5 Million Barrels to Be Released From Strategic Oil Reserve

Wednesday, 12 Mar 2014 04:07 PM

 

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The Energy Department said Wednesday a decision to release five million barrels from its Strategic Petroleum Reserve was a long-planned test, amid speculation it related to the Ukraine crisis.

The department's decision for a "test drawdown" of the huge reserve is being done to test new regional pipeline systems in Texas and Louisiana, and has been under discussion "for many months," the department said.

Department spokesman Bill Gibbons said it is required to undertake the test by law, though the last time a test release took place was in 1990.

Since then, however, there have been other releases undertaken in reaction to events: in 2005, after Hurricane Katrina damaged parts of the crucial oil industry infrastructure along the Gulf of Mexico coastline, and in 2011 to counter global supply disruptions from the Libyan revolution.

The test is a response to the sharp rise in US domestic crude production since 2011, said Gibbons.

"Significant changes in the system have occurred — including pipeline expansion, construction of new infrastructure, reversed flow of existing pipelines and increased use of domestic crude oil terminals."

He said the test is to "assess the system's capabilities in the event of a disruption."

Some analysts had speculated that the government made the decision on the release in response to the risk that Russian oil and gas supplies to Europe could be cut off if the standoff over Ukraine intensifies.

US oil prices fell more than $2 a barrel to $97.99 on Wednesday, but mainly that came in response to a sharp rise in commercial stockpiles last week reported early in the day.

 

 

 

 

 

 

 

 

 

 

 

 

© AFP 2014

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