Feds Award Oil Deals to Tiny, Inexperienced Firms

CNSNews.com Wednesday, Oct. 11, 2000 Bidding procedures at the U.S. Department of Energy are being questioned after contracts for more than 10 million barrels of crude oil from the Strategic Petroleum Reserve were awarded to three tiny oil companies that insiders say have little or no experience in making oil deals. On Capitol Hill, the Senate Energy and Natural Resources Committee is monitoring the controversy.

"We've been following this very closely. The next thing that happens is that these guys have to deliver letters of credit, and if that doesn't happen, they will not get the contracts. They [Department of Energy] will have to rebid the contracts," said a committee spokesman.

In announcing the contracts, the Department of Energy agreed to hand over 30 million barrels of crude oil from the Strategic Petroleum Reserve to 11 companies that had submitted bids. In exchange, according to DOE officials, the 11 firms will return more than 31.5 million barrels to the federal oil stockpile next year.

A Department of Energy spokesman, who didn't want to be identified said, "We picked the companies that offered the best bids based on quality and quantity."

However, the Energy and Natural Resources Committee spokesman said, "This is turning very political."

Some oil traders and analysts, according to Platt's Oilgram News, say they have never heard of three of the companies receiving the oil reserves: Euell Energy Resources of Aurora, Colo.; Burhany Energy Enterprises of Tallahassee, Fla.; and Lance Stroud Enterprises of New York.

All three companies are minority-owned. Black Enterprise magazine listed Euell as among its top 100 black-owned businesses in the United States in 1980-81.

Platt's Oilgram News Editor Beth Evans said in a statement, "It's very surprising when you see companies that have never done an oil deal suddenly grab a third of the oil being released."

According to the DOE spokesman, "By the close of business on Thursday, we anticipate moving the largest SPR (Strategic Petroleum Reserve) exchange ever."

Neither Lance Stroud Enterprises of New York nor Burhany Energy Enterprises in Tallahassee could be reached for comment. However, Stroud is reportedly his firm's only employee, and Burhany Energy Enterprises reportedly lists only one employee, Ronald Peek.

Euell Energy Resources, according to its Web site, is "an integrated energy services and construction company with operations that include natural gas and power marketing, construction and pipeline and cable installation."

Among Euell's projects, according to its Web site, are a "rapid transit system foundation for subway trains which are scheduled to begin running in 2001."

Another project is a "High Pressure Water System" in Northern California. The company says "installing this high pressure system entailed overcoming not only difficult work conditions through the Sierra Mountains, but also required that eight miles of road be built alongside the 14.2 mile pipeline."

The company says it assisted in the construction of the Alaska pipeline, and according to the Web site, "Euell Energy Resources has extensive experience in federal procurement and federal contracts since 1970."

Among those the company commends for helping make Euell "the successful company we are today" are the Rev. Jesse Jackson, the late U.S. Rep. Mickey Leland, former Sen. Bob Dole and former U.S. Interior Secretary Cecil Andrus.

Neither Jackson nor Dole could be reached for further comment.

In announcing the oil exchange contracts, Secretary of Energy Bill Richardson said: "These companies offered the best value in terms of restocking the Strategic Reserve a year from now. Every barrel we can get into the market in the next few weeks reduces the risk of a shortage of heating oil and diesel fuel this winter. This is good for consumers and good for our nation's long-term energy security."

http://www.newsmax.com/articles/?a=2000/10/10/183301

-- Martin Thompson (mthom1927@aol.com), October 11, 2000

Answers

This is a farce.

-- Chance (fruitloops@hotmail.com), October 11, 2000.

Government says it knew little about some oil bidders

By H. JOSEF HEBERT The Associated Press 10/11/00 7:41 PM

WASHINGTON (AP) -- Energy Department officials acknowledged Wednesday they knew virtually nothing about three bidders chosen to take a third of the 30 million barrels of oil being released from the government's emergency reserve.

Three small companies, including one operating out of a New York City apartment and a second incorporated less than two months ago, were scrambling to obtain financial backing to meet this week's deadline for completing the deals.

Their share amounts to 10 million barrels, worth an estimated $334 million in current markets.

Officials said several of the bids announced Oct. 4 may have to be reopened because some companies struggled to get the letters of credit required to guarantee that the government will recoup the oil at a future date. That snag could delay some oil deliveries into December.

President Clinton last month said the government would use 30 million barrels from its Strategic Petroleum Reserve on the Texas-Louisiana Gulf Coast to ease tight heating oil supplies.

Robert Kripowicz, the Energy Department's acting assistant secretary for fossil fuels, said in an interview the deals will not be final, or oil released, until the bidder produces a letter of credit from a third party for the full value of the oil.

Kripowicz said he did not know that Lance Stroud Enterprises was a one-man operation run out of a New York City apartment, nor that a second bidder, Burhaney Energy Enterprises of Tallahassee, Fla., also had little experience in the oil business and was incorporated only in late August.

A third bidder, Euell Energy Resources, describes itself on its Web page as "a full service energy corporation" but has only a small number of employees at its offices in the Denver area.

Kripowicz said the department gave heavy weight to information from other oil traders and industry representatives who said they were "in serious discussions" with the small companies to purchase the oil.

"We wanted to get the bids out quickly. ... We didn't prequalify any bidders," he said.

Burhaney Energy has requested and been granted a 24-hour extension until Friday to produce guarantees of financial backing, Kripowicz said. The deadline for most bidders was Thursday, although one-time extensions were not ruled out.

Three major bidders -- Marathon Ashland Petroleum, BP Oil Supply, and Elf Trading Inc. -- have submitted the financial guarantees completing deals covering a total of 10.9 million barrels, the Energy Department reported.

Sen. Frank Murkowski, chairman of the Senate Energy Committee, asked Energy Secretary Bill Richardson for a detailed accounting of the bid selection process.

Murkowski, R-Alaska, in a letter Wednesday, also sought to learn why some winners "had no experience in refining oil or even getting products to market."

Among the information know about the three small companies:

--Lance Stroud, who owns the company run out of his apartment, said earlier this week that he is confident of getting financial backing for the 4 million barrels of crude, worth about $133 million, that he hopes to receive.

The telephone at his apartment has an unpublished number and attempts to reach him Wednesday were unsuccessful.

--Burhany Energy was incorporated only a month before Clinton's decision.

The Aug. 21 incorporation paper, a copy of which was obtained by The Associated Press, describes the company's purpose as "energy marketing and personnel recruitment" and lists Ronald Peek as its agent and incorporator.

Peek's telephone number is unpublished. The company, which seeks 3 million barrels of crude, is not listed in the Tallahassee information directory and a number listed on the incorporation paper rings on an answering machine.

--Several attempts to reach Euell's chairman and founder, Renard Euell, were unsuccessful. He did not return telephone messages Wednesday. An employee at the company's office said she just answered the telephone and no one else was available to speak about the oil bids.

Euell told Dow Jones Energy Service that he has been in the energy business for 30 years and that he wants to sell the oil to East and West Coast refineries.

http://www.nj.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi? a0811_BC_EmergencyOil&&news&newsflash-washington

-- Martin Thompson (mthom1927@aol.com), October 12, 2000.