The Department of Energy’s purchase of 30 million barrels of oil is ongoing as it aims to fill the Strategic Petroleum Reserve (SPR) as part of the emergency action taken by President Donald J. Trump following a global price crash and the COVID-19 pandemic.

UPDATE:

Small, Midsize Oil Producers Left Out of Stimulus Bill

Purchases will continue despite unsuccessful attempts by Republicans to add $3 billion in crude buys to a stimulus bill negotiated by Congress this week. The deadline to submit a proposal for the first round of crude oil purchases is 11:30 a.m. CT on March 26. The department has said additional solicitations will follow but has not yet announced a timeline for those.

The department will eventually purchase a total of 77 million barrels of U.S. crude as it tops off the SPR. As of March 20, the SPR held 635 million barrels of oil, including 384.7 million barrels of sour oil. The reserve has a 713.5 million barrels storage capacity.

On March 19, U.S. Energy Secretary Dan Brouillette said that the department was “moving quickly to support U.S. oil producers facing potentially catastrophic losses from the impacts of COVID-19 and the intentional disruption to world oil markets by foreign actors.”

Saudi Arabia has flooded the market with oil after it was unable to come to a quota agreement with Russia, sending prices spiraling downward. This week, Rystad Energy said that the pandemic could cause global energy demand to collapse by more than 10 million barrels per day by April. 

The Energy Department’s purchase prices vary based on Nymex WTI prices adjusted for markets and differentials and the API gravity of the oil. The SPR, with extensive storage and pipelines along the Gulf Coast, is ready to receive up to 685,000 barrels per day, department officials said. Crude is set to be delivered in May and June.

Small and midsize oil producers are the focus of the initial purchases. Buyers with fewer than 5,000 employees are eligible to submit proposals.  

“The small to midsize oil producers, which are the focus of the initial crude oil purchase, employ thousands of Americans,” said Under Secretary of Energy Mark W. Menezes. “These businesses have been particularly hard hit by recent events but under President Trump’s leadership, we are taking swift action to assist hard-hit producers and deliver strong returns to the taxpayer.”

SPR locations (Source: U.S. Department of Energy)
SPR locations (Source: U.S. Department of Energy)

Trump said he directed Brouillette to purchase oil for the SPR during his national emergency declaration on March 13.

“We’re going to fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry and making us even further toward that wonderful goal—which we’ve achieved, which nobody thought was possible—of energy independence,” he said. “It puts us in a position that’s very strong, and we’re buying it at the right price.”

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