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The Office of Petroleum Reserves manages programs that provide the United States with strategic and economic protection against disruptions in oil supplies. The programs include:
Strategic Petroleum Reserve
The U.S. Strategic Petroleum Reserve is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.
The Energy Policy Act of 2005 directed the Secretary of Energy to fill the SPR to its authorized one billion barrel capacity. This required the Department of Energy to complete proceedings to select sites necessary to expand the SPR to one billion barrels.
Naval Petroleum and Oil Shale Reserves
The Naval Petroleum and Oil Shale Reserves (NPOSR) has a storied history beginning with its inception in 1912 during the Taft Administration, to the 1998 sale of its supergiant Elk Hills oil field (Naval Petroleum Reserve No. 1) to Occidental Petroleum under the Clinton Administration. The infamous Teapot Dome scandal in the 1920s during the Harding Administration may perhaps be the nadir in this storied history, but for the remainder of its almost-100 year history, the Reserves stood well managed to serve the Nation during times of both peace and war.
In response to the 1973 Arab oil embargo, the United States opened the Reserves to full production in 1976. Since that time, petroleum sales produced net revenues of $22 billion to the U.S. Treasury. The sale of the Elk Hills field in 1998 to Occidental Petroleum netted an additional $3.65 billion.
Today, three of the four original Petroleum Reserves (NPR-1, NPR-2, and NPR-4) have been sold or transferred to the Department of the Interior. The only remaining oil reserve managed by the Department of Energy is the Teapot Dome field (NPR-3) in Casper, Wyoming, which is now a stripper field that also serves as an oilfield technology testing center (Rocky Mountain Oilfield Testing Center).
In addition to the oil reserves, the Government also held oil shale lands in Colorado, Utah and Wyoming (NOSRs). During the early 1980s, the NOSRs were opened to oil shale development. After a brief hectic period, most oil shale development was abandoned because of a collapse in world oil prices from a high point of $40 per barrel in early 1980 to a low of $15 per barrel by 1989. Subsequently, the Government eventually transferred its NOSRs to BLM and an American Indian tribe.
Today's high oil prices have once again renewed interest in oil shale and other unconventional strategic fuels development. Even though the NPOSR no longer controls the NOSRs, its unique experience in oil shale technology led Congress - as part of the Energy Policy Act of 2005 - to designate the Petroleum Reserves program as the lead office to coordinate the creation and implementation of a commercial strategic fuel (oil shale and tar sands) development program for the United States.
Northeast Home Heating Oil Reserve
The Northeast Home Heating Oil Reserve is a 2-million barrel supply of emergency fuel oil for homes and businesses in the northeastern United States. Established in 2000, the Heating Oil Reserve is an "emergency buffer" that can supplement commercial fuel supplies should the heavily oil-dependent region be hit by a severe heating oil supply disruption. Since its creation, the Heating Oil Reserve has not been used, but 35,000 barrels were sold during 2007 for budgetary reasons. The Government will use the proceeds from the sale to repurchase a quantity of heating oil in the future.
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