ExxonMobil to return crude loan from SPR in 2024

ExxonMobil is set to return 4.8mn bl of sour crude it is withdrawing from the US Strategic Petroleum Reserve (SPR) by the end of September 2024, the longest loan term available under a new federal program intended to reduce gasoline prices.

ExxonMobil in June-September 2024 is scheduled to return the borrowed crude to the SPR, plus an in-kind payment of 8.6pc of the loan volume, according to a contract of the crude "exchange" that Argus obtained under the Freedom of Information Act. That corresponds to ExxonMobil returning 412,800 bl more crude to the SPR than it borrowed, which would be worth nearly $26mn based on current Nymex WTI crude future prices for June 2024.

ExxonMobil's contract is part of a program that President Joe Biden announced last month offering to loan up to 32mn bl from the SPR, in hopes of helping to lower gasoline prices that at the time were near a seven-year high of $3.41/USG. The program so far has awarded a loan to ExxonMobil and a more recent 250,000 bl loan to Marathon Petroleum, collectively accounting for less than 16pc of the amount offered.

The US Energy Department announced the ExxonMobil loan on 10 December, but it only released details today in response to a records request by Argus. ExxonMobil under the contract will withdraw 3.3mn bl from the Bayou Choctaw SPR site in Louisiana by the end of March. It will withdraw another 900,000 bl from the Bryan Mound SPR site in Texas in January-March, while the final 600,000 bl will come from West Hackberry SPR site in Louisiana in February-March.

ExxonMobil chose to return all the borrowed crude during the latest of three potential return periods, an option that requires any participating company to return an in-kind "premium" equivalent to 8.6pc of the borrowed volume at the same SPR site from which it drew down.

The 3.3mn bl that ExxonMobil has contracted to borrow from the Bayou Choctaw SPR site is similar in volume to the 3mn bl that the company borrowed from the same SPR storage site after Hurricane Ida made landfall on 29 August. The Energy Department said in September that the company would restock the borrowed crude in about 2-3 months.

An SPR inventory database managed by the Energy Department shows the Hurricane Ida crude withdrawal ended in September, but it does not show a return of crude to the SPR as of 17 December. The Energy Department said the 4.8mn bl exchange agreement was "separate and distinct" from the 3mn bl delivered for Hurricane Ida, but it did not respond to specific questions about whether ExxonMobil is allowed to roll over the September agreement without a physical exchange of crude.

ExxonMobil did not respond to a request for comment.

By Chris Knight