Article from The OilSpot News by Schneider Electric ()
November 18, 2011
Government Still Soliciting for Home Heating Reserve Stocks
by Dawn Gallagher

The Defense Logistics Agency on behalf of the Department of Energy continues to solicit to purchase 350,000 bbl of ultra-low sulfur distillate fuel needed to complete the fill of the Northeast Home Heating Oil Reserve, spokeswoman Jenny Hakun confirmed with Telvent DTN on Nov. 17.

On Nov. 4, DLA awarded a contract to Hess Corp. for the delivery of 400,000 bbl of ULSD to the NEHHOR at the Hess Terminal in Groton, Connecticut.

According to the DOE website, a second contract was awarded on Nov. 4 to Global Montello Group, LLC for the delivery of 250,000 bbl to the Global terminal in Revere, Massachusetts.

While the awards were announced later than anticipated, DLA said these deliveries must be completed no later than Dec. 31. Hakun stated that the companies have said this will be the case though whether or not the product is in transit or currently in the reserve could not be confirmed. Hakun said the DOE will update the profile of the reserve on the website once the information is available.

On Sept. 30, DOE announced the completion of the acquisition of commercial storage services for the one million bbl of ULSD for the reserve.

Hess in Groton, Ct., was awarded a second contract for 100,000 bbl, increasing its storage obligation to 500,000 bbl. Global Companies LLC in Revere, Mass., was awarded a second contract for 250,000 bbl, increasing its obligation to 500,000 bbl. DOE said that the contract terms are for one year with three option years.

Congress in the Energy Policy Act of 2000 authorized the NEHHOR as an emergency stockpile of up to two million bbl of government-owned heating oil for the Northeastern States.

Through February of this year, the reserve held a total of two million bbl in both New England and New York Harbor. At the end of the winter heating season, DOE announced a competitive sale of the NEHHOR stocks for the purpose of replacing them with cleaner burning ULSD prior to the 2011-2012 heating season. The conversion was conducted in order to comply in advance of new mandates being phased in by several Northeastern states for more stringent fuel standards that will require replacement of high sulfur, 2,000 parts per million heating oil to ULSD which has an allowable sulfur count of 15ppm.

Establishment of a one million bbl NEHHOR is consistent with the Presidentís 2012 budget request and will provide supplemental supplies to New England, the area most vulnerable to supply disruption. DOE has said it does not plan to reestablish a NEHHOR facility in the N.Y.H. because the area has abundant commercial stocks and connections to local refineries and a major pipeline for resupply.

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