Issued on: August 8, 2002
Koch Submits Winning Bid To Supply Additional Oil to Strategic Reserve
Will Add 8 Million Barrels to Emergency Oil Supply
NEW ORLEANS, LA - Koch Supply & Trading, LP, one of the world's largest crude oil trading companies, will become the newest supplier of crude oil to the Strategic Petroleum Reserve (SPR) under President Bush's plan, announced last November, to fill the nation's emergency oil stockpile to its full capacity by 2005.
Secretary of Energy Spencer Abraham today announced that the Wichita, Kansas-based company submitted the winning bid to provide approximately 8 million barrels of crude oil to the SPR. Deliveries will begin October 1, 2002, and run through April 30, 2003.
"With each contract like this, Americans gain another measure of energy security," Secretary Abraham said. "The SPR provides the nation with an energy resource that can be used as directed by the President to protect Americans against future supply disruptions."
The contract to Koch is part of the Administration's "royalty-in-kind" exchange program in which crude oil from federal leases in the Gulf of Mexico is exchanged for oil to be stored in the SPR for emergency protection against future supply disruptions.
Today's action will boost the average delivery rate of oil to the SPR under the program to nearly 100,000 barrels per day. Using the "royalty-in-kind" program, the Bush Administration has announced its intent to fill the SPR to its 700-million-barrel capacity by 2005.
The program is carried out cooperatively with the U.S. Department of Interior's Minerals Management Service (MMS). MMS recently awarded contracts for a similar amount of royalty oil to be delivered from designated Gulf of Mexico production platforms to "market centers." Koch will receive the crude oil at the market centers and deliver "in-kind" crude to the SPR. Actual volumes arriving at the SPR are adjusted to account for transportation and quality differentials. Koch's offer was selected on the basis that its exchange ratio provided the best value to the government.
The SPR currently holds 580 million barrels of crude oil deep in salt caverns created along the Texas and Louisiana coastlines.
-End of Techline-
For more information:
News Media Contact:
Drew Malcomb, DOE Office of Public Affairs, 202-586-5806
Jo Ann Rochon, SPR-Project Management Office, 504-734-4731