March 14, 2011 [OPIS] - The U.S. Department of Energy, through its agent, DLA Energy, has issued a solicitation for new contracts to store 2 million bbl of ultra-low-sulfur distillate for the Northeast Home Heating Oil Reserve in New York Harbor and New England.
Offers are due no later than 9:00 a.m. EDT on Mar. 29.
The previous storage contract holders were Hess and Morgan Stanley.
DOE plans to buy 2 million bbl of ULSD to refill the strategic reserve only in summer. In February, DOE sold 2 million bbl of heating oil for March lifting.
Of the U.S. households that use heating oil to heat their homes, 69% reside in the Northeast.
The Northeast Home Heating Oil Reserve was established by the Energy Policy Act of 2000 to provide an emergency buffer that can supplement commercial fuel supplies in the event of an actual or imminent severe supply disruption.
The Reserve can provide supplemental supplies for up to 10 days, the time required for ships to carry heating oil from the Gulf of Mexico to New York Harbor. DOE is moving toward conversion of its current stocks of heating oil to cleaner-burning ultra-low-sulfur distillate through use of an online interactive bidding system to sell the current stocks.
Receipts from the sales will be used to purchase ultra-low-sulfur distillate prior to the beginning of the next heating season. New storage contracts must be in place by summer 2011 in order to allow for timely delivery and storage of the new fuel stocks.
