The unprecedented worldwide reduction in consumer demand caused by COVID-19 has forced U.S. refiners to dial back production of motor gasoline, commercial airline jet fuel, and other refined products
The U.S. Department of Energy (DOE) announced asolicitation to immediately make 30 million barrels of the Strategic Petroleum Reserve’s (SPR’s) oil storage capacity available to U.S. oil producers that are struggling with catastrophic financial losses due to the combined impacts of COVID-19 and the intentional disruption of world oil markets by foreign actors. The Department currently intends to make an additional 47 million barrels of storage capacity available thereafter.
The unprecedented worldwide reduction in consumer demand caused by COVID-19 has forced U.S. refiners to dial back production of motor gasoline, commercial airline jet fuel, and other refined products. This situation has reduced refinery crude oil demand, exacerbated a market glut of globally produced oil, and increased the need for already constrained crude oil storage. A lack of storage is forcing premature shut-in of oil wells and economically hurting the U.S. energy industry and its workforce. The SPR is well-positioned to relieve some of this economic stress by making storage capacity available to U.S. oil producers immediately.
To help alleviate financial hardship to the critical American energy sector, President Trump has directed the Secretary of Energy to fill the SPR to its maximum capacity.
“Filling the SPR with crude oil, produced by American companies that are facing catastrophic losses and increased financial hardship, is a logical action for the federal government to take as we work to overcome the economic disruptions caused by COVID-19 and intentional, global oil market disruptions,” said U.S. Secretary of Energy Dan Brouillette. “The Department continues to work with Congress to find ways to make funding available for DOE to buy American oil. However, we must move with a sense of urgency to support an industry that underpins the U.S. economy and supports our national security. Making some of the SPR’s storage capacity available to industry, without purchasing the oil, provides this immediate benefit to the industry and its hard-working employees.”
“We expect the first crude oil deliveries to arrive in late-April or early-May depending on producer logistics. The SPR will be ready to receive up to 685,000 barrels per day,” explained Assistant Secretary for Fossil Energy, Steven Winberg. “With its extensive storage, pipeline, and marine infrastructure along the Gulf Coast, the SPR will help relieve oil-related disruptions to our economy.”
Source: Company Press Release