US 2018 budget proposes to sell crude oil reserves, lease drilling in arctic

HOUSTON (ICIS)–US President Donald Trump’s 2018 fiscal budget, released on Tuesday, proposes selling approximately 270m bbl of Strategic Petroleum Reserve (SPR) crude oil, as well as leasing oil and gas drilling in a portion of Alaska’s Arctic National Wildlife Refuge (ANWR).

The proposed budget would allow the Department of Energy (DOE) to sell about half of the SPR reserves, as well as reduce modernisation funding by $1bn, and close two of the four SPR sites, all by 2027.

After the Arab oil embargo of 1973-1974, US Congress approved funding for the SPR in order to protect the country from future disruptions. The SPR holds around 695m bbl in salt caverns in Louisiana and Texas.

“The SPR is a product of the 1970s, an era when the US imported 5-6 million barrels of oil per day from OPEC,” the budget stated. “Compared to now where imports from OPEC countries are roughly half that amount, despite a significantly larger economy.” 

According to the budget, the proposal to reduce the SPR to approximately half of its projected 2027 size should still provide protection in the event of an energy crisis.

The budget also proposes legislation authorising oil and gas leasing in a portion of the ANWR starting in 2022-2023. According to the budget, revenues would be derived from lease sale bonus bids, with further receipts coming in as drilling begins. Additional lease sales would occur in 2026-2027, the budget stated.

Additional reporting by Ignacio Sotolongo