The federal government has a reserve of crude  The federal government has been extensively involved in the production,  storage, and use of helium since the early part of the twentieth century. Furthermore, when the  debt is fully paid off, the revolving Helium Fund shall be terminated  (50 U.S.C. § 167b(a)); and established a modified “in-kind” program to meet federal needs for  helium. As directed by Congress, the National Academies’ National Research  Council reviewed the helium program and released a report in 2000 that  evaluated the changes made in the program, the effects of these changes  on the program, and several scenarios for managing the federal  government’s reserve of helium in the future.changes in price and availability of helium, in 2008, the National  Research Council convened a committee to determine if the current  implementation of the helium program was having an adverse effect on  U.S. scientific, technical, biomedical, and national security users of  helium. The Helium Privatization Act of 1996 Addressed or Altered Our Prior Concerns

Since our reports in the early 1990s, the Helium Privatization Act of 1996  has caused considerable changes to the helium program and addressed  or altered our prior concerns. In October 1992, we reported on various  aspects of the federal helium program including the helium debt, pricing,  and alternatives for meeting federal helium needs. Helium Debt

In October 1992, we recommended that Congress cancel the helium  program’s debt. As of September 1991, the debt had grown to about  $1.3 billion, over $1 billion of which was interest that had accrued on the  original debt principal of about $290 million. We recommended that  Congress cancel the debt in the Helium Fund because it was no longer  realistic to expect the debt to be repaid by the statutory deadline of 1995,  and because canceling the debt would not adversely affect the federal  budget as the debt consisted of outlays that had already been  appropriated and interest that was a paper transaction. 1). The helium debt was also a factor in setting the price of federal helium. In  1992, GAO recognized that if the helium debt was cancelled, Congress  may wish to propose a new pricing scheme. The 1996 act did not cancel  the debt, as we had recommended, but it did require a specific method for  pricing crude helium. 2). In 1992, GAO recommended that Congress reassess the conservation  objectives of the helium program and consider other alternatives to meet  federal helium needs. As part of the resetting of the helium program’s  objectives, the 1996 act established a revised approach for meeting  federal needs for helium. Three Urgent Issues Facing the Helium Program

As we testified in 2010, changes in helium prices, production, and  demand have generated concerns about the future availability of helium  for the federal government and other critical purposes. The Helium  Privatization Act of 1996 does not provide a specific direction for the  helium program past 2015. Specifically, the three  urgent issues are as follows:
How will the helium program be funded after 2013? If the helium  program’s debt is paid off this year, as expected, and the revolving  helium fund is terminated, it is not clear how the operations of the  helium program will be paid for. When we last testified on this issue, the estimated payoff date was  5 years away in 2015, and it was more closely aligned with the 1996  act’s requirement to sell down the helium reserve by January 1, 2015. The debt payoff schedule has accelerated primarily because of  improved sales of the crude helium offered for sale. At what price should BLM sell its crude helium? When  BLM first set its price after the 1996 act, its price was estimated to be  significantly higher than the market price, but now the reverse is  true—BLM’s price for crude helium is estimated to be at or below the  market price for refined helium. How should the helium remaining in storage after 2015 be used? As of September 30,  2012, there were 11.44 billion cubic feet of conservation helium in  storage. According to the 2010 report by the National Academies’  National Research Council, the United States could become a net  importer of helium within the next 7 to 12 years, and the principal new  sources of helium will be in the Middle East and Russia. As the deadline for the required actions to be taken under this act  approaches, Congress may need to address some unresolved issues  such as how the helium program will operate once the Helium Fund  expires at the end of this year, how to set the price for the helium owned  by the federal government, and how to use the remaining helium in  storage.
Why GAO Did This Study

The federal government has been extensively involved in the production, storage, and use of helium since the early part of the twentieth century. The federal helium program is currently managed by the Department of the Interior's BLM. During the 1960s and early 1970s, Interior purchased about 34 billion cubic feet of crude helium for conservation purposes and to meet federal helium needs, such as for the space program and scientific research. Crude helium is a gas of 50 to 85 percent helium. While some of this helium was used to meet federal needs, most of it was retained in storage. The funds used to purchase this helium became a debt owed by the program. BLM now sells crude helium from the reserve, and the proceeds go into the revolving Helium Fund, which is used to finance the program and payoff the program's debt.
GAO reported on the management of the helium program in the 1990s (GAO/RCED-92-44 and GAO/RCED-93-1).
Since GAO's reviews of the program in the 1990s, key changes have affected the program, and a 2010 report by the National Academies' National Research Council concluded that it is time to reassess the program. GAO testified on the helium program in May 2010 (GAO-10-700T). This testimony is an update of GAO's May 2010 testimony and discusses (1) how the Helium Privatization Act of 1996 addressed issues raised by GAO in the 1990s and (2) three urgent issues facing the helium program in the near future.
GAO is not making any recommendations in this testimony.

What GAO Found

Since GAO's reports in the early 1990s, the Helium Privatization Act of 1996 has caused considerable changes to the helium program and addressed or altered GAO's prior concerns. In 1992, GAO reported on various aspects of the federal helium program including the helium debt, pricing, and alternatives for meeting federal helium needs.
Helium debt. In 1992, GAO recommended that Congress cancel the helium program's debt since doing so would not adversely affect the federal budget, as the debt consisted of outlays that had already been appropriated and interest that was a paper transaction. As of September 1991, this debt had grown to about $1.3 billion, over $1 billion of which was interest that had accrued on the original debt principal of about $290 million. The 1996 act did not cancel the debt as GAO had recommended, but it did freeze the growth of the program's debt and, as a result, the debt should be paid off this year.
Helium pricing. The helium debt was also a factor in setting the price of federal helium. In 1992, GAO recognized that, if the helium debt was cancelled, Congress might need to propose a new pricing scheme. The 1996 act requires a specific method for pricing helium. This, along with other changes in the supply and demand for helium, has resulted in the Bureau of Land Management's (BLM) price to be at or below the market price.
Alternatives for meeting federal helium needs. In 1992, GAO recommended that Congress reassess the conservation objectives of the helium program and consider other alternatives to meet federal helium needs. In resetting the program's objectives, the 1996 act directed Interior to stop refining helium and established a modified in-kind approach for meeting federal helium needs. Agencies must purchase helium from refiners that then purchase an equivalent amount of crude helium from BLM.
Changes in the helium market have generated concerns about the future availability of helium for federal and other needs. The Helium Privatization Act of 1996 did not provide a specific direction for the federal helium program past 2015. Three urgent issues facing the program are as follows:
How will the helium program be funded after 2013? If the helium program's debt is paid off this year, as expected, the revolving Helium Fund will be terminated as required by the 1996 act. When GAO last testified on this issue, the estimated payoff date was 5 years away in 2015. The schedule has accelerated primarily because of improved crude helium sales.
At what price should BLM sell its helium? In the past, the debt has been a factor in the price, and the price has been above the market price. After 2013, the debt will be paid off, and the current price is at or below market.
How should the helium owned by the federal government be used? BLM's effort to sell off the excess helium in storage will not be completed by January 1, 2015, as required by the 1996 act. As of September 30, 2012, there were 11.44 billion cubic feet of conservation helium in storage. After BLM is finished drawing down the reserve, some believe that the United States could become a net importer of helium.