Delta Air Lines refining subsidiary Monroe Energy may look to improve its connection to its nearby baseline Bakken supply but is not on the hunt for its own rail yard.
The company continues to consider a pipeline connection between its 185,000 b/d Trainer, Pennsylvania, refinery and the 80,000 b/d terminal on the Delaware river in Eddystone, Pennsylvania, chairman Graeme Burnett told Argus on the sidelines of the Argus Americas Crude Summit in Houston. But an assortment of third-party contracts and success in the spot market meant the airline subsidiary did not need its own offloading facility.
"The only thing we're considering is connecting to it by pipeline," Burnett said.
The Trainer refinery in 2014 produced its first annual profit in at least six years, at $105mn. Steep reductions in waterborne, Brent-priced crudes — once the refinery's only source of feedstock — have helped to improve margins at a refinery nearly shuttered in 2011.
Monroe has a five-year contract with Bridger for at least 65,000 b/d at Eddystone. A portion of the contract is on a Brent-based formula and hedges on the remainder help to mitigate a narrow Brent-WTI spread.
Mid-term contracts with BP for Eagle Ford crude out of the US Gulf coast and shorter term deals with companies such as Plains All American, which operates a rail offloading terminal at Yorktown, Virginia, further supply alternatives to waterborne crude.
The refinery can run up to 100pc domestic crudes, though it faces operational constraints at such rates, Burnett said.
The company has also retooled the refinery's production. Delta consumes 25,000 b/d of the 40,000 b/d of jet fuel produced at the refinery. The airline uses the remaining production as a "gentle threat" in other markets for fuel purchasing leverage, Burnett said.
eb/tdf
Send comments to feedback@argusmedia.com
Request more information about Argus' energy and commodity news, data and analysis services.
Copyright © 2015 Argus Media Ltd - www.argusmedia.com - All rights reserved.
