U.S. delays buying emergency oil

"U.S. Strategic Petroleum Reserve
The U.S. Strategic Petroleum Reserve is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.

The recently enacted Energy Policy Act of 2005 directs the Secretary of Energy to fill the SPR to its authorized one billion barrel capacity. This will require the Department of Energy to complete proceedings to select sites necessary to expand the SPR to one billion barrels."
http://www.fossil.energy.gov/programs/reserves/
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U.S. delays buying emergency oil
Move keeps more oil on the market through winter heating season.
October 2 2006: 5:50 PM EDT

WASHINGTON (Reuters) -- The Energy Department said Monday it will hold off buying replacement oil for the nation's emergency petroleum stockpile through the winter heating season in order to keep more supplies on the market.

To help make more oil available for producing gasoline over the summer and help lower then-soaring pump prices, President Bush in April ordered the Energy Department to delay deliveries and purchases of oil for the Strategic Petroleum Reserve until this autumn, which began Sept. 22. The department needs to replace some 11 million barrels of crude oil that it sold last year from the stockpile for $600 million to oil companies that needed help after Hurricane Katrina disrupted petroleum supplies.

However, the department expects to delay buying that replacement oil during the winter, when demand for heating oil is strong, according to department spokesman Craig Stevens. "Right now, I think we're comfortable with that amount that's in the reserve. We certainly don't want to effect the market too greatly by doing anything [to reduce available winter supplies]," Stevens told Reuters.

"Even if we started purchasing [the 11 million barrels] today, it would take us several months to take that kind of deposit. But there is no plan as of right now to begin that purchase," he said. The department has said it wants to wait until oil prices are much lower before it buys the replacement crude.

The department also loaned oil refineries about 10 million barrels of reserve crude after Katrina. Most of that has been returned to the stockpile, except for about 1.7 million barrels that the department deferred for delivery until the April-June period next year. Supplies already appear plentiful heading into the winter.

U.S. commercial crude oil inventories, not including what is held in the reserve, total about 325 million barrels, well above the upper end of the average range for this time of year, according to the latest data from the Energy Department.

The reserve now holds about 688 million barrels of oil at four underground storage sites in Texas and Louisiana. That is equal to about 56 days of U.S. petroleum imports.

The emergency stockpile was created by the Congress in the mid 1970s after the Arab oil embargo.
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Strategic Petroleum Reserve -
Quick Facts and Frequently Asked Questions

The Strategic Petroleum Reserve is a U.S. Government complex of four sites created in deep underground salt caverns along the Texas and Louisiana Gulf Coast that hold emergency supplies of crude oil.

Inventory
Current inventory: Click to open inventory update window
Highest inventory - The SPR reached its highest level of 700.7 million barrels in late August 2005. The Hurricane Katrina loans and sales reduced it during Fall 2005.
Current storage capacity - 727 million barrels
Current days of import protection in SPR - 59 days
(Maximum days of import protection in SPR - 118 days in 1985)
International Energy Agency requirement - 90 days of import protection (both public and private stocks)
(SPR and private company import protection - approx. 118 days)
Average price paid for oil in the Reserve - $27.73 per barrel

Drawdown Capability
Maximum drawdown capability - 4.4 million barrels per day
Time for oil to enter U.S. market - 13 days from Presidential decision

Past Sales
2005 Hurricane Katrina Sale - 11 million barrels
1996-97 total non-emergency sales - 28 million barrels
1990/91 Desert Shield/Storm Sale - 21 million barrels
(4 million in August 1990 test sale; 17 million in January 1991 Presidentially-ordered drawdown)
1985 - Test Sale - 1.1 million barrels

Past Exchanges
**June 2006 - exchanged 750 thousand barrels of sour crude with ConocoPhillips and Citgo due to the closure for several days of the Calcasieu Ship Channel to maritime traffic. The closure resulted from the release of a mixture of storm water and oil. Action was taken to avert temporary shutdown of both refineries.
**January 2006 - exchanged 767 thousand barrels of sour crude with Total Petrochemicals USA due to closure of the Sabine Neches ship channel to deep-draft vessels after a barge accident in the channel. Action was taken to avert temporary shutdown of the refinery.
**Sep/Oct 2005- exchanged 9.8 million barrels of sweet and sour crude due to disruptions in Gulf of Mexico production and damage to terminals, pipelines and refineries caused by Hurricane Katrina.
http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html