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DOE to Resume Filling Strategic Petroleum Reserve
2 January 2009
The US Department of Energy plans to take advantage of the recent large decline in crude oil prices, and has issued a solicitation to purchase approximately 12 million barrels of crude oil for the nation’s Strategic Petroleum Reserve (SPR) to replenish SPR supplies sold following hurricanes Katrina and Rita in 2005.
In addition, DOE is also moving forward with three other SPR acquisition and/or fill activities in order to fill the SPR as Congress directed in the 2005 Energy Policy Act (EPAct): refiner repayments of SPR emergency oil releases following Hurricanes Gustav and Ike; the delivery of deferred royalty-in-kind (RIK) oil; and the solicitation of new RIK deliveries in the spring of 2009.
From May 2008 through the end of December 2008, DOE was prohibited by law from acquiring petroleum for the SPR. Now that the statutory moratorium on SPR oil acquisitions has expired, and in light of substantially lower crude oil market prices, DOE believes it is economically prudent and in the national security interest to move forward with filling the SPR.
Acquisitions in 2009 will fill the SPR to its current storage capacity of 727 million barrels and provide the US with approximately 70 days of net import protection.
The approximately $600 million received from DOE in 2005 from the emergency sale of crude oil following hurricanes Katrina and Rita will be used for the purchase. DOE is seeking offers for crude oil deliveries in February, March, and April 2009.
From January through May 2009, the SPR will receive 5,395,000 barrels of oil that were released from the SPR to refiners in the fall of 2008 due to localized interruptions caused by Hurricanes Gustav and Ike, along with 120,000 additional “premium” barrels of oil that the refiners are required to pay to DOE in return for releasing this oil to the refiners.
The SPR will also receive 2,178,000 barrels of RIK oil, originally scheduled for delivery in 2008 and deferred until the spring of 2009.
In addition to these deferred deliveries, DOE plans to resume a modest RIK oil fill program with the Department of the Interior at a rate of about 25,000 barrels per day. DOE has issued a solicitation seeking contracts to exchange 25,000 barrels per day of Government-owned oil from Federal oil leases in the Gulf of Mexico for crude oil deliveries that meet the specifications of the SPR. The RIK deliveries to the SPR would begin in May 2009.
January 2, 2009 in Brief | Permalink | Comments (1) | TrackBack (0)
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Posted by: Ross Nicholson | January 02, 2009 at 10:16 PM
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The federal government should buy oil with cash, and cash out the royalty in kind acceptances while deferring oil company payments into the treasury. That's right, give cash to the oil companies.
Similarly, we should increase the pay of non-union auto workers instead of decreasing payments to higher paid union member auto workers. We are fighting a deflation, cutting people's wages is NOT AN ECONOMICAL OPTION.
Buying gold for American stockpiles should also resume.
Buying stocks, bonds, and 'toxic' home loan investment instruments should begin as soon as possible. Hold the oil, the gold, the various negotiable papers in trust for the social security administration or just in the treasury's mitts. They can be sold again to fight inflation. Meanwhile, they will 'back' the currency.
Increasing taxes, at any level of government, is not an option. Decreasing state budgets is NOT AN ECONOMICAL OPTION.
Various parts of the American government must cease working at cross purposes.
Purchase foreign currencies.
Purchase stock of foreign companies of closely allied nations (where this is legal) that do business in the USA.
Deflation means that the world demands American dollars. Print and deliver them in exchange for commodities, currencies, stocks, bonds, debt instruments, anything of value. Pay market price, don't worry about making special deals (this has bogged down the Bush administration).