US to create 1m bbl gasoline reserve in northeast

02 May 2014 17:47  [Source: ICIS news]

HOUSTON (ICIS)--To better prepare for the aftermath of major storms, the US Department of Energy (DOE) announced on Friday a plan to institute a 1m bbl gasoline reserve for the northeast region of the country.

"Building on lessons learned from recent extreme weather events like Superstorm Sandy, today we are announcing the establishment of a refined petroleum product reserve for the region surrounding New York Harbor and the northern New England area to help ease the effects of potential future gasoline supply disruptions," Energy secretary Ernest Moniz said.

The 2012 storm caused heavy damage in New York and New Jersey, including to refineries and terminals. The impact to infrastructure caused parts of the US northeast to be without fuel for up to 30 days.

"Repairing the old is not good enough. We've got to learn lessons and prepare for the future," said US Senator Charles Schumer (Democrat-New York).

The reserve will store US-owned gasoline in leased commercial space in two locations, near New York Harbor and in New England, each containing 500,000 bbl of gasoline. Specific sites have not been chosen, but access to transportation will be a factor in the decision, Moniz said.

The gasoline reserve will complement the northeast regional heating oil reserve, which currently holds 1m bbl of diesel. Established in July 2000, it was used for the first time in the aftermath of Superstorm Sandy.

It also complements the US Strategic Petroleum Reserve, which has a capacity of 727m bbl. It has been used several times, including in the aftermath of Hurricane Katrina, which hit the Gulf coast region in August 2005.

The gasoline reserve will operate in a similar manner to the petroleum and heating oil reserves.

Establishing the reserve is estimated to cost about $2m, depending on product and lease costs. The DOE anticipates awarding contracts for storage, service and product to launch the reserve by late summer, Moniz said.

A reserve gasoline supply addresses only part of the problem, as many northeastern retail gasoline stations were unable to sell fuel due to power outages. Through Sandy aftermath funding, the US government is also helping gas stations purchase generators and helping them protect those generators from flooding.

"We're doing everything we can. We need both – gas stations with power and gasoline," said US Senator Ed Markey (Democrat-Massachusetts).

The DOE also will be considering fuel reserves in other locations throughout the US as it undertakes its quadrennial technology review. Focusing on infrastructure, the process will include studies on regionally based fuel resiliency, Moniz said, noting the DOE continues to work to enable more resilient electric grids.

By: Jessie Waldheim

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