Status of Strategic Petroleum Reserve Activities as of March 31, 1984

In response to a congressional request, GAO reported on the Department of Energy's (DOE) progress in filling the Strategic Petroleum Reserve (SPR) and in complying with the requirements of applicable law during the second quarter of fiscal year (FY) 1984.

During the quarter, the administration released its FY 1985 budget proposal which requested funds to: (1) fill the SPR at a rate of 145,000 barrels of oil per day; and (2) construct a new storage site. DOE added 12.7 million barrels of oil at an average fill rate of 140,000 barrels per day, bringing the total oil in the SPR to approximately 391.8 million barrels. A pipeline break at a storage site and preparation for an oil movement test slowed the effort to expand underground storage capacity. GAO found that DOE paid $512 million for oil acquisition and transportation, had unpaid obligations of $1.4 billion, and had $447 million in unobligated funds available for additional oil purchases. DOE has made 85 recommendations to improve SPR drawdown decisionmaking and the process of selling and distributing oil as well as conducting a successful oil movement test. DOE is also assessing the impact of the sale of three privately owned crude oil pipelines that it planned to use in the event of a drawdown. In addition, DOE has made a management change in the SPR Project Management Office and eliminated and downgraded some positions. It also announced its intention to solicit bids for a management, operations, and maintenance contractor to replace several current SPR contractors. Finally, an estimate of $264 million has been submitted for the cost of operations and maintenance by one current contractor, which is $71 million more than the original estimate because of DOE directives for additional work.