* Crude distillation unit began operation last week
* Refinery seen returning to full operations
By Janet McGurty
NEW YORK, Sept 24 Delta Air Lines Inc's
185,000-barrel-per-day refinery in Trainer, Pennsylvania, has
begun producing jet fuel, a source familiar with the situation
said on Monday.
Last spring, Delta made the bold move of buying a refinery
from Phillips 66 to control fuel costs for its fleet.
The refinery, which was shut in late September 2011, has
been undergoing maintenance and upgrading, and began restarting
earlier this month.
The refinery restart is within the expected time frame given
by Delta's Monroe Energy earlier this year.
Last week, the crude distillation unit began operation but
at half rates, ahead of the restart of the second crude heating
The sulfur recovery unit restarted, but unforeseen issues
with the 53,000-barrel-per-day gasoline-making fluid catalytic
cracking unit will delay the restart of that unit, the source
The second crude oil heater is undergoing extensive
maintenance and is expected to come back up in a week or so, the
Delta bought the refinery last spring from Phillips 66
to control fuel costs. ConocoPhillips shut the plant at
the end of September 2011 as it sought to minimize exposure to
high-cost, low-margin East Coast refinery operations.
Although the plant was preserved at shutdown to be able to
be restarted with a minimum of damage to piping and units,
problems with the gasoline-making fluid catalytic cracking unit
were found during a major turnaround on the unit that began in
Delta expected to spend about $100 million to increase jet
fuel production at the refinery to 52,000 bpd, or about 32
percent of output, while reducing production of gasoline.
Monroe signed a three-year deal with BP Plc to supply
crude oil to the facility. Under a product-offtake deal, Monroe
will exchange gasoline and other refined products from Trainer
for jet fuel from Phillips 66 and BP elsewhere in the country
through multi-year agreements.
Delta is the first U.S. airline to buy an oil refinery,
aiming to manage rising fuel costs. The airline expects the
refinery to reduce its annual fuel bill, which reached $12
billion last year, by $300 million.
Delta President Ed Bastian told a Deutsche Bank conference
earlier this month that Delta could save even more as the
carrier was looking to bring in Bakken crude from North Dakota
to supply the refinery at prices that could be equivalent to
West Texas Intermediate or lower.
The refinery currently processes more expensive crude from
the North Sea and Africa.