Leasing Storage Capacity for the Strategic Petroleum Reserve

In testimony before a congressional subcommittee, GAO agreed to provide supplemental information on accelerating the fill rate for the Strategic Petroleum Reserve (SPR) by leasing existing storage capacity on a temporary basis.

GAO found that, under the Department of Energy's (DOE) current expansion plans and the fiscal year budget proposal, the SPR fill rate will continue to be constrained by the rate at which underground storage capacity can be created. Leasing existing storage capacity until permanent capacity is available would enable DOE to accelerate the fill rate and take advantage of the relatively favorable oil prices which now exist. DOE would have to lease temporary storage capacity over 8 years to maintain an adequate fill rate until approximately 750 million barrels of oil are in storage. By fiscal year 1987, SPR oil would be stored in some combination of permanent and temporary storage. Thereafter, oil would be moved from temporary to permanent storage as capacity becomes available, and DOE would have to continue leasing storage capacity for about 3 more years. The cost of leasing temporary storage capacity was calculated using two price assumptions each for above ground storage tanks and oil tankers. GAO did not estimate prices for leasing above ground steel tanks or oil tankers, but calculated the costs for storage based on price ranges provided by DOE and industry groups.