DOE to Exchange Strategic Reserve Oil to Avert Temporary Shutdown of Louisiana Refinery

Citgo to Receive Crude Oil Under Exchange Agreement After Dry Dock Collapse Blocks Ship Channel

Secretary of Energy Bill Richardson today ordered a limited exchange of crude oil from the Strategic Petroleum Reserve, the federal government's emergency inventory, to avert a possible shortfall in gasoline and diesel fuel from one of Louisiana's major refineries.

"It is imperative that we get oil to this refinery so that the American public gets the gasoline it needs this summer," said Secretary Richardson. "Any interruption of gasoline and diesel production from this large refinery would diminish already tight gas supplies and increase prices. The cooperative effort between the public and private sectors will help ensure that gasoline keeps flowing."

The first of 500,000 barrels of crude oil from the Strategic Petroleum Reserve's West Hackberry site near Lake Charles, Louisiana, will begin flowing Friday afternoon to the nearby Citgo refinery.

The refinery was cut off from normal tanker deliveries earlier this week when a commercial dry dock collapsed into the Calcasieu ship channel just north of the Intracoastal Waterway near Lake Charles. The channel is the primary route used by the refinery for incoming crude oil shipments. Without oil from the government's reserve, the refinery could have begun curtailing production as early as this weekend.

Gasoline and diesel fuel from the refinery are sent into the Colonial interstate pipeline that serves the Mid-Atlantic and New England regions, running as far north as New York and New Jersey.

Citgo approached the Energy Department with an exchange offer. Under the contract, the company agreed to resupply the Strategic Petroleum Reserve with an equivalent value of crude oil after the shipping lanes are reopened, which will result in a light increase in the number of barrels in the Strategic Petroleum Reserve.

The channel has been blocked to commercial traffic since midweek when a dry dock at the Halter-Calcasieu shipyard collapsed while lifting a vessel out of the water.

Initial attempts to refloat the dock were unsuccessful and the Coast Guard plans to use large cranes to carry out the salvage operation. This effort is expected to take several days.

The Energy Department's West Hackberry site contains 194 million barrels of crude oil, part of the 570 million barrel inventory currently stockpiled by the federal government in four storage sites along the Texas and Louisiana coasts. If necessary, oil can be drawn out of the site's underground storage caverns at a maximum rate of 1.3 million barrels per day.

The Energy Department also used its exchange authority in May 1996 when it exchanged 900,000 barrels with ARCO to address pipeline blockage problems.

-End of TechLine-

For more information, contact:
Robert C. Porter, DOE Office of Fossil Energy, (202) 586-6503, e-mail: robert.porter@hq.doe.gov