Strategic Oil Reserves Rise As Gulf Oil Stays Offline

Through Sheela Tobben to 9/4/2021

(Bloomberg) – The United States is granting a second Louisiana refiner access to the country’s emergency crude stocks, as most oil rigs in the Gulf of Mexico remain offline after Hurricane Ida.

Placid Refining Co. will receive 300,000 barrels of crude from the Strategic Petroleum Reserve, the Energy Department said on Friday, after $ 1.5 million granted Thursday to Exxon Mobil Corp. The so-called swaps require companies to repay in-kind within two to three months, plus a few more barrels.

President Joe Biden said on Thursday that the United States would use whatever tools it has at its disposal to increase the availability of gasoline and ease the pressure on prices at the pump. With refineries accounting for nearly a fifth of the United States’ crude processing capacity, Louisiana struggles with fuel shortages hampering relief efforts, while pushing up gasoline prices in all the countries.

The government-run emergency crude supply – established in the aftermath of the Arab oil embargo in the 1970s and stored deep underground in salt caves along the Gulf coast – has been used a few times. times after hurricanes.

Placid will use the crude for its 75,000 bpd refinery near Baton Rouge, one of the fuel plants that have resumed operations. Exxon will use it in its neighboring facilities.

According to traders, at least three companies have purchased grades of crude that they would normally get from rigs in the Gulf of Mexico. The hunt for these scarce supplies has pushed the prices of Gulf oil grades such as Mars Blend to the highest levels in months.

Royal Dutch Shell Plc said Thursday that its West Delta-143 offshore facility which serves as a transfer station for all production assets in the Mars Corridor was damaged, based on early overflight assessments.

In addition to offshore logistics, a key piece of infrastructure that should be quickly restored to help resume production is the Louisiana Offshore Oil Port. More commonly called LOOP, it receives crude circulating on pipelines connected to offshore oil platforms. He had suspended deliveries before the storm.

LOOP manages up to 15% of the United States’ crude oil supply and also operates a marine terminal, some 72 kilometers offshore, which handles imports and exports of crude transported by tanker.

Meanwhile, prices at the pump are expected to hit their highest level in seven years ahead of Labor Day weekend. About 12% of the country’s crude processing capacity was shut down or reduced before Hurricane Ida.

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