The US Department of Energy (DOE) is seeking offers to sell up to 3 million bbl of sour crude oil this summer to the Strategic Petroleum Reserve (SPR) for its Big Hill site in southeastern Texas. The department added that it intends to purchase more oil for the SPR later this year.
DOE issued a solicitation May 15 for the oil, with delivery to occur Aug. 1-31, at a minimum offer quantity of 300,000 bbl and a maximum offer of 3 million bbl. Requests for earlier deliveries will be accommodated to the extent possible on a best-efforts basis.
The department said it aims to purchase crude oil at a lower price than the average of $95/bbl it received when it released oil from the SPR in 2022. It called the plan a good deal for taxpayers and a way to strengthen energy security. The strategy for replenishing the reserve includes not only direct purchases but exchange returns of oil in equivalent volumes plus a premium to what had been released previously.
The Biden administration has received some criticism for drawing down the SPR, the critics arguing that it is an emergency reserve, not a reserve for market price management. The announcement of the purchase plan included some points addressing the merits of the 2022 drawdown, which occurred in the wake of Russia’s invasion of Ukraine and an oil price spike.
“Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by up to roughly 40 cents per gallon compared to what they would have been absent these drawdowns,” DOE said.
Proposals will only be accepted via email. They must be received by DOE no later than 10 a.m. Central time May 31, and must be valid until 4 p.m. Central time June 9, when the government intends to issue notifications of awards.
The Big Hill SPR site, in Jefferson County, Tex., south of Beaumont, can receive up to 225,000 b/d of crude.