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EMD-82-95 1 (1982-05-21)

handle is hein.gao/gaobabdiw0001 and id is 1 raw text is: UNITED STATES GF.W =I.OUNTING OFFICE WASHINGTON, D.C. 20548 ZNERG AND MiNZRAL DiVIllON B-207583 May 21, 1982 The Honorable Bill Bradley Dear Senator Bradley: 118608 Subject: Feasibility and Cost of Interim Storage for the Strategic Petroleum Reserve (GAO/EMD-82-95) As part of our ongoing study of options for building, holding, and using private oil stocks, requested by your letter of July 31, 1981, your office has asked for information concerning the feasibility and cost of interim storage for the Strategic Petroleum Reserve (SPP) managed by the Department of Energy (DOE). Since our review of private storage options is not yet complete, the data and analysis set out here are preliminary; however, we anticipate that our calculations will be subject only to minor revisions. This report also builds on information and analysis presented in a recent letter report to the Chairman of the House Subcommittee on Fossil and Synthetic Fuels, Committee on Energy and Commerce. 1/ In the interest of timely release of this report, Senator Bradley requested that GAO not seek agency comments. Our calculations indicate that an SPR fill rate of 300 thousand barrels per day (MBD) beginning in FY 1983 and continuing until the SPR contains 500 million barrels (MMB) will require interim storage during FY 1983-1985. The peak 1-year requirement will be approximately 69 MMB in FY 1984. Our inquiries at DOE and among industry sources also suggest that temporary storage in the form of steel tanks and/or tankers will probably be available at costs ranging from about $1.20 to $3.65 per barrel per year. We estimate, therefore, that an interim storage program to meet the goals mentioned above, given DOE's estimates of future oil prices, would cost from about $0.7 billion to $1.1 billion over 4 years. These estimates include storage costs and incremental debt financing of both storage and accelerated oil purchases. In comparison to the present DOE plan, an interim storage program would result in budget additions in fiscal years 1983 and 1984 and reductions in fiscal years 1985 and 1986. 1/Leasing Storage Capacity for the Strategic Petroleum Reserve, EMD-82-62, March 12, 1982. 001709

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