DOE Will Buy Additional Oil for Strategic Petroleum Reserve

WASHINGTON, D.C. – The U.S. Department of Energy (DOE) today released a Request for Proposals (RFP) to purchase up to one million barrels of sweet crude oil to test the oil market. The oil is for delivery to the Strategic Petroleum Reserve (SPR) during July with early deliveries accepted in June.

Under this solicitation, DOE will purchase crude sourced from small to midsize U.S. oil producers. Delivery will be to one or more of three SPR storage sites – Big Hill (TX), Bryan Mound (TX), and Bayou Choctaw (LA) – based on bidder preference and scheduling logistics.

This crude oil purchase will serve as a test of the current conditions of physical crude oil available to the SPR, as opposed to the financial market trading WTI NYMEX futures contracts. This purchase complements deliveries of crude currently scheduled for June or July under DOE’s crude oil storage initiative, which was launched in April.

“We’ve opened up the storage for use by the private industry and we’re charging rent, essentially, for using the strategic reserve. So rather than going out and buying oil or charging people rent and having them paying cash, they pay in oil. So as a result, we’re filling the SPRO strategic reserve, and we’re doing it at the best price available. For the taxpayer that’s a really, really good deal, because we’re going to fill it up at some point in the future—not for free, but essentially for free at a very low price.”  Secretary of Energy Dan Brouillette explained CERAWeek Conversation interview, Secretary Brouillette notes that oil prices are beginning to stabilize. Watch his interview with Stuart Varney on stabilizing oil markets and President Trump’s transition to greatness, and his energy discussion with  David Westin of Bloomberg TV.

DOE must receive bids by 1PM Central Time on Wednesday May 27, 2020. DOE intends to award contracts by May 29, 2020. Deliveries will take place in June or July 2020. The solicitation is posted on the following websites – FedConnect, beta.sam.gov, and SPR websites. Bidders are encouraged to visit the websites regularly for updates, additional information, and changes or amendments to the RFP. Offerors must register in the System for Award Management (SAM) at https://www.sam.gov/.