Washington — Nine companies including Chevron Corp, Exxon Mobil Corp and Alon USA Inc have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve, a U.S. official said on Wednesday, as the Trump administration tries to help the industry deal with crashing oil prices.
The Department of Energy, or DOE, said on April 2 it would offer oil companies 30 million barrels of space in the Strategic Petroleum Reserve, or SPR. Later in the month, it said companies were in contract negotiations for only 23 million barrels of space.
President Donald Trump had ordered Energy Secretary Dan Brouillette in March to fill the reserve, which has about 77 million barrels of free space, “to the top.” But an initial plan to buy about 30 million barrels fell through after the U.S. Congress declined to fund the purchase.
The Energy Department did not immediately respond to a request for terms of the lease contracts.
The other companies leasing space in the reserve are Atlantic Trading, Energy Transfer, Equinor Marketing & Trading (US) Inc, Mercuria Energy America, MVP Holdings, LLC and Vitol, Inc. The U.S. official provided the list on condition of anonymity.
The DOE has said it is continuing to work with Congress on finding ways to fund a purchase of oil for the reserve and could initiate more plans to lease space in the facility.
Companies storing oil will be allowed to keep it in the SPR through March 2021 and will pay a small amount of oil to cover storage costs, the department said earlier this month. Most oil deliveries will be received in May and June, with some shipments in April.
The SPR website said 1.1 million barrels of sour crude oil had been moved to the facility in April and the reserve currently holds 636.1 million barrels. It has a capacity of about 714 million barrels, making it roughly 90% full.
“Once normal market conditions are re-established, ILTA would oppose further government actions in commercial storage markets,” said Kathryn Clay, president of the International Liquid Terminals Association, an industry group, in a letter to President Trump dated Wednesday.
“Allowing government-owned storage into the market constitutes a subsidized storage service that could place private commercial storage operators at a competitive disadvantage,” the letter said.
Oil prices surged more than 10% on Wednesday after U.S. crude stockpiles grew less than expected, feeding optimism that fuel consumption will recover as some European countries and U.S. states ease lockdowns caused by the coronavirus.