Click to edit Master title style United States Energy Emergency Response November 7, 2012 Click to edit Master title style David Johnson Deputy Assistant

Click to edit Master title style

United States Energy Emergency Response

November 7, 2012


David JohnsonDeputy Assistant Secretary

Office of Petroleum ReservesWashington, DC

Click to edit Master title styleEnergy Emergency Response

Programs

Strategic Petroleum ReserveNortheast Home

Heating Oil Reserve

Established in 1975727 Million Barrels Reserve

Crude Oil

Established in 20001 Million Barrel Reserve

Heating Oil (ULSD)

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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

Click to edit Master title styleStrategic 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%)

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Strategic Petroleum Reserve Storage Facilities

Storage Facility Capacity Inventory DD 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 Million 73 Million 0.5 MMB/d

Total 727 Million 695 Million 4.25 MMB/d

Bayou ChoctawBig HillBryan Mound West Hackberry

____________* 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


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Strategic Petroleum Reserve Oil Drawdown Capability

3.6

2.0

3.8

4.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1 - 30 30 - 60 60 - 90 91 - 120 121 - 150 151 - 180Days

Mill

ion

s o

f B

arre

ls p

er D

ay

695 Million Barrel Crude Oil Inventory

• Maximum Sustained Drawdown : 4.4 Million B/D for 90 Days • Full Drawdown of Inventory in 180 Days


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Strategic Petroleum Reserve Oil Distribution Capability

Puerto Rico/Virgin Islands

PADD V

PADD I

Hawaii

SPR

PADD III

PADD IV PADD II

Puerto Rico/Virgin Islands

PADD V

PADD I

Hawaii

SPR

PADD III

PADD IV PADD II

Pipeline Capabilities - 23 Gulf Refineries (Imports of 3.6 MMB/D) Marine Capabilities - 5 Terminals (Capacity of 2.5 MMB/D)


0

20

40

60

80

100

120

140

0%

10%

20%

30%

40%

50%

60%

70%

1975 1980 1985 1990 1995 2000 2005 2010 2015

Eq

uiv

ale

nt

Da

ys o

f N

et

Pe

tro

leu

m Im

po

rts

Cru

de

Oil

Imp

ort

De

pe

nd

en

ce

(%

)

Historical Projected (STEO) SPR Protection

United StatesCrude Oil Import Protection

*STEO: EIA Short-Term Energy Outlook (October 2012)8

Click to edit Master title styleSPR 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

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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

Click to edit Master title styleUnited States

Northeast 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

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SPR3324.ppt

PADD V & PADD IV< 2%

35.9%(41,852)

49.5%(57,697)

5.6%(6,568)1.6%

(1,881)

5.7%(6,663)

SPR3324.ppt

PADD 1A

PADD 1CPADD III

PADD IIPADD 1B

Petroleum Allocation Defense Districts (PADD)(Thousand Barrels)

United StatesHeating Oil Consumption

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Drawdown 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

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Oil Sale & Drawdown Activities

IEAAnnounces Oil Release

Bid PeriodJun 24-292PM EDT

PostSPR Notice

of Sale

Notification SuccessfulOfferors

SubmissionFinancial

Guarantees

Certify LOC & Award Contracts

Commence Early Oil

Deliveries

CommenceLast Oil

Deliveries

Scheduling Of Oil

Deliveries

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SPR Drawdown 2011

U.S. IEA Obligation 30.237 Million BarrelsU.S. SPR Response 30.640 Million Barrels


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SPR Drawdown 2011

Click to edit Master title styleU.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.

Year Name Category at Landfall

Landfall Date

1998 George Cat 2 9/28/1998

1999 Bret Cat 3 8/23/1999

2002 Lili Cat 1 10/3/2002

2003 Claudette Cat 1 7/15/2003

2004 Ivan Cat 3 9/16/2004

2005 Cindy Cat 1 7/6/2005

2005 Dennis Cat 3 7/10/2005

2005 Katrina Cat 4 8/29/2005

2005 Rita Cat 3 9/24/2005

2007 Humberto Cat 1 9/13/2007

2008 Dolly Cat 1 7/23/2008

2008 Gustav Cat 2 9/1/2008

2008 Ike Cat 2 9/13/2008

2012 Isaac Cat 1 8/28/2012

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Click to edit Master title styleHurricane Vulnerability

of Gulf Coast Refining Centers

Petronius

Blind Faith

Thunder HawkThunder Horse

Devil’s Tower

URSAMars

Droshky

SS 332

Neptune

AtlantisShenzi

Mad Dog

PoseidonConstitution

Ticonderoga

Tahiti

CascadeChinook

Jack

St. Malo

LOOP

Auger

Perdido

HO

OP

S

Cameron

Highway

Poseidon

Au

ger

Pose

idon

Am

berj

ack

Alleghen

yCaesar

Eugene Island

Mars

Mardi

Gras

Odyssey

Mo

un

taineer

Locap

Cap

lin

e

Shell

U.S Department of EnergyStrategic Petroleum Reserve Program

Washington, D.C. 20585

Platform

Offshore Port

Refinery

Major Pipeline

SPR Site

Gulf of Mexico

11 Refiners Capacity

2,347 MBD

9 Refiners Capacity

2,325 MBD

7 Refiners Capacity

1,817 MBD

4 Refiners Capacity688 MBD

2 Refiners Capacity410 MBD

HOUSTON PASCAGOULA

CORPUS CHRISTI

FREEPORT

TEXAS CITY

PORT ARTHUR

LAKE CHARLES

BATON ROUGE

NEW ORLEANS

Bryan Mound

Big Hill

West Hackberry

Bayou Choctaw

SPR3315.PPT

Hurricane LandfallVulnerabilities

Highest

Moderate

Lowest

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Click to edit Master title styleGulf Coast Hurricane Impacts

2005 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

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

8/29

9/59/1

29/1

99/2

610/3

10/10

10/17

10/24

10/31

11/711/1

411/2

111/2

8

Shut

dow

n Re

finer

y Ca

paci

ty (B

/D)

Hurricane Katrina Hurricane Rita

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

8/30

9/1 9/3 9/5 9/7 9/99/1

19/1

39/1

59/1

79/1

99/2

19/2

39/2

59/2

79/2

910/1

10/310/5

10/710/9

Shut

dow

n Re

finer

y Ca

paci

ty (B

/D)

Hurricane Gustav Hurricane Ike

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Hurricane Responses

Year Hurricane EmergencyOil Exchanges

DrawdownOil Sale

2002 Hurricane Lili 100,000 Bbl(1 contract)

-

2004 Hurricane Ivan 5,400,000 Bbl(6 contracts)

-

2005 Hurricane Katrina/Rita 9,800,000 Bbl(6 contracts)

11.0 MMB

2008 Hurricane Gustav/Ike 5,200,000 Bbl(16 contracts)

-

2012 Hurricane Isaac 1,000,000 Bbl(1 contract)

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Click to edit Master title styleHurricane Isaac 2012

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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

Click to edit Master title styleHurricane 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.

DOT issued waivers for truckers hours-of-service, fuel truck size and weight, ULSD usage, interstate tolls, vehicle registration requirements and fuel tax.

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Click to edit Master title styleU.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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Documents

Click to edit Master title style United States Energy Emergency Response November 7, 2012 Click to edit Master title style David Johnson Deputy Assistant