Everyone is talking about the impact of closing the Strait of Hormuz on oil and gas. I haven't seen much discussion of the war's impact on helium. Most people think of helium as being a fun gas you use for children's balloons. But helium is actually one of the most important industrial gases, used in rockets, MRIs, quantum computers, and most importantly, in the production of semiconductors. Qatar produces ~30% of the world's helium as a byproduct of its natural gas wells, and that supply is now cut off from the global market. 🧵

Helium is valuable because it has extremely high thermal conductivity, does not react with chemicals in plasma chambers, and works inside high vacuum environments.

Helium is used in semiconductor fabs for: * Wafer cooling during plasma etching and deposition * Leak detection in vacuum systems * Carrier gas in certain deposition processes * Heat transfer gas behind wafers

Helium is the only element that can reach extremely low temperatures easily. Liquid helium boils at −269°C. That property makes it vital in applications like MRI scanners, superconducting magnets, particle accelerators, and quantum computing hardware. For example, the Large Hadron Collider uses ~120 tons of liquid helium to cool its magnets.

SpaceX and other rocket companies use helium to keep fuel tanks pressurized at a constant level as they burn through fuel. It's used because it's inert, so there's no risk of it reacting with other molecules. And because it remains gaseous at extremely low temperatures, it's great for outer space.

In fact if you look at the top uses of helium globally, clowns don't even make the list:

Helium is incredibly rare on Earth. It's so light that it naturally just floats to the top of the atmosphere where it can't be recovered. As byproduct of radioactive decay of uranium and thorium, themselves relatively rare, helium can only be captured when those elements happen to be found directly under a salt dome. The salt dome creates natural pockets for the helium gas to accumulate (similar to the pockets for "oil" in this graphic).

Salt domes are also incredibly important geologic formations because they trap oil and natural gas, which would otherwise migrate upward and escape to the surface. And so most helium is produced as a byproduct of oil and gas wells. Hence Qatar producing 40% of the world's helium.

The U.S. government recognized the strategic importance of helium over a century ago and with Helium Act of 1925, Congress created the national strategic helium reserve, better known as the Federal Helium Reserve.

The U.S. Federal Helium Reserve is located about 3,000 feet underground in the Cliffside Gas Field, about 12 miles northwest of Amarillo, Texas, in the Texas Panhandle. This was not a natural helium deposit that was simply discovered and left in place. Instead, it was a man-made strategic stockpile where helium extracted as a byproduct of natural gas production around the country was pumped into an underground reservoir for storage.

However beginning in 2005 the government started to privatize the reserve, and fully sold it off along with all it's pipeline infrastructure to a German industrial gas company called Messer. This sale netted $460M to the U.S. Treasury.

At the time of the sale, there was an estimated 900M cubic meters (30-32B cubic feet) of gaseous helium stored in the reserve. This translates to roughly 140,000 cubic meters (5 million cubic feet) of liquid helium equivalent.

As of this past Monday with the result of the Iran war, spot prices of helium had tripled. If there is no quick resolution to the crisis, they are likely to go parabolic from here.

Without helium, TSMC cannot produce chips and SpaceX can't launch rockets (at least until Starship comes online using a design that remarkably does not use helium because they recognized the likelihood of future shortages). Demand for chips and rockets are increasing exponentially.

In North America there are really only two producers of helium apart from tapping into the national reserve owned by Messer. Exxon Mobile is the largest thanks to it's natural gas fields in Wyoming which contain rich helium deposits. The second is North American Helium (@NAHelium ) who I met here on Twitter 5 years ago through my work at Founders Fund. @NAHelium was formed with the realization that helium deposits don't just occur as byproducts of oil and gas production, but can occur anytime uranium or thorium is found under a salt dome, regardless of whether oil and natural gas are also present or not.

Over the subsequent decade @NAHelium scoured the entire geography of North America to identify all the places where thorium and uranium deposits occur under salt domes, negotiating the mineral rights to nearly the entire supply. After leasing the rights to the most promising geology on the continent, they now operate 9 modular helium mines and production facilities in Canada and are rapidly emerging as one of the leading producers of helium in the world. Disclosure: I am a investor in @NAHelium (personally, not through FF). Any mistakes in the math above are my own though, not the company's.

Transporting helium to TSMC in Taiwan to produce semiconductors is non-trivial. Because helium has to be transported at minus -269C, you need specialized cryogenic shipping containers tanks like these. There are only 3,000 of these containers in the world.

The ocean transit time from Qatar to Taiwan is around 23 days versus just 16 days from Long Beach (see below routes from Flexport Atlas). However getting the liquid helium by rail or truck from the U.S. and Canadian production facilities and reserves is non-trivial, and requires all these scarce cryogenic containers to be repositioned. Many of them are likely physically stranded inside the Gulf while presumably a huge percentage of them are locked in long-term contracts tied to Qatari production.

With Codex 5.4 and Opus 4.6, many of us in Silicon Valley have realized that AGI is basically here. Few realize how dependent the technologies we love are on these once obscure industrial trade networks of globalization. Those networks are much more fragile than we realize in an age where vital maritime chokepoints like the Strait of Hormuz, the Red Sea and even the Panama Canal can be cut off overnight.

As my favorite author Will Durant wrote, "civilization's delicate complex of order and freedom, culture and peace, can at any moment be overthrown."