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United States Energy Emergency Response November 7, 2012

Click to edit Master title style. United States Energy Emergency Response November 7, 2012. David Johnson Deputy Assistant Secretary Office of Petroleum Reserves Washington, DC. Energy Emergency Response Programs. Strategic Petroleum Reserve. Northeast Home Heating Oil Reserve.

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United States Energy Emergency Response November 7, 2012

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  1. Click to edit Master title style United States Energy Emergency ResponseNovember 7, 2012 David Johnson Deputy Assistant Secretary Office of Petroleum Reserves Washington, DC

  2. Energy Emergency Response Programs Strategic Petroleum Reserve Northeast Home Heating Oil Reserve Established in 1975 727 Million Barrels Reserve Crude Oil Established in 2000 1 Million Barrel Reserve Heating Oil (ULSD)

  3. United States Strategic Petroleum Reserve • Established by U.S. Law: Energy Policy & Conservation Act (EPCA) December 1975 • Mission: To ensure U.S. Energy Security: • To reduce the impacts of potential disruptions in U.S. petroleum supplies. • To carry out U.S. obligations under International Energy Program (IEA). • National Energy Policy (2001): “the United States also counts on the Strategic Petroleum Reserve as a national defense fuel reserve” 1973 Arab Oil Embargo International Energy Program

  4. Strategic Petroleum Reserve Implementation • U.S. Government Ownership • Centralized in U.S. Gulf Coast • Major U.S. Refining Centers • Entry Point for 70% of U.S. Imports • Flexibility in Response • Underground Storage in Salt Dome Formations • Maximum Safety and Security • Low Environmental Impacts • Lowest Storage Cost • Crude Oil Storage Only • Light Low-Sulfur Crude (S<0.5%) • Light Med-Sulfur Crude (S<2.0%)

  5. Strategic Petroleum Reserve Storage Facilities Bayou Choctaw West Hackberry Bryan Mound Big Hill Storage FacilityCapacityInventoryDD Rate Bryan Mound 254 Million 241 Million 1.35 MMB/d* Big Hill 170 Million 165 Million 1.1 MMB/d West Hackberry 227 Million 216 Million 1.3 MMB/d Bayou Choctaw 76 Million73 Million0.5 MMB/d Total 727 Million 695 Million 4.25 MMB/d ____________ * Bryan Mound Drawdown Rate - Reduced from 1.5 Million B/D to 1.35 Million B/D due to a storage tank out-of-service

  6. Strategic Petroleum Reserve Oil Drawdown Capability • Maximum Sustained Drawdown : 4.4 Million B/D for 90 Days • Full Drawdown of Inventory in 180 Days 695 Million Barrel Crude Oil Inventory

  7. Strategic Petroleum Reserve Oil Distribution Capability • Pipeline Capabilities - 23 Gulf Refineries (Imports of 3.6 MMB/D) • Marine Capabilities - 5 Terminals (Capacity of 2.5 MMB/D)

  8. United StatesCrude Oil Import Protection *STEO: EIA Short-Term Energy Outlook (October 2012)

  9. SPR Drawdown Policies • Energy Policy & Conservation Act: • Release Authority: President of the U.S. • Conditions for Release: • “Severe Petroleum Supply Interruption” • To meet U.S. obligations in an IEA Action • Other Authorities: Test Sales & Exchanges • Release Method: Public Sale Offering • Exports: Restrictions • SPR Oil Account for Repurchase • U.S. Administration Policy on SPR: • To be used in coordination with IEA • To be used to mitigate economic damage resulting from supply shortages, not to control oil prices

  10. Prior SPR Oil Releases SPR Drawdowns (IEA Actions): 1991 Iraq War: 17.3 MMB 2005 Hurricane Katrina: 11.0 MMB 2011 Libya Situation: 30.6 MMB SPR Test Sales: 1985 Test Sale: 1.0 MMB 1990 Test Sale:3.9 MMB Emergency Exchanges (Loans): Seaway Emergency (1996): 1.0 MMB Ship Channel Closure (2000): 1.0 MMB Time Exchange 2000: 30.0 MMB Hurricane Ivan (2004): 5.4 MMB Hurricane Katrina (2005): 9.8 MMB Ship Channel Closures (2006): 1.6 MMB Hurricane Gustav/Ike (2008): 5.4 MMB Hurricane Isaac (2011): 1.0 MMB 1991 Iraq War 2005 Hurricane Katrina

  11. United StatesNortheast Home Heating Oil Reserve Established by Law: • President Clinton directed the Reserve establishment in July 2000. Mission: • To protect the Northeast against high vulnerability of winter-related supply shortages. • To protect the safety and health of the Northeast Residents. • Implementation Policy: • Size: 1 Million Barrels • Stocks: Ultra Low Sulfur Distillate (ULSD) • Storage Location: New England (CT & MA) • Protection: 5-6 days of Consumption

  12. United States Heating Oil Consumption Petroleum Allocation Defense Districts (PADD) (Thousand Barrels) PADD 1A 35.9% (41,852) PADD V & PADD IV < 2% PADD II PADD 1B 5.7% (6,663) 49.5% (57,697) PADD 1C 5.6% (6,568) PADD III 1.6% (1,881) SPR3324.ppt SPR3324.ppt

