By DAN MURTAUGH
Delta Air Lines, the largest US carrier by market value, is
trying to cash in on the biggest oil boom in the
nations history by bringing more domestic crude to its
refinery near Philadelphia.
The Atlanta-based airline signed a five-year agreement with
Addison, Texas-based midstream company Bridger to supply the
Trainer, Pennsylvania, refinery with 65,000 bpd of crude,
more than a third of the plants capacity.
Delta is hoping that greater use of domestic crude will help
it turn a profit at the refinery
, which it bought from
ConocoPhillips in 2012 in an attempt to control prices and
supplies for its fleet. US crude production has risen 55%
since the start of 2010, making prices cheaper than in the
rest of the world.
We definitely believe domestic crude will be
competitive versus foreign alternatives, said Graeme
Burnett, Deltas senior vice president for fuel
optimization. We want to push the levels of domestic
crude as high as we can.
Trainer is 100 miles (160 kilometers) from New York Harbor,
the delivery point for gasoline and diesel futures on the New
York Mercantile Exchange. Delta imported about 140,000 bpd of
crude to feed the plant in April, mostly from Nigeria and
Brent crude, the Europe
an benchmark, was $5.38/bbl
more than West Texas Intermediate in Cushing, Oklahoma, on
July 18. Brent futures have settled above the US benchmark
every day since Aug. 17, 2010.
Conoco shut the refinery
in 2011, citing poor
economics. Delta lost $41 million operating the refinery in
the first quarter and booked $107 million in fuel hedging
gains. Delta uses the refinerys jet fuel and trades the
gasoline and other products for more.
Bridger is acquiring 1,300 crude-by-rail cars and has a
contract to load 80,000 bpd of crude from Enbridges
rail terminal in Eddystone, Pennsylvania, onto barges that
can deliver crude to Trainer. Delta may build a pipeline
connecting the Trainer refinery to the terminal, Burnett
Bridger will initially deliver Bakken crude from North Dakota
to the refinery, CEO Julio Rios said. The sourcing may change
over the length of the contract depending on economics and
s needs, he said.