Delta Buys an Oil Refinery

During 2012, Trainer's production will reduce Delta's fuel costs by more than $100 million.

A wholly owned subsidiary of Delta Air Lines, Monroe Energy LLC, has agreed to buy the Trainer petroleum refinery complex near Philadelphia, preventing it from a planned closure and puting Delta in position to produce most of the jet fuel needed for its U.S. flights, the airline announced April 30. BP and Phillips 66 are involved through sourcing and marketing agreements, and $30 million in state government assistance is part of the deal.

Monroe is investing $150 million to buy the refinery and spending $100 million to convert its infrastructure to maximize jet fuel production. Some of its production will be gasoline that is traded with BP, which will supply the crude oil that is refined at Trainer, and Phillips 66 to acquire jet fuel -- enough to satisfy 80 percent of Delta's domestic jet fuel needs.

"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," said Richard Anderson, Delta's chief executive officer. "This modest investment, the equivalent of the list price of a new widebody aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast. This strategy is aligned with the moves we have made to build a stronger airline.

"We are delighted to bring BP's global scale and access to the world's energy markets to this strategic agreement with Delta," said Paul Reed, CEO of BP's Integrated Supply and Trading. Trainer will be run by a seasoned leadership team headed by 25-year refinery veteran Jeffrey Warmann.

Monroe is expected to close on the acquisition in the first half of 2012. During 2012, Trainer's production will reduce Delta's fuel costs by more than $100 million. The Trainer complex has a crude oil processing capacity of 185,000 barrels per day and processes mainly light, low-sulfur crude oil.

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