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Washington, DC - The U.S. Department of Energy (DOE) has completed the acquisition of commercial storage services for the one million barrel Northeast Home Heating Oil Reserve (NEHHOR).
Two awards totaling 350,000 barrels have been made to companies that had earlier received storage contracts totaling 650,000 barrels. Hess Corporation in Groton, CT has been awarded a second contract for 100,000 barrels, increasing its storage obligation to 500,000 barrels. Global Companies LLC in Revere, MA was awarded a second contract for 250,000 barrels, increasing its obligation to 500,000 barrels.
The contract terms are for one year with three option years. The competitive procurement process was conducted by the Defense Logistics Agency (DLA Energy), acting as the agent for DOE.
The Northeast Home Heating Oil Reserve was authorized by Congress in the Energy Policy Act of 2000 as an emergency stockpile of up to two million barrels of Government-owned heating oil for the Northeastern States. Through February 2011, the NEHHOR held a total of two million barrels in both New England and New York Harbor. At the end of the winter heating season, DOE announced a competitive sale of the NEHHOR stocks for the purpose of replacing them with cleaner burning ULSD prior to the 2011-2012 heating season. The conversion was conducted in order to comply in advance of new mandates being phased in by several Northeastern states for more stringent fuel standards that will require replacement of high sulfur (2000 parts per million) heating oil to ultra-low sulfur distillate (15 parts per million).
Establishment of a one million barrel NEHHOR is consistent with the President’s 2012 budget request and will provide supplemental supplies to New England, the area most vulnerable to a supply disruption. DOE does not plan to reestablish a NEHHOR facility in the New York Harbor area because it has abundant commercial stocks and connections to local refineries and a major pipeline for resupply.
DOE will purchase one million barrels of ultra-low sulfur distillate fuel for delivery to the storage sites during October and November 2011.