U.S. to Purchase 6 Million Barrels of Oil for Strategic Petroleum Reserve

(P&GJ) — The U.S. Department of Energy’s Office of Petroleum Reserves has unveiled two new solicitations totaling 6 million barrels of oil for delivery to the Strategic Petroleum Reserve’s Bayou Choctaw site from September through December.

These solicitations mark a continuation of the department's direct purchase strategy, which has already secured nearly 40 million barrels and coincides with the completion of Bayou Choctaw’s Life Extension 2 Project.

The aim of these actions is to make consistent solicitations when oil prices are favorable for taxpayers, with the DOE targeting prices of $79 per barrel or less. This strategy contrasts sharply with the average of about $95 per barrel that the DOE received for emergency SPR sales in 2022. To date, the DOE has purchased a total of 38.6 million barrels of oil for delivery to the Big Hill SPR site at an average price of $77 per barrel, along with accelerating nearly 4 million barrels of exchange returns as part of its refill strategy.

The announcement is aligned with the President’s commitment to safeguard and replenish the nation's energy security asset. It follows the historic release from the SPR to address global supply disruptions caused by geopolitical events and maintain stability in the domestic market. Analysis from the Department of the Treasury suggests that SPR releases in 2022, combined with coordinated international releases, contributed to a reduction in gasoline prices by as much as 40 cents per gallon.

Bids for the solicitation of 1.5 million barrels for September delivery are due by 11:00 a.m. Central Time on June 12, 2024, while bids for the solicitation of the remaining 4.5 million barrels for deliveries in October, November, and December are due by 11:00 a.m. Central Time on June 17, 2024. These solicitations complement the 9 million barrels already secured for purchase into Big Hill for delivery during the same period.

The Administration's replenishment strategy involves three key components: direct purchases with revenues from emergency sales, exchange returns, and legislative solutions to avoid unnecessary sales unrelated to supply disruptions. Notably, the DOE has successfully canceled 140 million barrels of congressionally mandated sales scheduled for Fiscal Years 2024 through 2027, significantly advancing replenishment efforts.

The Strategic Petroleum Reserve remains the world’s largest emergency crude oil supply, stored in underground salt caverns across four sites in Texas and Louisiana. Through ongoing maintenance and the Life Extension 2 program, the DOE prioritizes the operational integrity of the SPR, ensuring its readiness to address emergency oil shortages and protect the economy and American livelihoods.

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