The Strategic Petroleum Reserve (SPR) is an emergency fuel storage of crude oil supply maintained by the United States government.
- Created in 1975 after oil crisis, it maintains a stockpile of over 600 million barrels of crude oil in storage caverns.
- Stored across four underground salt caverns along the coastline of the Gulf of Mexico.
- Intended to provide supply buffer against disruption and price spikes during emergencies or war.
- Controlled by the Department of Energy and can be tapped by President's order if required by situation.
- Oil is added to the reserve during periods of low prices to build inventory.
- The scale makes it the world’s largest supply of emergency crude oil, with capacity > 1 billion barrels.
In summary, the Strategic Petroleum Reserve is a US stockpile of crude maintained for contingency purposes to safeguard against global supply-demand dynamics or emergencies.
In 2004, the U.S. Department of Energy awarded five new contracts to deliver crude oil to the Strategic Petroleum Reserve (SPR) this spring under the Royalty-In-Kind (RIK) exchange program.
Atlantic Trading and Marketing Inc; Exxon Mobil Oil Corporation; Glencore, Ltd; Koch Supply and Trading, LP; and Shell Trading (US) Company, submitted the best offers and were awarded six-month contracts to begin delivering approximately 104,000 barrels per day of crude oil to the reserve, beginning this April.
As with all recent oil delivery contracts to the SPR, the crude oil will come from exchange arrangements the companies make for RIK crude produced from federal offshore leases in the Gulf of Mexico and owed to the U.S. government. The department awarded contracts to companies offering the highest exchange value of specification-grade oil for the SPR.
Under the RIK program, Federal Outer Continental Shelf tracts are leased to crude oil producers who deliver royalty oil from designated Gulf of Mexico production platforms to market centers along the Gulf Coast. The companies will receive crude from the market centers and deliver in-kind oil to the SPR. Actual volumes delivered to the SPR take into account adjustments for transportation and quality differentials.
The RIK program is managed by the Department of Interior Minerals Management Service and represents a practical means of filling the reserve in keeping with President Bush's objective to do so in a deliberate and cost-effective manner.
Approximately 643 million barrels of oil are currently stored in the SPR's underground salt caverns located along the Gulf Coast of Louisiana and Texas. The SPR is estimated to reach 700 million barrels in inventory, which is its current storage capacity, during 2005.