Status of Strategic Petroleum Reserve Activities--July 1981

Gao ID: EMD-81-118 July 17, 1981

GAO undertook a review of the status of Strategic Petroleum Reserve (SPR) storage facilities and the Government's activities to contract for SPR oil as of July 10, 1981. The review was based on the Department of Energy and Defense Fuel Supply Center (DFSC) SPR program documents and on publications and studies related to the program. This review is the seventh in a series of status reviews that were requested by Members of Congress to implement the Energy Security Act.

In its review, GAO found that the Government awarded contracts for an additional 14.2 million barrels of oil to be delivered to the SPR during July and August 1981. As of July 10, 1981, DFSC, which is the DOE oil purchasing agent for the SPR, completed evaluating 33 offers to sell about 83 million barrels of oil to the SPR and awarded contracts for about 14.2 million barrels of oil. These latest contracts bring the total oil acquired for the SPR for fiscal year 1981 to about 94.9 million barrels. This is equivalent to an average rate of about 260,000 barrels per day for the entire fiscal year. So far this fiscal year, DOE has received oil at an average rate of about 249,000 barrels per day. GAO also found that DOE has completed testing and final preparation of the 8-million-barrel West Hackberry cavern and the 5.6-million-barrel Sulphur Mines cavern. The completion of work on these two caverns by DOE brings total available SPR storage capacity to about 232 million barrels. In regard to funding for the SPR, the President has signed an appropriation bill which provides an additional $1.3 billion for SPR. DOE intends to use the appropriations to purchase additional oil through spot and long-term contracts. Additionally, the Government could use either spot-market purchases of oil to be delivered after October 1982, long-term advance purchases of oil for fiscal year 1982 deliveries, or a combination of both to meet the Energy Security Act's fiscal year 1982 minimum 100,000 barrels-per-day supply requirement.

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