DOE Agrees to 2nd Oil Exchange To Keep Gasoline, Diesel Flowing

Secretary of Energy Bill Richardson has approved a second agreement to exchange oil from the Strategic Petroleum Reserve to keep a major refinery in Louisiana operating.

The Energy Department will begin shipping 500,000 barrels by pipeline to the Conoco Inc. refinery at West Lake, Louisiana, on Sunday to make up for crude oil the refinery is unable to receive because of a blockage in the Calcasieu ship channel near Lake Charles.

"As with our decision yesterday, we are taking this action to avert a possible shortfall in gasoline and diesel fuel to American consumers at a time when supplies of these fuels are already tight," Richardson said.

Yesterday, Richardson directed that a similar agreement be executed with CITGO Petroleum Company which also operates a refinery threatened with a shortfall in crude oil supplies because of the blocked shipping channel.

Under both contracts, the companies agreed to resupply the Strategic Petroleum Reserve with an equivalent value of crude oil after the shipping lanes are reopened. Taking into account price differences between today and when the oil is resupplied, there is likely to be a slight increase in the number of barrels in the federal government's emergency crude oil stockpile.

Both the Conoco and CITGO refineries were cut off from normal tanker deliveries in midweek when a commercial dry dock collapsed into the shipping channel just north of the Intracoastal Waterway. Although some oil is being withdrawn from tankers and moved around the blockage by barges, the quantities are relatively small. Providing oil from the Strategic Petroleum Reserve will keep both refineries operating at their capacities while the U.S. Coast Guard works to remove the collapsed dock.

Without the oil exchange, the Conoco refinery could have forced to begin cutting back its output as early as this weekend. The refinery's gasoline and diesel fuel product goes to service stations in the Mid-Atlantic and New England regions.

The oil will be withdrawn from the Energy Department's West Hackberry site near Lake Charles and will be moved through the Equilon pipeline to the refineries.

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