Congressional Record publishes “THE HEATING OIL RESERVE” on Oct. 5, 2000

Congressional Record publishes “THE HEATING OIL RESERVE” on Oct. 5, 2000

ORGANIZATIONS IN THIS STORY

Volume 146, No. 123 covering the 2nd Session of the 106th Congress (1999 - 2000) was published by the Congressional Record.

The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.

“THE HEATING OIL RESERVE” mentioning the U.S. Dept. of Energy was published in the Senate section on pages S9917-S9918 on Oct. 5, 2000.

The publication is reproduced in full below:

THE HEATING OIL RESERVE

Mr. MURKOWSKI. Mr. President, I think Senator Domenici will be seeking recognition. First, I want to take 2 minutes to alert my colleagues to what I think is a very significant issue.

Much has been made of late about the status of the Strategic Petroleum Reserve and the recommendation by Vice President Gore that we withdraw 30 million barrels out of the SPR so we can build up our heating oil reserve. Let me tell you what is happening to that.

The administration forgot a very important detail when they put that oil up to bid for the refiners. They didn't mandate that the crude oil be refined into heating oil or that it be used to build inventories here in the United States for the benefit of the Northeast States that need that heating oil inventories built up.

What will happen to the crude oil or refined product? It will go into the marketplace, and it is going to Europe because Europe is paying a higher price for heating oil than the United States. Currently, 167,000 barrels a day of distillate is exported.

Let me tell you what came out of the Houston Chronicle, and I quote:

The buyers can do what they wish with the oil, such as sell or swap it, said Department of Energy spokesperson Drew Malcomb, although whoever ends up with the oil has to get it out of storage by the end of November.

The extra crude won't result in any additional heating oil because all the heating oil facilities already are operating at maximum capacity, Brown said.

There you have it. You have an administration that said we had an emergency, we had to go into SPR, address our heating oil situation, while sending a message to the Mideast that we are reducing our savings account. Then we find we may not build up our domestic heating oil inventories at all with this oil, it is going up for sale into the market and ending up in Europe because the administration didn't mandate that if you bought the oil, you had to keep it here in the United States.

Senator Stevens and I have experienced some demands relative to our inability to move our oil out of our State.

It is inconsistent to me that the administration could make such a poor business deal. We have not accomplished anything with SPR. We have simply increased our exports of heating oil. I think it is a charade.

I thank my colleague from New Mexico. But I did want to call that to your attention.

Mr. President, I ask unanimous consent to have printed in the Record an article from the Houston Chronicle entitled ``Oil from Reserve in High Demand'' and two tables on distillate exports.

There being no objection, the material was ordered to be printed in the Record, as follows:

Oil From Reserve in High Demand--Bidders Grab 30 Million Barrels

(By Nelson Antosh)

Trading companies and refiners looking for a good deal on crude have snapped up all 30 million barrels that the federal government is releasing from the Strategic Petroleum Reserve.

The Energy Department announced Wednesday that 11 companies, some of them with names little known even within the industry, had submitted the best bids for the oil being held underground in Louisiana and Texas.

The buyers in effect promised to return to storage 31.56 million barrels between August and November of next year, thus paying a premium of about 5 percent.

But by using the futures market, the successful bidders will be able to pay back with oil cheaper than what it is today, even if the real market price for crude may be higher by then.

``A good transaction for value,'' said Mary Rose Brown of Valero, a San Antonio-based company that will be refining its federal crude. The difference between Wednesday's futures and the payback cost is $3.25 per barrel, she said.

The futures price for next October is $28.53, said Kyle Cooper of Salomon Smith Barney in Houston, who reasons that all the reserve sale does is ``move around crude.''

In contrast to next October, the sweet crude contract for next month settled Wednesday on the New York Mercantile Exchange for $31.43 per barrel.

The buyers can do what they wish with the oil, such as sell or swap it, said DOE spokesman Drew Malcomb, although whoever ends up with the oil has to get it out of storage by the end of November.

Valero will be taking 1 million barrels of sour crude from the Bryan Mound storage site near Freeport and splitting it between its refineries in Texas City and Freeport.

That crude will be co-mingled with other supplies and be made into a full range of products, including gasoline.

The extra crude won't result in any additional heating oil because all the heating oil facilities already are operating at maximum capacity, Brown said. Valero even shifted some of its distillate output at a New Jersey refinery from premium-priced jet fuel into home heating oil.

``The product will go where the market is,'' said Malcomb, although he said his agency would prefer that it be refined into heating oil and be shipped to the Northeast.

Vitol, a trading company in Houston that also owns a refinery in Canada, will get 1.05 million barrels of sweet crude out of a storage site in Louisiana and 550,000 sour barrels out of Bryan Mound.

The company will apply for an export license, but logically it is a better value if sold along the Gulf Coast, said a Vitol employee who preferred not to be identified.

