OREANDA-NEWS. The US needs to add dedicated marine terminals to its Strategic Petroleum Reserve (SPR) so the emergency stockpile is able to deliver large amounts of crude to consumers during a supply disruption, the US Energy Department has concluded.

The federal agency issued a formal finding 12 August that there was a "mission need" for dedicated marine terminal capacity for the SPR, US energy secretary Ernest Moniz said yesterday at a Senate energy committee "field" hearing in Seattle, Washington. Adding dedicated marine capacity will address changes in the midstream market that have "significantly reduced" the effective distribution ability of the SPR, he said.

The Energy Department became aware of that reduced distribution capacity after holding a test sale in 2014 of 4.6mn bl of crude from the SPR. The emergency crude stockpile, constructed about 40 years ago, consists of four underground salt caverns in Texas and Louisiana that now hold 695.1mn bl, out of a design capacity of 713.5mn bl.

But the recent shale drilling boom has caused large amounts of crude to flow into the Gulf coast along the same pipelines used by the SPR. This has reduced the ability of the SPR to add incremental barrels to the domestic market, and limited its ability to protect the US from severe disruptions in the supply of crude.

During the 2014 test sale, buyers struggled to get capacity on Shell's Zydeco pipeline because it was already transporting large amounts of Eagle Ford crude from Texas to Louisiana refiners, the Energy Department found. Another bottleneck during the test sale was finding available storage capacity and docks that could move crude from the SPR onto barges and tank ships.

The US Congress last year, partly in response to the test sale, authorized the Energy Department to sell up to $2bn of crude from the SPR to fund a modernization program for the crude reserve. The first step in this modernization process will be a life extension project needed to address a growing maintenance backlog. The second step will be adding dedicated marine capacity to the SPR, although the Energy Department has not disclosed the scope of this project or its location.