The U.S. Department of Energy (DOE) announced on April 14, 2020 that it is discussing contract awards with nine U.S. companies with the intention to storing their U.S. produced crude oil in the U.S.’s Strategic Petroleum Reserve (SPR).[1] The U.S. oil industry is currently faced with storage demand exceeding availability which stems from the combined effects of a sharp decline in demand due to COVID-19 and an excess of supply. In a response to this, President Trump directed the DOE to fill the SPR to capacity in mid-March 2020, though Democrats were strongly critical of the move, stating that it is a waste of resources to save the oil industry.[2] [3] On April 2, 2020, the DOE issued a Request for Proposals to use available storage capacity at the SPR for temporary storage to alleviate the strain on oil companies.[4] The awards under negotiation are for approximately 23 million barrels of crude oil storage, to be distributed across all four SPR sites. Many of the deliveries will be received in May and June 2020, but there is a possibility of early deliveries in April 2020. Companies can schedule the return of their oil through March 2021, minus a small amount of oil to cover the cost of storage.

[1] https://www.energy.gov/articles/doe-announces-crude-oil-storage-contracts-help-alleviate-us-oil-industry-storage-crunch

[2] https://www.energy.gov/articles/doe-applauds-swift-action-president-trump-initiates-process-purchase-oil-strategic

[3]https://www.markey.senate.gov/imo/media/doc/2020_03_12%20COVID%2019%20Oil%20Tax%20Break%20Trump%20signed%20copy.pdf

[4] https://www.energy.gov/articles/us-department-energy-make-strategic-petroleum-reserve-storage-capacity-available-struggling