NEWS MEDIA CONTACT: FOR IMMEDIATE RELEASE
John Donnelly 202/586-5806 February 5, 1991
Phil Keif 202/586-5806
FIRST OIL SHIPPED FROM STRATEGIC PETROLEUM RESERVE
Crude oil from the U.S. Strategic Petroleum Reserve, drawn as a
precautionary measure following the outbreak of hostilities in the Persian
Gulf war, was delivered to the first of its commercial buyers today.
Less than three weeks after President Bush ordered the sale of a small
portion of the government stockpiled crude oil, the U.S. Department of Energy
today began transferring 200,000 barrels of "sweet," or low sulfur, crude oil
from its West Hackberry storage site in Louisiana to Crown Central Petroleum
Corp. of Bellaire, Texas. Transfer of the crude oil took place at the Sun
Terminal at Nederland, Texas.
"Our delivery today marks the first time the Strategic Reserve has shipped
crude oil under non-test conditions," said Secretary of Energy James D. Watkins.
"This is an historic event both because it is the first shipment in an actual
drawdown and because it is part of an unprecedented coordinated response among
International Energy Agency (IEA) countries."
"This delivery demonstrates in very real terms that the SPR process works
well and is able to deliver oil to the market in a very short timeframe and on,
or ahead of, schedule. We clearly can get oil to the market in less time than
it takes for delivery from the Persian Gulf," said Watkins. "We have responded
quickly and efficiently to purchasers' requests for expedited drawdown and delivery.
We saw this level of proficiency in our test sale last fall, and I'm pleased to
report that now, under actual sale conditions, we have seen no dropoff in our
capacity to deliver oil on, or ahead of, schedule."
In addition to the Crown Central shipment, the department expects to begin
moving 250,000 barrels of higher sulfur, or "sour," crude oil from its Bryan Mound
site in Texas to Lyondell Petrochemical Co., of Houston, later today.
Immediately after the Lyondell shipment, the department likely will begin
shipping 400,000 barrels of Bryan Mound sour crude to Phibro Energy Inc. of
Greenwich, Connecticut.
DOE said that the Lyondell and Phibro shipments could be reversed once
final delivery arrangements are completed late this afternoon. Since both
shipments will use the ARCO Pipeline Co. terminal in Texas City, Texas, the
actual timing of the oil movements will be made once all the necessary purchase
contracts are signed, and final arrangements are made with the terminal operator.
DOE also said that several of the 13 buyers it selected last week have
requested expedited delivery of crude oil, and as much as 1.5 million barrels
of Strategic Petroleum Reserve crude oil could be shipped this week.
In all, 17.3 million barrels of crude oil will be withdrawn from the
585 million barrel government stockpile and moved to purchasers by the end of
March.
All of the oil expected to be shipped this week will be transported by pipeline.
The remainder of the shipments will take place via pipeline, barge or tanker.
Final payments for the crude oil will be calculated following each shipment.
DOE is using a price indexing system to track changes in the crude oil market and
adjust the purchasers' bid prices accordingly.
- DOE-
R-91-030
