might result in higher total production. This, however, is a matter of reservoir engineering, not of economics.


Maximizing total recovery will result in the most conservative production plan of the ones presented. Again, this is not an economics-based objective, but a physical-based objective that may be consistent with treating the Bush Dome Reservoir as a strategic reserve. A strategic reserve would normally consider the value to a country of having access to helium. In this case it is the total quantity of helium that can be produced, regardless of time, that is important. This production objective (all else equal) would be most protective of the reservoir.

Given the more conservative production path, payback (if achievable) would be over a longer time horizon. This objective may also reduce the requirement for additional investment, because not as many additional wells may be needed to produce the helium as with the previous objectives. However, there is no guarantee of payback under this objective.


Under the objective of maximum net benefits, the management plan for the field would be based on the simultaneous consideration of economic and reservoir factors. Gross benefits are gained from the production and use (sales) of the helium. Net benefits are gross benefits less costs of production and scarcity value. To maximize the benefits of the field, the production plan would look to maximize the net benefits over the optimal life of the field. However, such a plan would need to take into account that today’s production choices impact the production choices available tomorrow (through changing pressure, reservoir degradation, etc.). Thus, the drawdown path would incorporate all of the economic and reservoir engineering information that would find the optimal trade-off between the marginal benefit from the production of another unit of helium today and the marginal cost of not leaving it for tomorrow plus the marginal damage to the reservoir from the production of one more unit today.

The committee believes that this last objective would be the most appropriate one for the Federal Helium Reserve. The efficiency of a production plan depends on its objective. If the objective is to maximize production over a time horizon or to maximize recovered gas, there are efficient paths to achieve these objectives. However, nothing will guarantee cost recovery. Maximizing net benefits will not guarantee maximizing recovery, nor will it guarantee breaking even. It does, however, provide a method to produce the helium that considers the value of helium in different time periods.

The National Academies of Sciences, Engineering, and Medicine
500 Fifth St. N.W. | Washington, D.C. 20001

Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement