Audacious Delta becomes first airline to buy a refinery: Energy

Posted: May 1, 2012 in Airlines, Aviation & Airports (General News), USA
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[Reuters] Delta Air Lines Inc will buy a Pennsylvania oil refinery from ConocoPhillips for US$150-million, an audacious bid to save money on fuel costs by investing in a sector shunned by many of the biggest oil firms.

Swissport Fueling employee Daniel Berg disconnects the main fuel line after refueling this Delta AirLines jet at Phoenix Sky Harbor International Airport: Jeff Topping/Getty Images

Atlanta-based Delta said the first ever purchase of a refinery by an airline would allow it to cut US$300-million annually from jet fuel costs, which reached US$12-billion last year. It said production at the refinery along with other agreements to exchange refined products for jet fuel would provide 80% of its fuel needs in the United States.

The deal for the idled 185,000 barrel per day Trainer, Pa., refinery, which has puzzled analysts since it first surfaced last month, will come as some relief to politicians and officials, who had feared thousands of lost jobs and a potential summer spike in fuel costs if the plant was shut permanently.

And while the initial investment is no more than a wide-body jet liner, even including an additional $100 million to upgrade the plant to maximise jet fuel production, it will put Delta in the unique position of hoping that the recent rebound in refinery profit margins — normally an indication of added costs for a fuel consumer — doesn’t prove too fleeting.

While Delta will remain hostage to fluctuating crude oil costs, the facility would enable it to save on the cost of refining a barrel of jet fuel….

Read the full Reuters story at Energy…..


May 1, 2012

 

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