The White House proposed modernizing the Strategic Petroleum Reserve (SPR) as part of a plan that could cost as much as US$2billion, the United States Department of Energy (DOE) divulged on Wednesday.
As mentioned by Reuters, the DOE plan presented to Congress calls for the replacement or fixing of aging equipment used for oil processing, firefighting, and security at the main oil reserve for the U.S. Furthermore, three marine terminals would be added to the series of sixty "heavily-guarded underground caverns" found on the coasts of Louisiana and Texas.
In order to pay for the modernization of the SPR, federal legislators would need to approve selling some 8 million barrels from the SPR during the fiscal years of 2017 to 2020. These transactions could pay off between US$1.5 to 2.0 billion, and come in addition to Congress previously approving the sale of 124 million barrels from the SPR from 2018 to 2025 in order to fund highway projects and balance the budget.
According to the DOE, the SPR has last been updated as part of a major refurbishment completed in 2000. Since then, numerous problems have plagued key components of the reserve including the collapse of a tank roof in 2015 and a water pipe burst earlier this year.
"This equipment today is near, at, or beyond the end of its design life," the DOE plan said. Therefore, the agency claimed lack of prompt refurbishment could hurt the U.S. fulfill its oil obligations in the case of a major global supply crisis.
Originally created in 1975 in the wake of the Arab oil embargo, the SPR can house as much as 713.5 million barrels of the commodity. It currently stores approximately 695 million barrels and is the world's largest emergency oil reserve owned by a government.
By Erwin Cifuentes for Oilprice.com
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Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.… More