WASHINGTON - The U.S. Government said on Tuesday it would grant Citgo Petroleum Corp's request for 250,000 barrels of crude oil from the Strategic Petroleum Reserve in the aftermath of Hurricane Gustav.
Citgo, owned by the Venezuelan state oil company, is the only oil company so far to ask for emergency crude oil from the U.S. emergency petroleum stockpile following the storm that barreled through the Gulf of Mexico.
Citgo asked for crude oil for its refinery in Lake Charles, Louisiana. The refinery's crude oil supply was disrupted when the Calacasieu Ship channel was closed. The channel was reopened on Tuesday but was restricted to ships with a draft of 16 feet or less.
"The Department intends to grant Citgo's request," U.S. Department of Energy spokesman Andrew Beck said.
Hurricane Gustav barreled through the U.S. Gulf oil patch before making landfall in Louisiana, shutting down 100 percent of U.S. Gulf of Mexico oil output. Thirteen refineries were closed in the storm's wake, representing 1 million barrels per day in lost gasoline output and 700,000 bpd in lost distillate output.
It may take two weeks for the Gulf to return to full production, emergency officials said.
Sensors on oil rigs and platforms in the Gulf, however, indicated no major damage to facilities from Gustav, although more checks still have to be made, American Petroleum Institute President Red Cavaney said Tuesday.
Oil prices fell to around $109 a barrel on Tuesday as fears of significant supply disruption from Gustav waned. Crude oil prices have declined well below the record July levels above $147 a barrel.
At least two other oil companies are assessing damage to oil rigs, refineries and pipelines along the Gulf coast, however, and have said they will request emergency oil supplies if necessary.
Exxon said it was in touch with the Energy Department about oil supply options, including tapping the SPR. Shell Oil said it was gauging its need for crude oil after Gustav, but it had not asked for any SPR oil yet.
"We remain in close communication with the DOE. As we assess the impact of Hurricane Gustav we continue to evaluate our supply options," a spokeswoman for Exxon told Reuters in an email.
Some energy experts said the damage from Gustav does not justify releasing oil from the emergency stockpile.
"These refiners don't need the oil, but they may be tempted by the prospect of taking it, storing it, and turning it around in a few months at a profit," said one energy trader who asked not to be identified. "They could do this because of the shape of the futures curve, with prices running a more than $1.00 per barrel premium three months out."
Created by Congress in the mid-1970s after the Arab oil embargo, the Strategic Petroleum Reserve now holds more than 700 million barrels of crude oil at four underground storage sites in Texas and Louisiana.
Kevin Kolevar, assistant secretary for electricity delivery and energy reliability, said Monday that with a record amount of oil in the reserve and U.S. petroleum inventories held by private companies at very high levels, the United States can handle supply problems caused by the storm.
"We are exceptionally well positioned to deal with temporary disruptions in petroleum supply," he said.
Citgo, owned by the Venezuelan state oil company, is the only oil company so far to ask for emergency crude oil from the U.S. emergency petroleum stockpile following the storm that barreled through the Gulf of Mexico.
Citgo asked for crude oil for its refinery in Lake Charles, Louisiana. The refinery's crude oil supply was disrupted when the Calacasieu Ship channel was closed. The channel was reopened on Tuesday but was restricted to ships with a draft of 16 feet or less.
"The Department intends to grant Citgo's request," U.S. Department of Energy spokesman Andrew Beck said.
Hurricane Gustav barreled through the U.S. Gulf oil patch before making landfall in Louisiana, shutting down 100 percent of U.S. Gulf of Mexico oil output. Thirteen refineries were closed in the storm's wake, representing 1 million barrels per day in lost gasoline output and 700,000 bpd in lost distillate output.
It may take two weeks for the Gulf to return to full production, emergency officials said.
Sensors on oil rigs and platforms in the Gulf, however, indicated no major damage to facilities from Gustav, although more checks still have to be made, American Petroleum Institute President Red Cavaney said Tuesday.
Oil prices fell to around $109 a barrel on Tuesday as fears of significant supply disruption from Gustav waned. Crude oil prices have declined well below the record July levels above $147 a barrel.
At least two other oil companies are assessing damage to oil rigs, refineries and pipelines along the Gulf coast, however, and have said they will request emergency oil supplies if necessary.
Exxon said it was in touch with the Energy Department about oil supply options, including tapping the SPR. Shell Oil said it was gauging its need for crude oil after Gustav, but it had not asked for any SPR oil yet.
"We remain in close communication with the DOE. As we assess the impact of Hurricane Gustav we continue to evaluate our supply options," a spokeswoman for Exxon told Reuters in an email.
Some energy experts said the damage from Gustav does not justify releasing oil from the emergency stockpile.
"These refiners don't need the oil, but they may be tempted by the prospect of taking it, storing it, and turning it around in a few months at a profit," said one energy trader who asked not to be identified. "They could do this because of the shape of the futures curve, with prices running a more than $1.00 per barrel premium three months out."
Created by Congress in the mid-1970s after the Arab oil embargo, the Strategic Petroleum Reserve now holds more than 700 million barrels of crude oil at four underground storage sites in Texas and Louisiana.
Kevin Kolevar, assistant secretary for electricity delivery and energy reliability, said Monday that with a record amount of oil in the reserve and U.S. petroleum inventories held by private companies at very high levels, the United States can handle supply problems caused by the storm.
"We are exceptionally well positioned to deal with temporary disruptions in petroleum supply," he said.
