Washington — An ongoing US Department of Energy study on the future of the Strategic Petroleum Reserve is expected to recommend leasing unused portions of the reserve, rather than closing one of its four storage sites, according to agency officials.

The study, initially expected to be released in late 2018, is now expected to be released later this year, according to sources familiar with the agency's plans.

The study is in the internal review process, a DOE official said Monday.

The study is expected to be released as the US sells off nearly 300 million barrels of crude from the SPR and Australia continues talks with the US to store potentially millions of barrels of crude in the SPR in order to meeting International Energy Agency obligations.

Over a year ago, Steven Winberg, DOE's assistant secretary for fossil energy, said DOE was poised to release a study recommending the ideal configuration of the SPR, including recommendations on potential closure of one or more SPR storage sites and a change to the mix of sweet and sour crudes in government stocks.

At the time, Winberg said the agency was considering shuttering one or more of its SPR storage sites along the Gulf Coast and altering the mix of sweet and sour crudes in its stockpile.

"Understanding the best configuration for the SPR will guide us as we continue to sell barrels over the next several years," Winberg told a House subcommittee. "It will also guide us in identifying which SPR storage caverns or related facilities likely will become underutilized or operationally inefficient, informing possible decisions concerning site decommissions."

Sources said closure of one of the four SPR sites in Texas and Louisiana is no longer being considered. Instead, the focus of the report will be on leasing portions of the SPR, either to foreign governments or private companies, these sources said.

In September 2018, the US House of Representatives passed a bill which would have allowed DOE to lease unused portions of the SPR to private companies. The bill was never taken up by the Senate.

A July 24 report from the Congressional Research Service pointed out that renting out SPR space to commercial clients may not fit the "physical capabilities" of the SPR.

"The salt domes that contain SPR crude oil are suitable for long-term oil storage and they may be less suitable for short-term injections and withdrawals," the report states. "Oil is drawn from the SPR storage caverns by injecting brine into the caverns and causing the contained oil to rise, and then exit, the facility. Frequent brine injection and withdrawal could result in accelerated structural deterioration of the caverns."

Leasing space to foreign governments would not represent the same risk since withdrawals by governments would likely be far less frequent, the report states.

As of Friday, the SPR held 644.8 million barrels of crude in four sites in Texas and Louisiana, including 250.3 million barrels of sweet crude and 394.5 million barrels of sour crude, according to DOE. The SPR has an authorized capacity of 713.5 million barrels of oil.

In March, DOE sold 4.32 million barrels of sweet crude from the SPR, part of a $2 billion modernization plan for the reserve, and the latest in an estimated 290 million barrels of congressionally-mandated sales from the SPR through fiscal 2027.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Jeff Mower, newsdesk@spglobal.com