Best Prices Yet for Strategic Reserve Crude Oil, DOE Authorizes Additional Sales Contracts

Government Now Has Three-Quarters of Financing Necessary to Decommission Unstable Oil Storage Site 

Washington, DC - The Department of Energy (DOE) is now more than three-quarters of the way to its goal of raising $100 million through the sale of Strategic Petroleum Reserve oil with the latest bids offering the best prices yet for the crude oil. The funding is needed to pay for decommissioning the Reserve's geologically-unstable Weeks Island site in Louisiana and for making other improvements to the Nation's emergency crude oil stockpile.

DOE today approved three more oil sale contracts, all of which will bring the highest prices yet for the Weeks Island sour crude oil. The contracts total 1.225 million barrels of crude oil and will go to:

• Ashland Petroleum Co., Russell, KY, which will buy 75,000 barrels at $20.20 per barrel for pipeline delivery in April.

• Exxon Co. USA, Houston, TX, which will purchase two batches of crude oil, each made up of 500,000 barrels for April pipeline delivery. One batch will be purchased for $20.20 per barrel; the other batch will bring $19.95 per barrel.

• Phibro Energy, Houston, TX, which will purchase 150,000 barrels at $20.00 per barrel for pipeline delivery in either March or April.

The purchases bring to $78.16 million the total amount of revenue received by the Energy Department from the sale of Weeks Island crude oil. Two other sets of contracts had been approved in February and earlier this month. [NOTE: For information on previous sales, select links: February 26, 1996, sale; March 8, 1996, sale.]

Until today's contracts, the highest price paid for the oil had been $18.65 per barrel.

The Department wants to sell up to $100 million of Strategic Petroleum Reserve crude oil as an alternative to asking for additional appropriations from Congress to pay for the corrective actions at Weeks Island. The site, one of five in the Strategic Petroleum Reserve complex, has developed geologic problems and is no longer suitable for storing crude oil.

DOE has now sold 4.17 million barrels of crude oil from the Weeks Island inventory. It had originally estimated that as much as 7 million barrels might be sold to raise the necessary funds. The Reserve has about 590 million barrels of crude oil stockpiled for energy emergencies.

While the oil sales are underway, DOE continues to move crude oil from the Weeks Island underground storage chambers in preparation for decommissioning the site. Currently more than 30 million barrels of site's 72 million barrel inventory have been removed with most transferred to other Reserve sites in Louisiana and Texas.

The Defense Fuel Supply Center (DFSC) is handling the sales process for the Department. DFSC is still evaluating offers and may recommend additional contracts later this week.

-End of TechLine -

Information Contact: Robert C. Porter, Office of Fossil Energy, 202/586-6503