The U.S. Department of Energy on Monday announced that it would accept bids until 2:00 p.m. August 28 for 11 million barrels of sour crude oil to be sold from the nation’s Strategic Petroleum Reserve (SPR). The sale is one of several planned sales that will occur over the next eight years, all of which were mandated by Congress.
This current sale includes 6 million barrels authorized to be sold in fiscal year 2019 and 5 million barrels authorized for sale in 2018. The delivery period for a successful bidder is October 1 through November 30 of this year.
The oil for sale is currently being stored in two locations in Texas–Bryan Mound and Big Hill–and one in Louisiana–West Hackberry.
Earlier this year Congress approved the sale of 100 million barrels from the SPR to begin in 2022 and end in 2027. The first sale of some 30 million barrels would be sold between 2022 and 2025, 35 million barrels would be sold in 2026, and another 35 million barrels would be sold in 2027. As of last Wednesday the U.S. SPR held 660 million barrels of its theoretical capacity of 727 million barrel capacity.
At today’s level the SPR is equal to 143 days of U.S. import requirements. As a member of the OECD, the United States has committed to maintaining a strategic reserve equal to 90 days of import quantities. The average price paid per SPR barrel is $29.70.
The DoE’s reference price for the barrels on offer is $67.444 a barrel. That does not mean that the government will realize that price.