The US Energy Department plans to lease roughly a third of its Strategic Petroleum Reserve (SPR) capacity to domestic producers as a crude oil storage capacity to alleviate the country’s crude supply glut.
Around 23 million barrels of oil storage capacity in its SPR are likely to be rented to nine companies under discussion. The tender was closed on April 9.
Most of the oil is planned to be transferred in May and June to four storage sites in Texas and Louisiana. initially, the Energy Department planned to rent as much as 30 million barrels of storage to local producers, and out of the planned rented capacity, 22.8 million barrels were allocated for the low-sulfur crude while the high-sulfur will take up the rest.
Small, medium and large producers will be able to schedule the return of their crude through March 2021. A small amount of oil will be substracted to cover SPR’s storage cost.
The Trump administration still intends to fill up the rest of the SPR, mainly by purchasing domestic crude. However, the initial buying proposal was blocked by Democrats in Congress and the purchase plan might be under revision as part of the upcoming stimulus package.
