[Federal Register Volume 79, Number 141 (Wednesday, July 23, 2014)]
[Notices]
[Pages 42808-42814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-17376]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[LLNM006200 L99110000.EK0000 XXX L4053RV]


Final Notice: Implementation of Helium Stewardship Act Sales and 
Auctions

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice.

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

SUMMARY: The Secretary of the Interior (Secretary), through the Bureau 
of Land Management (BLM), New Mexico State Office, is issuing this 
Final Notice to conduct auctions and sales from the Federal Helium 
Program, administered by the BLM New Mexico Amarillo Field Office. The 
BLM will use the sale and auction process outlined in this Notice for 
the sales and auctions that the Helium Stewardship Act of 2013 (``the 
Act'') requires the BLM to conduct during fiscal year (FY) 2014. This 
Notice does not apply to sales or auctions conducted after FY 2014. The 
BLM's process for sales and auctions conducted after FY 2014 will be 
announced in subsequent notices or through rulemaking to the extent 
rulemaking is necessary to implement the Act. Information included in 
this Notice regarding the BLM's anticipated actions beyond FY 2014 is 
provided for planning purposes only and is subject to change. This 
action takes into consideration public comments received as a result of 
the Notice of Proposed Action published in the Federal Register on May 
16, 2014.

DATES: This implementation plan is effective on July 23, 2014.

FOR FURTHER INFORMATION CONTACT: Robert Jolley, 806-356-1002. Persons 
who use a telecommunications device for the deaf (TDD) may call the 
Federal Information Relay Service (FIRS) at 1-800-877-8339. The FIRS is 
available 24 hours a day, 7 days a week, to leave a message for Mr. 
Jolley. You will receive a reply during normal business hours.

SUPPLEMENTARY INFORMATION: 

A. Purpose and Background

    The BLM published a Notice of Proposed Action: Implementation of 
Helium Stewardship Act Sales and Auctions, in the Federal Register on 
May 16, 2014 (79 FR 28540). The Notice

[[Page 42809]]

contained background information on the Act, definitions of terms used 
in the Notice, the reasons for proposing the action, and a proposed 
process for conducting the auctions and sales. The BLM requested 
comments regarding the proposed process for conducting the auctions and 
sales required under the Act. A summary of changes made as a result of 
those comments is provided below:

                           Summary of Changes
------------------------------------------------------------------------
           Affected text                    Explanation of change
------------------------------------------------------------------------
Supplementary Information.........  Updated the Supplementary
                                     Information with a summary of
                                     changes.
Supplementary Information.........  Provided web links to the full
                                     comments and comment and response
                                     summary.
Supplementary Information.........  Added discussion of forms required
                                     to be submitted to the BLM as a
                                     condition of sale or auction.
Supplementary Information.........  Added information regarding the fees
                                     required for participation in sales
                                     and auctions, as well as storage
                                     fees.
Section 1.02......................  Revised the definition of ``Tolling
                                     Agreement'' to mean an agreement
                                     between a helium refinery, located
                                     on the Federal Helium System
                                     pipeline, and any other party to
                                     refine helium at a specified volume
                                     and price.
Sections 1.02 and 2.15............  Added definition of ``Storage
                                     Contract Holder'' and added
                                     information regarding expiration of
                                     the current contract on September
                                     30, 2015, and the BLM's intention
                                     to have a new contract in place by
                                     October 1, 2015. Added link to the
                                     current contract.
Section 1.04......................  Updated the tables and modified
                                     discussion to address not reserving
                                     a 10 percent contingency from
                                     volumes to be sold and auctioned
                                     for delivery in FY 2015 and beyond.
Section 1.04......................  Lowered the annual In-Kind estimate
                                     to 160 MMcf (one million cubic
                                     feet) and added 10 MMcf in the
                                     volumes to be sold and auctioned in
                                     FY 2015 and beyond. Updated table
                                     and modified discussion to reflect
                                     the estimate of In-Kind.
Sections 2.01, 2.03, 2.07, 2.08,    Updated the text to reflect the
 2.11, 2.15, 2.17.                   changes in sales and auction
                                     volumes, as well as changes to the
                                     proposed schedule.
Section 3.01-3.04.................  Adjusted the delivery discussion to
                                     account for overage and shortage
                                     conditions, explanation of the
                                     dynamic process of delivery and
                                     coordination requirements, use of
                                     the formula in shortage condition,
                                     removal of 2-for-1 bonus and
                                     simplification of formula.
------------------------------------------------------------------------

