The U.S. administration aims to lease out space for energy corporations to store oil in the nation’s Strategic Petroleum Reserve, after a previous effort to buy hundreds of thousands of barrels for the emergency stockpile was suspended over a lack of funding, based on two people briefed on the matter.
The new plan could help the U.S. deal with a mounting excess of crude oil that risks overwhelming commercial storage tanks and sending world energy prices deeper into a tailspin as the coronavirus outbreak cuts fuel demand. It might be declared as soon as Wednesday, the sources stated.
The plan is a change of tack from the initial scheme, which might have had the Department of Energy (DOE) buy crude from domestic drillers utilizing federal funds.
U.S. President Trump ordered the DOE on March 13 to fill the reserve “to the top” to support oil producers suffering from the global oil price drop, and the initial solicitation asked for supply only from U.S. firms with fewer than 5,000 employees.
However, Congress didn’t approve funds for the buys, forcing the Energy Division last week to suspend the proposal.
The revised plan would help merchants and others as they attempt to ride out a precipitous plunge within the price of oil by storing crude for sale later as soon as the crisis is over.
The nation’s main commercial storage hub in Cushing, Oklahoma, is rapidly filling up.
The Strategic Petroleum Reserve has 77 million barrels of free capacity, rather less than the nation uses in four days. It presently holds around 635 million barrels of oil in salt caverns on the Texas and Louisiana shores.