The US Department of Energy has said it will buy up to 30 million barrels of crude oil for the Strategic Petroleum Reserve by the end of June “as a first step in fulfilling President Donald Trump’s directive to fill the emergency stockpile to help domestic crude producers”.
The department will buy up to 11.3 million barrels of sweet crude and up to 18.7 million barrels of sour crude. The delivery date is from May 1 to June 30 and proposals are due by March 26, it said. The reserve can receive up to 685,000 barrels per day of crude.
The funding for the full 77-million-barrel purchase would have to be mandated by new stimulus legislation. Energy Secretary Dan Brouillette told reporters in a teleconference that the department has asked Congress for about $3 billion.
The US emergency reserve has 77 million barrels of available capacity in caverns on the Texas and Louisiana coasts. The first 30-million-barrel purchase will be for both sweet and sour crude oil and will focus on buying from small and midsize producers with less than 5,000 employees, according to a statement.
Brouillette also said a second round of purchases for the reserve could occur in 60 to 90 days. He said: “We’re moving out as fast as we can possibly move out.”
The department “appears to be setting up multiple pathways to fulfill President Donald Trump’s request to fill the SPR, contingent upon future funding,” analysts at ClearView Energy Partners said in a note to clients.
It added: “We view today’s action as a necessary step towards an SPR fill, but not sufficient in its own right.”
Treasury Secretary Steven Mnuchin said on Fox Business he would tell Trump to take advantage of low oil prices and ask Congress for $10 billion to $20 billion to fill up the SPR for the long term. “We should be filling up the reserve for the next 10 years,” Mnuchin said. Brouillette said he had not yet talked to Mnuchin about that plan, but that he would.
For more information visit www.energy.gov