Strategic Petroleum Reserve

Substantial Progress Made, but Capacity and Oil Quality Concerns Remain Gao ID: EMD-82-19 December 31, 1981

The Strategic Petroleum Reserve (SPR) is vital to the Nation's efforts to protect itself against oil embargoes or temporary oil shortages. GAO was asked to provide periodic status reports and an overall report on the Administration's efforts through fiscal year 1981 to fill SPR in compliance with the Energy Security Act.

During fiscal year 1981, the Administration far surpassed the required minimum fill rate and almost met the higher fill goal by adding to SPR at an average rate of about 292,000 barrels per day. By the end of fiscal year 1981, SPR contained more than twice the amount of oil that was in SPR at the beginning of the year. The oil was acquired through a competitive exchange of Naval Petroleum Reserve oil and open continuous solicitation of oil available on the spot market. In addition, the Department of Energy (DOE) acquired oil under a multi-year contract with the Mexican State oil company. The storage expansion plans of DOE fell considerably short of the fill rate goal and could be even less if existing construction problems continue. DOE has considered only those options for increasing the SPR fill rate which increase the size of the reserve and assume that the present schedule will be maintained. GAO believes that DOE should have considered additional options and questioned some of the assumptions of its assessment. Depending on decisions on the final size of the reserve, the fill rate, and funding levels, DOE may need to alter its current expansion plans. The quality of SPR oil is an important determinant of the amount of specific petroleum products available to the Nation during an interruption in supply. DOE has been accepting crude oil that is heavier than oil previously purchased without conducting an assessment. The likely impact of the heavier crude oil on the mix of oil products which might be available is not known at this time.

Recommendations

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