Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: James Cherney who wrote (46549)	6/16/1999 8:30:00 PM
From: pz	Read Replies (1) of 95453

Wednesday June 16, 6:52 pm Eastern Time FOCUS -U.S. to add 9.3 ml barrels to oil stockpile By Tom Doggett WASHINGTON, June 16 (Reuters) - The U.S. Government signed contracts on Wednesday with energy companies to add 9.3 million barrels of oil to the nation's emergency stockpile of crude oil. The oil will be turned over by the companies, including Mobil Corp (NYSE:MOB - news), Texaco Inc (NYSE:TX - news) and Shell Oil , in lieu of making cash royalty payments on crude found in the Gulf of Mexico. The arrangement is part of the Clinton Administration's plan to add 28 million barrels of so-called ''royalty'' oil to the Strategic Petroleum Reserve. While taxpayer money is not being spent to buy oil for the reserve, energy companies are avoiding paying millions of dollars in cash royalties to the government. The Energy and Interior Departments are overseeing the oil transfer program. The reserve was created after the 1973 Arab oil embargo and is designed to offset disruptions in oil supplies. The reserve currently contains 574 million barrels of crude in a series of underground salt caverns in Texas and Louisiana, with room to store another 107 million barrels. Combined with contracts awarded to energy companies earlier this spring to deliver 4 million barrels, the new deals bring the amount of oil to be transferred into the reserve to 13.2 million barrels. The oil transfers reached in the spring should be completed by August, while the latest crude will be delivered between this August and next February. The new contracts are the first to be awarded in a competitive process open to all companies holding federal leases in the Gulf and to oil traders that deal with offshore producers, the departments said. The quality of oil to be delivered to the reserve will be adjusted to account for transportation expenses from lease sites and quality differences. The administration plans to sign additional contracts later this year to meet its 28 million-barrel goal.

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