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US SPR crude flows to Gulf coast refiners

07 Sep 2017 18:23 (+01:00 GMT)
US SPR crude flows to Gulf coast refiners

Houston, 7 September (Argus) — Phillips 66 today confirmed receiving all 700,000 bl of its requested crude from the federal Strategic Petroleum Reserve (SPR) after Hurricane Harvey disrupted port and pipeline infrastructure in the western US Gulf coast.

The Energy Department had delivered 1.8mn bl of 5.3mn bl of authorized exchanges from the SPR as of noon yesterday, including 400,000 bl of sweet and 300,000 bl of sour crude requested for Phillips 66's 252,000 b/d refinery in Lake Charles, Louisiana.

The refiner had initially requested another 300,000 bl of sour crude but determined it would not be necessary, the company said. The reduction draws the potential physical delivery down to 5mn bl.

Deliveries of 1mn bl of sweet crude for Valero, 300,000 bl of sweet crude for Placid Refining and 3mn bl of sweet crude for Marathon Petroleum refineries in Illinois, Kentucky and Louisiana continued today. Representatives did not comment on whether those companies expected to receive their full authorized release.

All of the crude has come from the SPR's Louisiana caverns. The 700,000 bl Phillips 66 authorization moved from the West Hackberry cavern and remaining 4.3mn bl will be delivered from the Bayou Chocktaw cavern.

Refiners borrow, instead of purchase, the crude. Short-term agreements require recipients of the crude to replace those volumes with additional oil. The reserve held 678.6mn bl as of 1 September, down by 300,000 bl from the previous week.

Harvey shut or reduced throughputs at about 5mn bl of Texas and Louisiana refining capacity after making landfall 25 August. Record rainfall shut ports, pipelines and other infrastructure and swamped some refineries.