Reserve duty
Petroleum depot staff ready to fulfill mission
09/22/2000
By Steven H. Lee / The Dallas Morning News
FREEPORT, Texas – The vanguard of our nation's energy security sits just past the First Assembly of God Church and down the road from Red Top Texas Style Burgers.
"I thought it was a fishing hole," says Red Top assistant manager Jackie Davenport, 30, when asked about the largest of four U.S. Strategic Petroleum Reserve sites, not more than three miles away.
Related stories
Oil strategies demonstrate the pressures
Gore asks Clinton to tap oil reserve
The good people of Freeport may be largely unaware, but President Clinton could order a spigot opened to release millions of barrels of crude oil stored deep underground in a giant salt dome here in order to curb 10-year-high oil prices and ensure enough heating oil for the winter.
"It's not really a spigot," politely corrects Jorge Aguinaga, the Department of Energy's senior site representative for the facility.
OK, so there is no real "spigot." Rather, there are dozens of wellheads sitting atop 20 cylindrical oil-filled caverns – each wide enough and deep enough on average to hold one of the 110-story towers at New York's World Trade Center.
And just as some in this blue-collar port don't attach much significance to what goes on at the strategic reserve, the site's 100 or so employees aren't caught up with being the first line of defense against disruptions in world oil supplies.
Most days, they take quiet pride doing routine maintenance and checking valves on the maze of pipes leading into and out of the caverns, while waiting for the big call from Washington.
Mr. Clinton recently told Saudi Arabia's Crown Prince Abdallah that the United States could act on its own to ease oil prices if the Organization of the Petroleum Exporting Countries failed to boost production.
It was a veiled reference to the strategic reserve, which hasn't been tapped in a national crisis since the Persian Gulf War in 1991, when President Bush ordered 21 million barrels released in anticipation of oil shortages resulting from Iraq's invasion of Kuwait.
Although OPEC since has agreed to raise production by 800,000 barrels a day, oil prices have shot to more than $35 a barrel – prompting concern over heating-oil supplies in this country and protests over high gasoline prices in France and the United Kingdom.
This week, the president said he is weighing whether to tap the strategic reserve, and some experts believe the oil stores are very much in play.
"I give a high likelihood of something happening," says Philip K. Verleger Jr., a partner with the Brattle Group, an economic consulting firm in Cambridge, Mass. "I think every politician is scared of what's happening in England. This presents as much grounds to release oil from the strategic reserve as anything else."
The history
The Strategic Petroleum Reserve was born of the Arab oil embargo in 1975, when a stunned Congress provided for the emergency stockpile to guard against future shortages.
The location at Freeport, about 60 miles south of Houston, where the Brazos River meets the Gulf of Mexico, is known as Bryan Mound – named for an original landowner of the 500-acre site and the inverted-bowl shape of the land pushed upward by the salt dome underneath.
Bryan Mound, which was developed from 1977 to 1987, has the largest capacity of the four reserve sites, all along the Texas and Louisiana coast. It can hold 232 million barrels of the reserve's total capacity of 700 million, and it currently contains about 215 million barrels.
Other sites are at Big Hill, east of Houston at Winnie, Texas; West Hackberry, near Lake Charles, La.; and Bayou Choctaw, not far from Baton Rouge, La. The sites are managed under contract with a private company, New Orleans-based DynMcDermott Petroleum Operations Co., which employs most of the staff.
All told, the reserve is meant to provide the equivalent of 30 to 90 days of foreign oil imports.
"A lot of people don't even know that we're here," Mr. Aguinaga says. "And a lot of people don't even know that there's a crude oil insurance policy that the nation has. We're here taking care of something that's very critical to the nation."
At each site, oil is stored in underground domes formed by eons of ocean salt deposits and compressed into a ball shape by the earth's movement. The massive dome at Bryan Mound is a mile-and-a-half in diameter and lies about 2,000 feet below the surface, protected by thick layers of cap rock and limestone.
Originally a sulfur mine, the site had been used to produce brine. The government started filling three existing caverns with oil – including one gigantic chamber with a capacity of 36 million barrels – and developed new ones through leaching or solution mining.
