The General Accounting Office says the Department of Energy should give high priority to degasifying oil stored in the U.S. Strategic Petroleum Reserve.
The problem apparently affects twice the volume of oil initially estimated. GAO told Congress about 400 million bbl of oil in the 577.3 million bbl SPR is affected by high temperatures and gas content (OGJ, Apr. 18, p. 27).
The high temperature is caused by geothermal heating. Over the years, gas from surrounding formations has penetrated some of the salt dome storage caverns at Bayou Choctaw and West Hackberry in Louisiana and most of the caverns at Big Hill and Bryan Mound in Texas.
GAO said the temperature and gas content limit DOE's ability to draw down the storage because they have raised the vapor pressure of the oil above safety and air pollution limits.
DRAWDOWN RATE
The congressional watchdog agency said DOE estimates that by blending affected and unaffected oil and observing some operating restrictions, it would draw down the reserve at 2 million b/d, only half the design rate. Without blending and operating restrictions, it could draw down only 800,000 b/d. GAO said DOE plans to install heat exchangers to dissipate the excess heat as the reserve is drawn down, a $19 million project to be completed next April.
To reduce the gas content of the oil, DOE will bring about 144 million bbl to the surface, degasify it, and blend it with other oil in the caverns. That project is to be finished by November 1997 at a cost of $45 million.
GAO also said DOE should give high priority to upgrade mechanical and electrical systems at storage sites, pipelines, and terminals. The systems were built in the late 1970s with a design life of 20 years.
DOE plans to spend $375 million during 7 years to upgrade the systems, extending the life of the reserve to 2025. Without the work, GAO said, the drawdown rate within 10 years could drop to 3 million b/d from the designed 4 million b/d.
CAPACITY EXPANSION
GAO urged Congress to give low priority to expanding SPR capacity from the current 750 million bbl to 1 billion bbl and filling it to that level.
It estimated filling the reserve to 1 billion bbl would cost $6.4-7.1 billion, far more than the expected benefits under all but the most severe oil supply disruptions. It said filling the SPR to 750 million bbl could produce net benefits of as much as $3.3 billion in the case of a severe supply disruption but cost $1.3 billion in the case of milder, shorter disruptions.
GAO said DOE should consider increasing the daily drawdown capacity for the existing reserve to have more flexibility to respond to a wider range of disruption scenarios.
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