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With Huge Infrastructure Bill on Table, U.S. to Sell Crude Held in Strategic Petroleum Reserve
The U.S. Department of Energy (DOE) plans to sell up to 20 million bbl of oil from the Strategic Petroleum Reserve (SPR) – double the level sold at an auction earlier this year – as the Biden administration complies with 2015 legislation and tries to raise funds to pay for a massive new infrastructure bill.
The House on Tuesday passed a resolution that paves a path for passage of a $1 trillion infrastructure bill that contains more than $500 billion in new spending. A final vote could come in September. The White House confirmed in June that SPR sales would help pay for the government investments, which would include spending on roads and bridges. The bill would also invest in programs to modernize the nation’s aging electricity grid with new transmission lines that could transport renewable energy.
DOE officials launched the SPR auction this week and said they would take bids until Tuesday (Aug. 31). The DOE plans to award contracts by Sept. 13, with deliveries between Oct. 1 and Dec. 15. The sales are to include oil stored at four SPR sites in Texas and Louisiana: Bryan Mount, Big Hill, West Hackberry and Bayou Choctaw.
The DOE in February sold 10.1 million bbl from the SPR to comply with the legislation that dates to 2015. Marathon Petroleum Supply and Trading LLC, Motiva Enterprises LLC, Phillips 66 Co., Shell Trading Co., Valero Marketing and Supply Co. and the Government of Australia purchased U.S. oil in that sale.
The new sale also helps the Biden administration comply with the 2015 law, which called for offering 58 million bbl between 2018 and 2025. The proceeds are to fund the federal government, research and modernization of the SPR.
The SPR held more than 620 million bbl of crude as of Aug. 20, according to the DOE.
The total sum gathered from the new auction will depend on fluctuating prices. West Texas Intermediate (WTI) oil prices slumped last week amid concerns about the fast-spreading coronavirus Delta variant and its potentially adverse impact on demand. WTI prices have rebounded this week and are up nearly 40% since the start of 2021.
The House on Tuesday also narrowly passed a Democrat-led budget resolution. That $3.5 trillion budget package previously advanced in the Senate on party line vote. Final House and Senate votes on the budget bill are expected in the fall.
The budget plan would do even more to combat climate change and meet Biden’s promises to put the United States on a path to a carbon-neutral economy by 2050. It calls for a series of tax incentives and other programs to push the United States to receive 80% of its electricity from renewable energy sources.
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