DynMcDermott Petroleum

Operations Company 

Since 1993, DynMcDermott Petroleum Operations

Company has operated and maintained the U.S. Strategic

Petroleum Reserve (SPR), a cache of up to 700 million

barrels of crude oil. The U.S. Department of Energy’s

(DOE) oil reserve was designed as “energy insurance” against

disruptions to the availability of crude oil. 

With a budget for 2006 of $113 million and just over 500

employees in Louisiana,Texas,andMississippi,DynMcDermott

works exclusively for DOE. DynMcDermott is the only

Louisiana company to have received the Baldrige-based

Louisiana Performance Excellence Award three times.

Additionally, the Big Hill site was the recipient of the 2005

Texas Award for Performance Excellence, a Baldrige-based

award process.

Ready to Operate

The SPR stores 700 million barrels of crude oil in 62

underground salt caverns at sites along the U.S. gulf coast.

These storage caverns, which each hold from about 7 million

to 35 million barrels of crude oil, were created by hollowing

out salt domes with fresh water injected at high pressure.

This approach has won engineering awards for being safer

and less expensive than other large-scale above ground

storage methods, and it is considered a global benchmark

studied by other countries.

Each of the SPR’s storage sites use state-of-the-art

automated systems to conduct operations from a central

control room and to monitor conditions, including

temperature, pressure, and vibration. Each site also has an

advanced fire protection system, emergency response

personnel and equipment, and specialized security.

DynMcDermott routinely updates its oil storage and

operations technology to tap the best new technologies, such

as using cement lining for brine disposal pipelines to reduce

corrosion and erosion.

For DynMcDermott, priority number one is operational

readiness. In the event of oil supply interruption, and

following an order from the President of the United States,

the SPR is poised to distribute crude oil to refineries. Called

“Drawdown,” this is DynMcDermott’s primary mission.

Another key process, “Fill,” consists of filling the SPR to

specified capacities. DynMcDermott conducts oil storage, oil

movement, and field-operating functions at the SPR sites in

Louisiana and Texas. 

Over the past decade, DynMcDermott has continually

improved its Operational Readiness System, a strategic

planning and organizational tool to ensure the company can

both drawdown and fill efficiently, securely, and safely. Each

site is run as a separate business unit under the operational

control of a Site Director, allowing maximum decisionmaking capability at the field level. 

2005

Award Winner

National Institute of Standards and Technology ● Technology Administration ● Department of Commerce

Baldrige National Quality Program

Highlights

• DynMcDermott is the SPR’s longest-running

management and operations contractor in the reserve’s

30-year history.

• Drawdown readiness has steadily improved from 95

percent in 1999 to 99 percent or better from 2002

through 2005. 

• Overall customer satisfaction has steadily improved 

from 67 percent satisfaction in 1999 to 85 percent 

(on a 90 percent scale) in 2005.

• Hurricane Katrina caused DynMcDermott to relocate

operations from New Orleans to Beaumont, Texas. 

Within five days, the SPR began delivering oil to

refineries in the Gulf Coast region, which normally 

get oil from the Gulf of Mexico. 
DynMcDermott’s organizational approach has worked

well. Drawdown systems availability has sustained a 98

percent or better performance level and has exceeded DOE

expectations in each year and at each site since 2001. The

drawdown rate has been sustained at the target level since

2000 and met the 2005 DOE drawdown target of 4.4 million

barrels per day, while overall distribution capability as a

percentage of drawdown rate has been sustained at 153

percent, compared to the DOE goal of 120 percent.

Drawdown readiness has steadily improved from 95 percent

in 1999 to 99 percent or better from 2002 through 2005,

exceeding DOE’s target of 95 percent. DynMcDermott has

conducted three major drawdown exercises in recent years.

Fulfilling its other major task, in August 2005,

DynMcDermott completed a “Fill” of the SPR to its

authorized capacity of 700 million barrels as ordered by

President Bush following the terrorist event on September

11, 2001. 

