DOE to convert Northeast heating oil reserve to ULSD

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Feb. 1 -- New, more-stringent standards by some US Northeast states were behind the Feb. 1 announcement by the US Department of Energy that it will convert inventory in the Northeast Home Heating Oil Reserve to ultralow-sulfur distillate fuel oil.

Congress authorized the 2 million bbl reserve in the 2000 Energy Policy Act as a government-owned heating oil stockpile for emergencies. About 69% of the US households that use heating oil are in the Northeast.

New York and other states in the region are implementing standards requiring replacement of higher sulfur heating oil (with 2,000 ppm) to the ULSD, which has 15 ppm, DOE’s Fossil Energy office said. DOE will sell the 2 million bbl of inventory in the reserve as a result, it said.

It said the sale of heating oil from the reserve’s sites in New England and the New York Harbor will commence on Feb. 3 from 11 a.m. to 2 p.m. EST with an initial 1 million bbl offer from Hess Corp.’s First Reserve Terminal in Perth Amboy, NJ, using an interactive online bidding system.

The sale will be open to all registered bidders who have posted a required $250,000 guarantee, DOE said. It added that for purposes of this sale, it has waived two requirements limiting the quantity of heating oil which may be awarded to a bidder and his affiliates, and requiring a bidder to certify that he is customarily engaged in the sale and distribution of heating oil.

Locations, delivery points, pricing policies, and both minimum and maximum quantities offered will be posted in the sale notice. DOE said that more than one offering is planned until it achieves its sales goal, and that notices will be sent to potential bidders before each additional sales offer.

Contact Nick Snow at nicks@pennwell.com.

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