Associated Press: 05.10.07, 5:59 PM ET
The Energy Department said Thursday it awarded a Royal Dutch Shell PLC subsidiary a contract to add 8.7 million barrels of oil to the nation’s emergency stockpile of crude oil.
The company’s Shell Trading Co. unit will provide 50,000 barrels per day over six months starting in August, the government said.
Shell is to provide the oil supplies as in-kind exchange for royalty payments that Shell would otherwise owe the government for offshore drilling.
The government had been trying to buy crude to fill the nation’s Strategic Petroleum Reserve, but suspended its plans for purchases until after the summer due to high crude prices.
The petroleum reserve, intended as a supply cushion in the event of an unexpected disruption, has the capacity to hold 727 million barrels of oil and currently has 690 million barrels stored in underground caverns in Louisiana and Texas. The Energy Department has asked Congress to double the size of the reserve.
Shell shares dipped $1.79 to close at $70.74 in Thursday’s trading. Light, sweet crude for June delivery rose 26 cents to settle at $61.81 a barrel on the New York Mercantile Exchange.
Copyright 2007 Associated Press.
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