B. Public Comment: Analysis of Comments and Changes

    In response to the invitation in the Notice of Proposed Action, 
nine commenters, who are refiners and non-refiners, submitted about 58 
comments totaling 56 pages. The BLM developed a table of comments and 
responses which is available for public review at: www.blm.gov/nm/HSAImplementation. Based upon the comments received, the BLM has 
revised the Notice of Proposed Action, published in the Federal 
Register on May 16, 2014 (79 FR 28540).
    The BLM has also developed several forms to assist refiners in 
reporting required information to the BLM. The forms are available at: 
www.blm.gov/nm/HSAImplementation. The forms are:
    Excess Refining Capacity Form--This form standardizes reporting to 
the BLM necessary to satisfy the terms-and-conditions section of the 
Act, which requires the refiners to make excess refining capacity 
available at commercially reasonable rates. The Act requires the BLM to 
aggregate this data and post the aggregated data on a public Web site. 
The form can also be used to inform the BLM of changes in the refiner's 
calculation of excess refining capacity as they occur. This form is due 
to the BLM by July 29, 2014, and should be resubmitted to the BLM 
within two weeks of any changes in excess refining capacity exceeding 
+/- 10 percent.
    Tolling Report Form--This form provides documentation of the 
tolling agreements that were entered into between a refiner and another 
party during the preceding year. The refiner may also take this 
opportunity to document its attempts to negotiate tolling with other 
parties. This form is due to the BLM annually by September 30.
    Tolling Occurrence Report--This form should be submitted throughout 
the year whenever a refiner enters into a tolling agreement with 
another party. This form is due to the BLM within 2 weeks of entry into 
a tolling agreement.
    The fee structure used by the BLM for storage contract holders and 
participants in the sales or auctions is provided at: www.blm.gov/nm/HSAImplementation. These forms and the information collected do not 
require Office of Management and Budget approval under the Paperwork 
Reduction Act because there are fewer than ten potential respondents 
(44 U.S.C. 3501 et seq.)

Implementation Plan

    1.01 What is the purpose of this Implementation Plan? The 
Secretary, through the BLM, New Mexico State Office, is issuing this 
Final Notice to conduct auctions and sales from the Federal Helium 
Reserve, administered by the BLM New Mexico Amarillo Field Office.
    1.02 What terms do I need to know to understand this Notice? Unless 
otherwise noted, the following definitions apply to helium sales and 
auctions that will be conducted in FY 2014. The definitions provided 
are taken from the Act, existing regulations, and established industry 
practice. These definitions apply only for purposes of the sales 
conducted in FY 2014 under this Notice.
    Allocated sale means a Phase A crude helium sale under which crude 
helium is sold to refiners.
    Auction volume means those volumes of the Federal Helium Reserve 
offered for sale to any person or qualified bidder under the Act in an 
auction.
    Cliffside Field means the subterranean formation near Amarillo, 
Texas, used as a helium storage reservoir and in which the Federal 
Helium Reserve is stored.
    Crude helium means a partially refined gas containing about 70 
percent helium and 30 percent nitrogen. However, the helium 
concentration may vary from 50 to 95 percent.
    Excess refining capacity means a refiner's reported operational 
refining capacity minus the refiner's forecasted crude helium demand 
for that particular fiscal year. The BLM will require each refiner to 
report excess refining capacity in advance of all Phase B sales as a 
condition of those sales. (NOTE: Section 6(b)(8)(B) of the Act, 50 
U.S.C. 167d(b)(8)(B), states: ``(B) Condition.--As a condition of sale 
or auction to a refiner under subsection (a)(1) and paragraphs (1) and 
(2) effective beginning 90 days after the date of enactment of the 
Helium Stewardship Act of 2013, the refiner shall make

