Energy companies have begun taking back millions of barrels of oil from the U.S. government’s emergency stockpile after renting storage in the facility to help manage a glut of crude this spring after energy demand collapsed during COVID-19 lockdowns, a Department of Energy website showed on Aug. 10.
Since Aug. 1, the companies have taken back 2.2 million barrels (MMbbl) of oil of the 23 MMbbl they agreed to store in the Strategic Petroleum Reserve, or SPR, from April through June. The companies have until March 31, 2021 to take back the oil after renting the space for a small fee.
Nine oil companies including Exxon Mobil, Chevron and Alon USA rented the space from the reserve, a series of underground salt caverns on the Texas and Louisiana coasts, an Energy Department official said in April.
An oil trader said that at least two companies, Exxon Mobil and Atlantic Trading & Marketing Inc (ATMI), a U.S arm of French oil major Total SA, had taken back the 2.2 MMbbl.
The taking back of the oil from the SPR might slow commercial inventory drawdowns as companies prioritize selling the barrels, market sources said.
Exxon had won the lion’s share of the total space while ATMI had won about 600,000 bbl of storage space, another trade source said.
Exxon did not immediately comment and an ATMI spokeswoman declined to comment.
Oil prices collapsed in the spring due to the pandemic’s crushing of fuel demand at the same time that major crude producers Saudi Arabia and Russia engaged in war over oil market share.
President Donald Trump tried to help domestic oil producers manage the oil price hit by ordering Energy Secretary Dan Brouillette to fill the SPR to the top, or purchase about 77 MMbbl of oil. But Congress failed to fund that order, leaving the department with little choice but to rent space in the facility.
Recommended Reading
Woodside Reports Record Q3 Production, Narrows Guidance for 2024
2024-10-17 - Australia’s Woodside Energy reported record production of 577,000 boe/d in the third quarter of 2024, an 18% increase due to the start of the Sangomar project offshore Senegal. The Aussie company has narrowed its production guidance for 2024 as a result.
SLB Earnings Rise, But Weakened 4Q and 2025 Ahead Due to Oil Glut
2024-10-22 - SLB, like Liberty Energy, revised guidance lower for the coming months, analysts said, as oilfield service companies grapple with concerns over an oversupplied global oil market.
Empire Raises $10M in Equity Offering to Ease Doubts, Reports $3.6M Loss
2024-11-14 - Empire Petroleum received a waiver from its lender after falling out of compliance with a credit agreement.
EON Enters Funding Arrangement for Permian Well Completions
2024-12-02 - EON Resources, formerly HNR Acquisition, is securing funds to develop 45 wells on its 13,700 leasehold acres in Eddy County, New Mexico.
Record NGL Volumes Earn Targa $1.07B in Profits in 3Q
2024-11-06 - Targa Resources reported record NGL transportation and fractionation volumes in the Permian Basin, where associated natural gas production continues to rise.