Statement by Assistant Secretary Smith On Use of the Strategic Petroleum Reserve In Advance of Hurricane Lili

Washington, DC - Assistant Secretary of Energy Michael Smith today issued the following statement:

"I want to commend the federal and contractor employees of the Strategic Petroleum Reserve for their efforts to help avert the shutdown of key refineries during the recent hurricane threats in the Gulf of Mexico.

When Hurricane Lili disrupted normal commercial oil shipments into Gulf Coast distribution hubs last week, our Strategic Reserve personnel in Louisiana responded rapidly to schedule and execute the temporary relocation of crude oil from our Bayou Choctaw site to the Capline terminal in Sugarland, Louisiana. This helped secure commercial storage tanks in preparation for the approaching hurricane and permitted the Capline operator to continue critical shipments of crude oil to refineries in Memphis and the Midwest.

Our employees performed the oil transfer simultaneously with taking action to safeguard the Reserve's storage sites and at the same time they were concerned with the security of their own families and homes.

While the situation this past week did not constitute an energy emergency, the actions of our Strategic Petroleum Reserve employees helped prevent the economic impact of Hurricane Lili from extending to regional oil shortages. And it provided another illustration of why the Reserve is essential to our energy security."

Background

On Monday, September 30, the Energy Department was informed that the Capline pipeline, a major interstate oil carrier that originates in Louisiana, might not be able to deliver needed oil supplies to customers, including the Williams refinery in Memphis, due to the curtailment of incoming oil deliveries because of Hurricane Lili. The Capline operator, Shell Pipeline Co. LP, was concerned that using oil stocks from its Sugarland terminal in St. James Parish, Louisiana, to keep the Capline pipeline flowing would cause stock levels in the tanks to drop below the safety threshold for protection against hurricane-force winds.

By Tuesday, October 1, Strategic Petroleum Reserve (SPR) staff in New Orleans and Washington worked out an arrangement with the Capline Pipeline System to temporarily relocate oil from the Strategic Petroleum Reserve to keep stocks in Shell's tanks at acceptable levels. This allowed Shell to continue supplying oil to Williams and other refineries in the Midwest that rely on the Capline pipeline.

The oil movement was accomplished on Tuesday and Wednesday, during which the SPR temporarily relocated 296,000 barrels from the Bayou Choctaw site to the Capline tanks. With commercial oil deliveries now returning to normal, Shell has begun pumping the SPR crude back to the Bayou Choctaw site.

Because the SPR oil that was sent to Shell displaced oil in a connecting pipeline that serves the Placid Refinery in Port Allen, Louisiana, the first 100,000 barrels of the returned SPR oil has gone directly to the Placid Refinery. DOE will receive a comparable grade of replacement oil within 60 days under an exchange agreement.

For more information, contact:
Robert C. Porter, DOE Office of Fossil Energy, (202) 586-6503