History Of The Strategic Petroleum Reserve

on July 03, 2015 at 5:00 PM

View of a flame from burning residual ga

The Strategic Petroleum Reserve, or SPR, is a complex of four locations that stockpile emergency oil in deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf Coasts.

Although the idea of stockpiling emergency oil arose as early as 1944, it took the oil embargo of 1973-74 to spur the creation of the Strategic Petroleum Reserve, which was included in the Energy Policy and Conservation Act signed by President Ford in late 1975.

The salt caverns on the Gulf Coast were chosen as an inexpensive and secure location close to many U.S. refineries and distribution points for tankers, barges and pipelines.

The SPR can hold up to 727 million barrels. These are split into barrels of sour — meaning the oil contains more than 0.5 percent but less than 2 percent sulfur by weight — and barrels of sweet — oil with sulfur content less than 0.5 percent by weight. Sweet crude oil is more frequently requested from the SPR, as it can be processed by nearly all refiners; the same is not true of sour.

Oil can be drawn down from the SPR in three different ways: a full drawdown to counter a “severe energy interruption,” a limited drawdown of up to 30 million barrels — such as the drawdown that took place during Hurricane Katrina — and a drawdown for a test sale or exchange.

Test sales are held periodically to evaluate the SPR’s drawdown and sales procedures. In March 2014, the Energy Department held a test sale of 5 million barrels of SPR crude oil. Exchanges most often take place to address short-term supply disruptions to a refiner’s normal supply, such as a blocked shipping channel.

A full or limited drawdown can only be authorized by a sitting President. However, the Department of Energy can conduct test sales or exchanges. Thirteen days after a President’s decision, the Energy Department can withdraw up to 4.4 million barrels of crude oil per day and release it to the market.

To learn more about the Strategic Petroleum Reserve, check out the quick facts and FAQs on our Fossil Energy page.