Strategic Petroleum Reserve:

Information on DOE's Fiscal Years 1986 and 1987 Budget Deferrals

RCED-86-116BR: Published: Feb 28, 1986. Publicly Released: Feb 28, 1986.

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Pursuant to a congressional request, GAO obtained information relating to Strategic Petroleum Reserve (SPR) budget deferrals and addressed questions concerning: (1) the status of the development of SPR sites; (2) the time and money needed to prepare SPR sites for continued oil fill; (3) the Department of Energy's (DOE) plan for SPR under a moratorium; (4) the effects of deferrals on completion of SPR; and (5) DOE plans for using funds appropriated for SPR.

GAO found that, in anticipation of the administration's proposed indefinite moratorium and funding deferrals, DOE: (1) has stopped all cavern leaching activities; (2) has suspended all further contract award proceedings and construction action at the Big Hill and Bayou Choctaw storage sites; (3) after purchasing sufficient oil to fill SPR to 500 million barrels, will discontinue oil purchases after May 1986; and (4) is developing a new transition plan describing all of the actions required to put SPR facilities in a standby status. Although the wells and caverns are completed and the surface construction for the initial caverns is nearly completed, the water, brine, and oil pipelines that were to be completed concurrently with the surface construction are not yet completed. GAO estimated that DOE would need approximately $202 million to complete all the facilities and leach all the caverns and would need approximately 34 months after contracts have been awarded to complete and fill all of the caverns to their 140-million-barrel storage capacity. DOE estimated that the deferral would result in a delay of at least 1 month for every month that work is not resumed, plus contract reactivation time of unknown duration. DOE has proposed the deferral of $198 million in facilities funds and $577 million in oil funds and the continued deferral of oil account money until a decision is made on future oil purchases. The remainder of the funds would be used to maintain and fill SPR to 500 million barrels.

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