Department of Energy authorized an emergency exchange of up to 400,000 barrels of crude oil for Phillips 66’s Lake Charles refinery in Louisiana on Oct. 23, responding to a temporary disruption in crude deliveries. The oil will come from the Strategic Petroleum Reserve’s West Hackberry site and is available for immediate delivery.
The refinery can process about 264,000 barrels per day, making the authorized volume equivalent to roughly a day and a half of its capacity. The cause of the delivery disruption was not disclosed. Phillips 66 confirmed that the refinery would receive crude from the reserve and said it did not anticipate an impact on Lake Charles operations.
The transaction is structured as an exchange rather than a sale. Phillips 66 must return the borrowed crude along with additional premium barrels, a mechanism intended to leave the reserve with more oil than it provided. Federal officials said the exchange is meant to support transportation-fuel production in Louisiana and nearby markets while limiting potential effects on regional fuel availability.
That arrangement covered up to 4 million barrels, divided into as much as 2 million barrels each for ExxonMobil and BP America, after weather-related supply disruptions in the Gulf region. ExxonMobil’s allocation was also intended to accelerate deliveries of crude that had already been awarded from the reserve.
Phillips 66’s obligation to repay the crude with a premium provides for replenishment, but the immediate volume available to the Lake Charles plant remains capped at 400,000 barrels while the underlying delivery disruption remains unspecified.