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Tulane Law School Summit Spr Energy Securityin Changes Times Jm Drake

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Strategic Petroleum Reserve overview briefing prepared for Tulane Law School Summit Energy Panel Apr 4-5, 2009 http://summit.law.tulane.edu

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油
Presentation Topics: Mission and need for Reserves Energy Outlook: Supply and Consumption Storage Method and Development How the Reserve is used Core Activities - Special Initiatives An Overview of the Strategic Petroleum Reserve - Energy Security for American during Changing Times
To Diminish the Vulnerability of the United States to the Harmful Effects of Petroleum Supply Disruptions To Meet U.S. Obligations under the International Energy Program SPR2603.ppt SPR MISSION One Team- Relevant, Ready, Responsive, and Reliable U.S. Energy Policy & Conservation Act (EPCA 1975) U.S. Energy Policy Act of 2005 U.S. Energy Independence and Security Act (EISA 2007)
Short-term relief to American Families More transparent energy trading regulations Reduce Imports over the Next Decade Deploy electric and advanced vehicles (tax credits) Promote domestic gas and oil production Economic Recovery and Job Creation Renewable green energy development Infrastructure design, development and investment Reduce Greenhouse Gas Emissions U.S. to become a leader in Climate Change Current Administrations Energy and Environmental Agenda Items
Total Domestic Production Total Petroleum Consumption MILLIONS OF BARRELS PER DAY 1973 Production as a Share of Consumption 63% 2007 33% Domestic Production and Consumption
Annual Energy Outlook (AEO) 2009 Projections for U.S. Domestic Production Domestic Onshore Alaskan Lower 48 Offshore Projected Historical Liquids from Biomass (Green) Liquids from Coal (Black)
AEO 2009 Projections for U.S. Crude and Product Imports Net Crude Imports Net Product Imports Historical Projected Ethanol Imports
AEO 2009 Projections for U.S. Demand, Supply & Imports Last Year EIA AEO 2009
AEO 2009 Projections for U.S. Crude Import Dependence EIA Annual Energy Outlook 2009
Components of Import Dependence Costs
Key Economic Factors in the Energy Outlook From 1970 to 1980 oil prices increased by a factor of ten from $3.50 per barrel to $35 per barrel . 1st Qtr 2015 oil prices between $90 to $100 are consistent with this data Lack of Spare Production Capacity played a major role in run up of oil prices just prior to the upside shock at near $150/bbl. One affect of upside economic shock is demand destruction Downside price shocks are likely to occur below $42/bbl. One affect of downside shock is supply destruction and the curtailment of the development of alternative fuels There is a close (3 to 4x) correlation between oil price and the Finding and Development (F&D) costs. On a cost basis it is nearly impossible to reach either $200/bbl or $20/bbl in the current market (Mar 2009). Historically, world oil demand grows at 2% less then Gross Domestic Product (GDP). If GDP is stagnant oil demand could fall by 1MMB/day during this bear market cycle.
