The U.S. Department of Energy has awarded two contracts to add a total of nearly 1 million barrels of domestic crude oil to the Strategic Petroleum Reserve that is at about 50% of capacity.
The DOE had requested proposals Oct. 21 of suppliers interested in selling 1 million barrels of sour crude oil produced in the United States for the Strategic Petroleum Reserve. The petroleum would be provided to one of the DOE’s SPR sites.
The U.S. government has oil reserves in large underground salt caverns at four sites along the Gulf coast: two each in Texas and Louisiana. President Gerald Ford established the Strategic Petroleum Reserve in 1975 to shield the U.S. from oil shortages in an energy crisis.
The DOE announced winning suppliers on Nov. 12 for both contracts totaling $55.7 million. Deliveries are to start from Dec. 1 through Jan. 31 at the Bryan Mound SPR in Texas. The agency stated that six companies submitted 18 offers to supply the crude oil.
“President Trump promised to protect America’s energy security by refilling and managing the Strategic Petroleum Reserve more responsibly,” U.S. Energy Secretary Chris Wright, noted in a press statement. “Awarding these contracts marks another step in the important process of refilling this national security asset. While this process won’t be complete overnight, these actions are an important step in strengthening our energy security and reversing the costly and irresponsible energy policies of the last administration.”
The largest contract (for some 600 million barrels) went to Trafigura Trading LLC (a wholly-owned subsidiary of Trafigura Group Pte Ltd). The other DOE contract was signed for 300 million barrels with Energy Transfer Crude Marketing LLC.
With a combined authorized storage capacity of 714 million barrels, the SPRs consist of the:
- Bryan Mound—in Brazoria County, 65 miles south of Houston,
- Big Hill—in Jefferson County, 26 miles southwest of Beaumont, Texas,
- West Hockberry—in Cameron Parish, 25 miles southwest of Lake Charles, La., and
- Bayou Choctaw—in Iberville Parish, 12 miles southwest of Baton Rouge, La.
“Decisions to withdraw crude oil in the event of an energy emergency are made by the President under the authority of the Energy Policy and Conservation Act and done through a competitive sale. The SPR is always drawdown-ready, which means it stands ready to release crude oil to the market within 13 days of Presidential direction; this is the time it takes to conduct the sales process, award contracts and to arrange the logistics for oil transportation,” according to DOE.