Posts Tagged ‘Strategic Petroleum Reserve’

That is the amount of oil the US government has “borrowed” from the Strategic Petroleum Reserve without replacing. At $80/bbl, that’s ~$28 billion worth of oil. Not refilling the SPR exposes the US to much greater costs, in terms of economic and national security risks. Those who were around during the 1970’s certainly remember the embargoes and the resulting disruptions that led to the establishment of the SPR.

The SPR has a fill rate of only 685,000 bopd, so a complete refill would require 518 days, which would have to be spread over years because of supply, operational, maintenance, and price considerations. The promised purchase of 3 million bbls in February never occurred, and we are now told that DOE “would like to start buying within the next year, depending on the window of opportunity.” This is not particularly encouraging, especially given that the mandatory sale of another 26 million bbls is upcoming this spring. So it looks like the SPR may be down another 20+ million barrels heading into 2024, an election year. Good luck making significant purchases then.

This is the hole we are in as a result of non-emergency SPR sales for price moderation purposes. Meanwhile, Congress has proposed the following legislation:

The last bill is interesting, but has little chance of passing and would be difficult to implement given other legislative, judicial, and administrative constraints on leasing and production. Having a plan is one thing; implementing it is quite something else.

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…especially when the market price is higher than the price the government wants to pay. Per EIA data, the “tank” has been flat-lined at half-full for the past month.

So far, the agency has not repurchased any barrels. The DOE announced earlier this month (Jan.) that it would not finalize a proposed buyback of 3 million bbl, because it did not receive offers that met its terms for price or quality.

Energy Intelligence

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For the first time in 71 weeks the Strategic Petroleum Reserve has not declined. DOE reports that the SPR was unchanged during the week ending 1/20/2023. The reserve remains at 371.6 million bbls, about 51% of capacity.

Bob McNally, founder and president of the consulting firm Rapidan Energy Group, said any effect on pump prices has been modest.

“Pump prices are largely driven by global crude oil prices,” McNally said in an email. “SPR releases have at most temporary and small impacts on global crude oil prices. Therefore the SPR is a bad tool for trying to manage pump prices.”

Washington Post

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This week’s loss was by a small margin, only 800,000 barrels (down to 371.58 million barrels total), suggesting that the record losing streak may end soon. EIA data

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  • Reserve down to 372.4 million bbls as of 12/30/2022
  • 222 million bbl decline (37.4%) in 2022
  • Lowest volume since 12/2/1983
  • Reserve is now depleted by nearly 1/2 (49%) from its capacity of 727 million bbls

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More “free” oil was withdrawn from the SPR, which has sunk to the lowest level (375.1 million bbls) since Christmas 1983. More rational oil and gas leasing policies would have been a far better gift, particularly for our children and grandchildren.

The “pilot” refill program is scheduled to begin in February. We’ll see how that goes.

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In October, the President announced a plan to replenish the SPR using updated authorities that allow for fixed-price purchases of crude oil. Relative to conventional purchase contracts that expose producers to volatile crude prices, this new approach, when used at scale, can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place. Today’s notice will pilot this new approach by starting with a purchase of up to 3 million barrels of crude oil.  


Note that these pilot deliveries will not begin until Feb. 2023 and will total < 3 million barrels. The reserve is 349 million bbls below capacity, and 216 million bbls have been withdrawn this year.

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  • down another 4.7 million bbs from the previous week (12/2/2022)
  • lowest reserve volume since 1/6/1984
  • 212 million bbls withdrawn this year
  • EIA data

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Down to 387 million bbls as of 12/2. Lowest SPR volume since 2/24/1984. 206 million bbls withdrawn in 2022. With WTI near $72/bbl, is this finally the end of the withdrawals?

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The reserve is at its lowest level since 3/16/1984, and is now 46.5% below capacity.

Meanwhile OPEC+ considers further cuts.

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