Marathon Ashland Petroleum LLC, a Houston-based venture that is a major refiner, was the high bidder on 2.4 million barrels of sour crude and 1.5 million barrels of sweet crude.

The DOE did not release the amounts that individual companies promised to return to the reserve, because that could influence any future sales.

Morgan Stanley Dean Witter of New York was the high bidder on 2 million barrels.

Lesser known names were Euell Energy of Aurora, Colo., which was the high bidder on 3 million barrels, Burhany Energy Enterprises of Tallahassee, Fla., also with 3 million barrels, and Lance Stroud Enterprises of New York with 4 million barrels.

Equiva Trading, which is a Houston-based alliance between Shell and Texaco, will get 2.5 million barrels. A spokesman could not be reached late Wednesday.

Elf Trading, also based in Houston, is getting 1 million barrels.

The largest quantity, 6 million barrels, was won by BP Oil Supply Co., in Warrenville, Ill.

``Every barrel we can get into the market in the next few weeks reduces the risk of a shortage of heating oil and diesel fuel this winter,'' said Secretary of Energy Bill Richardson in a news release. ``This is good for consumers and good for our nation's long-term security,''

Some have criticized releasing oil from the Strategic Petroleum Reserve as a political ploy to get more votes in the Northeast, where heating oil is widely used.

TABLE 5. U.S. YEAR-TO-DATE DAILY AVERAGE SUPPLY AND DISPOSITION OF CRUDE OIL AND PETROLEUM PRODUCTS, JANUARY-JUNE 2000

[Energy Information Administration/Petroleum Supply Monthly, August 2000; in thousand barrels per day]

--------------------------------------------------------------------------------------------------------------------------------------------------------

Supply Disposition

--------------------------------------------------------------------------------------------------------------------

Commodity Unaccounted

Field Refinery Imports for crude Stock Crude Refinery Exports Products

production production oil a change b losses inputs supplied c

--------------------------------------------------------------------------------------------------------------------------------------------------------

Crude Oil.......................... E 5,851 ........... 8,655 432 64 0 14,787 87 0

Natural Gas Liquids and LRGs....... 1,956 754 204 ........... 59 ........... 357 83 2,414

Pentanes Plus.................. 307 ........... 28 ........... 6 ........... 133 4 192

Liquefied Petroleum Gases...... 1,649 754 176 ........... 53 ........... 225 79 2,222

Ethane/Ethylene............ 746 29 23 ........... 6 ........... 0 0 791

Propane/Propylene.......... 549 597 124 ........... 8 ........... 0 60 1,201

Normal Butane/Butylene..... 163 121 13 ........... 34 ........... 120 19 125

Isobutane/Isobutylene...... 191 7 17 ........... 6 ........... 105 0 105

Other Liquids...................... 177 ........... 642 ........... 63 ........... 807 47 -98

Other Hydrocarbons/Oxygenates.. 339 ........... 62 ........... 4 ........... 367 30 0

Unfinished Oils................ ........... ........... 348 ........... 23 ........... 427 0 -102

Motor Gasoline Blend. Comp..... -162 ........... 231 ........... 37 ........... 16 16 0

Aviation Gasoline Blend. Comp.. ........... ........... 0 ........... -1 ........... -3 0 3

Finished Petroleum Products........ 218 16,146 1,282 ........... 70 ........... ........... 775 16,801

Finished Motor Gasoline............ 218 7,842 347 ........... 76 ........... ........... 109 8,223

Reformulated............... ........... 2,533 176 ........... 5 ........... ........... 1 2,703

Oxygenated................. 561 107 1 ........... -1 ........... ........... 1 669

Other...................... -343 5,202 170 ........... 71 ........... ........... 107 4,851

Finished Aviation Gasoline..... ........... 17 (s) ........... -1 ........... ........... 0 19

Jet Fuel....................... ........... 1,570 129 ........... 22 ........... ........... 27 1,650

Naphtha-Type............... ........... (s) 2 ........... (s) ........... ........... (s) 2

Kerosene-Type.............. ........... 1,570 127 ........... 22 ........... ........... 27 1,648

Kerosene....................... ........... 58 3 ........... -10 ........... ........... 1 70

Average exports per day:

Distillate Fuel Oil............ ........... 3,414 274 ........... -97 ........... ........... 152 3,634

0.05 percent sulfur and ........... 2,364 139 ........... -1 ........... ........... 35 2,469

under.....................

Greater than 0.05 percent ........... 1,049 136 ........... -96 ........... ........... 117 1,164

sulfur (Heating oil only).