[[Page 42810]]

excess refining capacity of helium available at commercially reasonable 
rates to--(i) any person prevailing in auctions under paragraph (2); 
and (ii) any person that has acquired crude helium from the Secretary 
from the Federal Helium Reserve by means other than an auction under 
paragraph (2) after the date of enactment of the Helium Stewardship Act 
of 2013, including nonallocated sales.'')
    Federal Helium Pipeline means the federally owned pipeline system 
through which helium extracted from the Federal Helium Reserve may be 
transported.
    Federal Helium Reserve means helium reserves owned by the United 
States that are stored in the Cliffside Field.
    Federal Helium System means:
    (1) The Federal Helium Reserve;
    (2) The Cliffside Field;
    (3) The Federal Helium Pipeline; and
    (4) All other infrastructure owned, leased, or managed under 
contract by the Secretary for the storage, transportation, withdrawal, 
enrichment, purification, or management of helium.
    Federal In-Kind crude helium or ``In-Kind helium'' means helium 
purchased by private refiners who have sold or are selling to Federal 
users and their contractors a quantity of refined helium equivalent to 
the quantity of crude helium the refiner is purchasing or will purchase 
from the BLM under contract, under the requirements and procedures of 
43 CFR part 3195. The refined helium initially supplied to a Federal 
user or its contractor may come from a source outside the Federal 
Helium Reserve.
    Helium storage contract means 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 means the Helium Privatization Act of 1996, Public Law 104-273, 
110 Stat. 3315.
    HSA means the Helium Stewardship Act of 2013, Public Law 113-40, 
127 Stat. 534.
    Mcf means one thousand cubic feet of gas measured at standard 
conditions of 14.65 pounds per square inch atmosphere (psia) and 60 
degrees Fahrenheit.
    MMcf means one million cubic feet of gas measured at standard 
conditions of 14.65 psia and 60 degrees Fahrenheit.
    Non-allocated sale means a Phase A crude helium sale, under which 
crude helium is sold only to non-refiners.
    One-time sale means a sale of helium from amounts available for 
delivery in FY 2016 offered by the BLM in FY 2014 under the HSA, 50 
U.S.C. 167d(b)(13).
    Person means any individual, corporation, partnership, firm, 
association, trust, estate, public or private institution, or State or 
political subdivision.
    Phase A means the allocation transition period prescribed in the 
HSA at 50 U.S.C. 167d(a).
    Phase B means the auction implementation period prescribed in the 
HSA at 50 U.S.C. 167d(b).
    Phase B sale means a sale of helium offered by the BLM to refiners 
during Phase B under the HSA, 50 U.S.C. 167d(b)(1), after completion of 
an auction.
    Phase B auction means an auction of helium offered by the BLM 
during Phase B under the HSA, 50 U.S.C. 167d(b)(2).
    Priority pipeline access means the first priority of delivery of 
crude helium under which the Secretary schedules and ensures the 
delivery of crude helium to a helium refinery through the Federal 
Helium System.
    Production capability means the estimated or calculated physical 
volume of helium that can be produced from the Cliffside Field.
    Qualified bidder means a person the Secretary determines is seeking 
to purchase helium for the person's own use, refining, or redelivery to 
users.
    Qualifying domestic helium transaction means any agreement entered 
into or any renegotiated agreement during the preceding 1-year period 
in the United States for the purchase or sale of at least 15,000,000 
standard cubic feet of crude or pure helium to which any holder of a 
contract with the BLM for the acceptance, storage, delivery, or 
redelivery of crude helium from the Federal Helium System is a party.
    Refiner means a person with the ability to take delivery of crude 
helium from the Federal Helium Pipeline and refine the crude helium 
into pure helium.
    Storage Contract Holder means a refiner or non-refiner who has 
purchased helium through sale or auction for storage in the Federal 
Helium System and has a signed contract with the BLM.
    Toll or Tolling means the practice of a helium refiner processing 
or refining another party's helium at an agreed upon price. Refiners 
are required by the Act (50 U.S.C. 167d(b)(8)(B)), as a condition of 
sale, to make excess refining capacity of helium available at 
commercially reasonable rates to: (i) Any person prevailing in auctions 
under section 167d(b)(2); and (ii) Any person that has acquired crude 
helium from the BLM from the Federal Helium Reserve by means other than 
an auction under section 167d(b)(2) after the date of enactment of the 
HSA, including nonallocated sales.
    Toller means a non-refiner that has an agreement with a refiner to 
process or refine helium.
    Tolling Agreement means an agreement between a helium refinery, 
located on the Federal Helium System pipeline, and any other party 
(refiner or non-refiner) to refine helium for a specified volume and 
price.
    1.03 What is the purpose of sales and auctions? The BLM is 
implementing the statutory directives to sell off the Federal Helium 
Reserve to a level of 3,000,000,000 standard cubic feet (3,000,000 Mcf) 
of recoverable helium (not including privately stored helium) (50 
U.S.C. 167d(b)(5)) and implement Phase D: Disposal of assets (50 U.S.C. 
167d(d)) by September 30, 2021.
    1.04 What is the estimated volume of helium available for sale, 
auction and delivery in each fiscal year? The BLM has created an 
illustration of the gradual reduction between the present time and FY 
2021 in the volume of helium in million cubic feet (MMcf) that is 
expected to be produced from the Cliffside Field according to current 
geological modeling. The graphic can be viewed at www.blm.gov/nm/nitec. 
Table 1 identifies the volumes offered for sale as part of Phase A 
under the Act. Those sales are divided into allocated sales for the 
refiners (549,000 Mcf) and non-allocated sales for the non-refiners 
(61,000 Mcf). Table 1 also identifies a substantial delivery of 
privately stored helium (564,600 Mcf), which was primarily the result 
of a delay in the initial FY 2014 offering and the Phase B sales in FY 
2014 for delivery in FY 2015 and FY 2016. Table 2 provides the 
projected volume of helium in MMcf available according to current 
geological modeling and provides estimated annual volumes that the BLM 
anticipates that it will offer, in accordance with Phase B of the Act, 
for sales, auctions and delivery during FY 2015 through FY 2021. 
Information regarding projected volumes that the BLM will offer for 
sale in sales conducted beginning in FY 2016 is provided for planning 
purposes only.
    The terms ``allocated sale'' and ``non-allocated sale'' do not 
apply to Phase B offerings. Phase B sales are reserved for refiners, 
while the Phase B auctions are open to all qualified bidders. Table 3 
provides an estimate of the production capability of the Cliffside 
Field broken into components (estimated sale volume and auction volume) 
and delivery of privately-owned helium, as well as an estimate of the 
total production.

