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The History of the Strategic Petroleum Reserve

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While the need for an emergency supply of crude to protect the interests of the U.S. was first discussed in 1944, the Strategic Petroleum Reserve was established 50 years later when President Gerald Ford signed the Energy Policy Conservation Act (EPCA) into law on December 22, 1975.The Strategic Petroleum Reserve (SPR) is the United States' emergency oil stockpile. Capable of storing the equivalent of 727 million barrels of crude oil (a barrel contains 42 gallons), the SPR is the largest government-owned emergency supply of petroleum in the world.

 

The SPR is headquartered in New Orleans, LA with four storage sites along the coastline of the Gulf of Mexico: Bryan Mound, near Freeport, Texas; Big Hill near Winnie, Texas; West Hackberry, near Lake Charles, Louisiana; and Bayou Choctaw near Baton Rouge, Louisiana. The government chose this region for storing the oil because of the more than 500 naturally occurring salt domes and the ready access to refineries, tankers, barges, and pipelines. Storage caverns are hollowed out of the salt domes by injecting water, removing the brine, and then pumping oil into the resulting cavity.

 

Salt caverns were selected because they are a more secure, affordable and longer-lasting means of storage than above-ground tanks and had been used successfully by the petrochemical industry since the1950s. A typical cavern holds 10 million barrels of crude oil, and is 200-feet wide and 2,000-feet high.

 

When the government established the SPR, it acquired previously created salt caverns to store the first 250-million-barrels of oil, because this was the quickest way to establish an emergency supply. The first salt caverns were acquired in April 1977 and construction of the first surface facilities began two months later. On July 21, 1977, the first oil – approximately 412,000 barrels of Saudi Arabian light crude oil – was delivered to the SPR. To stockpile additional oil, the Department of Energy (DOE) created new caverns.

 

By 1994, 591.7-million-barrels had been purchased. Direct purchases of crude oil were suspended from October 1995 until January 2009 so that budget resources could be diverted to refurbishing equipment and extending the life of the SPR complex though at least 2025. However, fill was resumed in 1999 through a joint initiative between the DOE and the Department of the Interior to supply royalty oil from Federal offshore tracts to the SPR. This arrangement, called the Royalty-in-Kind (RIK) program, was specific to crude oil produced from Federal leases in the Gulf of Mexico and paid to the U.S. government in lieu of cash royalty payments. The program continued until 2009 when it was discontinued by the Department of the Interior. The SPR was filled to its 727-million-barrel capacity on December 27, 2009.

 

Over the years there have been multiple sales or trades of oil that help to reduce economic and security concerns affected by events through the world. Decisions to withdraw crude oil from the SPR or drawdowns are ordered by the President. In the event of an energy emergency, SPR oil is distributed by competitive sale. The SPR has been under these circumstances only three times: during the Persian Gulf War in 1991, after Hurricane Katrina in 2005, and most recently in 2011 due to unrest in the Middle East.

 

For a complete history of the Strategic Petroleum Reserve please visit the Department of Energy's website: Energy.gov.

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