Eleven Bidders To Tap Oil Reserve
WASHINGTON (AP) _ The Energy Department announced agreements Wednesday with 11 companies and brokers to take 30 million barrels of oil from the government’s emergency reserve with deliveries to be completed by the end of November.
The 11 bidders agreed to return a like amount of crude, plus a 1.56 million barrel premium, late next year. No money was exchanged.
``These companies offered the best value in terms of restocking the strategic reserve a year from now,″ said Energy Secretary Bill Richardson.
Last month, President Clinton ordered the release of the oil from the federal Strategic Petroleum Reserve on the Louisiana and Texas Gulf Coast. Clinton said he decided on the release because of concern over tight supplies this winter and to boost the stocks of home heating oil.
Critics, including GOP presidential nominee George W. Bush, have accused Clinton of releasing the oil to help rival Al Gore in the tight presidential race.
Speaking earlier Wednesday at the National Press Club, Richardson dismissed those charges.
``Politics was not a factor. Charges of political pandering are simply untrue,″ said Richardson, arguing the oil was a ``good policy″ decision to ease the risk of winter home heating oil supply problems. He said the oil could provide an additional 3 to 5 million barrels of heating oil.
No money is being exchanged in what has been characterized as a temporary ``swap″ of government oil for crude to be returned to the reserve next year. The Energy Department did not release the number of bids it received or any other details about them.
Under the contractual agreements the 11 bidders will return 31.56 million barrels of oil to the government reserve between August and November of next year. The companies, are gambling that prices will decline, which means they benefit because they will be returning cheaper oil.
The Strategic Petroleum Reserve oil, currently 571 million barrels, is kept in salt domes along the Gulf Coast straddling the Texas-Louisiana border.
Most of the released oil _ 24.5 million barrels _ will come from the reserve’s West Hackberry storage facility in Louisiana and another 3.05 million barrels from the Bryan Mound storage facility in Texas. Both facilities are capable of discharging up to 1 million barrels a day, said a senior Energy Department official.
The remaining 2.9 million barrels are coming from the Bayou Choctaw storage facility in Louisiana.
The bidders, which included oil companies, middlemen and brokers, were:
Marathon Ashland Petroleum, Houston, 3.9 million barrels; Euell Energy, Aurora, Colo., 3 million barrels; BP Oil Supply Co., Warrenville, Ill., 6 million barrels; Elf Trading Inc., Houston, 1 million barrels;
Equiva Trading Co., Houston, 2.5 million barrels; Morgan Stanley Dean Witter, New York, 2 million barrels; Vitol S.A. Inc., Houston, 1.6 million barrels; Valero Marketing and Supply Co., San Antonio, Texas, 1 million barrels;
Burhany Energy Enterprises Inc., Tallahassee, Fla., 3 million barrels; Lance Stroud Enterprises Inc., New York, 4 million barrels; Hess Energy Inc., New York, 2 million barrels.