[[Page 42811]]



          Table 1--Projected Volumes for Allocated and Non-Allocated Sales, Phase B Auction and Sales, and Private Storage Delivery for FY 2014
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                                                                                                    Volume of
                                           Forecasted                                   Total        private                      Non-
                                           production                                production      storage      Allocated     allocated      Private
            Fiscal year (FY)               capability        10%         In-kind      available     delivered      sale or       sale or       storage
                                             (NITEC      Contingency      sales       for sale/     prior to    Phase B sale     Phase B      delivery
                                             study)                                  auction or   January 2014                   auction
                                                                                      delivery        sale
                                                   Mcf           Mcf           Mcf           Mcf           Mcf           Mcf           Mcf           Mcf
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2014A................................     1,494,000       149,400       170,000     1,174,600       408,000       360,000        40,000       564,600
FY 2014B................................     1,494,000       149,400       170,000     1,174,600       408,000       189,000        21,000       564,600
FY 2015 *...............................  ............  ............  ............  ............  ............       835,315        92,813  ............
FY 2016 **..............................  ............  ............  ............  ............  ............       250,000  ............  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* According to the Act, all of FY 2015 volumes will be sold and/or auctioned and paid for in FY 2014.
** According to the Act, 250,000 Mcf of FY 2016 volumes estimated to be offered must be sold before August 1, 2014.


                             Table 2--Projected Volumes for Sales, Auctions and Private Storage Delivery for FY 2015-FY 2021
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                                                                          Total
                                           Forecasted                  production        80%         FY 2016                                     20%
                                           production      In-kind      available     Available     advanced                     Auction      Available
            Fiscal year (FY)               capability       sales       for sale/     for sale/       sale      Sale  volume     volume      for private
                                             (NITEC                     auction/       auction     (conducted                                  storage
                                             study)                     delivery                   in FY 2014)                                delivery
                                                   Mcf           Mcf           Mcf           Mcf           Mcf           Mcf           Mcf           Mcf
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2015.................................     1,320,160       160,000     1,160,160       928,128             0       835,315        92,813       232,032
FY 2016 *...............................     1,158,150       160,000       998,150       798,520       250,000       348,890       199,630       199,630
FY 2017 *...............................       997,450       160,000       837,450       669,960             0       401,976       267,984       167,490
FY 2018 *...............................       848,280       160,000       688,280       550,624             0       247,781       302,843       137,656
FY 2019 *...............................       714,430       160,000       554,430       443,544             0       133,063       310,481       110,886
FY 2020 *...............................       606,130       160,000       446,130       356,904             0  ............       356,904        89,226
FY 2021 *...............................       537,880       160,000       377,880       302,304             0  ............       302,304        75,576
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* Delivery for FY 16-FY 21 sales and auctions will be subject to a new storage contract beginning October 1, 2015, and projected volumes are subject to
  change.


