(Adds background on SPR, previous sale)
WASHINGTON, Feb 8 (Reuters) - The U.S. Energy Department said on Wednesday it will sell 10 million barrels of oil from the government's emergency crude reserve in late February.
The sale from the Strategic Petroleum Reserve (SPR) was required by a law passed last year as a way to help increase funding for medical research. The law mandated sales of 25 million barrels from the SPR over three years, starting with the sale of 10 million barrels this year.
The reserve, a series of heavily guarded underground salt caverns along the coast in Texas and Louisiana, currently holds about 690 million barrels of mostly sour oil, a type containing high sulfur that many U.S. refineries can process.
It will be the second sale of oil from the emergency stash this year. Last month, Shell bought 6.2 million barrels from the reserve and Phillips 66 bought 200,000 barrels.
The federal government held that sale to fund a modernization of the SPR. More sales are expected be held in coming years to fund up to $2 billion for the revamp.
Reporting by Timothy Gardner; Editing by Grant McCool and Dan Grebler