WASHINGTON, D.C. – Today, the U.S. Department of Energy (DOE) announced asolicitation to immediately make 30 million barrels of the Strategic Petroleum Reserve’s (SPR’s) oil storage capacity available to U.S. oil producers that are struggling with catastrophic financial losses due to the combined impacts of COVID-19 and the intentional disruption of world oil markets by foreign actors. The Department currently intends to make an additional 47 million barrels of storage capacity available thereafter.
The unprecedented worldwide reduction in consumer demand caused by COVID-19 has forced U.S. refiners to dial back production of motor gasoline, commercial airline jet fuel, and other refined products. This situation has reduced refinery crude oil demand, exacerbated a market glut of globally produced oil, and increased the need for already constrained crude oil storage. A lack of storage is forcing premature shut-in of oil wells and economically hurting the U.S. energy industry and its workforce. The SPR is well-positioned to relieve some of this economic stress by making storage capacity available to U.S. oil producers immediately.
To help alleviate financial hardship to the critical American energy sector, President Trump has directed the Secretary of Energy to fill the SPR to its maximum capacity.
“Filling the SPR with crude oil, produced by American companies that are facing catastrophic losses and increased financial hardship, is a logical action for the federal government to take as we work to overcome the economic disruptions caused by COVID-19 and intentional, global oil market disruptions,” said U.S. Secretary of Energy Dan Brouillette. “The Department continues to work with Congress to find ways to make funding available for DOE to buy American oil. However, we must move with a sense of urgency to support an industry that underpins the U.S. economy and supports our national security. Making some of the SPR’s storage capacity available to industry, without purchasing the oil, provides this immediate benefit to the industry and its hard-working employees.”
“We expect the first crude oil deliveries to arrive in late-April or early-May depending on producer logistics. The SPR will be ready to receive up to 685,000 barrels per day,” explained Assistant Secretary for Fossil Energy, Steven Winberg. “With its extensive storage, pipeline, and marine infrastructure along the Gulf Coast, the SPR will help relieve oil-related disruptions to our economy.”
Read what the stakeholders are saying
American Petroleum Institute:
“As American energy producers navigate uncertain market conditions, we welcome the Administration’s announcement that they will make 30 million barrels of the SPR’s oil storage capacity available for private leasing and look forward to reviewing the details of today’s solicitation. Congress gave the president and the Department of Energy broad authority to manage the SPR and DOE has historically leased SPR capacity to the private sector.”
– Frank Macchiarola, API SVP of Policy, Economics and Regulatory Affairs
Louisiana Oil & Gas Association:
“The oil producers of Louisiana praise the President, his administration, and Louisiana’s federal delegation for taking swift, decisive action to help support the nation’s energy producers with the SPR’s exchange for storage. The oil and gas industry is the backbone of Louisiana’s economy and the foundation for many communities who have found themselves reeling in the wake of the both COVID-19 and the Russian-Saudi oil price war. This market-based solution creates a win-win scenario by opening up badly needed storage for producers and filling up the SPR for citizens when American energy security is clearly needed most.”
Permian Basin Petroleum Association:
“The members of the Permian Basin Petroleum Association greatly appreciate the efforts of the Administration and this is certainly welcome news. The domestic oil and gas industry has seen an unprecedented, two-fold attack from the worldwide effects of Covid-19 disrupting traditional demand and by foreign state-owned producers. We are grateful for the tireless work of Secretary Brouillette and President Trump on their America first efforts to work on behalf of an industry that creates jobs and contributes to America’s energy and economic security.”
Petroleum Equipment & Services Association:
“PESA and the over 500,000 men and women in the energy service and equipment sector welcome the Administration’s action to allow excess oil to be stored in federal storage. The oversupply crisis driven by OPEC+ has resulted in a storage shortage and stranded oil. This short term solution, as well as economic stabilization measures and continued pressure on Saudi Arabia and Russia by the Administration will be welcome news to the American oilfield workers and to the prospect of continued American energy independence.”
Texas Alliance of Energy Producers:
“The Texas Alliance of Energy Producers commends the Trump Administration and the US Department of Energy for continuing to search for real solutions to the current turmoil in the oil markets. With each passing day, the crude oil market is increasingly over-supplied with Texas and US production at or near record levels in the face of crashing demand. That means that oil needs a place to go until markets can begin to realign. The additional storage space provided by the DOE through the SPR program is a strong move that alleviates some of these storage issues now, and pushes back the "day of reckoning" in US crude oil storage, allowing more time for other supply and demand solutions to take hold.”