April 23, 2022 [Argus] – The Louisiana Offshore Oil Port (LOOP) is designating segregated storage capacity for crude deliveries from the US Strategic Petroleum Reserve (SPR) beginning in May, when the US Department of Energy (DOE) plans to release up to 2mn b/d of emergency reserves.
The announcement follows skepticism by US refiners about the ability of regional infrastructure to absorb roughly 1mn b/d of crude the White House aims to release from the SPR over the next six months, on top of the 30.225mn bl the DOE sold last month for delivery in May.
LOOP aims to divide the allocated storage into two streams for sweet and sour grades. “SPR Sweet” storage will accept deliveries of Bryan Mound Sweet, Big Hill Sweet, West Hackberry Sweet and Bayou Choctaw Sweet.
“SPR Sour” storage will accept Bryan Mound Sour, Big Hill Sour, West Hackberry Sour and Bayou Choctaw Sour, according to LOOP.
The company will charge 5¢/bl in capacity usage fees for the first 30 days.
LOOP representatives did not immediately respond to requests for further details.
The most recent SPR emergency drawdown sale concluded on 12 April. The DOE said today it awarded a combined 29.998mn bl to 12 companies for delivery in May and June, but price details were not yet available.
The DOE plans to issue a third notice of sale on 24 May for an additional 40mn bl of crude, with deliveries starting in June.
Crude from the Bryan Mound, Big Hill and West Hackberry SPR sites can flow to LOOP’s terminal in Clovelly, Louisiana, by way of Shell’s Zydeco pipeline traveling eastbound from the Houston, and Nederland, Texas, areas. The Bayou Choctaw site generally delivers to Baton Rouge and St James terminals, indicating that stream would likely stay in the regional refining centers or be delivered onto a vessel at the SPR marine terminal in St James.
From the Clovelly hub, crude can also be transferred to the St James-based Locap pipeline and terminal, which are also operated by LOOP.
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