The U.S. Department of Energy’s (DOE) Office of Fossil Energy (FE) on Thursday announced it would sell crude oil from the Strategic Petroleum Reserve (SPR).
The DOE plans to draw down crude oil from three SPR sites, including, Bryan Mound and Big Hill in Texas and West Hackberry in Louisiana.
According to the DOE, it will award contracts to successful offerors not later than Sept. 5, and deliveries will take place in October and November.
The DOE said the last sale from the SPR was a test sale in March 2014, when the DOE drew down and sold 5 million barrels.
The U.S. Energy Information Administration (EIA) said in early 2018, the U.S. SPR in fiscal years 2022 through 2027 could decline by about 40 per cent.
The EIA said based on legislated sales established in multiple acts of Congress, the SPR could decrease by 100 million barrels in the coming decade while still meeting requirements for petroleum import coverage.
It said the Bipartisan Budget Act of 2018 called for the sale of 30 million barrels over the four-year period of fiscal year 2022 through 2025, 35 million barrels in 2026, and 35 million barrels in 2027.
However, the Tax Cuts and Jobs Act of 2017 called for the sale of seven million barrels over the two-year period of fiscal year 2026 through 2027.
The Congress had so far enacted three bills in 2015 and 2016, which collectively call for the sale of 149 million barrels in fiscal year 2017 through 2025.
Located in four storage sites along the Gulf of Mexico, the U.S. SPR held 644.8 million barrels of crude oil by Aug. 16, or 90 per cent of its 713.5 million barrels design capacity.
Meanwhile, based on International Energy Agency’s requirement, the U.S. SPR should secure at least 90 days of import protection (both public and private stocks).
In past years, the U.S. had met its commitment with a combination of SPR stocks as well as its industry stocks.