That involved pumping water in from the nearby Brazos River Diversion Channel and forcing brine out, creating underground cavities to hold the oil.
Similarly, on the rare occasions when it's needed, oil is pumped out by injecting water into the bottom of the caverns. Wellheads are connected to pipelines that send the oil to ports at Freeport and Texas City – where the crude is loaded onto tankers or distributed to area refineries – and inland to Cushing, Okla., for distribution to refineries in the central United States.
Once the president gives the order to open the figurative spigot, refineries submit bids for the oil and can receive it within 15 days. Operators can control much of the system from a room inside Bryan Mound's main building, but field operators must open the wellheads manually with the turn of a hand wheel.
Oil can be kept in salt domes at a fraction of the cost of storing it above ground in steel tanks, Mr. Aguinaga says. Plus, it's more secure.
"You can't expect somebody to go in and steal thousands of barrels of crude oil," he says. "As far as somebody striking the site with a bomb or something, it wouldn't affect the caverns at all. The only thing it could affect is the piping and wellheads above it."
Indeed, given the strategic value of the reserve, it may surprise some to learn that detailed information on the sites is available at the Department of Energy's Web site, complete with aerial photos and a map showing locations.
The turnoff to Bryan Mound off State Highway 288, close to Freeport's south city limits, is unassuming. A simple green and blue sign sends visitors up onto a levee and a two-lane road more than a mile to a compound with a high fence and gated entrance.
There, however, a sign sternly warns against entering with firearms, dangerous weapons or explosives. A guard checks identification and searches vehicles. Once inside, another guard escorts guests past three large drumlike storage tanks, piping and maintenance buildings to the central office.
Once a year, Mr. Aguinaga says, personnel go through a security training exercise involving local law officers, bomb squads, and even the FBI and CIA.
They play out an invasion from outside the fences, simulating shooting and hostage situations.
"We're a target, always a target," says Bill Duncan, who remembers the tension that surrounded the Persian Gulf War, when he operated the control room. The room, on display in floor-to-ceiling windows past the main lobby, contains several computer monitors behind a single desk.
Responding to need
Mr. Duncan says releasing the oil in 1991 was gratifying, if primarily to show people in town the worth of the reserve.
"You spend years putting oil into the ground, and hearing people say that it was not necessary. And it was necessary," Mr. Duncan says. "You hear a lot of negativity, that it's a government boondoggle. We finally got to show that we're doing more than taking tax dollars."
When oil was released, field operator Ronnie Coldwater was dispatched to turn a wellhead valve and was exhilarated by the enormous whoosh of oil rushing to the surface and out the pipeline.
"It was pretty exciting," he says, smiling. "I think as people understand what we have, I think they'd probably appreciate it. I feel like it's a big responsibility to make sure that we watch over and keep it in good working order."
In the 25 years since Congress created the reserve, the Gulf War remains the only time a president has ordered oil released to avert a shortage. Since then, however, oil from the reserve has been loaned to oil companies and paid back. And on one occasion, the reserve sold oil to help reduce government deficits.
Some oil industry officials now believe that the reserve shouldn't be used to bring down prices.
"We feel that it should only be used for what it was intended, and that is a disruption of supplies from overseas producers," says Chris Kelley, a spokesman for the American Petroleum Institute in Washington. He says crude oil stocks are down, but "not low enough for it to be considered a danger point."
High prices reflect more a shortage of refined oil products, such as gasoline, heating oil and diesel fuel, due to strong demand generated by robust economies, says Craig Ward, director of crude oil policy with the Independent Petroleum Association of America.
He says opening the reserve could have only a minimal effect on crude oil prices.
"I think it's a political option for politicians to show that there are things they could do," Mr. Ward says. "Will it have the desired effect? Probably not."
At Bryan Mound, all DynMcDermott site manager Richard Phillips knows is the feeling he had in 1975 when he returned home from an offshore drilling job.
"When I came in," Mr. Phillips recalls, "I had to wait in line to get gas for about four or five hours. And I never forgot that.
"If the president tells us to draw it down," he says, "we're 100 percent ready."
