News | Nov. 5, 2015

DLA Energy partners with DOE’s emergency petroleum stockpiles

By Elizabeth Stoeckmann DLA Energy Public Affairs

Deep underground storage caverns created in salt domes along the coastline of the Gulf of Mexico are home to the Strategic Petroleum Reserve, federally-owned emergency oil stockpiles for U.S. obligations.

While the Department of Energy owns the SPR, Defense Logistics Agency Energy quietly supports this important mission around the clock throughout the U.S. in anticipation of natural disasters or supply disruptions.

The SPR is a strategic asset for the U.S., serving as an emergency storage reserve for crude oil and fuel. It is the largest emergency supply of oil in the world, holding up to 727 million barrels of oil.

“In the event of a commercial supply disruption, the president can turn to the emergency stockpiles of petroleum products managed by the DOE’s Office of Petroleum Reserves,” said Frank Wright, DLA Energy liaison officer to U.S. Transportation Command.

The OPR protects the U.S. from severe petroleum supply interruptions through the acquisition, storage, distribution and management of emergency petroleum stocks, and carries out contingencies under the International Energy Program. The OPR manages three stockpiles: the Strategic Petroleum Reserve, the Northeast Home Heating Oil Reserve and the Northeast Gasoline Supply Reserve.

“Most people probably remember the dramatic event that underscored the need for a strategic oil reserve in the 1973 oil embargo,” Wright said. “The cutoff of oil flowing into the U.S. and Europe from the Organization of the Petroleum Exporting Countries sent economic shockwaves throughout the nation.”

Wright said the SPR’s formidable size makes it a significant deterrent to oil import cutoffs and a key tool of foreign policy.

Upon acquisition of the Gulf Coast storage sites in 1977, DLA Energy, formerly the Defense Fuel Supply Center, has had a role in support of the SPR and continues to provide technical service support today.

“DLA Energy … initially purchased (for the DOE) the first fill of crude oil for the SPR and provided defense fuel support point quality assurance representatives to inspect and accept the cargo and manage the discharge of the crude oil,” Wright said.

When a national emergency strikes, the president is the only person who can authorize the withdrawal of SPR crude oil as an emergency loan. The release of crude oil has occurred only three times: Desert Storm in 1991, Hurricane Katrina in 2005 and the Middle East unrest in 2011.

Since the most recent need for crude oil in 2011, the SPR remains basically static with minimal movement only for maintenance as required, Wright said. This allows DLA Energy QARs to provide support to the other two stockpiles.

In an effort to keep these additional national assets safe, DLA Energy QARs provide inspections and volume verifications at the heating oil storage facilities that are primarily stored in the Northeast in aboveground fuel terminals.

For the Northeast Gasoline Reserve, DLA Energy assisted the OPR in obtaining storage contracts, determining quality compliance to the specifications and the product quantity finally accepted by the OPR representative.

“Specifically for the heating oil reserve, DLA Energy Americas (at Houston) QARs perform monthly inspections per the current memorandum agreement between DLA Energy and DOE,” said Lee Oppenheim, DLA Energy Quality/Technical Support deputy director.

QARs are responsible for assuring that during a designated timeframe the facility holds the required minimum volume in the fungible heating oil tanks and that the requisite quality is maintained, Oppenheim added.

The devastation of Hurricane Sandy in 2012 was the ultimate test for the heating oil reserve, Wright said. It was the first time emergency withdrawals from the Northeast Home Heating Oil Reserve were used.

After the presidential order to transfer the emergency fuel, DLA Energy personnel began loading trucks and barges from the reserve stocks in Connecticut for distribution to state, local and federal first responders in the New York and New Jersey area.

“DLA Energy personnel moved approximately four million gallons of heating oil in support of real-world emergency requirements,” Wright said.

Superstorm Sandy didn’t stop there though, Wright explained, and the storm caused heavy damage to most fuel terminals in New York Harbor resulting in closures due to water damage and power loss.

As a result of the fuel shortage, the DOE created the first Northeast Gasoline Supply Reserve, and once again, DLA Energy provided support with rapid acquisition of storage service contracts in the Northeast so gasoline could be delivered.

“Because of the strong relationship with DOE, DLA Energy was able to secure the assets needed in a very timely manner,” said Linda Barnett, DLA Energy Customer Operations deputy director.

Barnett said she was among many throughout DLA Energy at Fort Belvoir and the Americas region gathering industry information and requirements as needed during the time of disaster.

She engaged in discussions with the White House staff and DOE officials with requirements and determining what parameters DLA Energy could support.

“DOE really leveraged DLA Energy’s expertise,” Barnett added. “It was a time of synchronization with key partnerships during a time of constrained resources.”

Wright said as a result of hurricanes and other natural events, the Northeast region of the U.S. is particularly vulnerable to gasoline disruptions. Therefore, the gasoline reserve provides a secure and resilient energy infrastructure to the region in the event another hurricane causes widespread issues.

As the reserves are used, there is strict guidance to ensure they are resupplied. DOE and the Department of Defense have an agreement requiring the replenishment of equal volume of any petroleum reserve within a designated timeframe, Wright explained.

The SPR is a significant strategic asset with appropriate physical security and controlled access to ensure continuity of operations when needed, he added.

“DoD, DoE and DLA Energy do this business very well,” Wright said. “Together, we are energy independence for the nation.”
 
Whether in peace or war, the petroleum reserves serve as a strategic asset for the U.S., providing emergency storage for fuel and support to the entire nation’s energy contingency for defense, industry and private citizens.