USA Energy Dept Looking to Buy More Oil for Petroleum Reserve

A statement posted on the U.S. Office of Cybersecurity, Energy Security, and Emergency Response’s (CESER) website late Monday noted that the U.S. Department of Energy’s (DOE) Office of Petroleum Reserve announced a supplemental solicitation for up to three million barrels of oil for delivery in January 2024. Bids for the solicitation are due no later than 10am Central Time on November 20 and the delivery will be received by the Big Hill storage facility, the statement highlighted, adding that the DOE will continue to release monthly solicitations for any available capacity through at least May 2024. 

“This is the second solicitation for January 2024 delivery as DOE aims to purchase oil when it can purchase at a good deal for taxpayers; a price of $79 dollars per barrel or below, far less than the average of about $95 per barrel DOE received for 2022 emergency SPR sales,” the statement said. “[The] announcement advances the President’s commitment to safeguard and replenish this critical energy security asset, following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine and help keep the domestic market well supplied, which ultimately helps bring down prices for American consumers and businesses,” it added.

“Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by as much as 40 cents per gallon,” the statement on the CESER site continued. The statement noted that the Administration’s ongoing three-part replenishment strategy to get the best deal for taxpayers while increasing SPR stocks includes:

  • Direct purchases with revenues from emergency sales
  • Exchange returns that include a premium to volume delivered
  • Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions.

The statement highlighted that the DOE has already secured the cancellation of 140 million barrels in congressionally mandated sales scheduled for Fiscal Years 2024 through 2027. “This cancellation has led to significant progress toward replenishment,” the statement said.

The SPR continues to be the world’s largest supply of emergency crude oil, according to the statement, which noted that, through scheduled maintenance periods and the Life Extension 2 program, the DOE continues to prioritize the operational integrity of the SPR to ensure it can continue to meet its mission as a critical energy security asset.

A statement posted on CESER’s site on October 19 noted that the DOE’s Office of Petroleum Reserve announced that that it will post monthly solicitations to purchase oil for the SPR through at least May 2024, “beginning with a solicitation for up to six million barrels of oil for delivery in December 2023 and January 2024”. “DOE will purchase oil in those months where it can do so at a good deal for taxpayers,” it added.

According to the U.S. Energy Information Administration (EIA’s) latest weekly petroleum status report, which was released on November 1, crude oil stocks in the SPR stood at 351.3 million barrels on October 27 and October 20, and 399.8 million barrels on October 28, 2022. The EIA’s next weekly petroleum status report is currently scheduled to be released on November 15.

CESER’s website highlights that the federally owned SPR oil stocks are stored in “huge” underground salt caverns at four sites along the coastline of the Gulf of Mexico. The SPR has an authorized storage capacity of 714 million barrels, according to the site, which states that the SPR was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program.