DOE Completes Sale of Strategic Petroleum Reserve Oil

Higher-than-Expected Oil Prices Reduce Volume Sold; Revenues to Finance Decommissioning of Storage Site

Washington, DC - The Department of Energy has taken advantage of this week's rise in oil prices to complete its sale of Strategic Petroleum Reserve crude oil from its Weeks Island, Louisana, site with less oil being sold than the agency first anticipated.

DOE today gave approval for the final award in the Weeks Island sale. The contract will go to Phibro Energy USA, Houston, TX, for four batches of crude oil totalling 925,000 barrels. Phibro offered $19.85 per barrel for 150,000 barrels to be scheduled for March/April pipeline delivery, $19.70 per barrel for 150,000 barrels also for March/April pipeline delivery, $19.70 per barrel for 475,000 barrels slated for tanker pickup in March/April, and $19.50 for 150,000 barrels to be scheduled for March/April pipeline delivery.

Combined with six previous contracts, today's award brings the Department's sales revenues to $96.4 million. DOE has determined that the figure is sufficiently close to its target of $100 million that further sales under the current solicitation are unnecessary.

In total, DOE sold 5.1 million barrels, significantly less than the original 7 million barrels the agency had projected it would need to offer to raise the necessary funds.

[NOTE: For information on previous sales, select links: February 26, 1996, sale; March 8, 1996, sale; March 20, 1996, sale]

The funding is needed to pay for decommissioning the Reserve's Weeks Island site and for making other improvements to the emergency oil stockpile complex.

The converted salt mine used at Weeks Island to store stockpiled crude oil has developed geologic problems and is scheduled to be decommissioned and closed as soon as all of its 72 million barrel oil inventory has been safely removed. Currently 30 million barrels have been removed, and DOE expects to complete the oil transfer this fall. DOE received approval from Congress to sell a portion of the crude oil as an alternative to seeking additional appropriations.

Once all of the oil from the Weeks Island sale is delivered to purchasers, the Strategic Petroleum Reserve will have 587 million barrels remaining in storage.

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