Regional Sources -U.S. Oil Imports 2007 *Libya, Iran and Qatar provided none OPEC / Non-OPEC Imports 32% 19% 4% 2% 18% 1% 24% N America Central & S America W Europe E Europe & Former USSR Middle East Africa Asia & Oceania
Proven Oil Reserves OPEC Reserves* (in billions of barrels) World Reserves (in billions of barrels) *Iran and Libya not shown 261.9 77.2 35.3 115 101.5 11.8 4.7 97.8 15.2 Saudi Arabia Venezuela Nigeria Iraq Kuwait Algeria Indonesia UAE Qatar 261.9 215.3 100.6 16.3 79.2 100.8 36.3 Saudi Arabia North America Central & South America Western Europe E Europe & Former USSR Africa Asia & Oceania
Top 10 Suppliers U.S. Oil Imports January-December 2008 470 Millions of Barrels Per Day
EPCA and IEA IMPORTATION PROTECTION GOAL (90 DAYS) SPR Inventory & Import Protection 1977 - 2007 (Public Stocks)
Concentration Of Salt Domes Secure Economical Low Environmental Risk Major U.S. Refinery Area Major Crude Oil Distribution Center Tanker Terminals Pipelines Provides Maximum Flexibility To Respond To A Wide Range Of Interruptions Where Public Reserves are Located- Gulf Coast Storage
SPR NEW ORLEANS SPR NEW ORLEANS Gulf of Mexico Gulf of Mexico Gulf of Mexico WEST HACKBERRY WEST HACKBERRY LAKE CHARLES LAKE CHARLES BIG HILL BIG HILL TEXAS CITY TEXAS CITY HOUSTON HOUSTON BATON ROUGE BATON ROUGE BEAUMONT PORT ARTHUR BEAUMONT PORT ARTHUR BAYOU CHOCTAW BAYOU CHOCTAW BRYAN MOUND BRYAN MOUND SPR WAREHOUSE (Stennis) SPR WAREHOUSE (Stennis) RICHTON (Proposed New Site) SPR STORAGE FACILITY SPR WAREHOUSE (Stennis) CITIES RICHTON (Proposed New Site) LOUISIANA LOUISIANA LOUISIANA LOUISIANA TEXAS TEXAS TEXAS TEXAS MISSISSIPPI MISSISSIPPI MISSISSIPPI MISSISSIPPI
Designed Storage Capacity and Future Development Bayou Choctaw West Hackberry Big Hill Bryan Mound 254 MMB Richton +160 MMB 170 MMB +80 227 MB 76 MMB +33 Authorized- 1,000 MMB Capacity- 727 MMB Current Inventory 706 MMB April 4, 2009
Reserve Distribution Capability PAD V 16-18 DAYS Puerto Rico/ Virgin Islands 20-24 DAYS 5-6 DAYS 6-8 DAYS PAD I Hawaii SPR PAD III PAD IV PAD II
Industrial Energy Supply Chain Production -> Refining -> Distribution
油
Convention Gasoline Supply Components of Light Vehicle Upstream Energy Supply
A Model Gasoline and Ethanol Supply System
Development of Crude Oil Storage- Size Comparison Empire State Building 1,454 Feet (443 Meters) New Orleans Superdome 273 Feet (83 Meters) Salt Dome Cavity 2,000 Feet (610 Meters)
Very large diameter Cap Rock Forms on top of a Rising Salt Column Evolution of Gulf Coast Salt Deposits Geology of Salt Domes
Storage Cavern Development Oil Storage Configuration Standby mode Brine Out Oil Oil Water In Leaching Stage II Brine Oil Oil Brine Oil Oil Brine Out Water In Leaching Stage I Oil Brine Oil Storage Cavern Complete Oil Brine
Storage Cavern Drawdown Water In Oil Out Oil Out Oil Brine Salt Dome
Salt Cavern Storage Technology Salt Dome Storage for Hydrocarbon Storage Patented in 1919 Used Commercially for Crude Refined Products Natural Gas LPG Used for Oil Reserves by U.S.A. Germany France Netherlands
Brine Disposal Methods Brine Disposal in Wells Brine Disposal Pipeline to Gulf 8000 Feet 8000 Feet Brine Brine Pond Brine Disposal Pumps Brine Injection Pumps Oxygen Scavenger Injection Basket Strainer Polish Filters Brine Disposal Well Cavern Raw Water Intake Pumps Water to Caverns Water Source Cavern Oxygen Scavenger Injection Brine Line To Gulf Of Mexico Brine Pond Brine Disposal Pumps Brine
Calendar Year Millions of Barrels Cumulative Strategic Petroleum Reserve Oil Fill High Sulfur Low Sulfur
