SPR to Continue Royalty-in-Kind Fill Program 

Solicitation to Exchange Royalty Oil from Offshore U.S. Leases

Washington, D.C. - The U.S. Department of Energy (DOE) today issued a solicitation seeking contracts to exchange up to 13 million barrels of royalty oil from Federal leases in the Gulf of Mexico for crude oil that meets the specifications of the Strategic Petroleum Reserve (SPR).  Bids are due by May 13, 2008.

This action is taken in accordance with the provisions of the Energy Policy Act of 2005, which directs that the SPR fill to its authorized size of one billion barrels, and advances the President's agenda to increase the Nation's energy security.  It allows for a modest fill rate of approximately 76,000 barrels per day.  The royalty-in-kind contracts will begin July 1, 2008, and deliveries of crude oil will begin in August 2008 and continue through December 2008.

Under the royalty-in-kind exchange program, crude oil producers deliver royalty oil owed to the U.S. Department of the Interior to market centers along the Gulf Coast.  Ownership of the oil is transferred from the Department of the Interior to the Department of Energy.  Contractors are required to take the full contracted amount from the market centers and deliver exchange oil to the SPR.  Actual volumes delivered to the SPR take into account adjustments for transportation and quality differences.

The SPR has a capacity of 727 million barrels, and currently holds approximately 700.9 million barrels of oil in the underground salt caverns located along the Gulf Coast of Louisiana and Texas.

For more information, contact: Andrew Beck, DOE Office of Public Affairs, 202-586-4940