DOE plans to sell some crude oil from strategic reserves in 2021

The U.S. Department of Energy (DOE) plans to sell crude oil from the Strategic Petroleum Reserve (SPR) over a multi-month period during Fiscal Year (FY) 2021.

The DOE expects to begin deliveries in May 2021, but they could begin as early as April if market conditions warrant. The precise timing and amount that is sold is to be determined.

The SPR is the world’s largest supply of emergency crude oil, stored in underground salt caverns at four storage sites in Texas and Louisiana. The reserve has been invaluable in times of emergency oil shortages, such as hurricanes and geopolitical events, or during oil surpluses, such as those caused by COVID-19 related demand destruction.

The Bipartisan Budget Act of 2015 and the Consolidated Appropriations Act of 2018 require a mandatory sale of slightly more than 10 million barrels during FY 2021 with the proceeds deposited in the U.S. Treasury by fiscal year-end. Further, as modified by the CARES Act of 2020, the Energy Secretary may sell additional oil to raise up to $450 million for infrastructure modernization at the SPR. This could require up to 10 million barrels of additional sales.

After the DOE establishes its FY 2021 sales plan, all sales will be publicly announced. Companies that wish to participate in the sale may register through the SPR website’s Crude Oil Sales Offer Program. The DOE welcomes industry input on the sales, which can be done by contacting Barton Barnhart, deputy assistant secretary of petroleum reserves, U.S. Department of Energy, at barton.barnhart@hq.doe.gov.