Eleven companies to draw crude from SPR
The US Department of Energy Wednesday accepted bids from 11 companies seeking 30 million bbl of oil from the Strategic Petroleum Reserve. DOE has estimated that releasing 30 million bbl of crude this fall could result in production of 3-5 million bbl of additional heating oil.
WASHINGTON, DC�The US Department of Energy Wednesday accepted bids from 11 companies seeking 30 million bbl of oil from the Strategic Petroleum Reserve.
The Clinton administration had said it would release the crude in order to increase US home heating oil production and inventories. DOE said heating oil stocks in the Northeast are about 65% below the levels a year ago.
DOE has estimated that releasing 30 million bbl of crude this fall could result in production of 3 to 5 million bbl of additional heating oil.
The companies will return 31.5 million bbl to the SPR between August and November 2001.
Energy Sec. Bill Richardson said, "These companies offered the best value in terms of restocking the strategic reserve a year from now. Every barrel we can get into the market in the next few weeks reduces the risk of a shortage of heating oil and diesel fuel this winter. This is good for consumers and good for our nation's long-term energy security.
DOE said the oil would be released as soon as the companies can make delivery arrangements, and all will be transferred by the end of November.
It said, "Because the administration will continue to monitor fuel supply levels and could take further steps, including additional oil exchanges, the Energy Department is not releasing the individual amounts to be returned by individual companies at this time. Disclosing the specific exchange ratios at this point could bias future offers should the exchange process be repeated."
Taking sour crude from the Bayou Choctaw SPR site in Louisiana will be:
Marathon Ashland Petroleum LLC, Houston, 2.4 million bbl; and Equiva Tading Co., Houston, 500,000 bbl.
Taking sour crude from Bryan Mound in East Texas will be:
Valero Marketing and Supply Co., San Antonio, 1 million bbl; Morgan Stanley Dean Witter, New York City, 500,000 bbl; Vitol S.A. Inc., Houston, 550,000 bbl; and Hess Oil Co., New York City, 1 million bbl.
Taking sweet crude from the West Hackberry site in Louisiana will be:
Marathon Ashland 1.5 million bbl; Equiva 2 million bbl; Euell Energy Co., Aurora, Colo., 3 million bbl; BP Oil Supply Co., Warrenville, Ill., 6 million bbl; Elf Trading Inc., Houston, 1 million bbl; Burhany Energy Enterprises Inc., Tallahassee, Fla., 3 million bbl; Lance Stroud Enterprises Inc., New York City, 4 million bbl; Morgan Stanley, 1.5 million bbl; Vitol 1.05 million bbl; and Hess 1 million bbl.
Valero said, "Based on the current NYMEX futures market, this looks like it will be a very favorable transaction for Valero. Since we are in a backwardated market, we essentially will be getting more expensive oil today and repaying it with less expensive oil a year from now."
Three small traders�Euell, Burhany, and Lance Stroud�took 10 of the 30 million offered.