Govt sells 11 mln barrels emergency oil
By Tom Doggett and Chris Baltimore
Reuters
Wednesday, September 14, 2005; 10:26 AM
WASHINGTON (Reuters) - The U.S. Energy Department on Wednesday accepted bids from energy companies to buy 11 million barrels of crude oil from the government's emergency petroleum stockpile to help replace supplies disrupted by Hurricane Katrina, a spokesman said.
The companies that bought the oil from the Strategic Petroleum Reserve include BP, Marathon, Shell, Astra Oil and Vitol SA Inc, according to the department.
Of the oil sold, 10.8 million barrels were of "sweet" crude that refineries prefer because it is easier to process into gasoline and other oil products, and the remaining 200,000 barrels were the dirtier "sour" crude that normally has a higher sulfur content.
The Bush administration had offered to sell 30 million barrels of crude from the emergency stockpile after most oil production in the Gulf of Mexico was cut off and major refineries and pipelines were shut down because of the storm.
"This sale ensures that refineries have the petroleum they need to keep gasoline and diesel fuel flowing to American consumers while production facilities in the gulf region regain their capacity," said Energy Secretary Sam Bodman.
In the week after Katrina struck, the department also loaned 12.6 million barrels of the reserve's oil to refining companies.
With this latest action by the department, a total of 23.6 million barrels of crude from the stockpile will be put in the market.
Energy experts had cautioned that the full 30 million barrels offered by the government may not be purchased, because four major refineries on the Gulf Coast are still shut and would not be able to process the crude.
"I think if all those refineries were back up, you'd end up using (all the oil). If they're not up, they can't take advantage of it," American Petroleum Institute president Red Cavaney said.
"(The reserve's) basic intent was to provide crude oil at critical times to the users that had the need. If it isn't fully subscribed, then (the refinery) who had an urgent need was taken care of," Cavaney said.
The Energy Department had said four major refineries could remain offline for several months: ChevronTexaco's 325,000 bpd plant in Pascagoula, Mississippi; ConocoPhillips' 247,000 bpd plant in Bell Chase, Louisiana; ExxonMobil's 187,200 bpd plant in Chalmette, Louisiana, and Murphy Oil Corp.'s 120,000 bpd plant in Meraux, Louisiana.
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