Conservation Helium Sale, 18044-18047 [05-6978]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Land Management
• Land Management Bureau

[Federal Register Volume 70, Number 67 (Friday, April 8, 2005)]
[Notices]
[Pages 18044-18047]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-6978]


-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR

Bureau of Land Management


Conservation Helium Sale

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice Implementing a Supplemental Conservation Helium Sale.

-----------------------------------------------------------------------

SUMMARY: The purpose of this action is to continue implementation of 
the terms of the Helium Privatization Act (HPA) of 1996 dealing with 
the disposal of the Conservation Helium Reserve. The HPA requires the 
Department of the Interior to offer for sale, beginning no later than 
2005, a portion of the Conservation Helium stored underground at the 
Cliffside Field, north of Amarillo, Texas. The Department of the 
Interior, in consultation with the private helium industry, has 
determined that private companies, with refining capacity along the 
crude helium pipeline, will need a supply of helium in excess of that 
available from their own storage accounts and that available from crude 
helium extractors in the region. Given the current market, Conservation 
Helium sold in this sale will cause minimal market disruption.

DATES: Submit bids and other documentation as required in Notice on or 
before May 9, 2005.

ADDRESSES: You may submit your bids and other documentation as required 
in this Notice to the Bureau of Land Management; Amarillo Field Office; 
810 S. Fillmore, Suite 500; Amarillo, TX 79101-3545; Attention: Crude 
Helium Sales Analyst.

FOR FURTHER INFORMATION CONTACT: Connie H. Neely, (806) 356-1027. 
Individuals who use a telecommunications device for the deaf may call 
the Federal Information Relay Service at 1-800-877-8339 between 8 a.m. 
and 8 p.m., Eastern Time, Monday through Friday.

SUPPLEMENTARY INFORMATION:

1.01 What Is the Purpose of the Sale?

    The purpose of this sale is to continue implementation of the terms 
of the HPA of 1996 dealing with the disposal of the Conservation Helium 
Reserve. The HPA requires the Department of the Interior to offer for 
sale, beginning no later than 2005, a portion of the Conservation 
Helium stored underground at the Cliffside Field, north of Amarillo, 
Texas. The Department of the Interior, in consultation with the private 
helium industry, has determined that private companies, with refining 
capacity along the crude helium pipeline, will need a supply of helium 
in excess of that available from their own storage accounts and that 
available from crude helium extractors in the region. This is a 
supplemental sale of the excess helium offered for sale in September 
2004 that the Department will conduct to dispose of the Conservation 
Helium stored underground at the Cliffside Field. The annual sales and 
Supplemental Sale are being conducted in a manner intended to prevent 
pure helium market disruptions from occurring to end users; shortages 
of crude helium to pure helium refiners; and an oversupply of crude 
helium on the market for crude helium extractors. Subsequent sales may 
be adjusted as needed.

1.02 What Terms Do I Need To Know To Understand This Sale?

    Allocated Sale--That portion of the annual sale volume of 
Conservation Helium that will be set aside for purchase by the Crude 
Helium Refiners.
    Annual Conservation Helium Sale--The sale of a certain volume of 
Conservation Helium to private entities conducted annually beginning no 
later than 2005.
    Bidder--Any entity or person who submits a request for purchase of 
a volume of the Annual Conservation Helium Sale and has met the 
qualifications contained in part 1.05 in this Notice.
    BLM--The Bureau of Land Management.
    Conservation Helium--The crude helium purchased by the U.S. 
Government under the authority of the Helium Act of 1960 and stored 
underground in the Cliffside Field.
    Crude Helium--A partially refined gas containing about 70 percent 
helium and 30 percent nitrogen. However, the helium concentration may 
vary from 50 to 95 percent.
    Crude Helium Refiners--Those entities with a capability of refining 
crude helium and having a connection point on the crude helium pipeline 
and a valid Helium Storage Contract as of the date of a Conservation 
Helium Sale.
    Excess Volumes--Allocated sale volumes not requested by the Crude 
Helium Refiners.
    Helium Storage Contract--A contract between the BLM and a private 
entity allowing the private entity to store crude helium in underground 
storage at the Cliffside Field.
    HPA--The Helium Privatization Act of 1996.
    In-Kind Crude Helium--Conservation Helium purchased by private 
refiners in exchange for like amounts of pure helium sold to Federal 
agencies and their contractors in accordance with the HPA.
    MMcf--One million cubic feet of gas measured at standard conditions 
of 14.65 pounds per square inch (psi) and 60[deg] F.
    Mcf--One thousand cubic feet of gas measured at standard conditions 
of 14.65 psi and 60[deg] F.
    Non-Allocated Sale--That portion of the annual sale volume of 
Conservation Helium that will be offered to all qualified Bidders.
    Supplemental Sale--If all the Conservation Helium offered for sale 
is not sold during the annual sale, then an additional sale will be 
conducted to offer for sale the remaining volumes not purchased during 
the annual sale.