  13. Strategic Petroleum ReserveDrawdown 2011 IEA Collective Action: • On 6/23/11, the IEA announced the planned release of 60 million barrels to address the oil shortages created by the disruption in Libyan oil supplies. • IEA Allocation: 50% from N. America, 30% from Europe & 20% from Asia. • U.S. Share of the Collective Action: 30.237 million barrels. U.S. Response Action: • On 6/23/11, the President directed the Secretary of Energy to draw down the SPR to meet U.S. obligations under the International Energy Program. • On 6/24/11, the SPR issued a Notice of Sale for: • 30 million barrels of light sweet crude • Delivery in July and August 2011

  14. Strategic Petroleum ReserveOil Sale & Drawdown Activities Submission Financial Guarantees IEA Announces Oil Release Certify LOC & Award Contracts Post SPR Notice of Sale Notification Successful Offerors Bid Period Jun 24-29 2PM EDT Scheduling Of Oil Deliveries Commence Early Oil Deliveries Commence Last Oil Deliveries

  15. SPR Drawdown 2011 U.S. IEA Obligation 30.237 Million Barrels U.S. SPR Response 30.640 Million Barrels

  16. SPR Drawdown 2011

  17. U.S. Hurricane Vulnerability • Approx. 50% of the U.S. petroleum refining capacity is located along the U.S. Gulf of Mexico coastline. • The Gulf Coast has been impacted by 14 Hurricanes since 1998, including 5 major ones (Cat 3-5). • The annual probability of having one or more hurricanes hitting the Gulf Coast is 56.4% (NOAA). • Hurricanes cause disruption to U.S. oil production, refining operations and product supplies.

  18. Hurricane Vulnerability of Gulf Coast Refining Centers 2 Refiners Capacity 410 MBD Capline 7 Refiners Capacity 1,817 MBD 11 Refiners Capacity 2,347 MBD BATON ROUGE LAKE CHARLES 9 Refiners Capacity 2,325 MBD PORT ARTHUR NEW ORLEANS Bayou Choctaw PASCAGOULA Shell HOUSTON West Hackberry Locap Big Hill Odyssey Petronius TEXAS CITY Mardi Gras Bryan Mound Mountaineer FREEPORT EugeneIsland Cameron Highway Auger LOOP 4 Refiners Capacity 688 MBD Amberjack Poseidon Mars Blind Faith URSA Thunder Hawk Mars HOOPS Thunder Horse SS 332 Poseidon Devil’s Tower Allegheny CORPUS CHRISTI Droshky Caesar U.S Department of Energy Strategic Petroleum Reserve Program Washington, D.C. 20585 Auger Neptune Tahiti Constitution Shenzi Poseidon Ticonderoga Atlantis Platform Mad Dog Gulf of Mexico Hurricane Landfall Vulnerabilities Highest Moderate Lowest Offshore Port Refinery Cascade St. Malo Perdido Chinook Major Pipeline Jack SPR Site SPR3315.PPT

  19. Gulf Coast Hurricane Impacts2005 and 2008 Hurricanes Katrina & Rita Impacts in 2005 • Category 3 & 4 Hurricanes • 26 refineries were shutdown • Recovery time 18 weeks • 2 refiners required 8-9 months • Refined Product Losses - 180 million barrels • Katrina – 113 million barrels • Rita – 67 million barrels Hurricanes Gustav & Ike Impacts in 2008 • Both Category 2 Hurricanes • 26 refineries were shutdown • Recovery time 14 weeks • Refined Product Losses - 103 million barrels • Gustav – 39 million barrels • Ike – 64 million barrels

  20. Strategic Petroleum ReserveHurricane Responses

  21. Hurricane Isaac 2012 Hurricane Isaac • Category 1 Hurricane • 5 Refineries Shutdown • 6 Refineries Reduced Output • Recovery time: • 4 Refineries in 7-10 days • 1 Refinery - 3 weeks U.S. Oil Supply Impacts • Crude Production – 12 Million Bbl • Refined Products – 13 Million Bbl U.S. SPR Release -1 Million Bbl

  22. Hurricane Sandy 2012 FEMA coordinated Federal emergency assistance responses of Federal Agencies. DOE released ULSD from NE Reserve to DLA for emergency generators & responder needs. DHS waivered US Coastwise Shipping Law (Jones Act) for movement of oil products from Gulf to East Coast by Foreign vessels. EPA issued waivers of EPA restrictions on conventional fuels, ULSD and vapor emissions for states and terminals. DOTissued waivers for truckers hours-of-service, fuel truck size and weight, ULSD usage, interstate tolls, vehicle registration requirements and fuel tax.

  23. U.S. Strategic Petroleum Reserve Energy Security Role • A National Insurance Policy against interruption in critical petroleum supplies (International crises, Terrorism, & Hurricanes). • Provides a Deterrent to oil-based threats from oil producing nations and provides time for Diplomacy. • Avails U.S. worldwide Emergency Assistance through IEA Alliance. • Supports National Security for Military Fuel in the event of war.

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