By Janet McGurty
TRAINER, Pennsylvania, June 22 (Reuters) – Delta Air Lines
took the keys for the Trainer, Pennsylvania refinery
from Phillips 66 on Friday, becoming the first air
carrier to wade 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 U.S.
Northeast, was finalized 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 $100
million to convert the refinery in Trainer, Pennsylvania, to
increase jet fuel output to 52,000 bpd and cut back on
production of gasoline. Gasoline demand on the East Coast has
dropped in recent years, as drivers modify their behavior due to
the weak economy and as vehicle fuel economy improves.
Delta hopes the deal will lower its fuel costs, which
reached nearly $12 billion last year, the largest expenditure on
its balance sheet.
The airline paid an average $3.06 a gallon for jet fuel last
year, up nearly a third from 2010. The U.S. Department of Energy
forecasts the cost of jet fuel to average $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 that the plants process crushed margins,
raising the threat of a fuel squeeze in the region as the summer
driving season approached.
Further relief from the threat of shortage may come from a
deal for Sunoco Corp to either sell or form a joint
venture with private equity firm Carlyle Group LP to run
a 330,000 barrel per day Philadelphia refinery.
