Delta: Refinery will pay off

TRAINER — At an investors’ meeting, Delta Airlines President Ed Bastian said that despite a lackluster financial performance by the company’s refinery in Trainer, the future looks bright for the facility.

Purchased by Delta subsidiary Monroe Energy in June 2012 for $150 million, the former ConocoPhillips facility employs about 400 workers in Delaware County. In its first full year under the Monroe banner, the facility has operated at a loss of $100 million, according to Bastian. But he said that’s not particularly bad news.

“Let me be very clear: Trainer has been a great success for Delta and we are pleased that we made that acquisition,” Bastian said at the Investor Day Conference in Atlanta on Wednesday. The airline purchased the facility with an eye toward an affordable and steady source for jet fuel, a mission which the refinery has fulfilled.

“It had an immediate impact on jet fuel prices,” Bastian said. “For 2013 we’ve been trading somewhere between a 5 to 10 cent per gallon discount relative to diesel.”

While those figures may not seem large enough to make a significant impact on the company’s bottom line, Bastian reminded the gathered stockholders and investors that it was important to realize the vast supply of jet fuel required to operate the airline.

“Every penny that we save on jet fuel saves us about $40 million per year,” he said. “When you do that math it’s considerable and it’s well worth the $150 million capital investment that we’ve made in this refinery.”

The facility’s efficiency has been steadily improving, Bastian added, saying that this year’s operational costs should soon turn into profits.

“We do expect it’s going to continue to improve. We lost about $100 million in 2013 operating the facility... We have confidence in that goal, that it’s going to be profitable in 2014. There’s a lot of learning that we’ve had through the first year.”

The refinery is undergoing a turnaround that should be complete in early 2014. The refinery produced an average of 180,000 barrels of fuel a day, with 40 percent of that being jet fuel or diesel, the two most profitable products produced at the refinery. Bastian described the operational improvements currently underway as significant, explaining that they will increase the refinery’s recovery rate and its throughput abilities, while also maintaining is safety record.

He credited the refinery’s potential to the facility’s operations staff and managers.

“The team on the ground at Trainer has done an excellent job,” Bastian said. “There’s a lot of good news yet to come on the Trainer front.”

Source: DelcoTimes.com