Following a request yesterday from Marathon Petroleum Company, U.S. Secretary of Energy Steven Chu announced today that the Energy Department has agreed to lend 1 million barrels of sweet crude oil from the Strategic Petroleum Reserve's (SPR) Bayou Choctaw site in Louisiana to address the short term impact on the company's refining capacity caused by Hurricane Isaac, which is resulting in limited crude oil shortages.
The loan, which is distinct from a release from the SPR, will be provided to Marathon Petroleum Company under short-term contractual agreements. Under the agreement, Marathon Petroleum Company will return an equal amount of similar quality oil to the Reserve within three months, plus premium barrels, which is similar to interest. The SPR will be ready to begin oil deliveries later today.
"Today's announcement is part of the broader federal effort to respond to those impacted by Hurricane Isaac," said Secretary Chu. "This emergency loan from the Strategic Petroleum Reserve will help ensure Marathon's refining operations have the crude oil they need to continue operating."
In addition to the authority to drawdown and sell oil from the SPR in response to global oil supply disruptions, the Energy Policy and Conservation Act empowers the Energy Department to make loans of crude oil. The Department has used this authority to address short-term, emergency supply disruptions on eight previous occasions, most recently following Hurricane Gustav in 2008.
The Administration continues to keep all options on the table to address additional or sustained supply issues.