Agency denies request to release oil from strategic reserve

Source: Hannah Northey, E&E News reporter • Posted: Tuesday, August 29, 2017

During the chaos of Hurricane Harvey, the Trump administration said it had received — and rejected — a request to release oil from the same emergency stockpiles along the Gulf Coast that President Trump wants to shrink.

The Energy Department confirmed last night that a call came in to tap the Strategic Petroleum Reserve, a sprawling matrix of underground caverns below the Texas and Louisiana Gulf Coast that holds upward of 700 million barrels of oil.

Citing the massive flooding and havoc Harvey is wreaking, a DOE official said it was “not possible” to release oil from the caverns. But Shaylyn Hynes, a spokeswoman for DOE, said the agency is monitoring the storm closely and will “provide assistance as deemed necessary,” including releasing SPR oil.

While DOE didn’t immediately respond when asked who made the request, an administration official confirmed that the White House was not involved.

That leaves the possibility the distress call came from one of the refiners that are shuttering and facing operational challenges from rising floodwaters and stormy conditions along the Gulf Coast.

Harvey slammed into the Lone Star State’s southeastern coast as a Category 4 hurricane. It has already knocked out about 13 percent of the nation’s refining capacity and closed coastal ports, and is now driving gasoline prices higher.

The DOE request shines a bright light on a Capitol Hill debate about the dueling demands of buffering an energy industry facing increasingly violent storms and an administration seeking to lower the nation’s deficit.

Trump proposed in his fiscal 2018 budget request to cut the reserve in half to reduce the federal deficit by $16.6 billion over the next decade.

Doubling down on that call are conservative groups like the Heritage Foundation and Cato Institute, which have strong ties throughout the administration and have said the SPR should be drained and sold off.

But Republicans like Sen. Lisa Murkowski of Alaska, chairwoman of the Senate Energy and Natural Resources Committee, have spoken in favor of maintaining the storage caverns, questioning whether the Trump administration’s push for increased production will materialize and make up for any drawdown of the Gulf Coast reserves (E&E Daily, June 7).

And House Natural Resources Chairman Rob Bishop (R-Utah) has said the SPR should only be tapped if it’s coupled with another administration proposal to open Alaska’s Arctic National Wildlife Refuge for drilling.

In contrast to the current era of booming domestic oil production and soaring deficits, the Strategic Petroleum Reserve was created in the 1970s after the Organization of Arab Petroleum Exporting Countries waged a six-month oil embargo against the United States and other nations to protest their support for Israel in the 1973 Arab-Israeli war.

Some argue that buffer is still needed in emergencies like the one Hurricane Harvey poses.

Kevin Book, managing partner of ClearView Energy Partners LLC, said DOE’s decision to reject the request was tied to concerns about worker safety, not an inability of the Strategic Petroleum Reserve to operate and deliver oil in a pinch.

“The request informs the policy debate only if it ends up being something that: a) a company legitimately needed, and b) the SPR could not actually provide,” he said. “The people who want to get rid of the SPR probably won’t be able to use this to insist the SPR is useless.”

The request was not mentioned during an interview Energy Secretary Rick Perry gave with “Fox and Friends” this morning, in which he praised Trump’s response to the storm.

Perry called the president “really engaged” in a “personal way” and said Trump is eager to visit the storm-ravaged state of Texas.

“We’re seeing a very thoughtful, well-orchestrated effort in the face of a massive storm Mother Nature has thrown at Texas,” the secretary said.