This announcement follows President Biden’s release from the SPR addressing the “significant global supply disruption caused by Putin’s war on Ukraine and help keep the domestic market well supplied." (Source: Shutterstock)
The U.S. Department of Energy (DOE) is continuing to buy oil to replenish the Strategic Petroleum Reserve (SPR) after selling millions of barrels in 2022 to fend off high gasoline prices.
On Dec. 26, the DOE’s Office of Petroleum Reserves announced awarded contracts for the acquisition of 3 MMbbl of U.S. crude oil for the SPR, according to a press release. In July, DOE announced plans to purchase 6 MMbbl and a total of 12 MMbbl by August.
The December contracts follow a request for proposal announced on Dec. 8. The crude is being purchased for an average of $77.31/bbl, below the average of about $95/bbl that SPR crude was sold for in 2022. In 2023, the DOE purchased a total of 13.83 MMbbl of oil for the SPR for an average of $75.63.
Nine companies responded to the request, submitting a total of 33 proposals. The contracts were awarded to three companies that met quality and spec requirements, in addition to providing competitive bids. The crude oil will be delivered to the Big Hill SPR storage site from March 1, 2024, to March 31, 2024, according to the release.
This announcement follows President Biden’s release from the SPR addressing the “significant global supply disruption caused by Putin’s war on Ukraine and help keep the domestic market well supplied,” the release stated.
Analysis from the Department of the Treasury indicates that SPR releases in 2022, along with coordinated releases from international partners, reduced gasoline prices by as much as $0.40 per gallon.
The SPR’s ended 2022 with roughly 372 MMbbl compared to 593.6 MMbbl the year before. As of September, the SPR has 351.2 MMbbl, according to the U.S. Energy Information Administration.
The Biden administration’s three-part replenishment strategy to increase SPR stocks includes direct purchases with revenues from emergency sales, exchange returns that include a premium of oil above the volume delivered and securing legislative solutions to avoid “unnecessary sales”.
For fiscal years 2024- 2027, the DOE secured cancellation of 140 MMbbl of congressionally mandated sales, the release said.
Recommended Reading
GeoPark Announces Production Start at Argentina’s Confluencia Norte
2024-11-12 - GeoPark expects production at the Confluencia Norte Block in Rio Negro, Argentina to reach its peak within 90 days of startup.
E&P Highlights: Dec. 16, 2024
2024-12-16 - Here’s a roundup of the latest E&P headlines, including a pair of contracts awarded offshore Brazil, development progress in the Tishomingo Field in Oklahoma and a partnership that will deploy advanced electric simul-frac fleets across the Permian Basin.
E&P Highlights: Nov. 18, 2024
2024-11-18 - Here’s a roundup of the latest E&P headlines, including new discoveries in the North Sea and governmental appointments.
E&P Highlights: Jan. 27, 2025
2025-01-27 - Here’s a roundup of the latest E&P headlines including new drilling in the eastern Mediterranean and new contracts in Australia.
Murphy’s Vietnam Find May Change Investor Views, KeyBanc Analysts Say
2025-01-09 - The discovery by a subsidiary of Murphy Oil Corp. is a reminder of the company’s exploration prowess, KeyBanc Capital Markets analysts said.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.