Delta Seals Deal To Buy US Refinery

June 23, 2012

Bookmark and Share

Delta Air Lines took the keys for the Trainer, Pennsylvania refinery from Phillips 66 on Friday, becoming the first air carrier to move into fuel production in a bid to bring down costs.

The deal, which revived the shuttered 185,000 barrel-per-day plant and eased fears of a fuel supply shortfall in the US Northeast, was completed late afternoon, company officials said.

The refinery was expected to begin a 40 to 50-day maintenance period beginning in early July before resuming production.

Monroe Energy, a Delta subsidiary, will spend about USD$100 million to convert the refinery in Trainer, Pennsylvania, to increase jet fuel output to 52,000 bpd.

Delta hopes the deal will lower its fuel costs, which reached nearly USD$12 billion last year, the largest expenditure on its balance sheet.

The airline paid an average USD$3.06 a gallon for jet fuel last year, up nearly a third from 2010. The US Department of Energy forecasts the cost of jet fuel to average USD$3.35 a gallon in 2012.

Trainer was one of three refineries on the East Coast that was threatened with closure since late last year as the high cost of imported crude crushed margins, raising the threat of a fuel squeeze in the region as the summer driving season approached.