CERAWEEK: US should refill SPR with crude at 500,000 b/d to ensure energy security: Hess CEO

The US should refill the Strategic Petroleum Reserve with crude at 500,000 b/d to ensure energy security, Hess CEO John Hess said March 19.

Speaking at CERAWeek by S&P Global, Hess said energy security "is so important and the strategic reserves are so important, I don't think we can be asleep at the switch."

Currently, the US is refilling the SPR at 3 million barrels per month. Most recently, the US Department of Energy said it will add another 3.25 million barrels in August.

In 2022, the Biden administration sold 180 million barrels of oil to limit possible price spikes in the global oil market after Russia's invasion of Ukraine. The DOE has since purchased 29.61 million barrels to refill the reserve. At its 2021 peak the SPR held 638 million barrels.

At 3 million barrels per month "it will take five years to go back to 600 million barrels," Hess said. "We need to accelerate the refilling at rate of 500,000 b/d, at that rate it will take less than two years to get to 600 million barrels."

When Russia invaded Ukraine the oil market "was in shock because of the potential to lose 3.5 million b/d of Russian exports of crude and products," Hess said. "A lot of oil companies had hedges on, and they weren't necessarily hedges that had offsets. So big companies were going to banks in Europe saying, 'you have to give me relief for margin positions of hundreds of millions of dollars'," Hess said. "I think SPR played a key role in calming the market down."

"Now we don't have that security blanket and we have to refill it," Hess said.

In December, US deputy energy secretary David Turk told reporters the DOE intends to continue refilling the SPR as long as prices remained below the administration's $79/b target, but that physical constraints limit refill speed.

"We are refilling as much as we can," Turk said then. "We've been doing that for the last several months. And at this price level, we'll keep doing it."

The administration has continued solicitations and scheduled purchases for every month of 2024 through September. According to the US Energy Information Administration's most recent update, as of March 8, the SPR contains 361 million barrels.