liquids such as water, utilizes the natural pressure of a reservoir to extract the resources more efficiently, and avoids leaving substantial quantities in peripheral or less accessible portions of the reservoir. The language of the 1996 Act mandating straight-line extraction could therefore lead to inefficient exploitation of this taxpayer-funded resource.

If cost recovery is the ultimate objective, imposing straight-line drawdown is inappropriate. Instead, an objective of maximizing production within the constraint of cost recovery would add more flexibility. This would allow for a declining production path over time and might require fewer new wells. It would also allow for taking reservoir characteristics into account in the production plan and would consider the potential for reservoir degradation due to overly aggressive production. Appendix F contains a more detailed discussion on drawdown options.

BLM MANAGEMENT OF THE BUSH DOME RESERVOIR AFTER 2015

Finally, the 1996 Privatization Act is silent on policies for management of the Cliffside storage facility and the BLM pipeline after 2015, the mandated date for disposal of the crude helium reservoir. It is virtually certain that substantially more than 600 MMcf of crude helium will remain in the Bush Dome Reservoir by the end of 2015; indeed, most current projections estimate that this target will not be achieved until 2020 at the earliest. If BLM is unable to develop a market-based approach to pricing its sales of crude helium—and even if it does, given uncertainties about future prices and the capacity of the BLM pipeline—2016 may arrive with more than 600 MMcf in the Bush Dome Reservoir and incomplete retirement of the facilities’ debt. What is to be done with the remaining crude helium? How will BLM’s operations beyond 2015 be financed? As noted elsewhere, the progressive exhaustion of non-Bush Dome sources of crude helium in the Hugoton field also means that maintaining refinery capacity for the next decade or more poses additional challenges for which responses must be developed very soon.

The issues raised by the high probability that the Bush Dome Reservoir will contain significantly more than 600 MMcf by 2015 and by the possibility that the Helium Reserve’s debt may not be retired before 2015 go well beyond the study charge to this committee. No matter the scope of the charge, these issues urgently require study. They will almost certainly need additional legislative or policy guidance from the Congress, senior policymakers within the Interior Department, and perhaps even the White House Office of Science and Technology Policy.



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