U.S. Presidential Authority Presidential Finding: A Severe Energy Supply Disruption IEP Obligations Two Levels Defined: Full Drawdown Limited Drawdown - 30 MMB Authority & Conditions for Use
Authority & Conditions for Use Secretary of Energy Authority Oil Exchange Authority: To Acquire Oil for the Reserve To Alter Crude Mix Test Sale Authority: To Test Reserve Capabilities Limited to 5 MMB Dr Steven Chu
How the Reserve Has Been Used Ivan Exchange 5.4 MMB Congressional Sales 28 MMB Test Sale 90 3.9 MMB Test Sale 85 1 MMB Desert Storm Drawdown 17.3 MMB Time Exchanges 2000 30 MMB 30 20 10 0 5 10 15 Millions Of Barrels 1985 1990 1995 2006 2000 2005 2007 Maya Exchange Incoming 99 Maya Exchange Outgoing 98 2005 Hurricane Exchange and Drawdown 20.8MMB Calcasieu Exchange 750K Receipt of Katrina Exchange Oil
$4.50-$5.00 Per Barrel Storage Development (Historical) Operating Cost Per Barrel Per Year 17 Cents Cost Per Barrel Drawdown Reserve 10.29 Cents (One Barrel = 42 gallons with 90 Day Drawdown Of 396 mmb) Cost Per Barrel
FY 2009 AUTHORIZED STAFFING DOE- 95 authorized full time equivalents (FTE) Contractors and Subs* 820 authorized FTEs * Supporting organizations- M&O, Security, Support Services, A-E, Geotechnical, and Construction Management
Core Business Operations Areas
Coordinates with Federal, State and Local Response Agencies And Private Response Entitles Emergency Response Teams at Each Site Attend Annual Firefighting Training and Receive Hazardous Materials Clean-Up Training Emergency Management and Fire Protection
Charter Member National Environmental Performance Track Open Only To Organizations With Strong Compliance Record ISO 14001 Environmental Management System 1st US Bulk Petroleum Storage Entity Certified Voluntary Protection Programs (VPP) Achieved STAR Status Rating From Occupational Safety And Health Administration (OSHA) Environmental, Safety & Health
Primary Customer Team Establish Dialogue With Petroleum Industry Primary Customers Refiners and Traders Open Communications with SPR Stakeholders, the Public, International visitors and Industry Customer Service
In 1999 Interagency Agreement W/ Dept of Interior to divert Federal Royalty Oil Payments From Leases in the Gulf Of Mexico to the SPR In Nov 2001 The President directed the SPR be Filled To 700 mmb Through RIK Program As Of Dec 06 SPR has received 138.8 mmb Under RIK Program During 2006, the SPR received 158,746 barrels of RIK oil Royalty-In-Kind
Energy Policy Act of 2005 authorized Secretary of Energy to fill the SPR to 1 billion barrels On December 8, 2006, Department of Energy selected salt dome at Richton, MS as an expansion site On February 14, 2007 The Secretary of Energy signed the Record of Decision selecting the following sites for the expansion of the SPR: Richton (New site) Big Hill (Existing site) Bayou Choctaw (Existing site) Acquisition of Additional Storage Capacity Currently Planning and Development work is underway. Public Scoping meetings/Town Hall Meeting conducted April 7-10, 2008
Reference and Helpful Links U.S. Department of Energy Website: www.energy.gov Energy Information Administration: http://www.eia.doe.gov U.S. Department of Energy, Fossil Energy Website: http://www.fe.doe.gov/programs/reserves/ International Oil Stockpiling Symposium Presentations: http://www.petrostock.org/ Whitehouse Energy and Environment Agenda www.whitehouse.gov/agenda/energy_and_environment/ Book: The Strategic Petroleum Reserve- US Energy Security and Oil Policy, 1975-2005 by Bruce A. Beaubouef, Texas A&M University Press, College Station, 2007.