1.03 What Volume of Conservation Helium Will Be Offered in the 
Supplemental Conservation Helium Sale?

    The volume of helium available for this sale is 1,610 MMcf. In 
accordance with the HPA, this volume was determined by subtracting the 
volume sold in the October 2004 sale from the total volume offered for 
sale.

1.04 At What Price Will the Conservation Helium Be Sold?

    The Conservation Helium will be sold at the same price as In-Kind 
Crude Helium. In accordance with the HPA, this price covers helium debt 
repayment and its escalation by the Consumer Price Index since the 
helium debt was frozen in 1995. Additionally, the price includes 
administrative and storage costs associated with the Conservation 
Helium calculated on a per Mcf basis. For Fiscal Year 2005 that price 
is $54.50 per Mcf.

1.05 Am I Qualified To Purchase Conservation Helium at This Sale?

    Any person, firm, partnership, joint stock association, 
corporation, or other domestic or foreign organizations operating 
partially or wholly within the United States who meets one or more of 
the following requirements is qualified to submit a purchase request:
     Operates a helium purification plant within the U.S., or

[[Page 18045]]

     Operates a crude helium extraction plant within the U.S., 
or
     Is a wholesaler of pure helium or purchases helium for 
resale within the U.S., or
     Is a consumer of pure helium within the U.S., or
     Has an agreement with a helium refiner to provide its 
helium processing needs, commonly referred to as a ``tolling 
agreement.''
    All entities requesting participation in the Non-Allocated Sale 
must submit proof of being qualified to purchase Conservation Helium 
and must either have a Helium Storage Contract with the BLM or have a 
third-party agreement in place with a valid storage contract holder so 
that all Conservation Helium sold to the Bidder will be properly 
covered by a Helium Storage Contract (including associated storage 
charges).

1.06 When Will the Conservation Helium Be Offered for Sale?

    The BLM, Amarillo Field Office, will accept requests for purchase 
of Conservation Helium from final publication of this Notice until May 
9, 2005. On the next business day after this Notice closes, requests to 
purchase Conservation Helium will be opened and evaluated. Upon 
evaluation, volumes of this Conservation Helium Sale will be 
apportioned and allocated according to the sale rules described in this 
Notice.

1.07 What Must I Do To Submit a Request for Purchase?

    You must submit the following information to the BLM, Amarillo 
Field Office:
     Billing address information and name(s) of principle 
officers of the company.
     Proof of being an entity qualified to purchase 
Conservation Helium at this sale as defined in part 1.05 above. 
Documents such as invoices for sale or purchase of helium, Helium 
Storage Contracts, or other relevant documents may be submitted as 
proof of qualification.
     The amount (in Mcf) of Conservation Helium requested.
     Certified check or money order in the amount of $1,000 
made payable to the Bureau of Land Management. This money will be used 
to cover administrative expenses to conduct this sale and is 
nonrefundable.

1.08 Where Do I Send My Request for Purchases?

    All requests for purchase of helium, as part of this sale, must be 
sent by certified mail to: Bureau of Land Management, Amarillo Field 
Office, 810 S. Fillmore, Suite 500, Amarillo, TX 79101-3545, Attention: 
Crude Helium Sales Analyst.

1.09 When Do I Need to Submit Payment for Any Conservation Helium Sold 
to Me?

    Successful purchasers will submit payments according to the 
following schedule:
     50 percent by April 30, 2005, or 30 days after 
notification of the award volumes, whichever is later.
     50 percent by July 30, 2005.
    Conservation Helium will not be transferred to the purchaser's 
storage account until payment is received for that portion. Successful 
purchasers may, at their option, accelerate the purchase schedule.

