Strategic Petroleum Reserve Mission (2020 DOE Transition): Difference between revisions

Congress mandated several sales of SPR crude oil as an offset to various laws requiring additional funding during FY17-FY28 (see table below). These sales will reduce the SPR inventory from nearly 700 million barrels to about 400 million barrels. DOE proposed to disestablish the [[Northeast Gasoline Supply Reserve]] (NGSR) in the FY21 budget. As proposed, DOE would draw down and sell one million barrels of refined petroleum product from the NGSR during FY21, with $19 million of the proceeds from the sale to be deposited into the SPR Petroleum Account for Congressionally-mandated crude oil sale logistical/transportation costs. Any proceeds in excess of $19 million collected from the sale shall be deposited into the general fund of the Treasury during FY21 and dedicated to deficit reduction. Congress rejected previous proposals to disestablish the NGSR.

* The number and volume of sales over this 12-year period is unlike anything the SPR has previously experienced. Congressionally-mandated sales and demand disruption create an added strain on the infrastructure during the execution of the LE2 project. The FY21 House Mark provides $195M without support to disestablish NGSR. If the Mark prevails, an additional $20M is required above the request to maintain the NGSR annual lease; otherwise, SPR maintenance programs will be cut during a time maintenance is crucial to ensure requisite infrastructure to safely meet requirements.

* [[Congress]] allowed for a delay to the final ESIM sale (marked as TBD in the top row of the sales chart), but did not delay any other sales, so unless Congress delays the FY21 mandated sale of 10.1 million barrels, that sale will proceed in spring 2021.

* The FY21 Budget Request did not include a request for direct appropriation for the SPR Petroleum Account; instead, DOE proposed the sale of the NGSR’s one-million barrels of refined petroleum product (gasoline blendstock) and requested authorization to deposit sale proceeds into the SPR Petroleum Account up to $19 million. The House Mark provided $7.5M in the SPR Petroleum Account. To support ~30 million barrel drawdown capability during a supply interruption, SPR historically attempts to maintain ~$15M in the SPR Petroleum Account; readiness to support a ~30 million barrel fill action would require an additional $6M. Due to the execution of FY20 unplanned activities in response to the COVID-19 demand destruction, the SPR Petroleum Account resources for emergency drawdown/fill are estimated to be $8.5M which supports ~17 million barrel emergency drawdown. A larger drawdown would require additional funds. The following table reflects FY20 SPR Petroleum Account balances and FY21 requirements based on the House Mark.

* Hurricane Laura damaged the West Hackberry site. The initial damage assessment cost range was $25M - $95M. Congress requested to be kept apprised of estimates as they evolve.

* The additional supply surplus mission has not been formalized. A requirements study and a configuration study were in Departmental coordination prior to the new fill mission’s identification as a possible Departmental need (not yet formalized). To account for supply surplus use, the requirements and configuration studies are being updated to reflect impacts of the new mission.