U.S. energy secretary says it could take years to refill oil reserve

Credit: REUTERS/Richard Carson

By Timothy Gardner

WASHINGTON, March 23 (Reuters) - It could take years for the United States to refill the Strategic Petroleum Reserve, the energy secretary told lawmakers on Thursday, after sales directed by President Joe Biden last year pushed the stockpile to its lowest level since 1983.

"This year, it will be difficult for us to take advantage of this low price," Energy Secretary Jennifer Granholm told U.S. representatives in a congressional hearing. "But we will continue to look for that low price into the future because we intend to be able to save the taxpayer dollars."

Biden administration officials have said they want to refill the reserve, after last year's historic sale of 180 million barrels, when the oil price consistently is around $70 a barrel. Oil from that sale sold at about $94 per barrel.

The price for benchmark West Texas Intermediate crude futures CLc1 has fallen to around $70 per barrel this week on worries about the economy amid crises at several banks. Granholm said at the hearing the administration wants to buy oil back at under $72 a barrel.

The Department of Energy said last month it was implementing a three-part strategy to refill the reserve in the long term, including repurchases with about $4.5 billion in revenues from previous sales, returns of more than 25 million barrels of oil from previous exchanges, and working with Congress to avoid "unnecessary sales unrelated to supply disruptions."

The department succeeded last year in persuading Congress to cancel sales it had mandated of about 140 million barrels that had been set to take place from fiscal year 2024 to fiscal year 2027.

Still, the DOE is moving forward with a sale of 26 million barrels from the SPR that was mandated by Congress in earlier years to help fund the federal budget. The oil will be delivered from April 1 to June 20.

Granholm said that sale and maintenance at two of the reserve's four sites will make it difficult to buy back oil this year.

Bryan Mound in Texas and Bayou Choctaw in Louisiana were both undergoing planned "life extension" work, the department said later.

The SPR currently holds about 372 million barrels, the lowest since 1983, in hollowed-out salt caverns along the Gulf Coast. Steel pumps and other equipment are constantly exposed to moist salty air.

(Reporting by Timothy Gardner; Editing by Marguerita Choy and Jonathan Oatis)

((timothy.gardner@thomsonreuters.com; +1 202 380-8348 (Twitter @timogard); Reuters Messaging: timothy.gardner.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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