Strategic Petroleum Reserve
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The Strategic Petroleum Reserve (SPR) is an emergency petroleum store maintained by the United States Department of Energy. It is the largest emergency supply in the world with the capacity to hold up to 727 million barrels (116 million m³) of crude oil.
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Facilities
The reserve is stored at four sites on the Gulf of Mexico, each located near a major center of petrochemical refining and processing. Each site contains a number of artificial caverns created in salt domes below the surface. (Note: Capacity numbers may be out of date.)
- Bryan Mound - located near Freeport, Texas. Has a capacity of 226 million barrels (36,000,000 m²).
- Big Hill - located near Winnie, Texas. Has a capacity of 160 million barrels (25,000,000 m²).
- West Hackberry - located near Lake Charles, Louisiana. Has a capacity of 219 million barrels (35,000,000 m²).
- Bayou Choctaw - located near Baton Rouge, Louisiana. Has a capacity of 72 million barrels (11,000,000 m²).
Individual caverns within a site can be up to 1000 m below the surface, average dimensions are 60 m wide and 600 m deep, and capacity ranges from 6 to 30 million barrels (1 to 5 million m³). Almost $4 billion was spent on the facilities. The decision to store in caverns was taken to reduce costs; the Dept. of Energy claims it is roughly 10 times cheaper to store oil below surface with the added advantages of no leaks and a constant natural churn of the oil due to a temperature gradient in the caverns. The caverns were created by drilling down and then dissolving the salt with water.
A fifth site, Weeks Island in Iberia Parish, Louisiana, had a capacity of 72 million barrels (11,000,000 m²), but was decommissioned in 1999. Unlike the other facilities, the Weeks Island caverns were a conventional near-surface salt mine, formerly owned by Morton Salt. In 1993, a sinkhole formed on the site, allowing fresh water to intrude into the caverns.
Because of the caverns' construction in salt deposits, fresh water would erode the walls, potentially causing the structure to fail. The caverns were backfilled with salt-saturated brine. This process which allowed for recovery of 98% of the petroleum stored in the facility, reduced the risk of further freshwater intrusion, and helped prevent the remaining oil from leaking into the aquifer that is located over the salt dome.
History
Access to the reserve is determined by the conditions written into the 1975 Energy Policy and Conservation Act (EPCA), primarily to counter a severe supply interruption. The maximum removal rate, by physical constraints, is 4.3 million barrels per day (8 m³/s). Oil could begin entering the marketplace 13 days after a Presidential order. The Dept. of Energy says that it has about 7 to 8 weeks worth of inventory protection in the SPR. This, combined with private sector inventory protection, is estimated to total 150 days worth of emergency supply.
The SPR was created following the 1973 energy crisis. The EPCA of December 22, 1975, made it policy for the U.S. to establish a billion barrel (159 million m³) reserve. A number of existing storage sites were acquired in 1977. Construction of the first surface facilities began in June 1977. On July 21, 1977, the first oil—approximately 412,000 barrels (66,000 m³) of Saudi Arabian light crude—was delivered to the SPR. Fill was suspended in FY 1995 to devote budget resources to refurbishing the SPR equipment and extending the life of the complex. The current SPR sites are expected to be usable until around 2025. Fill was resumed in 1999.
Oil has been removed under emergency conditions only once, in 1991. However, oil has been temporarily loaned out or exchanged to private oil companies in a few circumstances. These include an ARCO pipeline disruption in April 1996; an exchange of 11 million barrels (1,800,000 m³) of Maya crude oil for 8.5 million barrels (1,400,000 m³) of higher value crude oil in 1998; a dry dock collapse in June 2000 just north of the Intracoastal Waterway near Lake Charles, Louisiana used by CITGO and Conoco refineries; and temporary loans in response to supply disruptions following Hurricane Lili in 2002 and several strong storms during the 2004 Atlantic hurricane season.
On November 13, 2001, President George W. Bush announced that the SPR would be filled, saying, "The Strategic Petroleum Reserve is an important element of our Nation's energy security. To maximize long-term protection against oil supply disruptions, I am directing...the Secretary of Energy to fill the SPR up to its 700 million barrel [111,000,000 m³] capacity." The highest prior level was reached in 1994 with 592 million barrels (94 million m³). At the time of President Bush's directive, the SPR contained about 545 million barrels (87 million m³). By redirecting a certain amount of imported crude oil to the reserve, some think this effectively raised oil prices by 28 cents per gallon (7c/L).
As of June 2005, the SPR is more than 99 percent full, containing more than 694 million barrels (110 million m³). It is being filled at the rate of 100,000 barrels per day (16,000 m³/day). At this rate, the SPR will reach 700 million barrels (111,000,000 m³) around August 2005. Approximately 60 % of the crude oil in the reserve is the less desirable sour (high sulfur content) variety. The oil delivered to the reserve is "royalty-in-kind" oil—royalties owed to the U.S. government by operators who acquire leases on the federally-owned Outer Continental Shelf in the Gulf of Mexico. These royalties were previously collected as cash, but in 1998 the government began testing the effectiveness of collecting royalties "in kind" - or in other words, acquiring the crude oil itself. This mechanism was adopted when refilling the SPR began.
In 2005, world consumption of crude oil is expected to surpass 84 million barrels per day (155 m³/s). This puts consumption equal to production leaving little surplus capacity. The U.S. consumes roughly 20.8 million barrels (3.3 million m³) of petroleum every day, about 25% of world daily consumption. [1] (http://www.eia.doe.gov/emeu/iea/table12.html)
SPR petroleum sales
- 1985 - Test sale - 1.1 million barrels (175,000 m³)
- 1990/91 - Desert Storm sale - 21 million barrels (3.3 million m³)
- 4 million in August 1990 test sale
- 17 million in January 1991 Presidentially-ordered drawdown
- 1996-97 total non-emergency sales for deficit reduction - 28 million barrels (4.5 million m³)
External links
- DOE Fossil Energy: Petroleum Reserves (http://www.fe.doe.gov/programs/reserves/)
- Current inventory (http://www.spr.doe.gov/reports/dir.htm)
- President Orders Strategic Petroleum Reserve Filled (http://www.whitehouse.gov/news/releases/2001/11/20011113.html) - November 13, 2001
- Will Market Notice Full Petroleum Reserve? (http://www.forbes.com/business/healthcare/feeds/ap/2005/06/07/ap2081010.html) Forbes, June 7, 2005