Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 27, 1993                   TAG: 9303270021
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: DOUG J. SWANSON KNIGHT-RIDDER/TRIBUNE
DATELINE: AMARILLO, TEXAS                                LENGTH: Long

U.S. EMPLOYS 220 TO HOARD HELIUM; IT'S A GAS

As envisioned by Congress, the national helium reserve was supposed to earn back the investment of $350 million in public money. It hasn't come close.

It did, however, give U.S. taxpayers ownership of the world's largest supply of the gas that floats blimps. Enough helium is stored beneath the wastelands northwest of Amarillo to last the government 100 years.

"It's ridiculous, plain and simple," said Scott Hodge, federal budget specialist with the Heritage Foundation, a conservative think tank. "For the federal government to be involved in helium, of all things, is preposterous beyond the wildest imagination."

Not to L. Dale Bippus, general manager of the reserve. He sees his domain as "an excellent example of a government program gone right."

To those who dispute the need for a century's supply, Bippus responded: "You say, `That's a lot of helium out there.' Well, gee whiz, is it?" The country, he said, could desperately need the reserve nine or ten decades from now.

"We may also need ermine pelts and Grand Marnier," countered Pete Sepp of the National Taxpayers Union. "That doesn't mean the government should be stockpiling them."

This is not a project dependent on powerful patrons to beat back annual challenges in Congress. With roots in World War I military concerns, the helium reserve attests to the political virtue of being forgotten.

Last week, Rep. Harris Fawell, R-Ill., included the helium reserve in a list of 904 suggested budget cuts. But, a spokesman admitted, "we don't know much about it."

Otherwise, the reserve has drawn little notice.

If it looks into helium, Congress - struggling to find ways to reduce the deficit and wrestling with possible tax increases - might see a source of potential revenue. The helium reserve is worth more than $1.6 billion at today's prices.

Tapping into it, however, might be difficult. The complex reasons spring from the government's violation of a basic rule of economics combined with the unexpected discovery of vast new supplies.

The Bureau of Mines committed itself to hoarding a gas so plentiful that much of it is now simply thrown away. And the government finds itself unable, or unwilling, to enter the very market it created.

Helium, extracted from natural gas, is odorless and colorless, does not burn and has several uses.

NASA pressurizes the fuel tanks of the space shuttle with it. It has applications in Star Wars research. It could play a big role as coolant for the superconducting super collider. The Army is developing a helium-inflated spy craft known informally as the "stealth blimp."

Yet such governmental use accounts for only about one-tenth of the helium sold in the United States. Private industry needs it for such things as welding, leak detection, magnetic resonance imaging and cryogenics. Last year private sales totaled about $300 million.

Some watchdogs would like to see the Bureau of Mines grab a big piece of that private market. A deficit-ridden government, they reason, should unload some of its surplus.

For the most part, the Bureau of Mines sells its stock only to other government agencies, who are required to buy from the bureau.

About 220 people are employed by the U.S. helium operations, 86 at the refinery near Amarillo. An isolated collection of buildings, tanks and pipes on the Panhandle plains, the World War II-vintage plant purifies about 350 million cubic feet of helium a year.

Private buyers of government helium are neither sought nor encouraged. Only one-one-hundredth of the underground stockpile is drawn down each year, leaving plenty for the late 21st century.

The buying stopped after discovery of a new source in the 1970s in western Wyoming estimated to contain up to 200 billion cubic feet. Last year, total worldwide consumption was less than 4 billion cubic feet.

T.S. Ary, director of the Bureau of Mines under President Bush, concedes that his predecessors may have bought too much. And he acknowledges critics' arguments for liquidating some of the Amarillo reserve.

"It's tough to say you shouldn't sell it off," he said. But he did not propose that while in office, nor does he think his successor should.

The explanation embraces both governmental philosophy and fear of corporate wrath.

Pricing the U.S. stockpile below the market to dominate sales would put the government in direct competition with such energy giants as Panhandle Eastern Corp., Enron and Exxon.

"If we started dumping material on the market and started affecting their operations, they would create one of the damnedest public relations activities against the government you've ever seen," said Ary. "This is a big business. They would raise Cain."

Ultimately, defenders of the status quo return to conservation.

"It's pretty simple," said Bippus. "Do I buy it when it's cheap and store it, or do I wait till when it's scarce, and I need more and it's expensive?"

Also, Bippus said, selling the helium would not really generate revenue. "You're doing nothing but converting it from one asset to another asset. Converting crude helium into cash does not improve your financial condition," he said. "The government doesn't need more cash. The government can always print more cash."