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Audit Letter Report: OAS-L-09-07

April 30, 2009

Controls Over Royalty Oil Exchanges

The Department of Energy's (Department) Strategic Petroleum Reserve (Reserve) was established pursuant to the Energy Policy and Conservation Act of 1975 (Act). The Reserve is an emergency stockpile to be used in the event of a severe disruption in oil supplies. Under the Act, the Department is authorized to hold up to one billion barrels of oil in the Reserve. The Act requires the Department to minimize the cost and adverse market impacts of filling the Reserve. Additionally, the Energy Policy Act of 2005 requires the Department to fill the Reserve to one billion barrels as expeditiously as practicable. The current capacity of the Reserve is 727 million barrels. As of February 28, 2009, the Department reported that the Reserve contained 705.5 million barrels of oil valued at $20.5 billion.

Topic: Management and Administration