Strategic Petroleum Reserve overview briefing prepared for Tulane Law School Summit Energy Panel Apr 4-5, 2009 http://summit.law.tulane.edu

5. Total Domestic Production Total Petroleum Consumption MILLIONS OF BARRELS PER DAY 1973 Production as a Share of Consumption 63% 2007 33% Domestic Production and Consumption

6. Annual Energy Outlook (AEO) 2009 Projections for U.S. Domestic Production Domestic Onshore Alaskan Lower 48 Offshore Projected Historical Liquids from Biomass (Green) Liquids from Coal (Black)

7. AEO 2009 Projections for U.S. Crude and Product Imports Net Crude Imports Net Product Imports Historical Projected Ethanol Imports

8. AEO 2009 Projections for U.S. Demand, Supply & Imports Last Year EIA AEO 2009

9. AEO 2009 Projections for U.S. Crude Import Dependence EIA Annual Energy Outlook 2009

10. Components of Import Dependence Costs

12. Regional Sources -U.S. Oil Imports 2007 *Libya, Iran and Qatar provided none OPEC / Non-OPEC Imports 32% 19% 4% 2% 18% 1% 24% N America Central & S America W Europe E Europe & Former USSR Middle East Africa Asia & Oceania

13. Proven Oil Reserves OPEC Reserves* (in billions of barrels) World Reserves (in billions of barrels) *Iran and Libya not shown 261.9 77.2 35.3 115 101.5 11.8 4.7 97.8 15.2 Saudi Arabia Venezuela Nigeria Iraq Kuwait Algeria Indonesia UAE Qatar 261.9 215.3 100.6 16.3 79.2 100.8 36.3 Saudi Arabia North America Central & South America Western Europe E Europe & Former USSR Africa Asia & Oceania

14. Top 10 Suppliers – U.S. Oil Imports January-December 2008 470 Millions of Barrels Per Day

15. EPCA and IEA IMPORTATION PROTECTION GOAL (90 DAYS) SPR Inventory & Import Protection 1977 - 2007 (Public Stocks)

17. SPR NEW ORLEANS SPR NEW ORLEANS Gulf of Mexico Gulf of Mexico Gulf of Mexico WEST HACKBERRY WEST HACKBERRY LAKE CHARLES LAKE CHARLES BIG HILL BIG HILL TEXAS CITY TEXAS CITY HOUSTON HOUSTON BATON ROUGE BATON ROUGE BEAUMONT PORT ARTHUR BEAUMONT PORT ARTHUR BAYOU CHOCTAW BAYOU CHOCTAW BRYAN MOUND BRYAN MOUND SPR WAREHOUSE (Stennis) SPR WAREHOUSE (Stennis) RICHTON (Proposed New Site) SPR STORAGE FACILITY SPR WAREHOUSE (Stennis) CITIES RICHTON (Proposed New Site) LOUISIANA LOUISIANA LOUISIANA LOUISIANA TEXAS TEXAS TEXAS TEXAS MISSISSIPPI MISSISSIPPI MISSISSIPPI MISSISSIPPI

18. Designed Storage Capacity and Future Development Bayou Choctaw West Hackberry Big Hill Bryan Mound 254 MMB Richton +160 MMB 170 MMB +80 227 MB 76 MMB +33 Authorized- 1,000 MMB Capacity- 727 MMB Current Inventory 706 MMB April 4, 2009

19. Reserve Distribution Capability PAD V 16-18 DAYS Puerto Rico/ Virgin Islands 20-24 DAYS 5-6 DAYS 6-8 DAYS PAD I Hawaii SPR PAD III PAD IV PAD II

20. Industrial Energy Supply Chain Production -> Refining -> Distribution

22. Convention Gasoline Supply Components of Light Vehicle “Upstream” Energy Supply

23. A Model Gasoline and Ethanol Supply System

24. Development of Crude Oil Storage- Size Comparison Empire State Building 1,454 Feet (443 Meters) New Orleans Superdome 273 Feet (83 Meters) Salt Dome Cavity 2,000 Feet (610 Meters)

