Looks like Bubba is tapping the SPR in trade for heating oil:
biz.yahoo.com
Thursday August 24, 5:04 pm Eastern Time
US fills half of Northeast heating oil reserve
(UPDATE: Recasts with more details of storage locations, Richardson comments)
By Tom Doggett
WASHINGTON, Aug 24 (Reuters) - The U.S. Government moved forward with its plans
to establish a two-million-barrel heating oil reserve for Northeast this winter, signing a
contract Thursday with Equiva Trading to fill half the emergency stockpile, the Energy
Department announced.
The Clinton administration is setting up the reserve to counter supply disruptions and avoid high prices in the region which
consumes the most heating oil nationwide.
Equiva Trading, which is joint marketing arm for Texaco (NYSE:TX - news), Shell Oil (quote from Yahoo! UK & Ireland:
SHEL.L) and state owned Saudi Aramco, will deliver one million barrels of heating oil to the reserve's storage tanks in New
Haven, Conn.
The Energy Department did not receive enough favourable bids to fill the entire reserve like it wanted, so it will again ask oil
companies next week for best and final offers for the remaining one million barrels of heating fuel, a Department official said.
The Department will then announce which firm or firms will deliver the rest of the heating oil to the emergency reserve's storage
facilities in Woodbridge, N.J., the official said.
The heating fuel is scheduled to be delivered to both sites beginning in October.
The government is not paying cash for the heating oil or the storage tanks, but will instead exchange crude oil from the
571-million-barrel Strategic Petroleum Reserve for the fuel and facilities.
Last week, the government signed contracts with Amerada Hess Corp. (NYSE:AHC - news), Equiva Trading and Morgan
Stanley Capital Group to provide the storage tanks in the New York Harbour area and New Haven to hold the emergency
stockpile.
Half the heating oil will be stored in New Haven and other half in the New York Harbour.
The storage terminals have tanker, barge, truck or pipeline connections, making it possible to move the stockpiled heating oil
into the market within 10 days if the government decided to tap the reserve.
U.S. Energy Secretary Bill Richardson has expressed concern that heating oil inventories in the Northeast will be too low this
winter and that there's a possibility of shortages. Heating oil prices are expected to be high.
The government is setting up the reserve on a temporary basis for this winter and possible next winter, if it exercises its option
to extend the contracts.
Congress must still pass legislation to establish the reserve on a permanent basis. Lawmakers will take up such a bill when they
return from their summer recess next month. |
