Strategic Petroleum Reserve

Who's Hiding Millions of Barrels of Oil in U.S. Salt Caverns?

strategic petroleum reserve
A pipeline carries oil September 20, 2000 at the Federal Strategic Petroleum Reserve facility known as Big Hill near Beaumont, Texas. Photo by Joe Raedle/Newsmakers

Definition: The Strategic Petroleum Reserve is an emergency stockpile of oil. The U.S. Department of Energy stores it for use in a crisis. It only takes 13 days for the oil to enter the U.S. market from the time the president first gives the order. The SPR was created in 1973 in response to the OPEC oil embargo. Some in Congress question whether it is still necessary.

Four underground salt caverns on the coast of the Gulf of Mexico store the oil.

That's a central location. The oil can be distributed to nearly half of the U.S. oil refineries either through interstate pipelines or via barges.

There are two cavern locations in Texas. Bryan Mound holds 242 million barrels in 20 caverns, while Big Hill holds 162.2 million barrels in 14 caverns. The other two are in Louisiana. West Hackberry holds 213.2 million barrels in 22 caverns and Bayou Choctaw holds 73.6 million barrels in 6 caverns. All are as of May 31, 2015. (Source: "SPR Storage Sites," U.S. Department of Energy.)

The maximum capacity of all four caverns is 727 million barrels. It reached that total fill level for the first time in December 2009. The federally-owned reserves can replace more than four months worth of imports should that ever become necessary. It can draw down 4.4 million barrels per day. To find out how much oil is currently being stored, see SPR Inventory.

The federal government owns all the oil held.

Fortunately, the government only paid $29.70 per barrel (on average). The SPR only cost $25.7 billion. Of that, $5 billion was a fixed cost to pay for the facility and $20.7 billion paid for the oil. (Source: "SPR Quick Facts," DOE)

Oil Releases 

Every time gas prices approach $4 a gallon, there are calls to release oil from the SPR.

But there are strict guidelines controlling when the oil can be released. These are defined in the Energy Policy and Conservation Act.

  1. The president can order a full drawdown if there is a long-term energy shortage that threatens national security or the economy.
  2. The president may order a limited drawdown of fewer than 30 million barrels if there is a significant oil shortage.
  3. The Secretary of Energy can carry out test drawdowns of less than 5 million barrels. (Source: "Strategic Petroleum Reserves," DOE.)

Limited releases occur as part of an exchange with a private company to avert a crisis.  The SPR can release oil if it has received more than it lent out. Here's a summary of when the oil has been released.

2017 - On August 31, the Department of Energy announced it would release 500,000 barrels of crude oil from the Reserve. It will supply oil that was disrupted by Hurricane Harvey. The release will go to the Phillips 66 refinery in Lake Charles, Louisiana. That was not damaged by the storm. The refinery will resupply the oil back to the Reserve when the supply returns to normal.  (Source: "United States Releases 500,000 Barrels of Oil from Strategic Reserve," Reuters, August 31, 2017.)

2012 - One million barrels was lent to Marathon Petroleum Company to offset damage caused by Tropical Storm Isaac.

2011 - President Obama directed a release on June 23, 2011, to offset the loss of production due to the Libyan crisis. The U.S. released 30 million barrels in coordination with 60 million barrels released from other members of the International Energy Agency.

2008 - Prior to Hurricane Gustav coming ashore on September 1, 2008, the SPR had reached 707.21 million barrels, the highest level ever held up until that date. A series of emergency exchanges conducted after Hurricane Gustav, followed shortly thereafter by Hurricane Ike, reduced the level by 5.4 million barrels until 2009, when it was repaid.

2006 - The SPR loaned 750,000 barrels to local refineries when the Calcasieu Ship Channnel was closed from an oil spill, and 767,000 barrels when the Sabine Neches channel was closed due to a barge accident.

Both loans were repaid later that year.

2005 - President George W. Bush ordered a drawdown to replace oil production lost as a result of Hurricane Katrina during the fall of 2005. That's because gas prices had skyrocketed to $5 gallon. Oil refineries and transportation had been damaged by the hurricane. The SPR helped keep gas prices at an affordable level until this infrastructure was repaired. The SPR released 20.8 million barrels. But oil had been released as an exchange prior to the president's orders.

2004 - Hurricane Ivan required a 5.4 million barrel loan. By 2005, 5.6 million barrels had been repaid.

2000 - The SPR loaned 500,000 barrels to refiners when the Calcasieu ship channel was blocked. Later that year, President Clinton ordered a 2 million barrel home heating oil reserve. The SPR exchanged its crude oil with private firms for the heating oil needed.

2002 - Hurricane Lili required an exchange of 98,000 barrels.

1998 - Eleven million barrels were exchanged for 8.5 million barrels of higher quality oil.

1997 - Congress directed that $220 million worth of oil be sold to balance the Federal budget.

1996 - An additional $227 million in oil was sold to balance the budget. Oil was also sold to pay for decommissioning the Weeks Island storage site, which had fractured. One million barrels was exchanged when ARCO's pipeline became blocked.

1991 - President George H.W.Bush ordered a release to stabilize the global supply under Operation Desert Storm. For more details on SPR releases, see SPR Drawdown

Global Reserves

All member countries of the International Energy Administration have reserves, but the U.S. SPR is the world's largest. Each country keeps 90 days worth of imports on hand. This protects against supply disruptions, either from embargoes by the oil-exporting countries or damage from hurricanes and other natural disasters.

There were 4.1 billion barrels held in global strategic reserves as of October 2011. Of this, 1.5 billion were held by governments, with the remainder controlled by industry. Strategic reserves are not counted in a country's proven oil reserves, which must be available for production. (Source: "Strategic Oil Reserves," Reuters.)