SPR depletion raises questions about integrity of oil caverns

The caverns that hold the U.S. strategic oil reserves could get damaged by the rapid release of stockpiles in response to the Iran war, experts warned this week as inventories hit a four-decade low.

Damage to the caverns would make it more difficult to respond to future energy emergencies, the experts said. The oil in the Strategic Petroleum Reserve is stored at 60 salt caverns thousands of feet underground at four major sites along the Gulf Coast in Louisiana and Texas.

The SPR has tumbled below 300 million barrels for the first time since it was filled in the early 1980s, according to Department of Energy data released Monday. Inventories are depleting as the U.S. releases 172 million barrels in response to the supply disruption caused by Iran war. The SPR will sit at around 243 million barrels after the drawdown is finished.

The Energy Department has said at least 70 million barrels must remain in the reserve to safely manage the caverns. Amos Hochstein, who served as a senior energy advisor to President Joe Biden, disputed that the figure this week.

“Don’t believe the people out of the government that are saying the SPR can go to 70 million barrels. It’s nonsense,” Hochstein told CNBC’s “Squawk Box” Thursday. At that level, the reserve would be depleted to “the point of never resurrecting it,” he said.

Depleting the reserve below 300 million barrels risks damage to the caverns, the former Biden administration official warned in June.

“I don’t know anyone who believes we can go below 300,” Hochstein told CNBC’s Brian Sullivan at an Atlantic Council event. “I know plenty of people who think we can’t get near 300 because physically you will damage the caverns where the oil is stored.”

Energy Department Press Secretary Ben Dietderich said claims the SPR’s storage caverns are at risk of collapse as oil is drawn down are false.

“The caverns are always full. All that changes is the ratio of oil and water that is filling them,” Dietderich told CNBC in a statement. The Trump administration is “responsibly managing the SPR as the critical national security asset it was designed to be,” he said.

Both sides of the political aisle have voiced worries about the integrity of the salt caverns. Republican lawmakers raised those concerns when the Biden administration released a record 180 million barrels in response to Russia’s invasion of Ukraine in 2022. The SPR fell below 350 million barrels in 2023 under Biden. It was refilled to around 415 million barrels before the Iran war.

The Government Accountability Office said in a May report that “repeated partial drawdowns followed by refill can leach a single part of a cavern repeatedly, leading to undesirable shapes.” 

The majority of the SPR’s caverns were found to be in “very good condition” after the 2022 drawdown, according to the…