Oil Reserve

Some Concerns Remain About SPR Drawdown and Distribution Gao ID: RCED-91-16 November 28, 1990

Pursuant to a congressional request, GAO examined the Department of Energy's (DOE) Strategic Petroleum Reserve (SPR) drawdown plans, focusing on: (1) DOE capability for withdrawing and distributing SPR oil; (2) SPR compliance with pipeline safety requirements; and (3) the status of DOE actions to correct problems previously identified by GAO.

GAO found that: (1) DOE estimated that it could withdraw and distribute SPR oil at a maximum sustainable rate of approximately 3.5 million barrels per day for 90 days; (2) if DOE withdrew SPR oil at the maximum achievable rate, the bulk of oil would be drawn down within 200 days; (3) DOE could not reach its downgrade goal of 4.5 million barrels per day until it completed planned drawdown and distribution enhancements and stored enough oil at one of its sites to support its planned drawdown rate; (4) crude oil prices could be almost $5 per barrel higher if the withdrawal rate were 2.5 million instead of 3.5 million barrels per day; (5) insufficient availability of U.S.-flag tankers could hamper SPR drawdown and distribution; (6) DOE and oil industry officials believed that there were not enough U.S. tankers available to move the amount of oil at the higher drawdown rates; (7) DOE voluntarily attempted to comply with Department of Transportation (DOT) pipeline safety standards; (8) pipeline operation problems during drawdown could have severe economic and environmental impacts; (9) SPR contractors failed to perform right-of-way and erosion control equipment inspections as frequently as required and to retain pipeline repair records; and (10) SPR was not in full compliance with DOT safety standards. In addition, GAO found that DOE implemented several prior GAO recommendations involving: (1) conducting 20 drawdown-related tests between 1986 and 1989; (2) completing automated controls to operate valves and pumps and monitor control equipment; (3) developing a program to identify pipeline conditions and needed corrective actions; and (4) developing a logistics support system to ensure an adequate supply of spare parts.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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