WASHINGTON -- Secretary Samuel W. Bodman announced that the U.S. Department of Energy has approved bids for the sale of 11 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). Combined with the 12.6 million barrels of crude previously approved for loans, these SPR releases, in response to the disruptions caused by Hurricane Katrina, will provide 23.6 million barrels of crude for the U.S. market.
The United States is committed to using all of the tools at our disposal to help keep our oil and gasoline markets well supplied, Bodman [image-nocss] said. This sale ensures that refineries have the petroleum they need to keep gasoline and diesel fuel flowing to American consumers while production facilities in the gulf region regain their capacity. As we move forward, we will continue to monitor the overall supply of petroleum available and the needs of the nation as we determine next steps.
Quantities (11 million barrels total) awarded as of September 14:
Astral Oil Co. Inc. (1 million bbl.)BP Oil Supply Co. Inc. (2.7 million bbl.)Marathon Ashland Petroleum LLC (2.3 million bbl.)Shell Trading (US) Co. (1.8 million bbl.)Vitol SA Inc. (3 million bbl.)As reported in CSP Daily News, on September 6, the Energy Department began a presidentially directed sale of approximately 30 million barrels of crude oil from the SPR as part of an international effort to bolster oil supplies in the aftermath of Katrina.
The action was part of a 26-nation effort coordinated by the International Energy Agency (IEA) to help mitigate disruptions in the global flow of crude oil while efforts are underway to restore operations of offshore oil rigs and refineries along the hard-hit coastal regions of the southeastern United States.
The U.S. oil sale will represent half of the 60 million barrel stock withdrawal agreed to unanimously by the IEA nations.
The sale is in addition to the 12.6 million barrels of crude oil from the government's emergency oil stockpile that the Energy Department previously agreed to lend to six companies in exchange for oil to be returned later:
ExxonMobil (6 million bbl.)Valero (1.5 million bbl.)Placid Refining (1 million bbl.)ATI (600,000 bbl.)BP (2 million bbl.)Marathon (1.5 million bbl.)The department has activated all four of its oil storage sitestwo in Louisiana and two in Texasfor the oil deliveries. Oil from one of the Louisiana sites is already flowing to refineries under the previous exchange agreements.
Although crude oil from the SPR has been released several times to counter supply shortfalls, most releases have been relatively small oil exchanges to alleviate shortfalls at individual refineries. This is only the second time a major oil release has been ordered by the President. The previous one, involving 17 million bbl., took place in 1991 at the direction of President George H.W. Bush following the beginning of Operation Desert Storm following Iraq's invasion of Kuwait.
The SPR currently has 700 million bbl. of crude oil stored in deep underground salt caverns along the Texas and Louisiana Gulf Coast.
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