The U.S. Department of Energy has authorized the exchange of up to 1 million barrels from the Strategic Petroleum Reserve (SPR) to ease the crude shortage at Exxon’s refinery in Baton Rouge, Louisiana, after quality issues with the Mars crude grade emerged last week.
DOE has authorized an exchange from the SPR with ExxonMobil Corporation “to address logistical challenges impacting crude oil deliveries to the company’s Baton Rouge refinery.”
U.S. Secretary of Energy Chris Wright authorized this action to help maintain a stable regional supply of transportation fuels across Louisiana and the broader Gulf Coast.
“The exchange agreement preserves the SPR’s operational flexibility and will not impact or delay the Department’s ongoing efforts to refill the reserve,” DOE said.
The exchange will support ExxonMobil’s restoration of refinery operations that were reduced due to an offshore supply disruption. ExxonMobil will return the borrowed crude along with additional barrels of crude oil for the SPR at no cost to the taxpayer.
Supply of crude to the Gulf Coast refining hub was reduced last week after Chevron said that the start-up of a new offshore well may have contributed to the change of the composition of the Mars crude grade and zinc contamination of the medium sour crude.
Mars crude is produced offshore Louisiana and is a staple with Gulf Coast refineries.
Exxon has said it wouldn’t buy Mars crude until the issue with the zinc contamination is resolved.
Meanwhile, DOE said last month that crude oil deliveries to the strategic petroleum reserve would be delayed by seven months due to maintenance.
The Biden administration released some 300 million barrels of oil from the SPR starting in 2021, amid high gasoline prices.
Earlier this year, President Donald Trump said the U.S. Administration would quickly fill up the Strategic Petroleum Reserve.
“They put it all out because they thought they could keep gasoline prices down a little bit, just go past the election, and after that, they didn’t care,” the President added.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
