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Calgary Herald: U.S. sells $1B in oil from refineries

17 August 2007

The U.S. sold almost $1 billion in oil obtained as royalty-in-kind payments to six refiners.

The 14.2 million barrels of oil, valued by the Interior Department’s Minerals Management Service, were originally sent by Gulf of Mexico oil producers to the federal government in lieu of royalties, or as so-called RIK payments. The bulk of the oil, 12.7 million barrels, will go to two companies under a special small refiner program.

“The Minerals Management Service has made RIK crude oil available to small refiners for decades in an effort to provide them with a consistent oil supply at market prices,” Randall Luthi, the service’s director, said today in an e-mailed statement.

Luthi said many of these small refiners face market challenges in locating and acquiring adequate crude supplies, which places them at a competitive disadvantage to larger refiners.

Gary Williams Energy Co. and Placid Refining Co. made winning bids under the small refiner program to get the oil over one year starting Oct. 1.

Chevron Corp., ExxonMobil Corp., Plains All American Pipeline LP, and Royal Dutch Shell PLC will get 1.5 million barrels over six months, also starting Oct. 1, the service said.

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