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Audit Report: DOE/IG-0916

July 10, 2014

The Strategic Petroleum Reserve’s Drawdown Readiness

The Department of Energy’s (Department) Strategic Petroleum Reserve (Reserve) has the largest stockpile of emergency crude oil in the world. It exists foremost as an emergency response tool the Unites States may use if confronted with threatening disruption in oil supply. This inventory is a critical component of the United States’ International Energy Agency obligation to maintain emergency oil stocks equal to at least 90 days of net imports.

We determined that the Department generally maintained the Reserve in a manner to ensure drawdown readiness. Yet, we noted that it was not fully successful in meeting all of its operational performance criteria. We found that due to the suspension and deferral of various maintenance and remediation activities, the Reserve was unable to achieve the maximum drawdown rate specified in its performance criteria, could not store oil at its full capacity, and had not ensured that its full inventory was available for drawdown.

These conditions occurred, in part, because the Department had not performed a current, extensive assessment and therefore, were not fully cognizant of the Reserve’s long-term sustainability. Budget cuts also contributed to the suspension of maintenance activities and resulted in the failure to maintain established drawdown rates and capacity. Management concurred with the report’s recommendations and agreed that a long-range strategic review was needed to ensure that the Reserve could meet current and future energy and economic security goals.
 

Topic: Management and Administration