[Federal Register: November 8, 2002 (Volume 67, Number 217)]
[Notices]
[Page 68152-68155]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no02-115]
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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
AmFOFMO@blm.gov 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
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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
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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]