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Posts Tagged ‘Strategic Petroleum Reserve’

As expected, the SPR refill has been paused

Posted in energy policy, tagged , , , on April 3, 2024| Leave a Comment »

After announcing that the planned 40 million barrel SPR refill would be the equivalent of the massive 180 million barrel withdrawal, DOE has halted the refill at < half the planned amount. There is no end in sight for the SPR deficit (chart below).

Citing rising oil prices, the DOE said, “We will not award the current solicitations for the Bayou Choctaw SPR site and will solicit available capacity as market conditions allow.” Three million barrels of oil had been slated for delivery to the Bayou Choctaw SPR site in August and September.

Forbes

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Strategic Petroleum Reserve: still over 50% depleted, but up 4% from the 2023 low

Posted in energy policy, tagged , , , , , on March 8, 2024| Leave a Comment »

from EIA data

Last May, Cathy Rodgers, Chair of the House Committee on Energy and Commerce, requested that the General Accountability Office (GAO) address the following questions (letter attached):

  1. Has the Biden administration conducted a long-term strategic review of the SPR, and if so, is the review adequate to inform decision making and protect the nation from energy supply disruptions in both current and future scenarios?
  2. What damage and increased maintenance requirements, including well remediation, cavern closure, and both pipeline and pump replacements, have resulted from the recent drawdowns?
  3. What physical or cybersecurity threats are there to the SPR facilities?
  4. How thorough are DOE’s studies and assessments of the SPR’s structural integrity?
  5. Has the DOE developed an adequate plan for replenishing the SPR? If so, please explain.

The GAO has not yet published their report.

05_08_23_letter_to_comptroller_general_dodaro_d0148d47a0Download

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How’s the Strategic Petroleum Reserve refill going?

Posted in energy policy, tagged , on January 25, 2024| Leave a Comment »

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“We are refilling (the SPR) as much as we can. We’ve been doing that for the last several months.” David Turk, Deputy Secretary, DOE, on 12/4/2023 

Posted in energy policy, tagged , , on December 6, 2023| Leave a Comment »

Huh? Since 9/1/2023, the SPR has increased from 350.34 million bbls to 351.9 million bbs, a total of only 1.56 million bbls. From the historic low of 346.76 bbls on 7/7/2023, the SPR has increased by just 5.14 million bbls, and remains at only 48% full. The total refill since the 2023 low amounts to only 0.7% of capacity.

DOE knew that refilling the SPR would be a very slow process given the significant acquisition, operational, and maintenance challenges. Nonetheless, political concerns about oil prices were prioritized and the reserve was recklessly depleted.

Prediction: The SPR will still be <400 million bbls at the end of 2024.

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Is production in Iran and Venezuela preferable to US offshore production?

Posted in energy policy, tagged , , , , , , , on October 17, 2023| Leave a Comment »

Consistent with analysts suggestions that the US is reluctant to tighten sanctions on Iran because of concerns about oil markets, note that Iranian crude oil production began ramping up in early 2023 (see chart below) shortly after the massive Strategic Petroleum Reserve withdrawals had ceased. The increase in Iranian production in 2023 of ~500,000 bopd is comparable to the SPR withdrawal rate for 2022 (averaged 608,000 bopd).

Given that further depletion of the SPR was no longer politically acceptable, a cynic might suggest that oil market considerations associated with the end of SPR withdrawals and OPEC tightening (Iran is currently exempt from OPEC quotas) factored into decisions regarding the relaxation of sanctions on Iran.

crude oil production: Iran

The US is also prepared to ease sanctions on Venezuelan oil production. Why is production from Iran and Venezuela preferable to US offshore production? Why is the US sanctioning itself by enacting a controversial and punitive 5 year offshore leasing plan?

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Strategic Petroleum Reserve update: scratch the mini-refill

Posted in energy policy, tagged , , on August 4, 2023| Leave a Comment »

WASHINGTON, Aug 1 (Reuters) – The Biden administration has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve, an Energy Department spokesperson said on Tuesday, as oil prices are expected to keep rising after a output cut from Saudi Arabia.

So much for adding a few drops to the SPR bucket. When your reserve is down 380 million barrels in a seller’s market, you don’t have a lot of purchasing leverage. Don’t expect much of an SPR refill anytime soon. It’s easy to deplete strategic assets; much more difficult to replace them.

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SPR: at least it’s not going down

Posted in energy policy, tagged , on July 31, 2023| Leave a Comment »

The Strategic Petroleum Reserve has held steady at 346.8 million bbls for the past 3 weeks. DOE’s latest update is as of 7/28/2023.

Previous SPR post

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SPR: more red ink

Posted in energy policy, tagged , , , on July 14, 2023| Leave a Comment »

The Strategic Petroleum Reserve is ⬇ to 346.8 million barrels, the lowest volume since August 19, 1983, when the SPR was still being filled.

But fear not, 6 million barrels, which is less than 1/4 of the amount withdrawn just in 2023 YTD, are to be added in the fall, and Secretary Granholm assures us that the SPR will be refilled (but not completely and maybe not until the Administration’s second term 😀).

Keep in mind that DOE only intends to buy when prices are <$72/bbl, that the maximum refill rate is 685,000 bopd, and that acquisition, operational, and maintenance delays are to be expected .Filling the reserve to its 727 million barrel capacity was a 28 year process.

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GoM production slumps in April; SPR slide continues

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , on June 30, 2023| Leave a Comment »

Meanwhile, the Strategic Petroleum Reserve is down to 348.6 million barrels as of June 23, but 6 million barrels, a relative drop in the bucket, are to be added in the fall.

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DOE announces SPR purchases; drop in the bucket?

Posted in energy policy, tagged , , , on June 16, 2023| Leave a Comment »

WASHINGTON, D.C. — Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3 million barrels of U.S. produced crude oil for the Strategic Petroleum Reserve (SPR).  These contracts follow the Request for Proposal that was announced on May 15, 2023. Furthering the Biden-Harris Administration’s three-part replenishment plan, DOE also announced a new Notice of Solicitation to purchase approximately 3.1 million additional barrels of crude oil to the Big Hill SPR site this September.

DOE (6/9/2023)

The Strategic Petroleum Reserve is now down to 351.7 million bbls, the lowest since 8/26/1983. The 6 million bbls in contracted and proposed purchases will replace only 30% of the oil withdrawn just in 2023 YTD, 2.0% of the amount withdrawn since 1/1/2021, and 1.6% of the volume needed to refill the SPR to capacity.

Given that 2024 is an election year, the prospects for substantial purchases next year would seem to be poor.

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