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Biden admin says Republican concerns about oil reserve damage unfounded

Published Apr 19, 2023 04:11PM ET Updated Apr 19, 2023 04:47PM ET
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© Reuters. FILE PHOTO: An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson
 
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By Timothy Gardner

WASHINGTON (Reuters) - The Biden administration said concerns of Republican lawmakers that last year's record drawdown of oil from the Strategic Petroleum Reserve damaged the system's delicate salt caverns were unfounded, a letter seen by Reuters on Wednesday showed.

The administration last year sold an unprecedented 180 million barrels of oil from the SPR, a system of hollowed-out natural salt caverns along the coasts of Texas and Louisiana. President Joe Biden launched the sale to control high fuel prices that had spiked after Russia's invasion of Ukraine and while people began to travel more as the global pandemic eased.

That withdrawal sapped the SPR, the world's largest emergency oil stockpile, to the lowest level since 1983. It also led to concerns by some Republicans that the withdrawal potentially damaged some SPR caverns. That's because oil is pushed out of the SPR by injecting water into the salt caverns, which can partially dissolve their walls, affecting shapes and volumes of the containers.

Senator John Barrasso and Representative Cathy McMorris Rodgers, both Republicans, had written to U.S. Energy Secretary Jennifer Granholm in November with concerns that the "rapid depletion of the SPR may have caused damage to SPR's pipelines and caverns, compromising its ability to meet its energy security mission in the event of a true energy supply interruption."

Kathleen Hogan, an infrastructure official at the Department of Energy, said in a letter received by lawmakers on April 12 that those concerns were unfounded. "The necessary emergency sales that took place in 2022 did not damage our SPR pipelines or caverns," Hogan said in the letter, which had not been reported previously.

"The Nation's top geoscientists at DOE's Sandia National Laboratory (NYSE:LH) continue to closely monitor cavern integrity, and the SPR remains operationally ready to respond to future supply disruptions, should they occur," Hogan said.

Granholm told Reuters late last month that two of the SPR's four sites, Bryan Mound and Bayou Choctaw, would be down until the fall due to life extension work.

That work and a congressionally mandated sale of 26 million barrels from the SPR have delayed buybacks, she said.

The DOE did not immediately respond to request for comment about the letter.

Hogan said in the letter that maintenance was initiated in 2016 and that DOE's request of Congress last year for an additional $500 million was for increased costs, not due to damage from the release. The maintenance work "experienced the same supply chain impacts, labor shortages, and other issues that many commercial companies have faced in the wake of the COVID-19 pandemic," Hogan wrote.

Biden admin says Republican concerns about oil reserve damage unfounded
 

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Scott Bailey
Scott Bailey Apr 20, 2023 10:04AM ET
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