Conservation Helium Sale, 58464-58467 [05-20083]

Agencies

• DEPARTMENT OF THE INTERIOR
• Land Management Bureau

[Federal Register Volume 70, Number 193 (Thursday, October 6, 2005)]
[Notices]
[Pages 58464-58467]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-20083]


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DEPARTMENT OF THE INTERIOR


Conservation Helium Sale

AGENCY: Bureau of Land Management (BLM), Interior.

ACTION: Notice implementing fourth conservation helium sale.

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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 (DOI) 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 DOI, 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. This sale will be conducted in 
four parts, with one-fourth of the annual sale amount offered each 
quarter of Fiscal Year 2006.

DATES: Submit bids for the first quarter sale and other documentation 
as required in Notice on or before November 7, 2005. Bids for the 
remaining three quarters must be submitted according to the following 
schedule:
     Second Quarter--December 1, 2005, through December 31, 
2005.
     Third Quarter--March 1, 2006, through March 31, 2006.
     Fourth Quarter--June 1, 2006, through June 30, 2006.

ADDRESSES: You may submit your bids and other documentation as required 
in this Notice to the BLM, Amarillo Field Office, 801 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 DOI 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 DOI, 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 the fourth in a series of sales that the Department 
will conduct to dispose of the Conservation Helium stored underground 
at the Cliffside Field. The annual sales 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.

[[Page 58465]]

    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.

1.03 What Volume of Conservation Helium Will Be Offered in the Fiscal 
Year 2006 Annual Conservation Helium Sale?

     The volume of helium available for this sale is 2,100 MMcf 
and will be offered in four equal quarterly increments of 525 MMcf. In 
accordance with the HPA, this volume was determined by dividing the 
total volume of stored Conservation Helium less the statutory required 
reservation of 600 MMcf for Government purposes less estimated In-Kind 
Crude Helium transfers for 12 years divided by 12. This volume 
represents a straight-line basis for offering the helium for sale in 
accordance with the HPA. Any helium not sold during the First, Second, 
or Third Quarter Sales will be carried over to the succeeding Quarter 
and reallocated according to the formula in Section 2.03. Any helium 
remaining unsold after the Fourth Quarter sale will be held in reserve 
for possible future sales.

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 2006 that price 
is $56.50 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 organization 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
     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 for the First Quarter from final publication of 
this Notice until November 7, 2005. On the next business day after this 
Notice closes, requests to purchase Conservation Helium for the First 
Quarter 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. Bids for the remaining three 
quarters must be submitted according to the following schedule:
     Second Quarter--December 1, 2005, through December 31, 
2005.
     Third Quarter--March 1, 2006, through March 31, 2006.
     Fourth Quarter--June 1, 2006, through June 30, 2006.
    On the next business day after close of each quarterly Sale, 
requests to purchase Conservation Helium for each Quarter 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 BLM. This money will be used to cover 
administrative expenses to conduct this sale and is nonrefundable.
     The above information and nonrefundable $1,000 fee only 
needs to be submitted the first time a prospective purchaser submits a 
bid.
    Prospective purchasers are not required to submit bids every 
quarter and may participate in only the quarterly sales they deem 
appropriate.

1.08 Where Do I Send My Request for Purchase?

    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, 801 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:
     First Quarter request by October 30, 2005, or 30 days 
after notification of the award volumes, whichever is later.
     Second Quarter Request by February 6, 2006.
     Third Quarter Request by May 8, 2006.
     Fourth Quarter Request by August 7, 2006.
    Conservation Helium will not be transferred to the purchaser's 
storage account until payment is received for that portion.

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

    Make checks payable to the BLM at the address listed in part 1.08 
in this Notice.

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

    If BLM does not receive payment for a Quarterly Sale by the due 
dates in Section 1.09, the purchaser will forfeit its quarterly 
purchase unless the purchaser can show that payment was late through no 
fault of its own. However, penalty interest will be

[[Page 58466]]

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 1 week after the bid opening for each Quarter of 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.

2.02 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 in 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 
Annual Conservation Helium Sale--1,890 MMcf, or 472,500 Mcf per quarter

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 \1/10\ 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 Refiners 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 472,500 Mcf Offered in the Quarterly 
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?

    525,000 Mcf available for total sale with 90 percent available for 
Allocated Sale (472,500 Mcf).

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                                                                                                                                               Carryover
                                                           Installed    Refiner    Allocated    Excess     Proration    Excess       Total      to non-
                 Bidder--allocated sale                    refining       bid       volume*     volume      percent   allocated*  allocated*   allocated
                                                           capacity     volume*               requested*                                         sale*
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Refiner A...............................................         10%      56,250      47,250       9,000         20%       9,000      56,250           0
Refiner B...............................................         50%     187,500     187,500           0          0%           0     187,500           0
Refiner C...............................................         40%     246,250     189,000      57,250         80%      39,750     228,750      17,500
                                                         -------------
    Total...............................................        100%     490,000     423,750      66,250        100%      48,750     472,500          0
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*All volumes in Mcf.

    After the initial allocation, Refiner B has received all requested. 
However, 66,250 Mcf 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 18,250 Mcf. Additionally, 750 Mcf remains unallocated and 
without any other Refiners is awarded to Refiner C, who now has a 
remaining request of 17,500 Mcf that is posted into the Non-Allocated 
Sale. All percentages used in the calculation will be rounded to the 
nearest \1/10\ 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 the non-
allocated portion of the quarterly Sale is 52,500 Mcf per quarter plus 
any additional helium that is not sold as part of the Allocated Sale 
and helium carried-over from previous quarters as described in Sec 
1.03.

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.

[[Page 58467]]

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

    525 MMcf available for total sale with 10 percent available for 
Non-Allocated Sale (52,500 Mcf).

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                                                                                                                                                Amount
                                                                      Bid      Appointed    Excess     Proration     Excess         Total      requested
                   Bidder--non-allocated sale                       volume*     volume*     volume      percent   apportioned*  apportioned*      not
                                                                                          requested*                                           received*
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Refiner C.......................................................      17,500      13,125       4,375         50%        3,750        16,875          625
Company D.......................................................      25,000      13,125      11,875         50%        3,750        16,875        8,125
Company E.......................................................      12,500      12,500           0          0%            0        12,500            0
Company F.......................................................       6,250       6,250           0          0%            0         6,250            0
                                                                 -------------
    Total.......................................................      61,250      45,000      16,250        100%        7,500        52,500       8,750
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*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 13,125 Mcf, (i.e., 52,500 Mcf of Non-Allocated Conservation 
Helium 4 /bidders = 13,250 Mcf per bidder).
    After the initial allocation, Companies E and F have received all 
the helium they requested. However, 7,500 Mcf 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 3,750 Mcf. 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 \1/10M\ of 1 percent. All volumes calculated will be 
rounded to the nearest 1 Mcf.

Linda S.C. Rundell,
State Director, New Mexico.
[FR Doc. 05-20083 Filed 10-5-05; 8:45 am]
BILLING CODE 9971-EK-P