Rep. Barton exploring options for filling US strategic oil reserve

By Jennifer Smith
OGJ Online

HOUSTON, Oct. 1 -- US Rep. Joe Barton (R-Tex.) plans to introduce a bill as early as Thursday to fill the Strategic Petroleum Reserve to its 700-million-bbl capacity and to seek ways to expand it to 1 billion bbl.

Barton, chairman of the House Energy and Air Quality Subcommittee, held a Houston press conference Monday after touring the Big Hill SPR site near Beaumont, Tex., one of four sites holding the nation's oil reserve of 544.7 million bbl (OGJ Online, Sept. 27).

Barton, who was accompanied by US Reps. Nick Lampson (D-Tex.) and Kevin Brady (R-Tex.), said that the federal royalty in-kind program could be used to fill the reserve to capacity, but that if purchases on the open market were required, he would prefer that the US buy stripper oil in order to keep those wells from being shut in.

In pilot programs, the US Minerals Management Service has been taking delivery of some federal royalty oil, rather than taking the cash value of the production.

Barton said, "If we can get support of the Congress and the Senate, we're going to put the additional 150 million very quickly into the reserve so that we get it up to the 700 million bbl and we're going to try to make it possible to construct some additional capacity so we get it up to the full 1 billion bbl."

He said Congress would have to appropriate funds for the expansion of the SPR. He said estimates are that the oil could cost $3-6 billion, not counting the cost of facility upgrades.

"We would go to the President on a bipartisan basis and if the President supports it, we'll either put it in a supplemental appropriation bill or possibly run it through the normal appropriation process sometime early next year -- or if we can get it in, in one of the spending bills this year," Barton said.

The cost adding 300 million bbl of capacity has not been estimated. Barton said Big Hill could be expanded by 80 million bbl for $200-300 million.

Existing oil reserves would support a drawdown rate of 4 million b/d, Barton said, but noted the US is importing 12 million b/d. That's more than double the level when the reserve was formed in 1975.

The congressman said the US should buy oil now, while prices are moderate. He said the government could begin adding to the reserve within a month and fill it to 700 million bbl within a year.

To get to 1 billion bbl could take as long as 5 years because of the need to construct capacity, he said. The US would expand existing sites and purchase one new site.

Barton said security at the Big Hill site was excellent, and that the reserve is "in the process of adding new security precautions" following the Sept. 11 attacks by terrorists.

"Their pattern in the past has been to not have a pattern. That being the case it is logical to be prepared to defend our strategic petroleum reserve facilities, our port facilities, our petrochemical complexes, our refinery complexes, things like that."

Rep. Brady said, "If terrorists wished to topple our economy like they did the World Trade Center, they would focus on our energy area. It's the lifeblood of our economy."

Rep. Lampson said he has been meeting with South Texas petrochemical industry officials and is impressed with their security precautions. "The work they are doing is phenomenal, their ability to imagine and attempt to correct weak spots is tremendous."

Contact Jennifer Smith at Jennifers@ogjonline.com

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