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Delta Air strikes crude supply deal with Bridger for Pennsylvania refinery

07.21.2014  |  HP News Services

Delta Air Lines signed a five-year agreement with midstream group Bridger to supply the Trainer refinery with 65,000 bpd of crude, more than a third of the plant’s capacity.

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By DAN MURTAUGH
Bloomberg

Delta Air Lines, the largest US carrier by market value, is trying to cash in on the biggest oil boom in the nation’s 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 plant’s 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, Delta’s 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 Norway.

Brent crude, the European 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.

Jet Fuel

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 refinery’s 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 Enbridge’s 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 said.

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 the refinery’s needs, he said.



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