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| Energy Secretary Samuel Bodman says the U.S. will release oil from the nation's Strategic Petroleum Reserve to help refiners hurt by Katrina. (August 31) |
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NEW YORK (CNN/Money) -
Secretary of Energy Samuel W. Bodman announced Thursday that the Department of Energy has approved two requests for a loan of crude oil from the Strategic Petroleum Reserve (SPR).
The Department of Energy said it will loan ExxonMobil Corp. (Research) 6 million barrels of crude oil, which is more than the 5.4 million barrels loaned to refiners during Hurricane Ivan.
"We are committed to doing everything in our power to meet the immediate needs of those directly affected by Hurricane Katrina. By utilizing the resources from the Strategic Petroleum Reserve, we will help minimize any potential supply disruptions as a result of the hurricane."
"With the Reserve fully operational, we will be able to start delivering this oil as soon as tomorrow," Secretary Bodman said in a statement.
The Department of Energy also confirmed that Valero Energy Corp. (up $3.00 to $109.50, Research) will receive 1.5 million barrels of crude from the SPR for use at its Memphis, Tenn., Lima, Ohio and Krotz Springs, La. refineries.
The crude oil will be loaned from the SPR under short-term contractual agreements and returned to the Reserve once supply conditions return to normal.
"In addition, we are continuing to review loan requests as they come in. When a loan becomes finalized, we will announce it," Secretary Bodman said.
The reserve, the government's emergency stockpile of crude oil, was created in the aftermath of the 1973-74 oil embargo and is overseen by the Energy Department. Currently there are 700.6 million barrels of oil in the Strategic Petroleum Reserve, according to a Department of Energy spokesperson.
Oil has been released from the Strategic Petroleum Reserve seven times under exchange arrangements. Most recently, the Department entered into similar loan agreements following Hurricane Lili in October, 2002 and Hurricane Ivan in September, 2004.
Hurricane Katrina slammed into Louisiana and Mississippi on Monday, halting crude oil production in the Gulf of Mexico and damaging deep-water oil facilities. (Full story.)
The region produces more than 1.4 million barrels a day of oil for U.S. consumption, equal to about 7 percent of the country's demand.
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Two major suppliers of gasoline to the eastern seaboard resumed partial service Thursday, click here for more.
U.S. crude oil prices settled 53 cents higher to $69.47 on the New York Mercantile Exchange Thursday, click here for more.
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