 Table 3--Summary of Total Sales, Auctions, and Delivery Through FY 2021
                          [All volumes in Mcf]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Production Capability....  .......................       7,676,480
                                 Total Sales Volume.....       2,827,025
                                 Total Auction Volume...       1,832,959
                                 Total In-Kind Volume...       1,290,000
                                 Total Engineering               149,400
                                  Contingency.
Total Pre-Act, Privately-Owned   .......................       1,577,096
 Helium to be Delivered.
------------------------------------------------------------------------

Phase B Sales and Auctions

    2.01 What volume of helium will the BLM offer under a Phase B 
auction for FY 2015? Pursuant to 50 U.S.C. 167d(b)(12), the BLM intends 
to offer 92,813 Mcf for auction on July 30, 2014, for delivery in FY 
2015 (hereinafter referred to as the ``FY 2015 Phase B auction'').
    2.02 What will be the minimum FY 2015 Phase B auction price and 
minimum FY 2015 Phase B sales price, and how were those prices 
determined? The minimum FY 2015 Phase B auction reserve price is $100 
per Mcf based on Producer Price Index adjustments to the open market 
crude sales price for FY 2014 (absent a market survey). The BLM will 
calculate the FY 2015 Phase B sales price using a weighted average of 
the average FY 2015 Phase B auction price (10 percent) and the adjusted 
FY 2014 helium sales price (90 percent).
    2.03 What volume of helium will the BLM offer under a Phase B sale 
for FY 2015? The FY 2015 volume of helium the BLM will offer for sale 
will be about 835,315 Mcf (hereinafter referred to as the ``FY 2015 
Phase B sale'').
    2.04 What will be the price for the FY 2015 Phase B sale and how is 
that price determined? The FY 2015 Phase B sales price will be 
calculated using a weighted average methodology as follows:

FY 2015 Phase B sales price = (10 percent x AAP) + (90 percent x $100)

Where

AAP is the average auction price in dollars
$100 is the auction reserve price

    2.05 What volume will be sold for the FY 2016 one-time sale? The 
BLM intends to offer 250 MMcf for the FY 2016 one-time sale to be 
conducted in FY 2014.
    2.06 What will be the price for the FY 2016 one-time sale and how 
was that price determined? The price for the FY 2016 one-time sale and 
the methodology will be the same as the FY 2015 Phase B sales price.
    2.07 When will the sales and auctions occur? The BLM intends to 
offer helium in FY 2014 according to the following schedule:

June 25, 2014--Required forms posted to the BLM's Web site
July 29, 2014--
     Pre-bid qualification form due to the BLM
     Excess refining capacity to be reported to the BLM
July 30, 2014--FY 2015 Phase B auction held in Amarillo, Texas

[[Page 42812]]

July 31, 2014--FY 2015 Phase B auction results published on the BLM Web 
site
August 1, 2014--Invitation for Offer--FY 2015 Phase B sale/FY 2016 one-
time sale
August 14--FY 2015 Phase B sale/FY 2016 one-time sale complete
August 15, 2014--
     FY 2015 Phase B sale/FY 2016 one-time sale results 
published
     Invoices sent (Net 30)
September 15, 2014--Revenue from auction and sales due to the BLM
September 26, 2014--Statutory deadline for receipt of revenue.
September 30, 2014--Refiners' FY 2014 Tolling Report due to the BLM

    2.08 What will be the auction format and who may participate? The 
auction will be a live auction, held in the main conference room of the 
Amarillo Field Office at 9 a.m. Central Time on July 30, 2014. The 
address is 801 S. Fillmore, Suite 500, Amarillo, TX 79101. Anyone 
meeting the definition of a qualified bidder provided in section 1.02 
of this Notice may participate in the auction. The logistics for the 
auction and the pre-bid qualification form is included in the auction 
notice at: www.blm.gov/nm/HSAImplementation. Questions relating to the 
auction can be submitted by phone to the BLM at 806-356-1001.
    2.09 Who is qualified to purchase helium at Phase B auctions? Only 
qualified bidders may purchase helium at Phase B auctions. The BLM will 
make the final determination of who is a qualified bidder using the 
requirements of a qualified bidder under the Act regardless of whether 
or not that person was previously determined to be a qualified bidder. 
Prior to issuing a Notice of Sale and Auction, the BLM will notify 
those persons that the agency has determined to be qualified bidders.
    2.10 What are the helium lot sizes that will be available for the 
Phase B auctions?
    The BLM plans to auction lots consisting of 5 MMcf and 10 MMcf. 
Because volumes are not always going to be divisible by 5, there will 
be an odd lot that will range from 5 MMcf to 10 MMcf.
    2.11 How many helium lots does the BLM anticipate offering for the 
FY 2015 Phase B auction? The BLM anticipates auctioning 92.813 MMcf for 
FY 2015. That volume would be divided as follows:

