[Federal Register Volume 80, Number 163 (Monday, August 24, 2015)]
[Notices]
[Pages 51304-51306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20861]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[LLNM006200 L99110000.EK0000 XXX L4053RV]


Notice of Final Action: Crude Helium Sale and Auction for Fiscal 
Year 2016 Delivery

AGENCY: Bureau of Land Management, Interior.

ACTION: Notice.

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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 a sale and auction 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 sale 
and auction that the Helium Stewardship Act of 2013 (HSA) requires the 
BLM to conduct during fiscal year (FY) 2015 for delivery in FY 2016. 
This action takes into consideration public comments received as a 
result of the Notice of Proposed Action published in the Federal 
Register on June 12, 2015.

DATES: This Notice is effective on August 24, 2015.

FOR FURTHER INFORMATION CONTACT: Robert Jolley, Amarillo Field Manager, 
at 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. You will receive a reply during normal business hours.

SUPPLEMENTARY INFORMATION: 

A. Purpose and Background

    In October 2013, Congress passed the HSA (Pub. L. 113-40). The HSA 
requires the Department of the Interior, through the BLM Director, to 
offer for sale and auction annually a portion of the helium reserves 
owned by the United States and stored underground in the Cliffside Gas 
Field, near Amarillo, Texas (50 U.S.C. 167d(b)). On July 22, 2014, the 
BLM published a ``Final Notice for Implementation of Helium Stewardship 
Act Sales and Auctions'' in the Federal Register, (79 FR 42808) (2014 
Final Notice). The 2014 Final Notice contained information about the 
HSA, definitions of terms used in the Notice, the reasons for the 
action, and a process for conducting the auctions and sales in FY 2014. 
The 2014 Final Notice is available at the BLM helium operations Web 
site at: http://www.blm.gov/nm/helium.
    The BLM published a ``Notice of Proposed Action: Crude Helium Sale 
and Auction for Fiscal Year 2016 Delivery'' in the Federal Register on 
June 12, 2015 (80 FR 33548). The BLM requested comments regarding 
elements of the FY 2016 sale and auction. These elements included:
    a. The process for arriving at the price for helium to be sold at 
the Phase B auction and sale, as described in section 1.01 of this 
Notice;
    b. The format of the auction, as described in section 1.04 of this 
Notice;
    c. Who will be allowed to purchase helium in the FY 2016 Phase B 
sale, as described in section 2.01 of this Notice; and
    d. The process for allocating helium for the FY 2016 Phase B sale, 
as described in section 2.02 of this Notice.
    A summary of changes made as a result of those comments is provided 
below:

                           Summary of Changes
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          Affected text                    Explanation of change
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Volumes Offered in the FY 2016     Added non-allocated and adjusted sale
 Helium Auction and Sale.           volumes.
Section 1.01.....................  Added the additional three criteria
                                    from the statute regarding pricing.
Section 1.03.....................  The BLM set the auction date as
                                    August 26, 2015, with auction
                                    results published on the BLM Web
                                    site on August 27, 2015; the BLM set
                                    the sale date for September 1, 2015.
Section 2.01.....................  The BLM re-instituted the non-
                                    allocated sale.
Section 2.02.....................  Added explanation for decision to
                                    reinstitute non-allocated sale.
Section 2.03.....................  Added information on how FY 2016
                                    Phase B sale will be allocated among
                                    those participating in the non-
                                    allocated sale.
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[[Page 51305]]

B. Public Comment: Analysis of Comments and Changes

    In response to the invitation in the Notice of Proposed Action, six 
commenters, who are refiners and non-refiners, submitted 22 comments 
totaling 8 pages. The BLM developed a table of comments and responses, 
which is available for public review at: www.blm.gov/nm/Helium2016. 
Based upon the comments received, the BLM has revised the process for 
the FY 2016 sale and auction.

C. Volumes Offered in the FY 2016 Helium Auction and Sale

    Table 1 identifies the volumes to be offered for auction and sale 
in FY 2015 for FY 2016 delivery.

                                      Table 1--Projected Volumes for Phase B Auction and Sales for FY 2016 Delivery
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                                                                     Total remaining
                                      Forecasted     In-kind sales      production         Volume      Previously sold       Volume           Volume
         Fiscal year (FY)             production       (sales to      available for    available for      in FY 2014     available for    available for
                                      capability     Federal users)  sale/auction or      auction       Advanced sale    non-allocated         sale
                                    (NITEC Study)                        delivery                                             sale
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                                           MMcf *             MMcf             MMcf             MMcf             MMcf             MMcf             MMcf
                                  ----------------------------------------------------------------------------------------------------------------------
FY 2016 **.......................           1,310              160            1,150          *** 300         **** 250               85              515
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* MMcf means one million cubic feet of gas measured at standard conditions of 14.65 per square inch atmosphere (psia) and 60 degrees Fahrenheit.
** Delivery for FY 2016 sales and auctions will be subject to a new storage contract beginning October 1, 2015.
*** 25% of total production capacity after deducting In-Kind (rounded).
**** In accordance with the HSA, 250 MMcf of FY 2016 volumes were offered in FY 2014.

