DOE reoffers SPR crude, fills distillate stockpile
The US Department of Energy has reopened bidding for 7 million bbl of Strategic Petroleum Reserve oil after two companies which had previously submitted winning offers could not provide the necessary financial guarantees. Separately, DOE said filling of the 2 million-bbl home heating oil reserve in the northeastern US is complete.
The US Department of Energy has reopened bidding for 7 million bbl of crude from the Strategic Petroleum Reserve after two companies which had previously submitted winning offers could not provide the necessary financial guarantees.
Separately, DOE said filling of the 2-million-bbl home heating oil reserve in the northeastern US is complete.
DOE had offered to swap 30 million bbl of SPR oil in exchange for that amount, plus additional oil, to be returned next year.
The deadline for offers for the 7 million bbl is Oct. 23. DOE made two major changes in the solicitation: the crude must be taken before Jan. 1, rather than before Dec. 1, and a bid bond must accompany offers.
DOE said the bond must guarantee that, if the winning bidder cannot produce the required letter of credit, the offeror must pay either 5% of the value of the offer or $3 million, whichever is less.
To ensure that small businesses could participate, DOE reduced the dollar threshold from $10 million, the amount it would require in an actual emergency drawdown and sale of SPR crude.
And it said the letter of credit must be for 110% of the value of the SPR crude on the day of the contract award, rather than the 100% previously set.
As in the previous solicitation, successful bidders must agree to return a comparable quality of crude oil, plus a bonus percentage, between August and November of 2001.
DOE said the final shipment has been received for an interim northeastern heating oil reserve.
Energy Sec. Bill Richardson said DOE was ahead of its schedule to have a 2 million bbl heating oil reserve in place.
A barge bringing the final 67,000 bbl of heating oil was unloaded at Amerada Hess Corp.'s First Reserve terminal in Woodbridge, NJ. The terminal is one of the three that DOE is using to stockpile heating oil as a supply cushion for consumers this winter.
The delivery completed the commitment of the Morgan Stanley Capital Group to supply 1 million bbl of heating oil to the reserve. Previously, Equiva Trading Company had delivered 1 million bbl to two storage terminals in New Haven, Conn.
The two companies will receive about 2.8 million bbl of crude oil from the SPR in exchange for the heating oil.
President Clinton established a Northeast home heating oil reserve July 10 and asked Congress to legislate guidelines for its use.
Energy Sec. Bill Richardson urged Congress again to "put the final steps in place" by passing a bill that would set a trigger for releasing the distillate.
DOE said the President has broad powers to release the heating oil but the administration wants Congress to define regionally-specific circumstances that would warrant a drawdown.