Residual Fuel Oil.............. ........... 657 212 ........... 7 ........... ........... 141 721

Naphtha For Petro. Feed Use.... ........... 164 104 ........... (s) ........... ........... 0 268

Other Oils For Petro. Feed use. ........... 203 154 ........... (s) ........... ........... 0 357

Special Naphthas............... ........... 102 11 ........... -1 ........... ........... 21 94

Lubricants..................... ........... 187 14 ........... -1 ........... ........... 27 174

Waxes.......................... ........... 15 2 ........... (s) ........... ........... 3 14

Petroleum Coke................. ........... 704 1 ........... 1 ........... ........... 289 416

Asphalt and Road Oil........... ........... 508 29 ........... 75 ........... ........... 4 458

Still Gas...................... ........... 652 0 ........... 0 ........... ........... 0 652

Miscellaneous Products......... ........... 53 (s) ........... (s) ........... ........... (s) 53

--------------------------------------------------------------------------------------------------------------------

Total...................... 8,201 16,900 10,783 432 256 0 15,952 992 19,117

--------------------------------------------------------------------------------------------------------------------------------------------------------

a Unaccounted for crude oil represents the difference between the supply and disposition of crude oil. Preliminary estimates of crude oil imports at the

National level have historically understated final values by approximately 50,000 barrels per day. This causes the preliminary values of unaccounted

for crude oil to overstate the final values by the same amount.

b A negative number indicates a decrease in stocks and a positive number indicates an increase in stocks.

c Products supplied is equal to field production, plus refinery production, plus imports, plus unaccounted for crude oil, minus stock change, minus

crude losses, minus refinery inputs, minus exports.

(s) = Less than 500 barrels per day.

E = Estimated.

LRG = Liquefied Refinery Gas.

-- = Not Applicable.

Note: Totals may not equal sum of components due to independent rounding.

Sources: Energy Information Administration (EIA) Forms EIA-810, ``Monthly Refinery Report,'' EIA-811, ``Monthly Bulk Terminal Report,'' EIA-812,

``Monthly Product Pipeline Report,'' EIA-813, ``Monthly Crude Oil Report,'' EIA-814, ``Monthly Imports Report,'' EIA-816, ``Monthly Natural Gas

Liquids Report,'' EIA-817, ``Monthly Tanker and Barge Movement Report,'' and EIA-819M, ``Monthly Oxygenate Telephone Report''. Domestic crude oil

production estimates based on historical statistics from State conservation agencies and the Minerals Management Service of the U.S. Department of the

Interior. Export data from the Bureau of the Census and Form EIA-810, ``Monthly Refinery Report.''

THESE ARE B-B EXPORTED--AMERICAN PETROLEUM INSTITUTE, ENERGY INFORMATION

ADMINISTRATION

------------------------------------------------------------------------

Date Distillate

----------------------------------------------------------------\1\-----

January 1998............................................. 133

February 1998............................................ 79

March 1998............................................... 129

April 1998............................................... 186

May 1998................................................. 121

June 1998................................................ 149

July 1998................................................ 161

August 1998.............................................. 150

September 1998........................................... 107

October 1998............................................. 75

November 1998............................................ 54

December 1998............................................ 145

January 1999............................................. 117

February 1999............................................ 116

March 1999............................................... 159

April 1999............................................... 191

May 1999................................................. 187

June 1999................................................ 180

July 1999................................................ 123

August 1999.............................................. 130

September 1999........................................... 162

October 1999............................................. 192

November 1999............................................ 170

December 1999............................................ 212

January 2000............................................. 132

February 2000............................................ 112

March 2000............................................... 211

April 2000............................................... 178

May 2000................................................. 127

June 2000................................................ 149

July 2000................................................ 132

August 2000.............................................. 168

------------------------------------------------------------------------

\1\ Distillate fuel exports (Mbld), heating oil and diesel.

The PRESIDING OFFICER. The Senator from New Mexico.

Mr. DOMENICI. Mr. President, I understand I have up to 20 minutes as if in morning business.

The PRESIDING OFFICER. Ten minutes.

Mr. DOMENICI. I ask unanimous consent for up to 20 minutes.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. DOMENICI. I understand Senator Sessions would like to follow me with 5 minutes, if there is no objection.

Mr. REID. Mr. President, reserving the right to object, the Senator from New Mexico wishes to speak for how long?

Mr. DOMENICI. Up to 20 minutes.

Mr. REID. We have the Senator from Alabama, and we have Senator Bryan who wishes 10 minutes. I ask that, using normal procedure, we have a Republican and a Democrat. I ask that Senator Bryan be the last speaker for up to 10 minutes.

Mr. DOMENICI. Mr. President, I assume we need Senator Sessions' concurrence.

Mr. SESSIONS. That is all right with me. I respect that. Senator Bryan will be the last. I defer to him.

Will the Senator restate the agreement? The Senator from New Mexico has 20 minutes, Senator Bryan has 10 minutes, and I have 5 minutes.

Mr. REID. That is correct.

The PRESIDING OFFICER. Is there objection?

Without objection, it is so ordered.

____________________

SOURCE: Congressional Record Vol. 146, No. 123

ORGANIZATIONS IN THIS STORY

More News