Monroe Energy LLC, a subsidiary of Delta Air Lines Inc., has entered into a 5-year agreement with midstream logistics provider Bridger LLC, Addison, Tex., to supply 65,000 b/d of US crude oil to Delta’s 185,000-b/d refinery in Trainer, Pa.
The supply agreement, which will cover about one third of crude oil processed daily at the refinery, comes as part of Delta’s strategy to manage the cost of the airline’s primary expense of jet fuel, according to a July 21 joint release from Delta and Bridger.
Bridger will supply the Trainer plant with lower-cost US crude from Bakken oil fields in North Dakota to replace more expensive crude feedstocks the refinery historically has sourced from overseas, the companies said.
“By combining this transaction with our other sources of domestic crude supply, we expect to meet our goal of a minimum of 70,000 b/d of domestic crude sourcing at the refinery,” said Graeme J. Burnett, Delta’s senior vice-president for fuel optimization and chairman of Monroe.
Bridger recently invested $200 million to expand its existing railcar fleet with acquisition of 1,300 railcars that exceed current safety specifications for crude oil tank cars which will be among the mix of assets used to transport crude supplies to the Trainer refinery, the company said.
Monroe Energy agreed to buy the Philadelphia refinery from Phillips 66 in 2012 for $180 million with the goal of converting the installation to primarily produce jet fuel in order to reduce Delta’s fuel costs (OGJ Online, Sept. 17, 2012; May 1, 2012).