Conclusion, Summary and Questions

More Related Content

Tulane Law School Summit Spr Energy Securityin Changes Times Jm Drake

  • 1. 油
  • 2. Presentation Topics: Mission and need for Reserves Energy Outlook: Supply and Consumption Storage Method and Development How the Reserve is used Core Activities - Special Initiatives An Overview of the Strategic Petroleum Reserve - Energy Security for American during Changing Times
  • 3. To Diminish the Vulnerability of the United States to the Harmful Effects of Petroleum Supply Disruptions To Meet U.S. Obligations under the International Energy Program SPR2603.ppt SPR MISSION One Team- Relevant, Ready, Responsive, and Reliable U.S. Energy Policy & Conservation Act (EPCA 1975) U.S. Energy Policy Act of 2005 U.S. Energy Independence and Security Act (EISA 2007)
  • 4. Short-term relief to American Families More transparent energy trading regulations Reduce Imports over the Next Decade Deploy electric and advanced vehicles (tax credits) Promote domestic gas and oil production Economic Recovery and Job Creation Renewable green energy development Infrastructure design, development and investment Reduce Greenhouse Gas Emissions U.S. to become a leader in Climate Change Current Administrations Energy and Environmental Agenda Items
  • 5. Total Domestic Production Total Petroleum Consumption MILLIONS OF BARRELS PER DAY 1973 Production as a Share of Consumption 63% 2007 33% Domestic Production and Consumption
  • 6. Annual Energy Outlook (AEO) 2009 Projections for U.S. Domestic Production Domestic Onshore Alaskan Lower 48 Offshore Projected Historical Liquids from Biomass (Green) Liquids from Coal (Black)
  • 7. AEO 2009 Projections for U.S. Crude and Product Imports Net Crude Imports Net Product Imports Historical Projected Ethanol Imports
  • 8. AEO 2009 Projections for U.S. Demand, Supply & Imports Last Year EIA AEO 2009
  • 9. AEO 2009 Projections for U.S. Crude Import Dependence EIA Annual Energy Outlook 2009
  • 10. Components of Import Dependence Costs
  • 11. Key Economic Factors in the Energy Outlook From 1970 to 1980 oil prices increased by a factor of ten from $3.50 per barrel to $35 per barrel . 1st Qtr 2015 oil prices between $90 to $100 are consistent with this data Lack of Spare Production Capacity played a major role in run up of oil prices just prior to the upside shock at near $150/bbl. One affect of upside economic shock is demand destruction Downside price shocks are likely to occur below $42/bbl. One affect of downside shock is supply destruction and the curtailment of the development of alternative fuels There is a close (3 to 4x) correlation between oil price and the Finding and Development (F&D) costs. On a cost basis it is nearly impossible to reach either $200/bbl or $20/bbl in the current market (Mar 2009). Historically, world oil demand grows at 2% less then Gross Domestic Product (GDP). If GDP is stagnant oil demand could fall by 1MMB/day during this bear market cycle.
  • 12. Regional Sources -U.S. Oil Imports 2007 *Libya, Iran and Qatar provided none OPEC / Non-OPEC Imports 32% 19% 4% 2% 18% 1% 24% N America Central & S America W Europe E Europe & Former USSR Middle East Africa Asia & Oceania
  • 13. Proven Oil Reserves OPEC Reserves* (in billions of barrels) World Reserves (in billions of barrels) *Iran and Libya not shown 261.9 77.2 35.3 115 101.5 11.8 4.7 97.8 15.2 Saudi Arabia Venezuela Nigeria Iraq Kuwait Algeria Indonesia UAE Qatar 261.9 215.3 100.6 16.3 79.2 100.8 36.3 Saudi Arabia North America Central & South America Western Europe E Europe & Former USSR Africa Asia & Oceania
