Where does Helium come from and why is is so expensive?

"Helium is a non-flammable, non-toxic, non-radioactive, naturally occurring and environmentally friendly gas that, after hydrogen, is the second most abundant element in the Universe. However, on Earth, helium is relatively rare. In the USA it is mined, or more precisely, drilled for in the Texas and Oklahoma panhandles from natural gas wells that also happen to be encased in radioactive rock. The rocks decay over millions and millions of years and, in the course of that decay, release a non-radioactive by-product --- Helium --- one molecule at a time! The helium gas accumulates in the same pocket that produces the natural gas. Both are recovered together and then later separated.

Right now, the world is gripped in a global helium shortage. Unfortunately, if it’s not extracted during the natural gas refining process, the helium it contains is simply lost. And because it is produced as a by-product of natural gas processing, its value is considerably less. So, extracting it from the natural gas stream is therefore a secondary consideration. Or, to put it another way, right now, helium isn’t valuable enough to those making billions from natural gas extraction to justify developing a natural gas field and then also building a helium gas processing plant purely to extract helium from that natural gas stream. The helium distillation plant would be an add on.

Following World War I, up to 32 billion cubic feet of helium gas were bunkered underground by the US government at the Cliffside Field near Amarillo, Texas, called the ‘Federal Helium Reserve’. This stockpile was set up to be privatized after the Helium Privatization Act of 1996 was passed. This helium is now being sold off at a constant rate (2.2 billion feet per year) with the intent of fully depleting the Federal Reserve (except for a permanent strategic reserve of 600 million cubic feet) by 2015.

The US Bureau of Land Management pipeline and the associated private crude Helium plants handling this strategic resource were all designed to produce 4 billion cubic feet per year of crude helium to supply the 6 private helium refineries located along this pipeline system. However, due to the continuing depletion of current helium-bearing natural gas fields, these refineries can no longer operate at full capacity. Increasing demand (along with a fixed rate of its removal from the Federal Reserve) plus depletion of these helium-gas-bearing natural gas fields have all conspired to reduce the available supply of helium in the United States by approximately 300 million cubic feet in 2007. And that gap is expected to continue growing each year as demand continues to rise and non-strategic reserve sources continue to be depleted.

And while there is an abundance of helium-bearing natural gas in the Middle East, none of these sources are expected to reach full capacity until at least 2011, all of which means that...at least for the foreseeable future...helium to fill balloons will continue to be scarce...and, therefore, ever-more expensive!"