In 2005, DynMcDermott’s response to Hurricanes

Katrina and Rita demonstrated the company’s operational

readiness, emergency planning, and emergency response.

Both hurricanes directly impacted several company sites,

displacing employees. But, less than five days after Hurricane

Katrina hit the Gulf Coast, DynMcDermott restored

operations and was able to provide oil to refiners. For

example, DynMcDermott’s response included re-routing the

primary SPR computer networks to a storage site in

Louisiana to support the Emergency Operation Center

(EOC) in Texas and just a month later, Hurricane Rita forced

an EOC evacuation and relocation to a second planned

alternate site. During this period, President Bush declared a

drawdown from the SPR, an action that has occurred only

twice in 30 years. Although the EOC had to be relocated over

200 miles, DynMcDermott made its first drawdown oil

delivery just three days after Hurricane Rita.

Partnership Leads to Success

DynMcDermott has achieved success by aligning its

purpose, vision, mission, and values to match those of its

customer, DOE. The two organizations hold joint planning

and performance reviews and share computer networks and

critical information. DynMcDermott’s values-based strategic

planning process is integrated with the DOE planning

process, and DynMcDermott employees are involved in the

DOE strategic planning activities. 

This close interaction has allowed both DynMcDermott

and DOE to continually assess progress, leading to

improvements and positive results across the SPR. Since

2001, performance levels have ranged from 4.5 to 5.8 on a 

6-point scale. In 2003, DynMcDermott successfully 

re-competed its DOE contract, which currently runs through

2008 and contains renewal options through 2013.

To further ensure a high-performing and safe

organization, DynMcDermott employees are well trained in

workplace safety, environmental stewardship, ethical business

practices, and management and leadership development. In

2005, DynMcDermott’s rate of workdays lost due to injury

per 200,000 worker hours was 0.6 compared to the Bureau of

Labor Statistics average of 4.8. Overall employee satisfaction

increased from 74 percent in 2000 to 83 percent in 2005,

which compares favorably to the 43 percent benchmark

determined by Business Research Laboratory. (BRL conducts

employee satisfaction surveys for about 300 organizations

and establishes industry norms.) The percentage of

employees agreeing with the statement “I am proud to be

associated with DynMcDermott” improved from 74 percent

in 2000 to 84 percent in 2005, comparing favorably to the

BRL benchmark of 71 percent. Employee understanding of

DynMcDermott’s mission was in the excellent band in 2005,

well above the Society for Human Resources Management

norm of 72 percent and the BRL benchmark of 82 percent. 

A Responsible Environment 

DynMcDermott’s management of the SPR not only must

be efficient, it also must be environmentally sound.

DynMcDermott is keenly focused on ways to better identify,

reduce, and eliminate waste produced by the SPR. Since

2000, DynMcDermott has decreased the SPR’s total pounds

of hazardous waste from 3,802 to 515 pounds, compared to

the DOE goal of 539 pounds. Since 2001, DynMcDermott

also has maintained certification with the International

Organization for Standardization’s ISO 9000:2000 quality

management system and the ISO environmental

management standards (ISO 14001).

In addition to technology, environmental stewardship

requires communication. DynMcDermott meets quarterly

with its Environmental Advisory Committee, made up of

external members, mainly scientists, technical experts, and

community representatives, to discuss and address potential

community concerns. 

This close eye on the environment has won

DynMcDermott many awards, including the 2005 Clean

Texas–Cleaner World National Award, the 2005 National

Environmental Excellence Award for Best Available

Environmental Technology from the National Association of

Environmental Professionals, and the 2005 Louisiana

Environmental Management Award. 

For more information:

DynMcDermott Petroleum Operations Company

850 S. Clearview Parkway

New Orleans, LA 70123

Telephone: (504) 734-4918

Fax: (504) 818-5918

Email: david.stoltz@spr.doe.gov

Web site: www.dynmcdermott.com