D. FY 2016 Helium Auction

    1.01 What is the minimum FY 2016 Phase B auction price and the FY 
2016 Phase B sales price, and how were those prices determined? The 
minimum FY 2016 Phase B auction price is $100 per Mcf (one thousand 
cubic feet of gas measured at standard conditions of 14.65 psia and 60 
degrees Fahrenheit). The BLM established the minimum auction price and 
will calculate the FY 2016 Phase B sale price using four criteria 
established in the HSA, in the following priority: (A) The sale price 
of crude helium in auctions held by the Secretary; (B) Price 
recommendations and disaggregated data from a qualified, independent 
third party who has no conflict of interest, who shall conduct a 
confidential survey of qualifying domestic helium transactions; (C) The 
volume-weighted average price of all crude helium and pure helium 
purchased, sold, or processed by persons in all qualifying domestic 
helium transactions; and (D) The volume-weighted average cost of 
converting gaseous crude helium into pure helium.
    The BLM will announce the FY2016 Phase B sale price after the 
auction has concluded and the BLM completes its analysis of the auction 
information. The BLM will post the crude helium price for the FY2016 
Phase B sale, effective October 1, 2015.
    1.02 What will happen to the helium offered but not sold in the 
helium auction? Any volume of helium offered, but not sold in the FY 
2016 Phase B auction, will be added to the 600 MMcf available for sale 
and will be offered for sale in the FY 2016 Phase B sale.
    1.03 When will the sale and auction take place? The BLM intends to 
offer helium for FY 2016 according to the following schedule:

August 26, 2015--FY 2016 Phase B helium auction held in Amarillo, Texas
August 27, 2015--FY 2016 Phase B helium auction results published on 
the BLM Web site
September 1, 2015--Phase B Helium Sale
September 30, 2015--Revenues from auction and sale due to the BLM

    1.04 What is the auction format? The auction will be a live 
auction, held in the main conference room of the Amarillo Field Office 
at 1:00 p.m. central time, on August 26, 2015. The address is 801 South 
Fillmore, Suite 500, Amarillo, TX 79101. Anyone meeting the HSA 
definition of a qualified bidder may participate in the auction. The 
logistics for the auction and the pre-bid qualification form is 
included in a document entitled Auction Guide at www.blm.gov/nm/
helium2016. Questions related to the auction can be submitted by phone 
to the BLM at 806-356-1001.
    1.05 Who is qualified to purchase helium at the Phase B auction? 
Only qualified bidders, as defined in 50 U.S.C. 167(9), may participate 
in and purchase helium at the Phase B auction. The BLM will make the 
final determination of who is a qualified bidder using the HSA's 
definition of a qualified bidder, regardless of whether or not that 
person was previously determined to be a qualified bidder.
    1.06 How many helium lots does the BLM anticipate offering at the 
FY 2016 Phase B auction? The BLM anticipates auctioning 300 MMcf in a 
total of 18 lots for FY 2016. The lots would be divided as follows:
    (8) lots of 25 MMcf each;
    (5) lots of 15 MMcf each; and
    (5) lots of 5 MMcf each.
    1.07 What must I do to bid at auction? The BLM has described the 
live auction procedures, including detailed bidding instructions and 
pre-bid registration requirements, in a document entitled FY 2016 
Helium Auction Notice and Guide at www.blm.gov/nm/helium2016.
    1.08 When will helium that is purchased at sale or won at auction 
be available in the purchaser's storage account? The BLM will transfer 
the volumes purchased in the FY 2016 Phase B auction and sale to the 
buyer's storage accounts beginning on the first day of the month 
following receipt of payment.

E. FY 2016 Phase B Helium Sale

    2.01 Who will be allowed to purchase helium in the FY 2016 Phase B 
sale? The Phase B crude helium sale will be separated into two distinct 
portions, a non-allocated portion and an allocated portion. The non-
allocated portion will be ten percent of the total amount offered for 
sale for FY2016 and will be available to those storage contract 
holders, as of August 31, 2015, who do not have ability to accept 
delivery of crude helium from the Federal Helium Pipeline (as defined 
in 50 U.S.C. 167(2)). The allocated portion will be ninety percent of 
the total amount offered for sale for FY2016 and will be available to 
any person (including individuals, corporations, partnerships, or other 
entities) with the ability to accept delivery of crude helium from the 
Federal Helium

[[Page 51306]]

