Posted on 04/10/2015 10:25:31 AM PDT by thackney
he US Department of Energy announced Thursday afternoon that it has awarded contracts for the delivery of crude oil to the Strategic Petroleum Reserve (SPR) to BP and Noble Energy so as to replenish oil it sold last year (see below).
With a capacity of 727 million barrels, the SPR is the largest stockpile of government-owned emergency crude oil in the world. Together, the SPR crude oil and facilities represent a $26 billion investment in energy security ($21 billion for crude oil and $5 billion for facilities).
Founded in the wake of the 1973-74 oil embargo, the SPR provides the President of the US with a powerful response option should a disruption in oil supplies threaten the US economy. It also serves as the critical component for the US to meet its International Energy Agency (IEA) obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.
BP Products North America will deliver 2,197,500 barrels and Noble Energy will deliver 2,000,000 barrels to the SPR's Bryan Mound site in Freeport, Texas. Deliveries are slated to be completed by July 31, 2015.
The DOE said in a press release that the awards are repurchasing crude oil sold during the 2014 test sale, using $239.2 million funds from the sale. The DOE is required by law to buy back petroleum products within one year of completion of a test sale to the extent funds are available from the sale. Funding from the test sale was also used to establish the Northeast Gasoline Supply Reserve last year.
Currently, the SPR holds 691 million barrels of crude oil in four storage locations in Louisiana and along the Texas Gulf Coast.
2014 Test Sale In a move to test the capabilities of the Strategic Petroleum Reserve in a rapidly changing oil market, the US Department of Energy sold 5 million barrels of crude oil from the nation's emergency stockpile from March-May last year.
This was the first sale from the reserve since 1990- when 4 million barrels were auctioned off- that is specifically designed as a test. The DOE offered sour crude from its West Hackberry and Big Hill sites on the US Gulf Coast.
Weekly SPR deliveries averaged between 50 K/bd to 185 K/bd. Early deliveries during March 2014 totaled 40,118 barrels. The remaining 4.9 MMbbls were delivered in April and May 2014.
DOE department spokesman Bill Gibbons commented at the time, "Due to the recent dramatic increase in domestic crude oil production, significant changes in the system have occurred." He said further that the test sale was needed to "appropriately assess the systems capabilities in the event of a disruption."
The test sale was timed so refineries interested in purchasing from the reserve can plan for when their facilities come out of yearly maintenance cycles and crude oil stocks are needed in preparation for the switch-over to summer grade gasoline.
Winning bidders included ExxonMobil, BP, and Shell, as well as independent refiners Valero, and Tesoro, and energy traders such as Hess Energy, Vitoil, and Barclays Bank.
The release was equal to approximately 25% of the crude oil used in the US every day.
Read "SPR Test Sale 2014 Final Report"
White House Press Secretary Jay Carney dismissed suggestions that the 2014 test sale was aimed at demonstrating that the US is prepared to use its surging oil and gas production as a weapon against Russia which had recently invaded Ukraine.
"This action was taken consistent with the requirements by law of the [DOE] to evaluate the Strategic Petroleum Reserve and its drawdown capacity," Carney said. "It's a test for operational reasons."
Crude Oil Storage By Site
Bryan Mound - Holds 240.7 MMB
Big Hill - Holds 162.2 MMB
West Hackberry - Holds 213.3 MMB
Bayou Choctaw - Holds 73.6 MMB
Fill Status
The SPR completed fill on December 27, 2009 with a cargo that arrived and began to unload on December 25. The cargo was 493,000 barrels of Saharan Blend, a light sweet crude that was delivered to the Bryan Mound site. A sale and drawdown in 2011 reduced the inventory to 695.9 million barrels. Based on 2014 net petroleum imports, the SPR holds the equivalent of 137 days of import protection.
Past Sales
2014 Test Sale: 5 million barrels
2011 IEA Coordinated Release: 30,640,000 barrels
2005 Hurricane Katrina Sale: 11 million barrels
1996-1997 total non-emergency sales - 28 million barrels
1990/1 Desert Shield/Storm Sale: 21 million barrels
1985 Test Sale: 1.0 million barrels
Do we really need this? I thought we were going green.
Out west we could use a strategic water reserve
And there is:
In California, Farmers Rely on Oil Wastewater to Weather Drought
http://www.newsweek.com/california-farmers-rely-oil-wastewater-weather-drought-319648
Although that has basically the same problem of salt.
My trucks still run on petroleum products? How about your transportation?
Sarcasm.
I’m glad they’re not waiting for the price of oil to tripple before getting a refill.
They have to replace it within one year of the sale.
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