The U.S. Strategic Petroleum Reserve has fallen to its lowest level since March 1983 after four years of emergency withdrawals tied to wars in the Middle East and Europe. Federal auditors say the reserve’s aging pipelines and caverns now limit its ability to answer the next supply shock, and more than a quarter of the stockpile cannot be drawn at all.
The Strategic Petroleum Reserve dropped this week to its lowest level since March 1983, after the U.S. withdrew 352 million barrels in four years to ease supply disruptions triggered by its war with Iran and Russia’s invasion of Ukraine. Those releases have stressed old infrastructure that needs repair.
Federal auditors found the reserve’s ability to respond to future emergencies is at risk. A May report quoted Department of Energy officials telling auditors that the web of pipelines, caverns and storage tanks holding the crude oil is patched together with stopgap fixes, and that it is uncertain how long they will hold.
More than a quarter of the reserve cannot be drawn
The Government Accountability Office said the SPR’s drawdown, distribution and fill capabilities are currently limited and at risk going forward because of longstanding aging-infrastructure problems compounded by the major construction meant to fix them. Auditors also found that more than a quarter of the stockpile was not available for drawdown because of construction and cavern outages.
That implies a minimum of 103 million barrels sitting in the reserve today are not deployable, according to a July analysis by Rapidan Energy. Congress established the stockpile in 1975 after the 1973 Arab oil embargo, and the auditors said its infrastructure is reaching the end of its life as releases grow larger and more frequent.
Hormuz release pulls inventories toward 243 million barrels
President Donald Trump ordered the release of 172 million barrels in March as Iran choked off oil exports through the Strait of Hormuz, triggering the largest supply disruption in history. Government inventories fell last week by 3.7 million barrels to about 308 million barrels.
Energy Information Administration data show the reserve will fall to about 243 million barrels once Trump’s release is fully executed, against an authorized storage capacity of 714 million barrels. Federal law sets no minimum operating level, and a Department of Energy spokesperson said the operational minimum needed to safely manage the caverns is about 70 million barrels.
Each drawdown wears the wells
David Goldwyn, a State Department special envoy for international energy affairs under President Barack Obama, said the reserve holds enough inventory right now to address another crisis. But Goldwyn told CNBC that each drawdown speeds up wear on the equipment: “Every time when you do a drawdown, you accelerate the degradation of the wells themselves”
Auditors called President Joe Biden’s 180 million barrel release after the invasion of Ukraine an unplanned stress test of the reserve’s operational capabilities. The Energy Department executed it without major equipment failures or spills, but energy officials told auditors the episode highlighted risks to repeating a drawdown of similar speed and scale to the 2022 drawdown in the near future.
Source: CNBC
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