25. Very large diameter Cap Rock Forms on top of a Rising Salt Column Evolution of Gulf Coast Salt Deposits Geology of Salt Domes

26. Storage Cavern Development Oil Storage Configuration Standby mode Brine Out Oil Oil Water In Leaching Stage II Brine Oil Oil Brine Oil Oil Brine Out Water In Leaching Stage I Oil Brine Oil Storage Cavern Complete Oil Brine

27. Storage Cavern Drawdown Water In Oil Out Oil Out Oil Brine Salt Dome

29. Brine Disposal Methods Brine Disposal in Wells Brine Disposal Pipeline to Gulf 8000 Feet 8000 Feet Brine Brine Pond Brine Disposal Pumps Brine Injection Pumps Oxygen Scavenger Injection Basket Strainer Polish Filters Brine Disposal Well Cavern Raw Water Intake Pumps Water to Caverns Water Source Cavern Oxygen Scavenger Injection Brine Line To Gulf Of Mexico Brine Pond Brine Disposal Pumps Brine

30. Calendar Year Millions of Barrels Cumulative Strategic Petroleum Reserve Oil Fill High Sulfur Low Sulfur

33. How the Reserve Has Been Used Ivan Exchange 5.4 MMB Congressional Sales 28 MMB Test Sale ’90 3.9 MMB Test Sale ’85 1 MMB Desert Storm Drawdown 17.3 MMB Time Exchanges 2000 30 MMB 30 20 10 0 5 10 15 Millions Of Barrels 1985 1990 1995 2006 2000 2005 2007 Maya Exchange Incoming ‘99 Maya Exchange Outgoing ‘98 2005 Hurricane Exchange and Drawdown 20.8MMB Calcasieu Exchange 750K Receipt of Katrina Exchange Oil

35. FY 2009 AUTHORIZED STAFFING DOE- 95 authorized full time equivalents (FTE) Contractors and Subs* – 820 authorized FTEs * Supporting organizations- M&O, Security, Support Services, A-E, Geotechnical, and Construction Management

36. Core Business Operations Areas

37. Coordinates with Federal, State and Local Response Agencies And Private Response Entitles Emergency Response Teams at Each Site Attend Annual Firefighting Training and Receive Hazardous Materials Clean-Up Training Emergency Management and Fire Protection

38. Charter Member National Environmental Performance Track Open Only To Organizations With Strong Compliance Record ISO 14001 Environmental Management System 1st US Bulk Petroleum Storage Entity Certified Voluntary Protection Programs (VPP) Achieved STAR Status Rating From Occupational Safety And Health Administration (OSHA) Environmental, Safety & Health

39. Primary Customer Team Establish Dialogue With Petroleum Industry Primary Customers – Refiners and Traders Open Communications with SPR Stakeholders, the Public, International visitors and Industry Customer Service

40. In 1999 Interagency Agreement W/ Dept of Interior to divert Federal Royalty Oil Payments From Leases in the Gulf Of Mexico to the SPR In Nov 2001 The President directed the SPR be Filled To 700 mmb Through RIK Program As Of Dec 06 SPR has received 138.8 mmb Under RIK Program During 2006, the SPR received 158,746 barrels of RIK oil Royalty-In-Kind

41. Energy Policy Act of 2005 authorized Secretary of Energy to fill the SPR to 1 billion barrels On December 8, 2006, Department of Energy selected salt dome at Richton, MS as an expansion site On February 14, 2007 The Secretary of Energy signed the Record of Decision selecting the following sites for the expansion of the SPR: Richton (New site) Big Hill (Existing site) Bayou Choctaw (Existing site) Acquisition of Additional Storage Capacity Currently Planning and Development work is underway. Public Scoping meetings/Town Hall Meeting conducted April 7-10, 2008

43. Conclusion, Summary and Questions