(6) Lots of 10 MMcf each
(5) lots of 5 MMcf each
(1) lot of 7.813 MMcf each

    2.12 When will helium that is purchased at sale or won at auction 
be available in the purchaser's storage account? The volumes purchased 
in the FY 2015 Phase B auction and sale and in the FY 2016 one-time 
sale (to be offered in FY 2014) will be transferred to buyers' storage 
accounts beginning on the first day of the month following receipt of 
payment.
    2.13 What must I do to bid at auction? Detailed bidding 
instructions, including pre-bid registration, will be provided in the 
auction notices. A description of the live auction process is available 
by calling the BLM, Amarillo Field Office, at 806-356-1001. The Auction 
Notice will contain information regarding the time and location of the 
auction, process for notification of winning bidders, payments, and how 
to make such payments.
    2.14 Who will be allowed to purchase helium in the FY 2015 Phase B 
sale? Only those who are refiners as defined in section 1.02 of this 
Notice may purchase helium in the FY 2015 Phase B sale.
    2.15 How will the helium sold in the FY 2015 Phase B sale be 
allocated among the refiners? The allocation to each refiner connected 
to the Federal Helium Pipeline, through September 30, 2015, will be 
based on its percentage share of the estimated total refining 
capability as of October 1, 2000. The BLM intends to revise the storage 
contract effective October 1, 2015. The current standard contract 
expires on September 30, 2015, and the BLM will renegotiate all storage 
contracts prior to the FY 2016 delivery cycle, which begins October 1, 
2015. A formal letter will be sent to each storage contract holder by 
September 30, 2014, with information regarding the new storage 
contract.
    2.16 What will happen if one or more refiners request an amount 
other than its share of what is offered for sale? If one or more 
refiners requests less than its allocated share, any other refiner(s) 
that requested more than its 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 in the FY 2015 Phase B sale will not be 
considered.
    2.17 What will happen if the total amount requested by the crude 
helium refiners is less than the 835,315 Mcf offered in the FY 2015 
Phase B sale? Any excess volume not sold to the refiners in the FY 2015 
Phase B sale will be available for future sale or auction.
    2.18 Do you have a hypothetical example of how a Phase B sale would 
be conducted? Assume 1,000 MMcf available for the Phase B sale.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Installed
                                             refining       Refiner bid      Allocated     Excess volume     Proration        Excess           Total
         Bidder--allocated sale              capacity        volume *        volume *       requested *       percent       allocated *     allocated *
                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refiner A...............................              10             115             100              15              20              15             115
Refiner B...............................              50             400             400               0               0               0             400
Refiner C...............................              40             700             400             300              80            80+5             485
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................             100           1,215             900             315             100             100           1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
* All volumes in MMcf.

After the initial allocation, Refiner B has received all volumes 
requested. However, 215 MMcf is deemed in excess of the total in the 
first iteration of the Phase B sale and reallocated to the two 
remaining refiners based on the refining capacity between them. With 
the reallocation, Refiner A gets all volumes requested, but Refiner C 
is still short by 215 MMcf. Additionally, 5 MMcf remains unallocated 
and, without any other refiners, is awarded to Refiner C. All 
percentages used in the calculation will be rounded to the nearest one-
tenth of one percent. All volumes calculated will be rounded to the 
nearest 1 Mcf.

