The U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 1.5 million barrels of U.S.-produced crude oil for the Strategic Petroleum Reserve (SPR).
Office of Cybersecurity, Energy Security, and Emergency Response
August 15, 2024
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The New Purchase of 1.5 million Barrels Showcases the Biden-Harris Administration’s Strong Commitment to Replenish the SPR at a Good Price, Maintain the SPR’s Operational Readiness, and Protect the Nation’s Energy Security
WASHINGTON, D.C.— The U.S. Department of Energy today announced that contracts have been awarded for the acquisition of 1.5 million barrels of crude oil for the Strategic Petroleum Reserve (SPR). The contracts awarded yesterday represent a fully subscribed solicitation for January 2025 delivery to the Bayou Choctaw site following the Request for Proposal (RFP) that was announced on August 6, 2024. In addition, DOE issued a solicitation for a total of 6 million barrels of crude oil for delivery into the Strategic Petroleum Reserve’s Bryan Mound site from January 2025 through March 2025. That solicitation marks a 4-million-barrel increase from the previous announcement and will be the first solicitation for this site as it has been undergoing significant construction that will ensure the longevity of the SPR to decades to come.
To date, DOE has directly purchased nearly 45 million barrels of oil for the SPR at an average price of $77. This is per barrel lower than the $95 average sales price for 2022’s emergency sales, meeting the Administration’s commitment to secure a good deal for taxpayers.
On top of the 140 million barrels of oil secured by working with Congress to cancel previously-mandated sales, this brings the total purchased or kept in the SPR since 2022 to 180 million barrels – the full amount sold following the unprecedented Russian war against Ukraine. DOE has also successfully accelerated approximately 5million barrels in exchange returns initially slated for the summer of 2024 to maximize SPR refill. DOE will continue to evaluate options to refill the SPR even more with the remaining proceeds from the 2022 emergency sales while securing a good deal for taxpayers, taking into account planned exchange returns and market developments.
This milestone underscores the Biden-Harris Administration’s commitment to safeguard and replenish this critical energy security asset. This follows the 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, ultimately helping to bring down prices for American consumers and businesses. 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.
For the 1.5 million barrels of oil purchased for the Bayou Choctaw site, a total of 5 companies responded to the RFP, submitting 19 proposals, and the contracts were awarded to 2 companies that met quality and spec requirements, in addition to providing competitive bids. The crude oil will be delivered to the Bayou Choctaw SPR storage site from January 1, 2025, through January 31, 2025.
Bids for the Bryan Mound solicitation will be due no later than 11:00 a.m. Central Time on August 20th, 2024. Delivery to Bryan Mound will be 2 million barrels per month from January 2025 through March 2025.
The Administration’s ongoing three-part replenishment strategy to get the best deal for taxpayers while increasing SPR stocks included: (1) Direct purchases with revenues from emergency sales; (2) Exchange returns that include a premium of oil above the volume delivered; and (3) Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions. DOE has already secured cancellation of 140 million barrels 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. Through scheduled maintenance periods and the Life Extension 2 program, DOE continues to prioritize the operational integrity of the SPR to ensure that it can continue to meet its mission as a critical energy security asset. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.
For more information on the SPR please visit Infographic: Strategic Petroleum Reserve and Fact Sheet: Strategic Petroleum Reserve.