1.10 To Whom Do I Make Payments for Awarded Conservation Helium 
Volumes?

    Make checks payable to the Bureau of Land Management at the address 
listed in part 1.08 of this Notice.

1.11 What Are the Penalties for Not Paying for the Conservation Helium 
in a Timely Manner?

    If BLM does not receive a payment by the original due date or by 
the deadline established on a written late notice, the purchaser will 
forfeit the remainder of its allotment unless the purchaser can show 
that payment was late through no fault of its own. However, penalty 
interest will be assessed in accordance with the Debt Collection Act of 
1982, 31 U.S.C. 951-953.

1.12 How Will I Know If I Have Been Successful in My Purchase Request?

    Successful purchasers will be notified in writing by BLM no later 
than 2 weeks after the close of this Notice with the awarded volumes 
and payment schedule.

Allocated Sale

2.01 What Is the Allocated Sale?

    That portion of the annual sale volume of Conservation Helium that 
will be set aside for purchase by the Crude Helium Refiners.

2.20 Who Will Be Allowed To Purchase Conservation Helium in the 
Allocated Sale?

    Only those who meet the definition of Crude Helium Refiners as 
defined in part 1.02 of this Notice.

2.03 What Volume of Conservation Helium Is Available in the Allocated 
Sale?

    The amount available will be 90 percent of the total volume of the 
Supplemental Conservation Helium Sale - 1,449 MMcf.

2.04 How Will the Conservation Helium Be Apportioned Among the 
Refiners?

    The apportionment to each Crude Helium Refiner will be based on its 
percentage share (rounded to the nearest 1/10th of 1 percent) of the 
total refining capacity as of October 1, 2000, connected to the BLM 
crude helium pipeline.

2.05 What Will Happen if a Refiner or Refiners Request an Amount Other 
Than Their Share of What Is Offered for Sale?

     If one or more refiners request less than their allocated 
share, any other refiner(s) that requested more than their share will 
be allowed to purchase the excess volume based on proportionate shares 
of remaining refining capacities.
     Requests by the Crude Helium Refines that are in excess of 
the amount available above will be carried over to the Non-Allocated 
Sale and considered a separate bid under the Non-Allocated Sale rules.

2.06 What Will Happen If the Total Amount Requested By the Crude Helium 
Refiners Is Less Than the 1,449 MMcf Offered in the Allocated Sale?

    Any excess volume not sold to the Crude Helium Refiners will be 
added to the Non-Allocated Sale volume.

2.07 Do You Have a Hypothetical Example of How an Allocated Sale Would 
Be Conducted?

    Assume 2,100 MMCcf were available for total sale with 90 percent 
available for Allocated Sale (1,890 MMcf).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Carry
                                                                 Installed  Refiner               Excess                                        over to
                     Bidder--allocated sale                       refining    bid    Allocated    volume    Proration    Excess       Total       non-
                                                                  capacity  volume*   volume*   requested*   percent   allocated*  allocated*  allocated
                                                                 (percent)                                                                       sale*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refiner A......................................................         10      225       189           36         20          36         225          0

[[Page 18046]]

 
Refiner B......................................................         50      750       750            0          0           0         750          0
Refiner C......................................................         40      985       756          229         80       156+3         915         70
                                                                ------------
    Total......................................................        100    1,960     1,695          265        100         195       1,890         0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* All volumes in MMcf.

    After the initial allocation, Refiner B has received all it 
requested. However, 265 MMcf is deemed excess of the total in the first 
iteration of the allocated Sale and reallocated to the two remaining 
refiners based on the refining capacity between them. With the 
reallocation, Refiner A gets all requested, but Refiner C is still 
short by 73 MMcf. Additionally, 3 MMcf remains unallocated and without 
any other Refiners is awarded to Refiner C, who now has a remaining 
request of 70 MMcf that is posted into the Non-Allocated Sale. All 
percentages used in the calculation will be rounded to the nearest 1/
10th of 1 percent. All volumes calculated will be rounded to the 
nearest 1 Mcf.

Non-Allocated Sale

3.01 What Is the Non-Allocated Sale?

    That portion of the annual sale volume of Conservation Helium that 
will be offered to all qualified Bidders.

3.02 What Is the Minimum Volume I Can Request?

    The minimum request is 5 MMcf.

