Biden administration purchases 3 MMbbl of U.S.-produced oil for Strategic Petroleum Reserve
(WO) — On Dec. 26, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3 MMbbl of U.S.-produced crude oil for the Strategic Petroleum Reserve (SPR). According to a press release, the contracts awarded for a March delivery follow the Request for Proposal (RFP) that was announced on Dec. 8, 2023. The 3 MMbbl are being purchased for an average price of $77.31 per bbl, well below the average of about $95 per bbl that SPR crude was sold for in 2022. Over the course of this year, DOE has purchased a total of 13.83 MMboe for the SPR for an average price of $75.63, as well as accelerated nearly 4 MMbbl of exchange returns, pursuant to its strategy to refill the SPR.
A total of 9 companies responded to the RFP, submitting 33 proposals, and the contracts were awarded to 3 companies that met quality and spec requirements, in addition to providing competitive bids. The crude oil will be delivered to the Big Hill SPR storage site from March 1, 2024, to March 31, 2024.
The administration’s ongoing three-part replenishment strategy to increase SPR stocks includes:
- Direct purchases with revenues from emergency sales
- Exchange returns that include a premium of oil above the volume delivered
- Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions.
DOE has already secured cancellation of 140 MMbbl of congressionally mandated sales scheduled for Fiscal Years 2024 through 2027.
The SPR continues to be the world’s largest supply of emergency crude oil. The federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.