Delivery of Purchased Helium, Helium Won at Auction and Pre-Helium 
Stewardship Act (PHSA) Helium

    3.01 When will I receive helium that I own from purchase in a sale, 
or successful auction bid, or that I have in a PHSA storage account? 
Helium purchased at sale or won at auction will be delivered starting 
October 1 of each

[[Page 42813]]

designated fiscal year on a reasonable basis established by the BLM. 
The intent is to ensure timely delivery of all helium purchased or won 
at auction along with helium in PHSA storage accounts up to the BLM's 
production capability for the year. This delivery includes helium 
purchased or won at auction by refiners and non-refiners alike.
    3.02 How will the BLM prioritize delivery? The Act gives priority 
to Federal In-Kind helium. In addition to that priority, the BLM will 
make delivery on a reasonable basis to ensure storage contract holders 
who have purchased or won helium at auction have the opportunity during 
the year to have that helium produced or refined. For FY 2015, the BLM 
will continue to allocate helium purchased during the FY 2015 Phase B 
sale and the FY 2016 one-time sale to refiners based on each refiner's 
percentage share of the estimated total refining capability as of 
October 1, 2000. Refiners and non-refiners would have access to In-Kind 
helium and to volumes won at auction in approximately equal monthly 
volumes. In addition, the BLM will provide refiners access to up to 20 
percent of PHSA stored helium in approximately equal monthly volumes, 
based upon relative percentages of the privately-owned stored helium.
    Non-refiners would have access to the helium volumes they purchased 
in the FY 2014 Phase A non-allocated sale or won at auction in 
approximately equal monthly volumes based upon successfully negotiating 
tolling agreements with refiners.
    3.03 How will the BLM deliver helium? Delivery occurs in one of two 
situations--when there is a shortage or a surplus, both of which are 
addressed below. First, a shortage situation is one in which the demand 
for helium from the Federal Helium System exceeds the maximum 
production capability of the system. In a shortage, the volume 
delivered to the refiners, including tolling of non-refiner-owned 
helium, would be calculated using the following equation:

MD = (IKR + IKT) + (ACR + 
ACT) + SR + ULT + PHSA

where
MD--Monthly Delivery is the volume delivered from the Crude Helium 
Enrichment Unit (CHEU) during a particular month.
IKR--In-Kind Refiners is the monthly amount of planned 
In-Kind helium sales to refiners to support Federal helium needs.
IKT--In-Kind Tollers is the monthly amount of planned In-
Kind helium sales to non-refiners requiring tolling services to 
support Federal helium needs.
ACR--Auction Refiners is the monthly amount of planned 
auction-acquired helium to meet refiners' forecasted helium demand.
ACT--Auction Tollers is the monthly amount of planned 
auction-acquired helium to meet non-refiners' planned tolling.
ULT--Unallocated Tollers is the monthly amount of non-
allocated sale-acquired helium sold during the Phase A-Transition 
Sales in FY 2014 but not delivered in FY 2014.
Once ULT deliveries are complete, this element will not 
be a part of the equation.
SR--Sales Refiners is the monthly amount of planned sale-
acquired helium to meet refiners' forecasted crude helium demand.

PHSA--Pre-Helium Stewardship Act is the monthly amount of helium 
purchased before enactment of the HSA that remains in storage. The BLM 
plans to dedicate about 20 percent of delivery capability per year to 
delivery of PHSA volumes, based upon the proportion to each refiner's 
volume in storage. This methodology will allow helium storage contract 
holders the opportunity to receive substantially all of their PHSA 
purchased volumes within 7 years. An example follows:
    Refiner A owns 40 percent of the total privately owned helium in 
storage. The calculation for the refiner's monthly delivery of PHSA 
helium is:
    Monthly PHSA delivery = (40% x 232,032 Mcf)/12, where 232,032 Mcf 
is the volume available in 2015 for private storage delivery
    Monthly PHSA delivery = 7,734 Mcf

