WASHINGTON — The U.S. Energy Department said on Thursday it has approved a second loan of 1.5 million barrels of oil to Exxon Mobil Corp from the Strategic Petroleum Reserve (SPR) after damage from Hurricane Ida devastated offshore oil production.
“The SPR’s ability to conduct exchanges is a critical tool available to refiners to strengthen the fuel supply chain and mitigate disruptions following emergencies, like Hurricane Ida,” the department said on its website.
The department has now authorized loans totaling 3.3 million barrels to help refiners cope with the dearth of oil coming from the U.S. Gulf. Last Thursday, U.S. Energy Secretary Jennifer Granholm authorized a loan of 1.5 million barrels to Exxon’s Baton Rouge refinery.
The Energy Department then also loaned 300,000 barrels of oil to Placid Refining Company LLC’s refinery near Baton Rouge, Louisiana.
Three-quarters of U.S. Gulf of Mexico oil production remains offline after Ida made landfall over a week ago. Ida was one of the worst hurricanes for oil producers since back-to-back storms in 2005.
Royal Dutch Shell Plc, the largest oil producer in the U.S. Gulf of Mexico, on Thursday canceled some export cargoes due to Ida’s damage to offshore facilities, signaling energy losses would continue for weeks.
Power outages at onshore processing and pipeline facilities have prevented some crude from reaching shore, which has supported oil prices since last week.
The SPR had 621.3 million barrels of crude in stock as of last week, according to the Energy Department, the lowest since August 2003.
The SPR has four major storage facilities, two in Texas and two in Louisiana, to deliver crude to nearby refineries for fuel production. It was developed in the 1970s after the Arab oil embargo spiked gasoline prices, but has been tapped recently after unusual fuel disruptions like hurricanes. (Reporting by Timothy Gardner; Editing by Sandra Maler and Chris Reese)