The US Senate has finally passed a bill reauthorizing the Energy Policy and Conservation Act, the law under which the 571 million bbl US Strategic Petroleum Reserve is operated.
The House of Representatives already had approved an extension of the law.
Sen. Barbara Boxer (D-Calif.) had delayed EPCA until Sen. Frank Murkowski (R-Alas.) was forced to drop a royalty in-kind amendment.
That measure would have continued a pilot program that allows the Department of Interior to accept its royalty share of oil from federal leases, rather than cash payments. Boxer said the program could compromise the new oil royalty reform rule.
The bill also sets a trigger mechanism for use of the new 2 million bbl Northeast Heating Oil Reserve. Murkowski added a provision stipulating that only firms that distribute or sell distillate can acquire product from the reserve.
Another clause requires Interior to inventory the oil and gas potential of federal lands, one of the recommendations of last year's National Petroleum Council natural gas study.
Drawdown hit
Clinton administration officials were in the hotseat at congressional hearings on the decision to release 30 million bbl of SPR oil in order to increase distillate stocks.
Republicans tried to paint the drawdown as a misguided political ploy designed to help Vice-Pres. Al Gore in the Nov. 6 US presidential election.
Sen. Murkowski, the energy and natural resources committee chairman, claimed US Northeast heating oil stocks have declined since the SPR release was announced, while heating oil exports to Europe have increased.
He said, "This should not have been unexpected. The administration's logic was flawed when announced and only got worse when executed. Refineries were operating at or above 95% of capacity, pipelines for crude and finished products were already full, and new heating oil resulting from SPR releases couldn't be delivered until late November at the earliest."
At a House energy and power subcommittee hearing, a DOE official said release of the 30 million bbl may yield only an extra 250,000 bbl of heating oil.
Separately, Energy Sec. Bill Richardson said no more SPR releases are planned.
Distillate sale
The Department of Energy announced a quick process for selling heating oil stored at sites in New Haven, Conn., and Woodbridge, NJ.
The sale process would begin when the president declares that a severe fuel supply problem justifies use of the reserve. Within 2 days, DOE would notify preregistered bidders that a release is imminent.
Bidders would submit offers by noon the next day via the internet. Winning bids would be announced later that same day.
The minimum bid size would be 50,000 bbl. No one firm would be awarded more than half of the distillate at either location.
DOE said successful bidders could take delivery of the heating oil in less than 10 days by ship, barge, truck, or pipeline.
