US Strategic Petroleum Reserve undergoes changes

By North American Shale magazine staff | March 31, 2017

For the first time since 2014—and only the third time since 2005—the U.S. Department of Energy has sold a portion of its stockpiled oil from the Strategic Petroleum Reserve this year. The sale of 8 million barrels of sweet crude will be used to pay for maintenance and infrastructure upgrades to the SPR’s storage facilities. Starting in 2015, the DOE began a $2 billion modernization effort. The sale of crude is used to pay for the modernization work.

Outside of sales completed for maintenance and infrastructure updates, the SPR’s stock is rarely tweaked. In 2011, the president directed the sale of 30 million barrels of crude to offset disruptions to the oil supply due to unrest in the Middle East. According to the SPR, the 713.5 million barrels in its series of salt cavern storage facilities located along the Gulf of Mexico (where several refineries can have quick access to the crude) can help the US withstand 149 days of oil import disruptions. The idea for the SPR started in the 1950s following the 1956 Suez Crisis."

Light tight oil in the SPR?
The U.S. Energy Information Administration, a division of the DOE, believes that by 2040 tight oil will make up for the majority of any production increases. Troy Cook, senior global upstream analyst (and petroleum engineer by training) helped to create the EIA’s projections on light tight oil. “The application of two existing older technologies, horizontal drilling and hydraulic fracturing, combined with the higher prices within the past decade, made the experimentation and then full scale application of these technologies possible,” Cook said. “In the future, cost reductions based on learning by doing and optimization of both drilling and completion practices will continue to allow development in the current lower-cost environment that this development helped create.”

Technologies and strategies utilized to retrieve light tight oil in the known formations of today could evolve, according to Cook. “I believe the idea of a previously known but generally discounted resource could spring to life and at such high volumes in such a short period of time,” he said. “The proven reality of light, tight oil and available resources of the same type not yet exploited, has been substantial enough to alter expectations of future U.S. oil production.”