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The Strategic Petroleum Reserve (SPR) is an emergency Petroleum store maintained by the United States Department Of Energy . The US SPR is the largest emergency supply in the world with the current capacity to hold up to 727 million Barrel s (116 million M³ ) of Crude Oil . The second largest emergency supply of petroleum is Japan's with a 2003 Reported Capacity Of 579 Million Barrels . The current inventory is displayed on the SPR's website . As of August 24, 2007, the current inventory was 690 million barrels. At current market prices ($70 a barrel) the SPR holds approximately $48.3 billion worth of petroleum. The purpose of the reserve is to mitigate temporary supply disruptions. According to the World Factbook , the United States imports a net 12 million barrels of oil a day (MMbd), so the SPR holds about a 57-day supply. However, the maximum total withdrawal capablility from the SPR is only 4.4 MMbd. FACILITIES The SPR management office is located in New Orleans, Louisiana . The reserve is stored at four sites on the Gulf Of Mexico , each located near a major center of petrochemical refining and processing. Each site contains a number of artificial caverns created in Salt Dome s below the surface. (''Note'': Capacity numbers may be out of date.)
Individual caverns within a site can be up to 1000 m below the surface, average dimensions are 60 m wide and 600 m deep, and capacity ranges from 6 to 30 million barrels (1 to 5 million m³). Almost $4 billion was spent on the facilities. The decision to store in caverns was taken to reduce costs; the Dept. of Energy claims it is roughly 10 times cheaper to store oil below surface with the added advantages of no leaks and a constant natural churn of the oil due to a temperature gradient in the caverns. The caverns were created by drilling down and then dissolving the salt with water. Weeks Island in Iberia Parish, Louisiana was a former site which had a capacity of 72 million barrels (11,000,000 m³), but was decommissioned in 1999 . Unlike the other facilities, the Weeks Island facility was a conventional room and pillar near-surface mine Salt Mine , formerly owned by Morton Salt . In 1993 , a Sinkhole formed on the site, allowing fresh water to intrude into the mine. Because of the mine's construction in salt deposits, fresh water would erode the ceiling, potentially causing the structure to fail. The mine was backfilled with salt-saturated Brine . This process, which allowed for recovery of 98% of the petroleum stored in the facility, reduced the risk of further freshwater intrusion, and helped prevent the remaining oil from leaking into the Aquifer that is located over the salt dome. HISTORY Background Access to the reserve is determined by the conditions written into the 1975 Energy Policy And Conservation Act (EPCA), primarily to counter a severe supply interruption. The maximum removal rate, by physical constraints, is 4.4 million barrels per day (8 m³/s). Oil could begin entering the marketplace 13 days after a Presidential order. The Dept. of Energy says that it has about 59 days of import protection in the SPR. This, combined with private sector inventory protection, is estimated to equal 115 days of imports The SPR was created following the 1973 Energy Crisis . The EPCA of December 22, 1975, made it policy for the U.S. to establish a reserve up to one billion barrels (159 million m³) of petroleum. A number of existing storage sites were acquired in 1977. Construction of the first surface facilities began in June 1977. On July 21, 1977, the first oil—approximately 412,000 barrels (66,000 m³) of Saudi Arabian light crude—was delivered to the SPR. Fill was suspended in FY 1995 to devote budget resources to refurbishing the SPR equipment and extending the life of the complex. The current SPR sites are expected to be usable until around 2025. Fill was resumed in 1999. Filling the SPR On November 13, 2001, President has since directed the Secretary Of Energy to fill the SPR to the full 1 billion barrel authorized capacity, a process which will require a physical expansion of the Reserve's facilities. On August 17, 2005, the SPR reached its goal of 700 million barrels (111,000,000 m³), or about 96% of its now-increased 727 million barrel capacity. Approximately 60% of the crude oil in the reserve is the less desirable sour (high Sulfur content) variety. The oil delivered to the reserve is "royalty-in-kind" oil—royalties owed to the U.S. government by operators who acquire leases on the federally owned Outer Continental Shelf in the Gulf of Mexico. These royalties were previously collected as cash, but in 1998 the government began testing the effectiveness of collecting royalties "in kind" - or in other words, acquiring the crude oil itself. This mechanism was adopted when refilling the SPR began, and once filling is completed, revenues from the sale of future royalties will be paid into the Federal treasury. On January 23, 2007, President George W. Bush suggested in his state of the union speech that congress should approve expansion of the current reserve capacity to twice its current level. Emergency sales and loans Oil has been released and sold in the open market under emergency conditions just twice, in 1991 and 2005. However, oil has also been temporarily loaned out or exchanged to private oil companies on several occasions, then returned to the reserve after the specified loan period including "premium barrels". These oil exchanges include an ARCO pipeline disruption in April 1996; an exchange of 11 million barrels (1,800,000 m³) of Maya crude oil for 8.5 million barrels (1,400,000 m³) of higher value crude oil in 1998; a dry dock collapse in June 2000 just north of the Intracoastal Waterway near Lake Charles, Louisiana used by CITGO and Conoco refineries; and temporary loans in response to supply disruptions following Hurricane Lili in 2002, Hurricane Ivan in 2004, and Hurricane Katrina in 2005. On August 31, 2005, President George W. Bush authorized the SPR to loan oil to help refineries whose operations had been affected by Hurricane Katrina . In addition, the President announced the sale of 30 million barrels of oil as part of a coordinated, international sale of 60 million barrels to maintain supplies and calm markets. Katrina had shut down an estimated 95% of crude production and 88% of natural gas output in the Gulf of Mexico. This amounted to a quarter of total U.S. output. About 735 oil and natural gas rigs and platforms had been evacuated due to the hurricane. On April 25, 2006, President George W. Bush announced a temporary halt to petroleum deposits to the SPR as part of a four point program to alleviate high gas prices. Emergency sales to Israel According to the 1975 Second Sinai withdrawal document signed by the United States and Israel , in an emergency the U.S. is obligated to make oil available for sale to Israel for up to 5 years.http://www.heritage.org/Research/MiddleEast/bg76.cfm LIMITATIONS The Strategic Petroleum Reserve is exclusively a crude oil reserve, not a stockpile of refined petrochemical products, such as gasoline, diesel and kerosene. Although there are small-scale (2 Million Barrels) Heating Oil Reserves in Connecticut , Rhode Island and New Jersey under the aegis of the Department of Energy, the Federal government maintains no gasoline reserves on anything like the scale of the SPR. Consequently, while the US enjoys some protection from disruptions in oil supplies, it would have to depend on other stockpiling members of the International Energy Agency for relief from any major disruption to refinery operations. Since no new refineries have been constructed in the US for thirty years, there is little reserve capacity. This was illustrated during Hurricane Katrina, when many of the Gulf Coast oil refining complexes were disrupted for some time. However, since gasoline has a short shelf-life, a gasoline reserve would require regular refreshment of stocks, which would make it vulnerable to inappropriate drawdowns. However, a jet fuel reserve may be a possibility since other countries have Strategic Reserves Of Jet Fuel . The Secretary of Energy, Samuel Bodman, has said the Department will consider refined products as part of the expansion between 1 billion and 1.5 billion barrels. SPR DRAWDOWNS Petroleum sales
Petroleum exchanges and loans ''Note: Loans are made on a case-by-case basis to alleviate supply disruptions. Once conditions return to normal, the loan is returned to the SPR with additional oil as interest.''
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