US choses new site to expand emergency oil reserve
08 Dec 2006 20:48:58 GMT Source: Reuters
(Adds Bodman comment, details on storage site) By Tom Doggett WASHINGTON, Dec 8 (Reuters) - The U.S. Energy Department said on Friday it had chosen a new storage site in Mississippi to hold about 160 million barrels of oil as part of the government's plan to expand the nation's emergency petroleum stockpile and protect the country from supply disruptions. The new site will be a group of salt domes in the town of Richton, in southeastern Mississippi. Oil will be brought to the site by pipeline from Pascagoula along the Gulf Coast. The department said because the site was located inland, it would be less vulnerable to hurricanes. The department also said it wanted to expand three of the Strategic Petroleum Reserve's four existing storage sites in Texas and Louisiana to help bring the emergency stockpile's capacity to 1 billion barrels. The three sites are Big Hill in Texas, and Bayou Choctaw and West Hackberry in Louisiana. The oil reserve currently has a storage capacity of about 727 million barrels, but Congress passed an energy bill last year requiring the boost in the stockpile's size. "As our nation's use of crude oil increases, so, too, must our reserve supply. So, by preparing to expand the capacity of our Strategic Petroleum Reserve, we will be able to accomplish just that," Energy Secretary Sam Bodman said. Mississippi's congressional delegation welcomed the selection of Richton as the new storage site. "Abundant, affordable energy is the lifeblood of our economy and we saw the vulnerability of our entire nation to energy shortages when Katrina hit the Mississippi Gulf Coast," said Rep. Charles Pickering. "This reserve provides an additional option in times of energy crisis." The department's plan will be subject to public comment. The petroleum reserve was created by Congress in the mid-1970s in response to the Arab oil embargo. The stockpile now holds about 689 million barrels of crude oil. The United States uses about 21 million barrels of oil a day, 12 million of which are imported. That means the reserve can now provide about 57 days of U.S. oil imports. The Energy Department has said it would take about 15 years to increase the reserve to 1 billion barrels. To the get the new oil, the department has said, it could buy the crude, transfer some of oil the government receives as royalty payments or allow energy companies to delay returning oil they borrow from the stockpile, which would result in more barrels coming into the reserve as interest at a future date.
