WASHINGTON, DC - The U.S. Department of Energy's Office of Fossil Energy today said that it had reviewed, and deemed unacceptable, the bids that it had received in response to a solicitation to purchase up to four million barrels of crude oil for the Strategic Petroleum Reserve (SPR). The Office of Fossil Energy determined that the bids were too high and not a reasonable value for taxpayers.
In keeping with Secretary Bodman's commitment to fill the SPR in a deliberate, predictable, and transparent manner, consistent with the Department's updated guidelines that were announced in November 2006, the Office of Fossil Energy will issue another solicitation for bids in mid-April.
This is the first of a series of solicitations planned to replace 11 million barrels of oil sold in the fall of 2005 after Hurricane Katrina disrupted refinery supplies. This would be the first direct purchase of crude oil for the reserve since 1994. The Strategic Petroleum Reserve will use the proceeds from the emergency sale totaling $584 million to complete the purchases.
The Strategic Petroleum Reserve has a capacity of 727 million barrels, and currently holds 689 million barrels in inventory. The solicitations over the next several months will be staggered so as not to substantially affect the market price. Bids will be accepted based on fair market value and combinations of sweet and sour crude will be purchased based on price.
Through the terms of contracts to be issued from the planned series of solicitations, the Strategic Petroleum Reserve seeks to achieve a moderate fill rate of approximately 100,000 barrels per day over the course of a few months.
Craig Stevens, (202) 586-4940