US Energy Department offers 30 million barrels of SPR space to US producers

Washington — After Democrats in Congress blocked efforts to buy US crude for the Strategic Petroleum Reserve, the Department of Energy announced Thursday that it was making 30 million barrels of space available for US producers to store crude.

The DOE said it would make an additional 47 million barrels of storage space, accounting for the remainder of its total capacity, available at a later date.

"The Department continues to work with Congress to find ways to make funding available for DOE to buy American oil," US Energy Secretary Dan Brouillette said in a statement. "However, we must move with a sense of urgency to support an industry that underpins the US economy and supports our national security. Making some of the SPR's storage capacity available to industry, without purchasing the oil, provides this immediate benefit to the industry and its hard-working employees."

In a request for proposals released Thursday, DOE said the initial, 30 million barrels of storage space would be made through an exchange of up to 22.8 million barrels of sweet crude and 7.2 million barrels of sour crude, both "produced in the United States by United States producers." The sweet crude barrels would be delivered to the SPR's Bayou Choctaw, Bryan Mound, and Big Hill sites and the sour crude would need to be delivered to the SPR's West Hackberry site. All deliveries would be made from May 1 through June 30 and would be scheduled for return between August 1, 2020, and March 31, 2021, for the Bryan Mound, Big Hill, and West Hackberry sites, and between October 1, 2020, and March 31, 2021, for the Bayou Choctaw site.

Steven Winberg, DOE's assistant secretary for fossil energy, said the first deliveries to the SPR could take place as soon as late April. The SPR can receive up to 685,000 b/d of crude, Winberg said.

"With its extensive storage, pipeline, and marine infrastructure along the Gulf Coast, the SPR will help relieve oil-related disruptions to our economy."

DOE last week formally withdrew a solicitation to buy 30 million barrels of crude after Republican leaders of the Senate agreed to take the measure out of stimulus legislation as part of a deal with Democrats to break an impasse. The solicitation was the first step in seeking 77 million barrels to fill the stockpile.