Pipeline (as defined in 50 U.S.C. 167(2)).
    2.02 Why did the BLM re-institute the non-allocated sale? The BLM 
specifically requested information regarding who will be allowed to 
purchase helium in the FY 2016 Phase B sale in the draft Federal 
Register notice. Based on comments received, the BLM determined that a 
non-allocated sale would increase participation in the Federal Helium 
Program and maximize the total financial return to the taxpayer.
    2.03 How will helium sold in the FY2016 Phase B sale be allocated 
among those participating in the non-allocated sale? The non-allocated 
sale will be made available to all qualified entities not eligible to 
participate in the allocated sales. The minimum volume that can be 
requested is 1 MMcf. The total volume available for the non-allocated 
portion of the sale is 85 MMcf. Any volumes not sold at auction will be 
distributed between the non-allocated (10 percent) and the allocated 
sale (90 percent). Any volumes not purchased at the non-allocated sale 
will be sold in the allocated sale. A hypothetical example is provided 
in a document entitled ``Hypothetical example of how the FY 2016 Phase 
B Non-Allocated Sale would be conducted'' at www.blm.gov/nm/helium2016.
    2.04 How will the helium sold in the FY 2016 Phase B sale be 
allocated among the persons to accept delivery of crude helium from the 
Federal Helium Pipeline? Any person desiring to participate in the 
allocated portion of the FY 2016 Phase B sale needs to report its 
excess refining capacity and operational capacity by August 14, 2015, 
using the Excess Refining Capacity form, which can be downloaded at 
http://www.blm.gov/nm/heliumreporting, or in a link entitled ``Required 
Forms for Helium Reporting'' at www.blm.gov/nm/helium2016. Each person 
participating in the sale will then be allocated a proportional share 
based upon that person's operational capacity. A hypothetical example 
is provided in a document entitled ``Hypothetical Example of how the FY 
2016 Phase B Allocated Sale would be conducted'' at www.blm.gov/nm/
helium2016.
    2.05 How does a person apply for access to the Federal Helium 
Pipeline for the purpose of taking crude helium? The steps for taking 
crude helium are provided in the BLM's Helium Operations Web site in a 
document entitled ``How to Set Up a Storage Account and Pipeline 
Access'' at http://www.blm.gov/nm/helium2016. Reporting forms show the 
due dates for each report, and can be found in a document entitled 
``Required Forms for Helium Reporting'' at www.blm.gov/nm/helium2016. 
The length of time required to apply for and obtain access to the 
Federal Helium Pipeline will vary based on the person's plans for plant 
construction, pipeline metering installation, and other variables. The 
BLM is available to provide technical assistance and information, 
including contact information for applying for access and information 
about any applicable National Environmental Policy Act requirements.
    2.06 What will happen if one or more persons request an amount 
other than the person's share of the volume offered for either the 
allocated or the non-allocated sale? If one or more persons request 
less than their share(s), any other person(s) who request(s) more than 
their share(s) will be allowed to purchase the excess volume based on 
the proportionate shares of operational capacity of all persons 
requesting more than their initial shares.
    2.07 What will happen if the total amount requested by persons is 
less than the 515 MMcf offered in the FY 2016 Phase B allocated sale? 
Any excess volume not sold in the FY 2016 Phase B allocated sale may be 
available for future sale or auction.

F. Delivery of Helium in FY 2016

    3.01 When will I receive the helium that I purchase in a sale or 
win based on a successful auction bid? Helium purchased at the FY 2016 
sale or won at the FY 2016 auction will be delivered starting October 
1, 2015, in accordance with the crude helium storage contract. The 
intent is to ensure delivery of all helium purchased at sale or won at 
auction up to the BLM's production capability for the year.
    3.02 How will the BLM prioritize delivery? The HSA gives priority 
to Federal In-Kind helium (i.e., helium sold to Federal users) (50 
U.S.C. 167d(b)(1)(D)) and (b)(3)). After meeting that priority, the BLM 
will make delivery on a reasonable basis, as described in the crude 
helium storage contract, 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 in monthly increments.

G. Background documents

    Supplementary documents referenced in this Notice are available at 
the BLM helium operations Web site at: http://www.blm.gov/nm/helium2016, and include the following:
    a. The HSA (50 U.S.C. 167);
    b. Proposed Notice, June 22, 2015;
    c. Consolidated Comment Sheet from Proposed Notice;
    d. FY 2016 Helium Auction Notice and Guide;
    e. Table of Projected Volumes for Sales and Auctions for Delivery 
for FY 2017-FY 2021 (informational);
    f. Hypothetical example of how the FY 2016 Phase B Allocated Sale 
would be conducted (informational);
    g. Hypothetical example of how the FY 2016 Phase B Non-Allocated 
Sale would be conducted (informational);
    h. Schedule for Helium Auction and Sale;
    i. How to Set Up a Storage Account and Pipeline Access;
    j. 2011 Reference Helium Storage Contract (informational); and
    k. Required Forms for Helium Reporting.

    Authority:  The HSA of 2013, Public Law 113-40, codified to 
various sections in 50 U.S.C. 167-167q.

Corey Grant,
Acting State Director.
[FR Doc. 2015-20861 Filed 8-19-15; 4:15 pm]
BILLING CODE 4310-FB-P