[Federal Register Volume 67, Number 217 (Friday, November 8, 2002)]
[Notices]
[Pages 68152-68155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28702]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[NM-090-03-9971-EK]


Conservation Helium Sales

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice requesting comment to proposed conservation helium sale.

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SUMMARY: The purpose of this action is to request comments on the 
proposed method of sale to begin implementation of the terms of the 
Helium Privatization Act (HPA) of 1996 dealing with the conservation 
helium reserve sell off.

[[Page 68153]]

The Act 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, TX. 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.

DATES: Submit comments on or before December 9, 2002.

ADDRESSES: Comments: If you wish to comment, you may submit your 
comments by any one of several methods. You may mail comments to Bureau 
of Land Management; Amarillo Field Office; 810 S. Fillmore, Suite 500; 
Amarillo, TX 79101; Attention: Crude Helium Sale or e-mail them to 
[email protected] with Crude Helium Sale in the subject line.

FOR FURTHER INFORMATION CONTACT: Timothy R. Spisak, (806) 356-1002 
Individuals who use a telecommunications device for the deaf (TDD) may 
call the Federal Information Relay Service (FIRS) 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 begin implementation of the terms of 
the Helium Privatization Act (HPA) of 1996 dealing with the 
conservation helium reserve sell off. The Act 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, TX. 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 the first of 12 annual 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 market disruptions occurring 
from a shortage of crude helium. This first sale will be used to test 
the disposal process with subsequent sales 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 
typically 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.

1.03 What Volume of Conservation Helium Will Be Offered in the Year 
2003 Annual Conservation Helium Sale?

    The volume of helium available for this sale is 2,100 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.

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. For fiscal year 2003 that price is $52.50 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:
    [sbull] Operates a helium purification plant within the U.S., or
    [sbull] Operates a crude helium extraction plant within the U.S., 
or
    [sbull] Is a wholesaler of pure helium or purchases helium for 
resale within the U.S., or
    [sbull] Is a consumer of pure helium within the U.S.
    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.

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 
January 15, 2003. On January 16, 2003, requests to purchase 
conservation helium will be opened and evaluated. Thereafter, 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:
    [sbull] Billing address information and name(s) of principle 
officers of the company.
    [sbull] 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

[[Page 68154]]

contracts, or other relevant documents may be submitted as proof of 
qualification.
    [sbull] The amount (in Mcf) of conservation helium requested.
    [sbull] 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 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, 810 S. Fillmore, Suite 500, Amarillo, TX 79101, Attention: 
Crude Helium Sale.

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: 25% by February 28, 2003; 25% by April 30, 2003; 
25% by June 30, 2003; 25% by September 30, 2003.
    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 Are There Any Penalties for Not Paying for the Conservation Helium 
in a Timely Manner?

    If a payment is not received by the due date, 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 accessed 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 January 31, 2003, 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.

2.02 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 1.01 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 
annual conservation helium sale--1,890 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 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?

    [sbull] 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.
    [sbull] 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 1,890 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?

    2,100 MMcf available for total sale with 90 percent available for 
allocated sale (1,890 MMcf).

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                                                                                                                                                 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*
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Refiner A....................................................         10        225        189          36         20          36         225          0
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        70
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*All volumes in MMcf.

    After the initial allocation, refiner B has received all 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.

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 210 MMcf plus any additional helium that is not sold as 
part of the allocated sale.

[[Page 68155]]

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?

    [sbull] 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.
    [sbull] If all bidders request more than their apportioned amount 
each bidder will receive its apportioned amount as determined in part 
3.05 of 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 3.03 of 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 the total non-allocated volume requested is less than the non-
allocated volume offered for this portion of the sale, the excess 
amount 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?

    2,100 MMcf available for total sale with 10 percent available for 
non-allocated sale (210 MMcf).

 
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                                                                                                                                                Amount
                                                                      Bid     Apportioned    Excess    Proration     Excess         Total      requested
                    Bidder--Non-allocated sale                      volume*     volume*      volume     percent   apportioned*  apportioned*      not
                                                                                           requested*                                          received*
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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
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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 52.5 MMcf, (i.e., 210 MMcf of non-allocated conservation 
helium / 4 bidders = 52.5 MMcf per bidder).
    After the initial allocation, companies E & F have received all 
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.

    Dated: October 9, 2002.
Richard A. Whitley,
Acting State Director, New Mexico.
[FR Doc. 02-28702 Filed 11-7-02; 1:50 pm]
BILLING CODE 4310-FB-P