Delta Air Lines to buy Trainer refinery from Phillips 66
A Delta Air Lines Inc. subsidiary has agreed to buy the 185,000-b/d Trainer, Pa., refinery near Philadelphia from Phillips 66 Co. for $180 million, the companies reported Apr. 30.
A Delta Air Lines Inc. subsidiary has agreed to buy the 185,000-b/d Trainer, Pa., refinery near Philadelphia from Phillips 66 Co. for $180 million, the companies reported Apr. 30. Delta said Monroe Energy LLC is buying the refinery to reduce the airline’s fuel costs, and will convert the installation to primarily produce jet fuel.
The Delta unit said the acquisition includes pipelines and other transportation assets, which will provide access to Delta’s jet fuel delivery network throughout the US Northeast, including the airline’s hubs at LaGuardia and JFK airports in New York City. Monroe also agreed with Phillips 66 and BP PLC to exchange gasoline, diesel fuel, and other products from the refinery for jet fuel, effectively providing 80% of Delta’s US fuel needs, the airline said.
The acquisition is an innovative approach to managing Delta’s biggest expense, Chief Executive Officer Richard Phillips said. “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,” he explained.
Delta said BP will supply oil to the refinery under a 3-year agreement, and that gasoline and other products will be exchanged with BP and Phillips 66 elsewhere in the US under multiyear agreements. It said Monroe expects to close the acquisition by the end of June and complete changes at the plant to produce more jet fuel by the end of the third quarter.
Jeffrey Warmann, who previously was the manager at Murphy Oil USA Inc.’s refinery in Meraux, La., will lead the Trainer facility’s management team, according to Delta.
It said Monroe will spend $150 million to acquire the plant, after receiving $30 million of state government assistance from Pennsylvania for job creation and infrastructure improvement. The Delta subsidiary will spend another $100 million to convert the refinery’s operations to maximize jet fuel production.
Pennsylvania government officials applauded the agreement. “Today marks an important win for southeast Pennsylvania and the commonwealth as a whole,” Gov. Tom Corbett (R) said. “This announcement means the preservation of more than 5,000 jobs at the Trainer facility and in related industries.” He and the state’s two US senators, Robert P. Casey Jr. (D) and Patrick J. Toomey (R), noted that the agreement followed months of discussions with Delta and Phillips 66.
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