Feds sell 30.6 million barrels of emergency crude to 15 companies

Traders and oil refiners are among the 15 companies that are buying roughly 30.6 million barrels of crude from the United States’ emergency stockpiles, the Energy Department announced today.

The government inked 28 contracts to sell the oil, with prices ranging from $104.97 to $109.26 per barrel. According to a government list of the winning bids, Barclays Bank nabbed the lowest price in the auction, while the nation’s largest refiner, Valero, paid the highest amount for a portion of the crude it snapped up in the sale.

All told, the government is set to take in about $3.3 billion from the sale.

The Energy Department said it is now coordinating with the winning bidders, federal maritime authorities and the Homeland Security Department “to facilitate and streamline deliveries, including those for companies that have requested early delivery of the crude oil in July 2011.”

The Obama administration announced it was releasing oil from the Strategic Petroleum Reserve late last month — offering up half of the 60 million barrels that the International Energy Agency’s 28 member nation’s committed to put on the market. Administration officials said the move was essential to restoring stability to the market and offsetting the loss of 1.5 million barrels of high-quality light, sweet crude oil daily from Libya during the summer driving season.

Although the announcement initially sent oil prices downward, the cost of crude has since rebounded — and has traded higher than it was even before President Barack Obama authorized the sale. On Monday, West Texas Intermediate crude futures — the U.S. oil benchmark — closed at $95.15 per barrel, just slightly under the trading price before the SPR announcement.

Government officials previously described industry interest in the sale as “very high,” with far more bids streaming in than available oil.

Firms that nabbed the crude include major oil companies — Exxon Mobil, Shell, BP and ConocoPhillips — as well as other independent refiners, such as Valero, Tesoro, Murphy Oil, Sunoco and Marathon.

Valero was one of the biggest single purchasers of the stockpiled oil. The company is buying 6.1 million barrels of oil, some for as low as $105.62 per barrel. The company would not release specific details about its plans for the crude.

But spokesman Bill Day noted that “with the capacity to process 2.6 million barrels per day, Valero can quickly process the crude from this purchase.”

Oil traders also got into the act:

  • Barclays Bank is buying 200,000 barrels of oil for $21 million.
  • Hess Energy Trading Co. is buying 2 million barrels for $212.6 million.
  • Trafigura AG is buying 1.1 million barrels for $116.8 million.
  • Vitoil Inc., is buying 4 million barrels for $432.2 million.
  • And J.P. Morgan nabbed 1.5 million barrels for $105.33 each — making a final pricetag of $158 million.

Plains Marketing, a pipeline operator, also spent $223 million buying roughly 2.1 million barrels.

It is unclear how each bidder plans to use their oil — and how immediately the crude may get refined. Some traders may put the crude in storage, in anticipation of prices rising further.

The government does not bar successful bidders from storing oil for later use or resale. But it does bar the winners from exporting any of the stockpiled crude unless they return an equal volume of refined product to the U.S.

The big demand for the reserve oil stands in contrast to a lackluster response to the last Strategic Petroleum Reserve auction. After Hurricane Katrina damaged pipelines, offshore rigs and refineries in 2005, the U.S planned to sell 30 million barrels of crude from the reserve, but just 11 million barrels ultimately were auctioned off.