Issued on: February 11, 2002
DOE Awards Contract to Equiva to Increase Strategic Petroleum Reserve
18.6 Million Barrels to Be Added through Exchange of Royalty-in-Kind Oil from Offshore Gulf of Mexico Tracts
Washington, DC - The Department of Energy has signed a contract with Equiva Trading Co. of Houston, Texas that will add another 18.6 million barrels of crude oil to the Strategic Petroleum Reserve, the nation's emergency crude oil stockpile. The contract is the first to be awarded in a competitive bid process that was synchronized with contracts awarded by the Department of the Interior.
"Today's announcement is another step forward in the President's efforts to strengthen the nation's energy security," Secretary of Energy Spencer Abraham said. "The Strategic Petroleum Reserve is one of our most important strategic assets, and today's action ensures that we will be prepared for potential supply disruptions in the future."
The contract is part of an initiative announced in November 2001 by President Bush to use royalty oil from federal leases in the Gulf of Mexico to fill the Strategic Petroleum Reserve up to its 700 million barrel capacity. "Royalty oil" is that which is owed to the Federal government by producers who operate on Outer Continental Shelf tracts leased by the Department of the Interior. The royalty oil may be taken in kind and transferred to other Government agencies.
The contract with Equiva is the first of several anticipated exchanges of royalty oil that are expected to fill the Reserve to capacity as early as 2005.
Under the new contract, Equiva will begin taking royalty oil on April 1, 2002. Deliveries to the Strategic Petroleum Reserve generally will occur in the month following receipt of the royalty oil, and all deliveries are expected to be completed by May 2003.
The Strategic Petroleum Reserve has the capacity to hold 700 million barrels of crude oil at its four sites in Louisiana and Texas. The Reserve reached its highest inventory of 592 million barrels in 1994 and has been below that level since 1996. Other initiatives, including earlier royalty in kind transfers would have returned the inventory to 592 million barrels by January 2003, leaving 108 million barrels of unfilled capacity.
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For more information, contact:
News Media: Drew Malcomb, 202/586-5806
Program contact:
Lynnette LeMat, Office of Fossil Energy, 202/586-4398, e-mail: Lynnette.LeMat@hq.doe.gov
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