Bush's plans keep the US in oil
12 Aug 2002
Koch Supply & Trading LP, one of the world's largest crude oil trading companies, will become the newest supplier of crude oil to the US Strategic Petroleum Reserve (SPR) under President Bush's plan, announced in November 2001, to fill the nation's emergency oil stockpile by 2005.
US Secretary of Energy Spencer Abraham recently announced that the Wichita, Kansas-based company submitted the winning bid to provide approximately 8 million barrels of crude oil to the SPR. Deliveries will begin October 1, 2002, and run through to April 30, 2003.
The contract awarded to Koch is part of the US government's 'royalty-in-kind' exchange program in which crude oil from federal leases in the Gulf of Mexico is exchanged for oil to be stored in the SPR for emergency protection against future supply disruptions.
Koch Supply & Trading LP is expected to deliver nearly 100,000 barrels per day to the SPR. Using the royalty-in-kind program, the Bush Administration has announced its intent to fill the SPR to its 700-million-barrel capacity by 2005.
The program is carried out co-operatively with the US Department of Interior's Minerals Management Service (MMS). MMS recently awarded contracts for a similar amount of royalty oil to be delivered from designated Gulf of Mexico production platforms to 'market centres.' Koch will receive the crude oil at the market centres and deliver 'in-kind' crude to the SPR.
Actual volumes arriving at the SPR are reportedly adjusted to account for transportation and quality differentials. Koch's offer was selected on the basis that its exchange ratio provided the best value to the government.
The SPR currently holds 580 million barrels of crude oil deep in salt caverns created along the Texas and Louisiana coastlines.
