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ExxonMobil to take over US Strategic Petroleum Reserve lease at St. James terminal from Shell

Washington — ExxonMobil Pipeline in January will take over operations of the US Strategic Petroleum Reserve's 2-million-barrel capacity St. James, Louisiana, terminal that can distribute government-owned crude to Gulf Coast and Midwest refiners.

The Department of Energy said Monday that ExxonMobil signed a 20-year lease to operate the St. James marine terminal and 36-inch-diameter Redstick pipeline that connects to the Bayou Choctaw SPR facility. The lease will end Shell's 22-year operational control of the facilities.

St. James is the pricing hub for Gulf Coast benchmark Light Louisiana Sweet crude. In the event of an emergency SPR drawdown, the terminal can distribute crude from the SPR's Bayou Choctaw site to the Midwest via Capline, and to Gulf Coast refineries via Locap, Shell, NuStar and Plains terminals.

The St. James terminal has two marine docks and six storage tanks. It sits on the Mississippi River about 30 miles southeast of Baton Rouge.

In 2016, DOE considered retaking operational control of the St. James facility over concerns it would not be able to distribute government-owned crude without displacing commercial flows while a private company operated it.

"This lease helps ensure the free flow of crude oil in the Gulf region so we may continue to strive for energy independence and embrace America's energy renaissance," Energy Secretary Rick Perry said in a statement. "It's a win-win for producers, refiners, consumers, and taxpayers."

DOE operated the St. James facility from 1980 to 1997, before leasing it to Shell.

-- Meghan Gordon, meghan.gordon@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com

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