3.03 What Volume of Conservation Helium Is Available for the Non-
Allocated Sale?

    The total volume of Conservation Helium available for this portion 
of the sale is 161 MMcf plus any additional helium that is not sold as 
part of the Allocated Sale.

3.04 How Is the Ratio of Allocated to Non-Allocated Sale Volumes 
Determined?

    According to the terms of the HPA, the BLM must conduct the Annual 
Conservation Helium Sales in a manner not to cause undue helium market 
disruptions; and therefore, the majority of the Conservation Helium is 
being offered as part of the Allocated Sale. Currently, the Crude 
Helium Refiners have refining capacity roughly double what can be 
supplied through the Annual Conservation Helium Sales. Although there 
are other crude helium supplies available to the Crude Helium Refiners, 
these supplies are declining each year. The BLM must be sensitive to 
the Crude Helium Refiners' requirements while maintaining a balance 
with other helium industry requirements. The exact ratio of Allocated 
to Non-Allocated Sale volumes may change for subsequent Annual 
Conservation Helium Sales.

3.05 How will the Non-Allocated Conservation Helium Be Apportioned 
Among the Bidders?

    The Conservation Helium will be apportioned equally in 1 Mcf 
increments among the Bidders with no prospective Bidder receiving more 
than its request.

3.06 What Will Happen if the Bidders Request More Than What Is Made 
Available for Sale in Part 3.03 of This Notice?

     If one or more Bidders request less than their apportioned 
amount, any other Bidder(s) that requested more than its apportioned 
amount will be allowed to purchase equally apportioned amounts of the 
remaining volume available for this sale.
     If all Bidders request more than their apportioned amount 
each Bidder will receive its apportioned amount as determined in part 
3.05 in this Notice.

3.07 What Will Happen If a Bidder Requests Less Than Its Apportioned 
Amount?

    Any Bidder requesting less than the calculated apportioned volume 
will receive the amount of its request and amounts remaining will be 
reapportioned in accordance with part 3.05 in this Notice.

3.08 What Will Happen If the Total Requests From All Bidders Are Less 
Than That Offered for Sale in the Non-Allocated Sale?

    If there is any excess amount after the Supplement Sale, then it 
will not be sold and will be held in storage for future sales.

3.09 Do You Have a Hypothetical Example of How a Non-Allocated Sale 
Would Be Conducted?

    Assume, 2,100 MMcf were available for total sale with 10 percent 
available for Non-Allocated Sale (210 MMcf).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Amount
                                                                        Apportioned     Excess      Proration      Excess         Total       requested
               Bidder--non-allocated sale                  Bid volume     volume*       volume       percent    apportioned*  apportioned*       not
                                                                                      requested*                                              received*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refiner C...............................................           70          52.5          17.5           50            15          67.5           2.5
Company D...............................................          100          52.5          47.5           50            15          67.5          32.5
Company E...............................................           50          50             0              0             0          50             0
Company F...............................................           25          25             0              0             0          25             0
                                                         --------------
    Total...............................................          245         180            65            100            30         210           35
--------------------------------------------------------------------------------------------------------------------------------------------------------
*All volumes in MMcf.

    In this example, three companies submit a request and there is a 
carryover amount from one of the Crude Helium Refiners in the Allocated 
Sale that is considered as a separate request. Each Bidder would be 
apportioned 52.5

[[Page 18047]]

MMcf, (i.e., 210 MMcf of Non-Allocated Conservation Helium / 4 Bidders 
= 52.5 MMcf per Bidder).
    After the initial allocation, Companies E and F have received all 
the helium they requested. However, 30 MMcf is deemed excess in the 
first iteration of the Non-Allocated Sale and reallocated to the two 
remaining Bidders. With the reallocation, Refiner C and Company D each 
receives an additional 15 MMcf. No more helium is available, Refiner C 
and Company D do not receive all that they requested, and the sale is 
complete. All percentages used in the calculation will be rounded to 
the nearest \1/10\th of 1 percent. All volumes calculated will be 
rounded to the nearest 1 Mcf.

    Dated: January 27, 2005.
Jesse J. Juen,
Acting State Director, New Mexico.
[FR Doc. 05-6978 Filed 4-7-05; 8:45 am]
BILLING CODE 4310-A6-M