The Biden administration has been on a mission for more than a year to restock the Strategic Petroleum Reserve (SPR), which was tapped at unprecedented levels in an effort to keep crude oil and refined product prices under control after Russia’s invasion of Ukraine in early 2022 disrupted energy flows globally. But if returning all of the released 180 MMbbl and replenishing the SPR to pre-war levels was the plan, they’ve got a long way to go. In today’s RBN blog, we examine the steps the administration has taken to replenish the reserve and the headwinds it faces.
The SPR is the largest emergency crude stockpile in the world. It was first proposed in the 1940s, but not established until 1975 and the first barrels weren’t added until 1977, four years after Arab members of producer cartel OPEC cut off oil flows to the U.S. after it provided aid to Israel during the Yom Kippur War. At that point, the U.S. was heavily dependent on Middle East crude for use at domestic refineries. (Many still remember idling in their cars in long lines at gas stations in hopes of getting a few gallons). The reserve was aimed at bolstering energy security and meeting the nation’s pledges with the then three-year-old International Energy Agency (IEA). According to a 1974 agreement, IEA members must hold stocks equivalent to at least 90 days of net oil imports, based on the previous year’s annual average. U.S. net imports averaged 2.42 MMb/d in 2023, so the total required in storage would be 217.8 MMbbl, or 58% of the SPR’s current inventory (more on that in a bit).
Remembering Robert Sanz
Our RBN team is profoundly saddened this week by the unexpected passing of our dear friend and colleague, Bob Sanz, on July 13, 2024. According to his obituary, Bob was visiting his grandfather Arthur G. Boughner’s home, Brookhaven, in Confluence, PA, when he suffered a cardiac arrest during a cold morning swim.
Bob's loss is deeply felt by all of us at RBN. He was a trusted advisor in all matters related to crude oil shipping, exports, trading, and virtually everything connected to the oil markets. As our first customer and the instigator of our popular wall map products, Bob's influence and insight were invaluable. He believed “that It doesn’t make sense until you can see it on a map,” and his perspective helped shape our approach.
Born on October 21, 1949, in Washington DC to Robert B. Sanz and Elaine Boughner Sanz, Bob had an incredible career as a UDT SEAL in the U.S. Navy, earning the cherished moniker “Mad Spaniard.” Following his distinguished military service, he entered the energy industry, enjoying a rich 48-year career, including a stint at Tesoro. Bob was well-known for his willingness to help anyone in need, living out his faith through his generous spirit, sage advice, tenacity, and determination to bring joy to others.
Bob was always keen for a proper steak, and we are grateful to have enjoyed a steak dinner with him in Houston just a few weeks ago. His presence, wisdom, and warmth will be sorely missed by all who knew him.
Funeral services will be held on Thursday morning, July 25, 2024, at St. Paul Catholic Church, Nassau St, Princeton, NJ at 10:00 am. Bob, you will be deeply missed, and your memory will forever be cherished.
As shown in Figure 1 below, the federal crude oil storage program is located at two sites in Texas (Bryan Mound and Big Hill) and two more in Louisiana (West Hackberry and Bayou Choctaw). Oil is kept in underground salt caverns — 61 in all — that have a combined authorized capacity of 714 MMbbl. (The SPR once had an even higher storage limit of 727 MMbbl and reached that level in December 2009.) The SPR contains both domestic and foreign-sourced crude oils and, for the most part, these are of medium to light gravity (30 to 40 degrees API) and contain less than 2% sulfur. The Department of Energy (DOE) commingles the crudes according to their sulfur content –– sweet (less than 0.5% sulfur) or sour (greater than 0.5% but less than 2%). For most of its lifespan, the reserve has held more than 500 MMbbl, or just over 70% of capacity.
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