After millions of barrels of withdraws, U.S. government has finally started to buy some of it back- however, given the difference between hundreds of millions of draws and only 3 million repurchase, the oil industry in the U.S. isn’t that happy. Department of Energy conveyed the cancellation of further 140 million barrels in “congressionally mandated” sales between 2024 to 2027. The crude stocks right now stand at 362 million barrels which was 543 million barrels in May 2022.
The U.S. strategic reserves were built 50 years ago. It is meant to be used in case of emergency and are stored in underground facilities. The maximum limit that can be withdrawn on a single day is 4.4 million - which is about 25 percent of the country’s daily consumption. Once withdrawn it takes two weeks for the oil to hit the markets.
Source: Council on Foreign Relations
Where is it located?
The four sites are lcoated in undergroound caverns in Gulf of Mexico with two sites in Texas called Byran Mound and Big Hill and two in Louisiana namely West Hackberry and Bayou Choctaw. They cost almost 10 times less than surface tanks and 20 times less than hard rock mines.
The cavern range from 6 to 37 million barrels in holding capacity and has a cylindrical shape with average of 10 million barrels capacity. There are total of 60 such caverns and have a total capacity of 714 million barrels.
What about the draws?
December 29th, 2007 was the time when SPR was full to its maximum at 727 million barrels.
There has been more than three dozens of total draws from the SPR. The recent withdraws, before Russia-Ukraine war, was to cover the demand rebound post-Covid 19.
That’s all. There is a whole debate to SPR and it is highly relevant these days. But I thought it would be equally useful to just provide an overview of what the SPR actually is!