfer,
they've always used more urgun. 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, 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 manufacturer is prior to two thousand and seven, 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 shift 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. And you know, I sort of tell people, if you're still using helium after four global shortages, you have to use helium.
There are ballue There are helium balloons in Europe. In fact checked that they do exist. They perhaps I actually found a 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 and the Baltic Sea Area Scoping Study, a collection of existing information, regulation and best practices published by the Baltic Marine Environment Protection Commission, is a fifty
page paper on the release of balloons. Anyway, sorry, but I take your point that for I but I also found a Reddit post someone asking where they can get helium balloons, So maybe they're not. Maybe they're not.
If the EU has regulations on it. I'm willing to believe they've got it now.
There's there's something going on there. You know. The thing, the big takeaway I have from this conversation, it's just going back to thinking about that thirty 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 apply coming out too the market and it's not even price sensitive in any way, why would you ever like build out private production at that point.
One hundred percent? That's been a big issue. And you know when I first started looking at this issue in twenty eleven, because my dad was involved in trying to advocate for fusion fission hybrid reactors and he shared 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, I fool He called me and I said,
I thought that was for party balloons down. Cursed to be on the other side of that conversation for the rest of my life. But the America in physical society at the time, you know, put out a statement saying, not only should you do 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 with uranium 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 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, five hundred percent nearly two thousands. So that's certainly been a factor in terms of you know, why haven't people been doing this the whole time?
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 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 LERG and things like that, what do you do.
We're on the unique end of the spectrum in the industry because we're not running a ten billion dollar energy 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 pre date plant life on Earth, so there's not a lot of organic material there. So you're drilling for fields of helium and nitrogen and these exist, and you know where we
are primarily operating in southwest Saskatchewan and Canada. They had found a field like this in the nineteen sixties. They wrote helium legislation, which made them very unique. But because of the combination of the forced sales from the federal stockpile keeping helium prices low and nitrogen being worthless because it's already eighty percent of the atmosphere, no one ever came back and looked at this. But we're certainly, I would say, we were already going pretty fast, 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 uses of helium 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. 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. If you're running MRI or their cousin an MR, which is used for drug discovery and things like that, if that mag and it heats up, it will destroy the magnet, so you're talking about your machine
getting destroyed, essentially. 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 us.
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 cattarc.
What are the.
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, transportation investment? Like, what are you going to do with the money?
It's a little bit of all of the above. Our focus has always been on the lack of reliability in the supply chain, which comes from two things. One is the extreme concentration where you've got one Exxon Co two 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 thirteen years to build a new helium hub to create you know, helium supply from non hydridcarbon sources in Western Canada, and for that reason, we run a bunch of stuff in parallel, so we'll be bringing a new facility online that will 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 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 liquifier in Canada because right now we have nine facilities that are producing helium and we truck all of that in carbon fiber overwrapp tube trailers down to existing liquifiers in the US Mid Continent, and there's a lot of extra capacity down there because production has been falling
in the US for the last thirty five years. But building a helium liquifire 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 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.
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 Cover. 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
of the weird logistical stuff. 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. So now you've got an issue where the special containers for the semiconductor firms or trapped somewhere they've got to go
somewhere else. You've got to say, well, we need more of this from the Exon facility, and maybe that's going to cause a problem somewhere else. But building our own liqui fire gives us the opportunity to meet any purity and be able to sort of you kind of go farm to table with the whole supply chain.
Fable. Nicholas Snyder, thank you so much for coming on Odd Lots. I learned a lot about helium in that conversation.
That was fantastic, Tracy, Thanks so much your.
Pleasure, Tracy. I really want to do a live episode one day in Saskatchewan with Nicholas and Maraud al Katib, the Lentil King of Saskachewan. We got to have the helium King of Saskatchewan and the lentil King of Saskatchewan. I think that'd be a great live event for us.
I want to go scout scout the planes for helium.
Yeah.
I guess now, that was a fascinating episode. 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.
Yeah, you know what, it reminds me of May twenty twenty five. It's like the shortages are coming to the shelves because of the tariffs. Yeah, and they didn't and that it's like, well, but that.
Was partially because Trump, Yeah started.
I know, he did, he did, he did. But I do think we're at like this weird moment where it's like nothing ever happens, but maybe it will. But yeah, but everyone who we talk to in commodities essentially is like we're in the phase where the water has come out. In the longer it takes for production to restart and the straight to reopen, the greater the damage is going to be.
You know what.
I think it's like really interesting about this conversation particular, and they're actually from a sort of economic standpoints, 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 year of a thirty years, you destroy any sort of semblance of a market. And yeah, for private production, that's interesting. Another interesting thing is that, okay, like helium itself is sort of scarce and not all
over the place. And then the scarcity of the containers to uh, 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 and not a lot contrapant. 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 you mentioned at the end, they want the six nines purity, not the five nines 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, so much of the store seems to be in the shipping and holding of it
rather than the commodity per se.
No, it strikes me as very similar and like helium is even more gnat gas than that gas, right in the sense that we don't even have any pricing to look 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.
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. There's a helium 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 twenty eighteen, like they stopped whatever whatever this indexes in twenty eighteen. So there is not a lot of there's not a lot of data on helium, and I've found that to be the case with a
lot of the nisia. Yeah, discontinued. It's for historical purposes only to the dees page.
Well, the other weird thing about it is it doesn't actually look that volatile at all.
It seems like hi, so I don't even believe that.
You yeah, exactly, Okay, well, if anyone wants to create some sort of pricing index for Helium, let us know.
Yeah, we'd love to check it out.
Shall we leave it there?
Let's leave it there.
This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
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