ExxonMobil won largest contract for SPR storage

ExxonMobil negotiated the largest contract in a government program that will allow oil companies to temporarily store more than 23mn bl of privately-owned crude at the US Strategic Petroleum Reserve (SPR).

The company will be able to hold 10mn bl of crude across four facilities in Louisiana and Texas that make up the SPR, according to a previously undisclosed government contract. US midstream operator Energy Transfer Partners' subsidiary Sunoco won the next-largest contract, for 6.2mn bl of storage at the Big Hill SPR storage facility in Texas.

The US Energy Department last month awarded a total of 23.2mn bl of storage contracts to the nine companies participating in the program, according to contracts Argus obtained through a public records request. Crude injections under the program began in late April and total deliveries had reached 6.7mn bl as of 15 May, according to federal data. Storage injections are on schedule to be complete by 30 June, US energy secretary Dan Brouillette said last week.

The trading firms Vitol and Mercuria won the third and fourth largest storage contract at 2.4mn bl and 1.1mn bl, respectively. The remaining 3.5mn bl of storage went to independent refiner Delek subsidary Alon USA, Chevron, the trading subsidiary of Norway's Equinor, Total subsidiary Atlantic Trading and US energy logistics company MVP Holdings.

The identify of those nine companies was reported last month, but the Energy Department declined to provide further information. Argus obtained partially redacted copies of the nine contracts by filing a request under the Freedom of Information Act.

Oil companies participating in the program were required to say how many barrels they would give to the federal government for each month they stored crude in the SPR. But the US Energy Department redacted that information from the records request, citing an exemption for trade secrets and confidential business information.

ExxonMobil declined to release details on the terms it had negotiated for crude storage, which it said was "proprietary and commercially-sensitive." Energy Transfer also declined to release details. The company's chief financial officer Thomas Long on 12 May said its storage capabilities and leased space at the SPR were providing "valuable opportunities" to benefit from contango in the oil market.

By Chris Knight