Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Biden admin says Republican concerns about oil reserve damage unfounded

Published 04/19/2023, 04:11 PM
Updated 04/19/2023, 04:47 PM
© 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

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.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"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.

Latest comments

Sure it doesn’t
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.