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Deals on Gov’t Reserve Oil Reached

October 14, 2000

WASHINGTON (AP) _ The Energy Department completed deals with nine companies Saturday for the release of 23 million barrels of oil from the government’s reserve, and the first crude began flowing to distributors.

But two bidders tentatively awarded 7 million barrels failed to provide the necessary financial guarantees. As a result, the government will solicit new bids for the oil Monday, delaying its release, officials said.

The first 500,000 barrels began moving Saturday from at the Bryan Mound facility of the federal Strategic Petroleum Reserve in Louisiana, the Energy Department announced. It was among the 2 million barrels bid for by Morgan Stanley Dean Witter, which quickly resold it.

The 23 million barrels must be taken by the end of November under the contract agreements with the nine successful bidders. The oil to be offered again on Monday must be delivered by the end of December, officials said.

Also Saturday, the Energy Department announced that it had completed delivery of the last 67,000 barrels of heating oil for emergency storage in the Northeast this winter.

The emergency stockpile, totaling 2 million barrels, is being kept in storage tanks in New Jersey and Connecticut in case of supply disruptions in heating oil this winter.

President Clinton on Sept. 22 ordered the release of 30 million barrels from the emergency stockpile on the Louisiana-Texas Gulf Coast. He acted to ease tight supplies during this winter’s heating season.

Bids from 11 companies were accepted on Oct. 4. But Euell Energy Resources, a pipeline company based in Denver, and Lance Stroud Enterprises, a one-man brokerage firm in New York City, failed to come up with the required letters of credit, so their bids were dropped.

Renard Euell, the Colorado company’s chairman, said in an interview that he plans to bid on some of the 7 million barrels on Monday. The winning bidders for that oil will be announced Oct. 23, officials said.

Stroud, who operates out of his apartment in Manhattan, won tentative approval for 4 million barrels of oil, worth more than $133 million at current prices.

Sen. Frank Murkowski, R-Alaska, plans a hearing this week by his Energy and Natural Resources Committee to examine the bidding process.

On Friday, White House spokesman Jake Siewert said the bidding ``was arranged by career professionals at the DOE. We have no reason to think they didn’t do that job in a professional manner.″

One of the companies that had attracted attention, Burhany Energy Enterprises of Tallahassee, Fla., received approval to get 3 million barrels. The company immediately sold title to the oil to another company, but did come up with the required letters of credit to protect the government’s interest, officials said.


On the Net: Department of Energy: http://www.doe.gov

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