  • 14. Top 10 Suppliers U.S. Oil Imports January-December 2008 470 Millions of Barrels Per Day
  • 15. EPCA and IEA IMPORTATION PROTECTION GOAL (90 DAYS) SPR Inventory & Import Protection 1977 - 2007 (Public Stocks)
  • 16. Concentration Of Salt Domes Secure Economical Low Environmental Risk Major U.S. Refinery Area Major Crude Oil Distribution Center Tanker Terminals Pipelines Provides Maximum Flexibility To Respond To A Wide Range Of Interruptions Where Public Reserves are Located- Gulf Coast Storage
  • 17. SPR NEW ORLEANS SPR NEW ORLEANS Gulf of Mexico Gulf of Mexico Gulf of Mexico WEST HACKBERRY WEST HACKBERRY LAKE CHARLES LAKE CHARLES BIG HILL BIG HILL TEXAS CITY TEXAS CITY HOUSTON HOUSTON BATON ROUGE BATON ROUGE BEAUMONT PORT ARTHUR BEAUMONT PORT ARTHUR BAYOU CHOCTAW BAYOU CHOCTAW BRYAN MOUND BRYAN MOUND SPR WAREHOUSE (Stennis) SPR WAREHOUSE (Stennis) RICHTON (Proposed New Site) SPR STORAGE FACILITY SPR WAREHOUSE (Stennis) CITIES RICHTON (Proposed New Site) LOUISIANA LOUISIANA LOUISIANA LOUISIANA TEXAS TEXAS TEXAS TEXAS MISSISSIPPI MISSISSIPPI MISSISSIPPI MISSISSIPPI
  • 18. Designed Storage Capacity and Future Development Bayou Choctaw West Hackberry Big Hill Bryan Mound 254 MMB Richton +160 MMB 170 MMB +80 227 MB 76 MMB +33 Authorized- 1,000 MMB Capacity- 727 MMB Current Inventory 706 MMB April 4, 2009
  • 19. Reserve Distribution Capability PAD V 16-18 DAYS Puerto Rico/ Virgin Islands 20-24 DAYS 5-6 DAYS 6-8 DAYS PAD I Hawaii SPR PAD III PAD IV PAD II
  • 20. Industrial Energy Supply Chain Production -> Refining -> Distribution
  • 21. 油
  • 22. Convention Gasoline Supply Components of Light Vehicle Upstream Energy Supply
  • 23. A Model Gasoline and Ethanol Supply System
  • 24. Development of Crude Oil Storage- Size Comparison Empire State Building 1,454 Feet (443 Meters) New Orleans Superdome 273 Feet (83 Meters) Salt Dome Cavity 2,000 Feet (610 Meters)
  • 25. Very large diameter Cap Rock Forms on top of a Rising Salt Column Evolution of Gulf Coast Salt Deposits Geology of Salt Domes
  • 26. Storage Cavern Development Oil Storage Configuration Standby mode Brine Out Oil Oil Water In Leaching Stage II Brine Oil Oil Brine Oil Oil Brine Out Water In Leaching Stage I Oil Brine Oil Storage Cavern Complete Oil Brine
  • 27. Storage Cavern Drawdown Water In Oil Out Oil Out Oil Brine Salt Dome
  • 28. Salt Cavern Storage Technology Salt Dome Storage for Hydrocarbon Storage Patented in 1919 Used Commercially for Crude Refined Products Natural Gas LPG Used for Oil Reserves by U.S.A. Germany France Netherlands
  • 29. Brine Disposal Methods Brine Disposal in Wells Brine Disposal Pipeline to Gulf 8000 Feet 8000 Feet Brine Brine Pond Brine Disposal Pumps Brine Injection Pumps Oxygen Scavenger Injection Basket Strainer Polish Filters Brine Disposal Well Cavern Raw Water Intake Pumps Water to Caverns Water Source Cavern Oxygen Scavenger Injection Brine Line To Gulf Of Mexico Brine Pond Brine Disposal Pumps Brine
  • 30. Calendar Year Millions of Barrels Cumulative Strategic Petroleum Reserve Oil Fill High Sulfur Low Sulfur
  • 31. U.S. Presidential Authority Presidential Finding: A Severe Energy Supply Disruption IEP Obligations Two Levels Defined: Full Drawdown Limited Drawdown - 30 MMB Authority & Conditions for Use
  • 32. Authority & Conditions for Use Secretary of Energy Authority Oil Exchange Authority: To Acquire Oil for the Reserve To Alter Crude Mix Test Sale Authority: To Test Reserve Capabilities Limited to 5 MMB Dr Steven Chu
