U.S. Energy Department Approves Strategic Petroleum Reserve Exchange

The U.S. Energy Department on July 11 announced the approval of an exchange from the Strategic Petroleum Reserve, or SPR, with ExxonMobil Corporation to tackle logistical complexities affecting crude oil deliveries to the firm’s Baton Rouge refinery. The action will help maintain robust regional supply of transportation fuels across Louisiana and the wider Gulf Coast. This measure maintains the SPR’s operational flexibility and will not affect or hinder ongoing efforts to replenish the reserve.

Pursuant to the exchange agreement, the department will authorize the release of up to 1 million barrels of crude oil from the SPR. This operation is intended to facilitate ExxonMobil’s restoration of refinery throughput curtailed by offshore supply disruptions. ExxonMobil is obligated to restitute the borrowed crude volumes plus additional compensatory barrels to the SPR, with no financial liability borne by taxpayers.

The department continues to work closely with industry partners to maintain stability in the fuel supply chain during the peak demand season. Moreover, the department encourages refiners to prioritize the efficient production and distribution of refined fuels, remains prepared to safeguard the nation’s energy security through the prudent use of strategic resources, and is committed to advancing President Trump’s commitment to strengthen U.S. energy security by replenishing the SPR.

The Energy Policy and Conservation Act grants the department the authority to exchange petroleum products from the SPR and to acquire petroleum products through exchange for storage within the SPR. This authority has previously been exercised in response to supply disruptions, including the Keystone Pipeline incident during December 2022. A rupture in the Keystone Pipeline, operated by TC Energy, resulted in the release of approximately 14,000 barrels of crude oil. As a result, the pipeline was shut down, and an emergency response was initiated, including containment and cleanup efforts. In response to this supply disruption, the department authorized an exchange from the SPR to help stabilize regional fuel supply, particularly in areas affected by reduced refinery inputs.

A recent oil supply disruption has curtailed operations at the Baton Rouge refinery, limiting the production of transportation fuels. The exchange approval aims to help maintain sufficient supplies of refined fuel in the Gulf Coast region as ExxonMobil works to resolve logistical challenges.