VOL. 127 | NO. 85 | Tuesday, May 01, 2012
Delta Subsidiary to Buy Pa. Refinery
By Bill Dries
Delta Air Lines announced Monday, April 30, that its Monroe Energy LLC subsidiary has an agreement to buy the Trainer oil refinery south of Philadelphia from Phillips 66 for a $150 million investment.
Reports of Delta’s interest in the refinery surfaced earlier in April and Delta executives declined comment as recently as an earnings call last week.
Delta CEO Richard Anderson said Monday buying the refinery is “an innovative approach to managing our largest expense” and estimated the set of agreements, including those for the pipeline and transportation assets to carry the product, will provide 80 percent of Delta’s fuel needs in the U.S.
“This modest investment, the equivalent of the list price of a new wide-body aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast,” Anderson said in a written statement.
The delivery network will supply Delta’s Northeast operations, including its hubs at LaGuardia and JFK airports in New York. Distribution to other parts of Delta’s network in the U.S. would come through exchanges of oil products from Trainer for jet fuel made by Phillips 66 and BP elsewhere in the country.
Monroe intends to spend $100 million to convert existing infrastructure at the refinery to make jet fuel. The investment is conditioned on $30 million in Pennsylvania state government assistance for the project.
BP will supply the crude oil to the refinery under a three-year pact.