  • 33. How the Reserve Has Been Used Ivan Exchange 5.4 MMB Congressional Sales 28 MMB Test Sale 90 3.9 MMB Test Sale 85 1 MMB Desert Storm Drawdown 17.3 MMB Time Exchanges 2000 30 MMB 30 20 10 0 5 10 15 Millions Of Barrels 1985 1990 1995 2006 2000 2005 2007 Maya Exchange Incoming 99 Maya Exchange Outgoing 98 2005 Hurricane Exchange and Drawdown 20.8MMB Calcasieu Exchange 750K Receipt of Katrina Exchange Oil
  • 34. $4.50-$5.00 Per Barrel Storage Development (Historical) Operating Cost Per Barrel Per Year 17 Cents Cost Per Barrel Drawdown Reserve 10.29 Cents (One Barrel = 42 gallons with 90 Day Drawdown Of 396 mmb) Cost Per Barrel
  • 35. FY 2009 AUTHORIZED STAFFING DOE- 95 authorized full time equivalents (FTE) Contractors and Subs* 820 authorized FTEs * Supporting organizations- M&O, Security, Support Services, A-E, Geotechnical, and Construction Management
  • 37. Coordinates with Federal, State and Local Response Agencies And Private Response Entitles Emergency Response Teams at Each Site Attend Annual Firefighting Training and Receive Hazardous Materials Clean-Up Training Emergency Management and Fire Protection
  • 38. Charter Member National Environmental Performance Track Open Only To Organizations With Strong Compliance Record ISO 14001 Environmental Management System 1st US Bulk Petroleum Storage Entity Certified Voluntary Protection Programs (VPP) Achieved STAR Status Rating From Occupational Safety And Health Administration (OSHA) Environmental, Safety & Health
  • 39. Primary Customer Team Establish Dialogue With Petroleum Industry Primary Customers Refiners and Traders Open Communications with SPR Stakeholders, the Public, International visitors and Industry Customer Service
  • 40. In 1999 Interagency Agreement W/ Dept of Interior to divert Federal Royalty Oil Payments From Leases in the Gulf Of Mexico to the SPR In Nov 2001 The President directed the SPR be Filled To 700 mmb Through RIK Program As Of Dec 06 SPR has received 138.8 mmb Under RIK Program During 2006, the SPR received 158,746 barrels of RIK oil Royalty-In-Kind
  • 41. Energy Policy Act of 2005 authorized Secretary of Energy to fill the SPR to 1 billion barrels On December 8, 2006, Department of Energy selected salt dome at Richton, MS as an expansion site On February 14, 2007 The Secretary of Energy signed the Record of Decision selecting the following sites for the expansion of the SPR: Richton (New site) Big Hill (Existing site) Bayou Choctaw (Existing site) Acquisition of Additional Storage Capacity Currently Planning and Development work is underway. Public Scoping meetings/Town Hall Meeting conducted April 7-10, 2008
  • 42. Reference and Helpful Links U.S. Department of Energy Website: www.energy.gov Energy Information Administration: http://www.eia.doe.gov U.S. Department of Energy, Fossil Energy Website: http://www.fe.doe.gov/programs/reserves/ International Oil Stockpiling Symposium Presentations: http://www.petrostock.org/ Whitehouse Energy and Environment Agenda www.whitehouse.gov/agenda/energy_and_environment/ Book: The Strategic Petroleum Reserve- US Energy Security and Oil Policy, 1975-2005 by Bruce A. Beaubouef, Texas A&M University Press, College Station, 2007.

Editor's Notes

  1. The Strategic Petroleum Reserve (SPR) is a National asset intended to protect the United States against severe supply disruptions that could harm our economy and threaten our national security. Quote from speech by former Secretary of Energy, Samuel Bodman in Feb 2007.