Government to buy more oil for petroleum reserve

The US Department of Energy is preparing to purchase crude oil for the Strategic Petroleum Reserve (SPR), which has room for an additional 77 million bbl.

“The department is confident that the purchase of oil could begin in as soon as two weeks,” an Energy Department official said March 16. “However, it will take several months to fill the SPR to its maximum capacity.”

The department will purchase “crude oil owned and produced in the United States,” department spokeswoman Shaylyn Hynes said in a statement released late Mar. 13.

First word of the decision came from President Trump speaking to White House reporters Mar 13. Energy Secretary Dan Brouillette then directed Steven Winberg, assistant secretary for fossil energy, to immediately initiate an expedited process for the oil purchases.

A solicitation for the purchase of oil will be issued as soon as possible, Hynes said.

The SPR currently is authorized to store about 713 MMbbl of oil. The stored oil includes both sweet and sour grades, kept in four sets of salt caverns on the Gulf Coast, two of the sets in Texas, and two in Louisiana.

The decision to buy oil for the SPR came as prices for West Texas Intermediate lingered at levels low enough to spur severe reductions in spending and staffing by many US oil companies and service companies, with economic implications for communities in oil-producing areas.

The price of West Texas Intermediate oil, as measured by New York Mercantile Exchange futures, continued to drop Mar. 16 despite the SPR oil purchase plan.