DOE Seeks 6 MMBbl of Crude to Refill Bayou Choctaw SPR Cavern

The Department of Energy (DOE) has issued two tenders to buy 6 MMBbl of U.S.-produced crude for delivery to the Strategic Petroleum Reserve (SPR)’s Bayou Choctaw storage cavern site in Louisiana. The purchases are part of the agency’s government-directed SPR buyback program which has secured nearly 40 MMBbl and follows the completion of Bayou Choctaw’s Life Extension 2 Project. It aims to help resupply the reserves after a 180-MMBbl emergency drawdown in 2022 to avert major supply disruptions and price rallies at the pump in the wake of Russia's invasion of Ukraine. Analysis from the Department of the Treasury showed that the releases, along with that from international partners, reduced gasoline prices by as much as $0.40/gal.  The tender is also coming on the heels of sharp declines in NYMEX oil futures in response to the OPEC+ alliance signaling it may begin to unwind some production starting later this year. In the first tender, the DOE seeks 1.5 MMBbl of sour crude for September delivery and offers are due no later than 11am CT on June 12. In the second solicitation, it seeks 4.5 MMBbl for October, November, and December deliveries, and offers are due no later than 11am CT on June 17. The DOE continues to aim for $79/bbl, or less, for its purchases, significantly lower than the average of about $95/bbl it got for the 2022 emergency SPR sales.