Washington, DC - The U.S. Department of Energy (DOE) has awarded contracts to purchase 10,683,000 barrels of crude oil at a cost of $553 million for the Department's Strategic Petroleum Reserve (SPR). Deliveries of the oil will be made from February to April 2009. The awards made to Shell Trading and Vitol are the first direct purchases of crude oil for the SPR since 1994. Revenues from the 2005 Hurricane Katrina emergency sale were used for the purchase.
The Department has also awarded contracts using the royalty-in-kind (RIK) transfer program with the Department of the Interior to two companies for exchange of a modest rate of 26,000 barrels per day. The awards to Shell Trading and Glencore will result in the addition of approximately 6,157,000 barrels to the SPR inventory from May 2009 through January 2010.
Under the RIK program, the Department of the Interior contracts for the delivery of Federal royalty oil to market centers along the Gulf Coast, where ownership of the oil is subsequently transferred to DOE. DOE solicits contracts to exchange the royalty oil at the market center for delivery of crude oil that meets the quality specifications of the SPR.
The contract awards for direct purchase and RIK exchanges resulted from two solicitations issued on January 2, 2009. DOE was able to take advantage of the recent sharp decline in crude oil prices to acquire crude oil for the SPR on terms favorable to the Nation while also increasing the Nation's national energy security. Both acquisitions will have an insignificant effect on market prices.
Currently, the SPR has a storage capacity of 727 million barrels and an inventory of 702 million barrels (97%) stored in the SPR's underground salt caverns located along the Gulf Coast of Louisiana and Texas.
Activities to resume SPR fill are taken in accordance with the provisions of the Energy Policy Act (EPAct) of 2005, which directs that DOE fill the SPR to its authorized capacity of one billion barrels, and advances the President's agenda to increase the Nation's energy security.