* Loan of 1 mln barrels not expected to move oil prices
* White House considers large tap, no decision yet
* Marathon refinery at reduced rates after Isaac
* No other refiners asked DOE for oil
By Timothy Gardner and Joshua Schneyer
WASHINGTON/NEW YORK Aug 31 The United States
will loan 1 million barrels of crude from emergency reserves to
Marathon Petroleum Corp after one of its refineries
slowed output in the wake of Hurricane Isaac, the Department of
Energy said on Friday.
The Obama administration has been considering plans to tap a
larger amount of crude from the 727 million barrel Strategic
Petroleum Reserve as tension over Iran's nuclear program and
Western sanctions on Tehran have boosted oil prices.
The White House is in the data-gathering process and would
not likely make a decision on a larger tapping of the reserves
until early September, sources have said.
Friday's decision by the DOE was much narrower than a large
drawdown, which typically involves talks with oil consumer and
producer countries. Energy Secretary Steven Chu has the power to
loan small amounts of oil from the reserve following storms and
other events that reduce petroleum supplies.
"This emergency loan from the Strategic Petroleum Reserve
will help ensure Marathon's refining operations have the crude
oil they need to continue operating," Chu said in a statement.
The DOE said it continues to "keep all options on the table
to address additional or sustained oil supply issues."
An analyst said the loan of sweet crude oil to Marathon
should not have a big impact on markets.
"This is a small, limited time swap in response to Isaac and
should not have a major impact on crude prices, although, as DOE
noted, it is keeping the option of a larger release on the table
for future or sustained disruptions," said Bob McNally, head of
the Washington-based consulting firm the Rapidan Group.
Oil futures in New York rose about $1.50 after the loan
announcement, to more than $96 per barrel.
The DOE has not received additional requests from other
refiners along the U.S. Gulf Coast for oil loans, a source
familiar with the talks said. If the agency gets more requests,
it "will move expeditiously to review them" to ensure it is
responding as quickly as possible to those hit by the storm, the
Marathon said its 490,000 barrels per day refinery in
Garyville, Louisiana, was running at reduced rates due to heavy
rain but that it had not sustained significant damage.
Under the loan agreement, Marathon will return an equal
amount of similar oil to the reserve within three months, plus
additional barrels representing interest, the DOE said. The SPR
will be ready to begin delivering oil to Marathon on Friday.
Exxon Mobil, Valero and Royal Dutch Shell
also have refineries that were either still shut or
were at reduced rates due to the storm.
Valero spokesman Bill Day said his company had not asked for
oil from the reserve but it would continue to evaluate its
needs. Bo th of its Louisiana refineries remained shut.
Isaac made landfall this week as a Category 1 hurricane but
has since moved inland and weakened to a tropical depression.
BIG DRAWDOWN LAST YEAR
The Obama administration agreed to tap 30 million barrels of
oil last year - less than two days of U.S. demand - as civil war
in Libya took out about 1 million bpd of crude from the country.
The drawdown was part of a wider sale of 60 million barrels
coordinated with the International Energy Agency.
This year sanctions have reduced Iran's oil output the same
rate as last year's Libyan crisis, spurring calls from Congress
to push the White House to release oil. Countries in the West
believe Iran is attempting to develop nuclear arms, while Tehran
says its nuclear program is for energy and medical purposes.
Maria van der Hoeven, the IEA's chief, said in Norway this
week she opposed a coordinated drawdown, citing adequate global
supplies. Sanctions on Iran, "didn't come out of the blue," she