    In a shortage situation, IKR and IKT will be 
fulfilled at 100 percent of demand. The BLM intends to deliver as much 
of ACR, ACT, SR, ULT, and 
PHSA as practicable on an equitable basis.
    The BLM will deliver helium to each refiner up to the prescribed 
amount as calculated above. If a refiner takes more than allowed, the 
overage will be reduced in the next calculation month. Amounts not 
delivered will carry forward to the next calculation month to the 
extent practical, as determined by the BLM.
    Second, a surplus situation is one in which the demand for helium 
from the Federal Helium System is less than the maximum production 
capability of the system. The BLM will coordinate with refiners who are 
able to take delivery of volumes greater than their normal allocated 
volumes. The BLM will coordinate with refiners who are able to take 
delivery of volumes greater than their normal allocated volumes to 
balance delivery on a reasonable basis. Surplus situations provide 
additional capability to support tolling and delivery of additional 
PHSA volumes.
    Surplus situations in the helium market can result in reduced 
demand for helium from the BLM Helium Program and lead to the BLM 
reducing volumes delivered or, in extreme cases, re-injecting some of 
the helium being produced into recoverable wells or plant shutdown.
    3.04 Do you have a hypothetical example of how the Delivery 
Schedule would be implemented? Delivery is a dynamic process which 
takes into account a variety of factors including: Plant operating 
parameters, pipeline pressures, changes to refiners planned delivery, 
differences in planned versus actual delivery, verification process for 
In-Kind delivery and maintenance activities. An example of the process 
described in section 3.03 follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Refiner                                          Delta
                                              Planned        Toller A        Toller B         allowed     Refiner actual    Toll actual      carryover
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refiner A...............................  ..............  ..............  ..............          37,105  ..............  ..............           (106)
In-Kind.................................           2,000              20  ..............           2,020           1,990              20  ..............
Auction.................................           2,500           1,500  ..............           4,000           2,400           1,500  ..............
Sale....................................          24,816  ..............  ..............          24,816          25,000  ..............  ..............
PHSA Stored.............................           6,269  ..............  ..............           6,269           6,300  ..............  ..............
Refiner B...............................  ..............  ..............  ..............          30,627  ..............  ..............             245
In-Kind.................................           2,000  ..............              25           2,025           2,100              25  ..............
Auction.................................             200  ..............             120             320             200             120  ..............
Sale....................................          21,056  ..............  ..............          21,056          20,900  ..............  ..............
PHSA Stored.............................           7,164  ..............             121           7,285           7,000             121  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 42814]]

    In the example, Refiner A plans for delivery of 4,500 Mcf of its 
own In-Kind and auction helium and refining for Toller A, an additional 
1,520 Mcf of Toller A's In-Kind and auction helium. Refiner A also has 
24,816 Mcf available for delivery of helium purchased at sale and a 
percentage of the amount of its PHSA stored volume (6,269 Mcf) 
available for delivery.
    Refiner B plans for delivery of 2,200 Mcf of its own In-Kind and 
auction helium and refining for Toller B, an additional 266 Mcf of 
Toller B's In-Kind, auction, and PHSA helium. Refiner B also has 21,056 
Mcf available for delivery of helium purchased at sale and a percentage 
of the amount of its PHSA stored volume (7,164 Mcf) available for 
delivery.
    Refiner A overdrew its allowance of helium acquired at sale by 106 
Mcf. This overage will be deducted during the next calculation month. 
Toller A had its In-Kind and auction helium refined.
    Refiner B drew less than its allowance of helium acquired at sale 
by 245 Mcf. The volume may still be available for delivery in the next 
calculation month, based upon the total demand and production 
capability for that month.
    In cases where the volumes requested for the month exceed the BLM's 
production capacity, the BLM may have to limit delivery to refiners. In 
those situations, any undelivered gas would remain in the refiners' 
storage accounts.
    In cases where tolling is not occurring and pipeline pressure is 
rising, the BLM would systematically reduce plant operations to lower 
levels and potentially re-inject helium or, in the extreme, cease plant 
production during a particular month.

In-Kind Program

    4.01 What is the Federal In-Kind Program? Federal helium suppliers 
who have contracts to supply helium to the Federal government 
(agencies, government contractors, and universities with certified 
Federal grant numbers) are required to buy like amounts of helium from 
the Federal Helium Reserve. The supplied helium may originate from 
sources other than the Federal Helium Reserve. Replenishment of helium 
volumes provided to the government typically takes about 5 months to 
complete. However, the helium is sold to the suppliers at a discounted 
rate compared to open market rate.
    4.02 Who participates in the Program? Federal helium suppliers, 
Federal agencies, and grant recipients participate in the Federal In-
Kind Program.
    4.03 How do I participate? You may be a participant in the Federal 
In-Kind Program if you are a supplier of pure helium and have entered 
into contracts to supply helium to the Federal Government, you are a 
Federal agency requesting helium deliveries, or you are a Federal end 
user with a per location local volume of 200 Mcf per year and wish to 
participate in the In-Kind program. Potential Federal end users/Federal 
grant recipients and universities are encouraged to register with the 
BLM at the provided Web page link: http://www.blm.gov/nm/heliumops.

    Authority:  The Helium Stewardship Act of 2013, Public Law No. 
113-40, codified to various sections in 50 U.S.C. 167-167q.

Sheila Mallory,
Acting State Director.
[FR Doc. 2014-17376 Filed 7-22-14; 8:45 am]
BILLING CODE 4310-FB-P